Vujicic v MacEachern (Estate), 2021 ABQB 9

Court of Queen’s Bench of Alberta Citation: Vujicic v MacEachern (Estate), 2021 ABQB 9 Date: 20210112 Docket: 1501 14049 Registry: Calgary Between: Ranko Vujicic Plaintiff - and - The Estate of Leona Donna MacEachern, Deceased, by Thomas MacEachern, Litigation Representative Defendant Docket: 1501 14050 Registry: Calgary Between: Tomislav Raljic Plaintiff - and - The Estate of Leona Donna MacEachern, Deceased,

by Thomas MacEachern, Litigation Representative Defendant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice R.A. Neufeld _______________________________________________________ Appeal of Masters Order Master Farrington, Master in Chambers Dated the 4 th day of September, 2019 I. Overview [ 1 ] On Christmas Day of 2013, a tragic motor vehicle accident occurred near the Town of Cochrane. A car driven by Leona MacEachern collided head-on with a semi-trailer driven by Ranko Vujicic, and in which Tomislav Raljic was a passenger. Ms.

MacEachern died, and the others were injured. [ 2 ] Mr. Vujicic and Mr. Raljic were residents of British Columbia. They elected to claim compensation for income loss through WorkSafeBC (the equivalent to Alberta’s Workers’ Compensation Board). WorkSafeBC accepted the claims and to date has paid Mr. Vujicic approximately $300,000 in benefits, and Mr. Raljic approximately $12,000 in benefits. [ 3 ] The BC Workers Compensation Act (“BC WCA”) confers a right of subrogation on WorkSafeBC when it makes payments of this nature: s 10(6). WorkSafeBC has acted on that right to bring an action against the Estate of Ms.

MacEachern in the names of the two injured workers, seeking compensation for lost income and various other heads of damages. [ 4 ] At questioning, a disagreement arose between the parties regarding whether the benefits paid by WorkSafeBC are recoverable from the Defendant Estate. The parties agreed to submit the issue to a Master of this Court for determination, pursuant to Rule 7.1(1) (

a) of the Alberta Rules of Court , Alta Reg 124/2010 . [ 5 ] By decision dated September 4, 2019, Master Farrington held that the payments must be deducted from any award of damages, pursuant to s 570(3) of the Insurance Act , RSA 2000, c I-3 and to that extent WorkSafeBC did not have a right of subrogation. In the name of the plaintiffs, WorkSafeBC appeals. [ 6 ] To decide this appeal, I must determine whether the Master’s

interpretation of the Insurance Act was correct. [ 7 ] I have decided that having regard to the language used by the Legislature, and the purpose and context of s 570, it was the intention of the Legislature to require deduction of payments made by an extra-provincial workers’ compensation entity from awards made in respect of automobile accidents, and that the general right of subrogation enjoyed by that entity to bring action in the name of the compensated workers does not affect the issue of deductibility. My reasons for reaching that decision follow. II.

Standard of Review [ 8 ] The parties agree that the questions placed before Master Farrington in the first instance, and before me on appeal turn on the

interpretation of s 570 of the Insurance Act with the standard of review being that of correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 . III.

Interpretational Approach

[9] The modern principle of statutory

interpretation provides that the words of

an Act are to be read in their entire context, intheir grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of the legislature:Driedger, The Construction of Statutes (Toronto: Butterworths, 1974) at 67; Re Rizzo & Rizzo Shoes Ltd (SCC), [1998]1 SCR 27 at 41. [10] The overall purpose of the Insurance Act is to regulate the manner in which the insurance industry is to operate withinAlberta. [11] The forms of insurance contracts governed by

Part 5 of the Act include, but are not limited to automobile insurance contracts. [12] Subpart 1 of

Part 5 deals with insurance contracts generally. Subpart 2 relates specifically to automobile insurance. Itprescribes the statutory conditions that are required to appear in automobile insurance contracts, the types of risks that must be covered,exclusions of coverage that are permitted, and how claims are to be made as between the insured and the insurer.

It also prescribescertain circumstances in which first party automobile insurance benefits will not be available (see, for example, s 566, where the insuredis injured in the course of employment). [13] Subpart 2 also includes provisions that limit damage awards that may be made in respect of an automobile accident and forwhich an automobile insurer may be required to compensate third parties.

For example, s 597 empowers the Lieutenant Governor inCouncil to promulgate regulations in respect of “minor injuries”, and to set limits on the quantum of non-pecuniary damages that mightbe awarded for such injuries. [14] Falling within the same category is s 570 – the subject of this appeal. It reads as follows: Reductions of automobile accident claim awards 570(1) In this section, (a) “award” means a judgment or settlement in respect of an accident claim; (b) “prescribed” means provided for in regulations made under subsection (8).

