MICHAEL ALLAN HOWARTH PLAINTIFF - v. -, 2023 SKKB 109

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 109 Date: 2023 05 25 Docket: QBG-BF-00217-2018 Judicial Centre: Battleford BETWEEN: MICHAEL ALLAN HOWARTH PLAINTIFF - and - AMY LEER, HAZCON ENVIRO SOLUTIONS LTD. and X-TREME CLEANING LTD. DEFENDANTS (APPLICANTS) -and- WORKERS’ COMPENSATION BOARD RESPONDENT Counsel: Justine A. Shenher for the defendants (applicants) Jean P. Jordaan for the plaintiff Allison L. Graham for the respondent ___________________________________________________________________________ DECISION HILDEBRANDT J. May 25, 2023 ___________________________________________________________________________ Introduction

[ 1 ] The defendants, Amy Leer [Ms. Leer], Hazcon Enviro Solutions Ltd., and X-Treme Cleaning Ltd. [X-Treme], joined by the Saskatchewan Workers’ Compensation Board [WCB], pursuant to the WCB’s request heard and granted in Chambers on July 29, 2021, have applied pursuant to Rule 7-1 of The Queen’s Bench Rules for a determination of the following three questions:

a) Do the provisions of The Automobile Accident Insurance Act, RSS 1978, c A-35 [ AAIA ], and particularly Parts III and IV thereof, apply to this action?

b) Do ss. 103 and 104 of the AAIA limit the plaintiff’s claimable damages to past and future income loss, and preclude the plaintiff from otherwise seeking general damages and special damages?

c) Does the reciprocity agreement, otherwise known as the Knock for Knock agreement [K4K], dated July 9, 1997, between Alberta and Saskatchewan Government Insurance [SGI], preclude the WCB from maintaining a subrogated claim? [ 2 ] The process in Rule 7-1 is considered as a two-step process. However, counsel agreed on the questions to be determined and all concurred that the criteria in Rule 7-1(1)(

a) had been met as the answers to the questions would assist in “(

i) disposing of all or part of a claim; (ii) substantially shortening a trial; or (iii) saving expense”. Further to the direction provided by the Chambers judge on July 29, 2021, briefs had been filed and all parties were prepared to proceed to having the legal issues posed by the questions determined by this court. [ 3 ] This court concurred that the questions were appropriate and that, in the circumstances, the answers thereto would assist in focussing the issues for trial. Accordingly, I ordered that the substantive submissions on the legal issues posed could proceed.

As such, both steps of the process were completed in the context of a single hearing, which was also consistent with foundational Rule 1-3. [ 4 ] To provide context for the questions, an agreed statement of facts was filed. The facts may briefly be summarized as follows:

a) On September 21, 2016, Ms. Leer, an Alberta resident driving a vehicle owned by X-Treme and bearing an Alberta license plate, lost control of the vehicle near Highway #3 in the Rural Municipality of Britannia, Saskatchewan and collided with a stationary vehicle in which the plaintiff, Michael Allan Howarth [Mr. Howarth] was seated.

b) At the time, Mr. Howarth, also an Alberta resident, was seated in the passenger seat of a parked vehicle, the engine of which was switched off. The passenger door was open and Mr. Howarth’s legs were outside the vehicle. Mr. Howarth was engaged in the course of his employment and was located at a boat launch for an environmental remediation worksite. The vehicle in which Mr. Howarth was sitting had been rented by a co-worker and bore an Alberta license plate.

c) Both Mr. Howarth and Ms. Leer held current drivers’ licenses and both vehicles were validly insured.

d) Mr. Howarth’s employer, Sundown Consulting Ltd., was a registered corporation in Alberta, paying out workers’ compensation dues both in Alberta and Saskatchewan.

e) As a consequence of the accident, Mr. Howarth has received $37,381.95 in compensation from the Saskatchewan WCB. The WCB is pursuing a subrogated claim against the Defendants for the amount paid to Mr. Howarth. [ 5 ] The application was commenced by the defendants, whose application also seeks to have portions of Mr. Howarth’s amended statement of claim struck, particularly those pertaining to claims for general damages and special damages, in the event this court determines that one or more of the three questions raised ought to be answered in the affirmative.

Counsel for the defendants asserts, however, that this is not an application to strike pursuant to Rule 7-9. Nonetheless, Rule 7-1(3) would permit such a striking in appropriate circumstances. [ 6 ] Mr. Howarth is, of course, opposed to the application by the defendants and asserts that the AAIA does not limit his claim and the questions must be answered in the negative.

The WCB only has an interest in the third question and, in this regard, asserts that the K4K agreement does not apply to limit the rights of the WCB in maintaining a subrogated claim. [ 7 ] There have been amendments to the AAIA since the date of the accident in 2016. However, nothing in such amendments indicates that they are to be considered as having retroactive application and all parties have approached this application utilizing the version of the AAIA in force at that time. This approach is in keeping with s. 2 - 5 of The Legislation Act, SS 2019, c L-10.2 : 2-5 Unless otherwise provided : (

a) an enactment comes into force at the beginning of the day on which it comes into force; and (

b) the repeal of an enactment takes effect at the beginning of the day of the repeal. [Emphasis added] [ 8 ] The Supreme Court of Canada, in R v Dineley , 2012 SCC 58 at para 10 , [2012] 3 SCR 272 , stated: [10] There are a number of rules of

interpretation that can be helpful in identifying the situations to which new legislation applies. Because of the need for certainty as to the legal consequences that attach to past facts and conduct, courts have long recognized that the cases in which legislation has retrospective effect must be exceptional . More specifically, where legislative provisions affect either vested or substantive rights, retrospectivity has been found to be undesirable. New legislation that affects substantive rights will be presumed to have only prospective effect unless it is possible to discern a clear legislative intent that it is to apply retrospectively . . .

[Emphasis added] [ 9 ] Five years later, in Tran v Canada (Public Safety and Emergency Preparedness), 2017 SCC 50 , [2017] 2 SCR 289 , the Supreme Court of Canada, at para. 43, described the “presumption against retrospectivity” as a “rule of statutory

interpretation”. Accordingly, in the absence of any clear legislative intent regarding retrospective application, it is appropriate to consider the AAIA as it stood in 2016. [ 10 ] The AAIA is the governing legislation in relation to motor vehicles in Saskatchewan. Prior to 1995, when the no- fault insurance scheme was implemented, drivers were able to bring action for non-economic loss against others considered responsible for a motor vehicle collision, with allegations of intentional tort or negligence being assessed on a civil standard of proof.

The issues in this case focus on whether, at the pertinent time, the AAIA maintained such a right of action for non-residents. [ 11 ] With this background, the questions to be determined will be addressed under separate headings in the following. Analysis

a) Do the provisions of the AAIA , and particularly Parts III and IV thereof, apply to this action? [ 12 ] On behalf of the defendant applicants, it is submitted that once an accident has occurred in Saskatchewan, the claimant’s rights are delineated by

Part VIII of the AAIA, entitled “Bodily Injury Benefits (No Fault)”, in the absence of the claimant having opted into the tort coverage scheme. In this action, no party had exercised such option. The defendant applicants further submit that there is nothing in the AAIA which suggests that

Part VIII does not apply when, as in this case, there is a collision between two non-resident parties. Reliance is placed on ss. 101(1.1), located at the beginning of

Part VIII of the AAIA: 101(1.1) This Part applies to any person who sustained bodily injury caused by a motor vehicle arising out of an accident on or after the date that this

Part comes into force and who has not provided the insurer with a tort election in the manner prescribed by

Part IV. [ 13 ] The defendant applicants also rely on the wording of s. 40.1, found in

Part IV of the AAIA , which states: 40.1 Notwithstanding any other Act or law but subject to

Part II.1, this Part,

Part VI and

Part VIII: (

a) no person has any right of action respecting, arising out of or stemming from bodily injuries caused by a motor vehicle arising out of an accident that occurs on or after the day this

Part comes into force; and (

b) no action or proceeding lies or may be commenced in any court respecting, arising out of or stemming from bodily injuries caused by a motor vehicle arising out of an accident that occurs on or after the day this

Part comes into force. [ 14 ] This

section immediately precedes s. 40.2, which enables Saskatchewan residents to make a tort election “to bring an action for loss or damage for bodily injury caused by a motor vehicle arising out of an accident.” [ 15 ] In the British Columbia decision of Ngo v Luong, 2014 BCSC 516 [ Ngo ] , on which the defendants rely, the court noted that the AAIA is substantive, rather than procedural, law and, accordingly, a non-Saskatchewan resident involved in a motor vehicle accident in Saskatchewan is bound by the AAIA and its no-fault principles, albeit the action was commenced in British Columbia.