(2) To the extent that an award is for or is determined with reference to loss of earnings, the amount of the award must be reduced by (

a) income tax, if the award is not subjected to income tax, (

b) contributions by employees, and 50% of contributions by self-employed persons, under the Canada PensionPlan (Canada), and (

c) premiums under the Employment Insurance Act (Canada) relating to the state of being employed, that would be or would have been payable on or with reference to the lost earnings, both before and after the award, had the accident notoccurred.

(3) The whole of or the portion of an award that is for or is calculated with reference to a head of damages to which any payment in anyform specified in subsection (4) relates must be reduced by the aggregate of all payments, both before and after the award, and net of tax,contributions and premiums referred to in subsection (2)(

a) to (

c) paid or payable on those payments, that (

a) are received by or on behalf of the claimant as a result of or otherwise in respect of the accident, (

b) are in any form specified in subsection (4)(

a) to (h), and (

c) relate to that head of damages.

(4) The forms of payment referred to in subsection (3) are (

a) medical, dental, disability, rehabilitation, income continuation or replacement and hospitalization benefits paid ona no-fault basis and received by or on behalf of a resident of a jurisdiction other than Alberta under a contract of automobile insurance, (

b) medical care, accident and sickness benefits comprising medical care or goods or services that are not providedunder the Alberta Health Care Insurance Act or, where the claimant is a resident of another jurisdiction, the equivalent legislation of thatjurisdiction, or that exceed the limits for that care or those goods or services under that Act or that equivalent legislation, (

c) proceeds of a contract that falls within Subpart 6 or the legislation of another jurisdiction that is equivalent to thatSubpart, (

d) benefits under a prescribed income continuation or replacement plan or scheme,

(

e) benefits under an income replacement plan or scheme referred to in

section 15.1 , (

f) disability pensions under the Canada Pension Plan (Canada) or under any equivalent legislation of a jurisdiction outside Canada, (

g) compensation under legislation of another jurisdiction that is equivalent to the Workers’ Compensation Act a nd its regulations, in respect of disability, medical, dental, rehabilitation or hospitalization expenses, and (

h) any other prescribed payments, benefits or compensation under the laws of any jurisdiction, other than laws referred to in clauses (e), (

f) and (g).

(5) The reference in subsection (3) to payments received is deemed to include circumstances where a legal obligation to make the payments or to provide related benefits referred to in subsection (4) to or on behalf of the claimant (netted, where applicable, as referred to in subsection (3)) has been established or acknowledged before the award.

(6) A person who makes or assumes liability for a payment referred to in subsection (3) is not subrogated to a right of recovery of the insured against another person in respect of that payment.

(7) Nothing in this

section is to be construed as limiting a court’s ability to take into account any premiums or other amounts paid by a claimant in respect of any benefits, policies, plans or compensation in any form specified in subsection (4).

(8) For the purposes of this section, the Lieutenant Governor in Council may make regulations (

a) respecting any matter or thing that may be or is to be prescribed for the purposes of this section, and (

b) defining, for the purposes of this section, any expression used in it and not defined in this Subpart.

(9) This

section does not apply to any accident claim that arose in respect of an accident that occurred before the coming into force of this section. [ 15 ] WorkSafeBC argues that in interpreting s 570, I should commence with an examination of whether the Legislature intended to preclude WorkSafeBC from advancing a subrogated claim by virtue of s 570(6), and then decide whether the benefits paid by WorkSafeBC must be deducted from an award pursuant to s 570(3).

It says that this was the approach used by the Alberta Court of Appeal in Hammond v DeWolfe , 2014 ABCA 81 [ Hammond ] in dealing with benefits paid by Syncrude Canada Ltd to an employee who had been injured in an automobile accident, and should be used here as well. [ 16 ] I do not accept that argument. While it is appropriate to consider s 570 as a whole in determining the issues before me, it is logical to follow the sequence used by the Legislature within s 570 to determine its intent.

I do not read the Court of Appeal’s decision in Hammond as requiring otherwise. [ 17 ] I will begin, therefore by assessing whether it was the intention of the Legislature to require deduction of benefits paid by entities such as WorkSafeBC from automobile accident awards. Question 1: Does s 570 require that benefits paid by WorkSafeBC be deducted from an award? [ 18 ] The language used in s 570(3) is mandatory and requires deduction of any form of payment specified in s 570(4) from an “award” (defined in s 570(1) as a judgment or settlement in respect of an accident claim).

As the payments made by WorkSafeBC in this case clearly fall within the form of payment set out in s 570(4)(g), the Respondent argues that this is a clear-cut case for the Court to rely on the plain language of the statute to interpret the Legislature’s intent regarding the deductibility issue. [ 19 ] WorkSafeBC advocates a more nuanced approach. It commences with the proposition that the primary purpose of s 570 was to prevent double recovery of collateral benefits by accident victims.