The facts in Ngo involved a plaintiff and defendant, both residents of British Columbia, involved in an accident in Saskatchewan. The Ngo court emphasized, at paras. 14 and 16, that only Saskatchewan residents are given the opportunity to make a tort election: [14] The legislation does not specifically mention out-of-province drivers, but only Saskatchewan residents are given the opportunity to make a tort election.

Moreover, even for Saskatchewan residents, a tort election is only effective if it is made before there has been an accident, and only if the claimant has not ceased to be a Saskatchewan resident. . . . [16] A tort election was not made by the plaintiff in this case, nor would it have been available to her as a non-resident. [ 16 ] The Ngo court concluded, at paras. 27-28: [27] The substantive rights of a person who is injured in a motor vehicle accident in Saskatchewan after 2002 and who did not make a tort election prior to the accident are those rights set out in

Part VIII. That is true for anyone who did not make a prior tort election, regardless of whether that person is a Saskatchewan resident or not. The only difference is that the out-of-province claimant never had the possibility of making such an election . But once the accident has occurred and the claimant, whether from Saskatchewan or not, has not previously made a tort election, the claimant’s rights are those defined by

Part VIII of the AAIA . Thus, the statute does not, as submitted by the plaintiff, set out a procedural election by which a claimant who has been injured in an accident can then select the means by which he or she enforces his or her rights. The rights are already defined by the statute at the moment the accident has occurred.

Since the AAIA defines what the claimant’s rights are and not the means of their enforcement, the AAIA is substantive, not procedural law. [28] This categorization of the AAIA has the consequence that a British Columbia plaintiff who is injured in a Saskatchewan motor vehicle accident is in no better position bringing his or her suit in British Columbia than in Saskatchewan .

The fact that this categorization eliminates a motive for forum shopping is an additional indicator that the categorization of the law as substantive is the correct categorization. [Emphasis added] [ 17 ] Accordingly, the defendant applicants submit that Mr. Howarth cannot maintain an unrestricted claim for

general damages. [18] The plaintiff, however, correctly asserts that the Ngo decision is not binding on this court and suggests that thecourt in Ngo did not directly address the provisions of s. 18 of the AAIA. [19] In this regard, the plaintiff submits that ss. 18(2) of the AAIA can exclude the operation of Parts III and IV of theAAIA in certain circumstances and he is therefore not precluded from seeking general damages and special damages. Located in

Part I ofthe AAIA, entitled “Application for Insurance and Certificates”, s. 18 states: 18(1) In this section: (a) “non-resident owner” means an owner of a vehicle who is a resident of another province, state or country; (b) “vehicle” means a vehicle that: (

i) is operated in Saskatchewan; and (ii) is registered in Class A, C, D, F or LV pursuant to The Vehicle Classification and Registration Regulations.

(2) Parts III and IV do not apply to a non-resident owner of a vehicle, if the administrator is satisfied that the non-resident owneris insured against the non-resident owner’s liability for loss or damage to the person or property of others arising out of the use,operation or ownership of the vehicle.

(3) The Lieutenant Governor in Council may order that the provisions of subsection (2) are not to operate with respect to any vehicle orclass of vehicles owned by a resident of any province, state or country specified in the order. [Emphasis added] [20] The plaintiff suggests that, from a plain reading of s. 18, the prohibition on tort actions found in s. 40.1 may beexcluded and that the application of s. 18 goes well beyond insurance applications and certificates. Indeed, Mr. Howarth’s counsel, in hisbrief, asserts, at para. 19: 19.