It says that it could not have been the intent of the Legislature that an accident victim would be deprived of full recovery of both pecuniary and non-pecuniary damages, which would happen in this case if the Defendant is found liable, given WorkSafeBC’s entitlement to recover its benefits payout, with the injured workers receiving the excess only.

In effect, even if the language used in ss 570 (3) and (4) of the Act is clear, the Court should find that it does not reflect the true intent of the Legislature and no deduction of WorkSafeBC payments should be required. [ 20 ] With respect, I do not agree with the propositions advanced by WorkSafeBC. [ 21 ] To begin with, as I read the excerpts of Hansard dealing with s 570, the underlying concern was the need to bring rising automobile insurance rates under control. Eliminating double recovery of collateral benefits was a mechanism for doing so but was not, in itself, the objective.

[ 22 ] Second, a review of the forms of payment set out in s 570(4) shows that aside from the vague and confusing forms of employer benefit programs set out in subsections (4)(

d) and (e), the common element of the forms of payment to be deducted is that they are made by out of province entities or by insurance programs other than automobile insurance, such as accident and sickness insurance governed by subpart 6 of

Part 5 of the Act . By requiring such payments to be deducted from automobile accident awards in Alberta, automobile insurers in Alberta would pay out less in personal injury and death awards, with some of the costs of compensation of accident victims shifted to other regimes. This suggests that cost reduction for automobile insurers and by extension Alberta drivers was the underlying and primary objective. [ 23 ] Third, it is not at all clear that accident victims in this or similar cases would necessarily be deprived of fair recovery.

Each of the forms of payment enumerated in s 570(4) provides benefits to the accident victim on a no-fault basis. Deduction of those benefits from an award does not in itself have any effect on the accident victim unless the payor is inclined and able to claw back some or all of those payments at the expense of the accident victim. [ 24 ] Whether such a claw back is fair depends on the terms under which the benefit payments were made to begin with and the litigation risks and costs associated with the action.

Using this case as an example, the injured workers elected to accept immediate, no- fault income replacement benefits from WorkSafeBC, rather than commencing an action in Alberta. WorkSafeBC has subrogated and apparently intends to recover all of the benefits it paid out before paying out any of the proceeds of the action (under heads of damages other than income loss) to Mr. Vujicic or Mr. Raljic if liability can be established. This may well be a fair outcome given the litigation risks involved.

It is also the outcome dictated by the governing legislation in British Columbia under which the payments were made. [ 25 ] To summarize, I find that the language used in ss 570(3) and 570(4)(

g) and its applicability to the payments made by WorkSafeBC are clear. The Legislature intended to take measures to lower accident claim awards. One method of doing so was to effectively transfer responsibility for certain costs to other benefits regimes, including extraprovincial entities such as workers’ compensation boards, the Canada Pension Program, and other insurance programs such as accident and illness insurance under subpart 6 of the Act .

Payments made by WorkSafeBC fall squarely within s 570(4)(g), and must be deducted from a judgment or settlement of this accident claim. [ 26 ] In reaching this conclusion I have taken into consideration the question of whether WorkSafeBC is precluded from making a subrogated claim for payments made to the plaintiffs by virtue of s 570(6) of the Act . I will discuss that question separately next. It suffices to say for now that the applicability of s 570(6) to extraprovincial workers’ compensation entities does not affect my

interpretation of ss 570 (3) and (4). Question 2: Is WorkSafeBC precluded from pursuing a subrogated claim to recover benefits paid to the plaintiff? [ 27 ] Section 570(6) of the Act states: “A person who makes or assumes liability for a payment referred to in subsection (3) is not subrogated to a right of recovery of the insured against another person in respect of that payment”. [ 28 ] The learned Master found that “a subrogated claim by WorkSafeBC is not permitted in relation to any matters that fall within those described in s 570(4)(

g) and to the extent that any of those matters are claimed in those actions they would need to be deducted from any award made”. [ 29 ] I agree with the conclusion reached by the Master, although my reasons for reaching that conclusion are somewhat different. [ 30 ] The right to bring a subrogated action can arise in different ways.

It can be grounded in contract; in equity by virtue of having made a payment to the victim of an alleged tort; or pursuant to statute. [ 31 ] The common feature of the right of subrogation, when exercised, is that the payor becomes entitled to step into the shoes of the recipient in bringing and prosecuting the action.

In the tort context, the payor obtains the right and in some cases the obligation to advance a claim for full indemnity for all recoverable heads of damages. [ 32 ] In doing so, however, the payor does not acquire any rights or entitlements beyond those held by the recipient. [ 33 ] For example, in Manitoba Public Insurance Corp. v. University of Waterloo et al. , 2007 MBCA 107 , MPIC argued that it was entitled to advance a subrogated claim against the driver of an out-of-province vehicle, on a no-fault basis.

The Court rejected that argument, holding that while Manitobans were not required to establish fault in pursuing compensation for damages arising from an automobile accident, as against other Manitoba drivers, the same did not apply to actions against out-of-province drivers. MPIC’s rights under a subrogated claim were no greater than those held by its insured, and its subrogated claim was subject to the same traditional principles governing liability in tort: para 42. [ 34 ] A similar conclusion was reached by the British Columbia Supreme Court in Manitoba Public Insurance v Dybhaun , 2016 BCSC 27 .

The Court recognized that MPIC had a general right of subrogation allowing it to prosecute claims outside of the Manitoba. Such a right does not amount to a statutory right of recovery, but is narrowly defined and subject to any defences or principles that may be raised by the defendant: para 60. [ 35 ] When WorkSafeBC stepped into the shoes of Mr. Vujicic and Mr. Raljic, its rights were no more and no less than those held by them as against the Defendant. [ 36 ] As the accident took place in Alberta the rights of the plaintiffs as against the Estate are to be determined pursuant to the laws of this Province.

That applies to both liability and quantum of damages. As an example, if Mr. Vujicic’s injuries were “minor” for the purpose of the Insurance Act , they would be subject to a cap on damages. [ 37 ] The same principle applies in respect of any claim for loss of income that might be advanced by the plaintiffs. Because the

plaintiffs received payments from an extraprovincial workers’ compensation entity, the amount of those payments must be deducted from any award. That would have been the case if the plaintiffs had advanced a claim of their own, and WorkSafeBC is in no better position. [ 38 ] That does not mean that WorkSafeBC does not have a general right of subrogation in this case. Rather, its right of subrogation is limited by any defences or limiting principles that may properly be raised by the Defendant, including the deductions required under s 570(3) of the Act .

WorkSafeBC may still pursue an action but the amount of its potential recovery will be less than it would have been but for such deductions. [ 39 ] In argument, WorkSafeBC relied heavily on the decision of our Court of Appeal in Hammond . It urged me to find that because the injured workers here were not “insureds” under the Act , WorkSafeBC was not precluded from bringing a subrogated claim by virtue of s 570(6), and that its benefits payments were therefore not caught by ss 570(3) and (4) either.

In my view, this overstates the findings in Hammond . [ 40 ] In that case, the Court observed that use of the word “insured” in s 570(6) suggests that the preclusion of subrogation only applies to payments made under a contract of insurance: para 24. This contributed to the uncertainty as to the intent of the Legislature regarding the inclusion of payments made by an employer such as Syncrude Canada Ltd. under ss 570(4)(

d) or (e): para 23. In the face of that uncertainty, the Court was not prepared to disallow Syncrude’s claim for recovery of amounts paid under its income replacement program. [ 41 ] The situation addressed in Hammond was fundamentally different than in this case. The language used in s 570(4)(

g) clearly applies to payments made by WorkSafeBC, whereas the language used in ss 570(4)(

d) and (

e) and considered in Hammond was vague and confusing in its own right and when considered in conjunction with the reference to “insured” in s 570(6). [ 42 ] Moreover, the Court of Appeal made it clear that the questions of deductibility of benefits described in s 570(4) and the restriction of subrogated actions under s 570(6) are discrete: para 24.

Therefore, even if the Legislature intended that s 570(6) would only preclude subrogated actions in respect of payments made under an automobile insurance contract, deduction of other benefits would still be required, provided that the language used in s 570(4) was sufficiently clear: para 27. [ 43 ] That is precisely the case here. Section 570(4)(

g) clearly applies to income replacement payments made by WorkSafeBC to the injured workers and its right of subrogation is subject to that limitation. IV. Conclusion [ 44 ] In

summary, I find that the decision of the learned Master was correct. Payments made by WorkSafeBC to the injured workers must be deducted from their accident claim award. WorkSafeBC’s right of subrogation is proscribed by that mandatory deduction. [ 45 ] The appeal is dismissed, with costs. If the parties are unable to agree on the quantum of costs, within thirty days, that matter can be referred back to me for direction by way of written submissions, not to exceed five pages exclusive of authorities. Heard on the 23 rd day of October, 2020. Dated at the City of Calgary, Alberta this 12 th day of January, 2021.

R.A. Neufeld J.C.Q.B.A. Appearances: Dana C. Neilson, Rodin Law Firm for the Plaintiffs Thomas W. Percy, Intact Insurance Company for the Defendants

Ivan Derer, Q.C., Derer Law for WorkSafeBC