The objective of Section 18(2) seems to be to place a person injured by a motor vehicle accident in Saskatchewan on the same levelas prior to the no-fault insurance scheme. This is only if the owner of the vehicle is insured to the satisfaction of SGI. The no-faultinsurance scheme was not enacted to protect the liabilities of insurance companies outside of Saskatchewan. [21] The plaintiff notes the discussion of statutory

interpretation by the Saskatchewan Court of Appeal in Ballantynev Saskatchewan Government Insurance, 2015 SKCA 38, 457 Sask R 254 [Ballantyne], which referenced the Supreme Court of Canadadecision in Re Rizzo & Rizzo Shoes Ltd., (SCC), [1998] 1 SCR 27. However, I am not persuaded that the Ballantynedecision assists the plaintiff, in light of the court’s comments at paras. 19-21: [19] The leading case with respect to statutory

interpretation is the Supreme Court of Canada’s decision in Re Rizzo & Rizzo Shoes Ltd., (SCC), [1998] 1 SCR 27 [Rizzo Shoes]. A number of principles set out in that case are applicable to the case at hand,namely: 1. The words of

an Act are to be read in their context and in their grammatical and ordinary sense harmoniously with the scheme ofthe Act, its objects, and the intention of the legislature (See: Rizzo Shoes at para. 87). (See also: Saskatchewan Government Insurancev Speir, 2009 SKCA 73 at para 20, 331 Sask R 250; and Acton v Rural Municipality of Britannia, No. 502, 2012 SKCA 127 at paras 16-17, [2013] 4 WWR 213 [Acton]). 2. The legislature does not intend to produce absurd consequences. An

interpretation can be considered absurd if it leads to ridiculous orfrivolous consequences, if it is extremely unreasonable or inequitable, if it is illogical or incoherent or if it is incompatible with otherprovisions or with the object of the legislative enactment (See: Rizzo Shoes at para. 27). 3. Any statute characterized as conferring benefits must be interpreted in a broad and generous manner (See: Rizzo Shoes at para. 21).This principle is enshrined in s. 10 of The

Interpretation Act, 1995, SS 1995, c. I-11.2 (See: Acton at paras. 16-18). 4. Any doubt arising from difficulties of language should be resolved in favour of the claimant (See: Rizzo Shoes at para. 36). [20] In Sullivan on the Construction of Statutes, 6th ed (Markham: LexisNexis, 2014) at 28-29, Ruth Sullivan sets out three propositionsthat apply when interpreting the plain meaning of a statutory provision: 1. It is presumed that the ordinary meaning of a legislative text is the meaning intended by the legislature. In the absence of a reason toreject it, the ordinary meaning prevails. 2.

Even if the ordinary meaning is plain, courts must take into account the full range of relevant contextual considerationsincluding purpose, related provisions in the same and other Acts, legislative drafting conventions, presumptions of legislative intent,absurdities to be avoided and the like. 3. In light of these considerations, the court may adopt an

interpretation that modifies or departs from the ordinary meaning, provided theinterpretation adopted is plausible and the reasons for adopting it are sufficient to justify the departure from ordinary meaning. [21] In sum, in interpreting s. 123(1) of the Act, the ordinary meaning of the words of that provision must be read in the context ofthe Act as a whole and in the context of

Part VIII in particular. It is also important to keep in mind the purpose of the Act and thelegislature’s intention in enacting the provision. The provision is benefit conferring and accordingly must be given a broad and

purposive

interpretation . It must also be interpreted in a manner that will not lead to absurdities. … [Emphasis added] [ 22 ] The requirement that a particular provision be considered harmoniously with the scheme of the legislation in which it is found is also noted in s. 2 - 10 of The Legislation Act, SS 2019, c L-10.2 : 2-10(1) The words of

an Act and regulations authorized pursuant to

an Act are to be read in their entire context, and in their grammatical and ordinary sense, harmoniously with the scheme of the Act , the object of the Act and the intention of the Legislature.

(2) Every Act and regulation is to be construed as being remedial and is to be given the fair, large and liberal

interpretation that best ensures the attainment of its objects. [Emphasis added] [ 23 ] Similar commentary is noted in Harding v Saskatchewan Government Insurance and Skopyk, 2014 SKQB 228 , 443 Sask R 34 [ Harding ] and other more recent decisions of this court. [ 24 ] The overall scheme of the AAIA , since 1995, has been one of no-fault coverage, with the benefits provided by

Part VIII of the AAIA , which, broadly stated, include income replacement, living assistance, rehabilitation, permanent impairment benefits, and pension benefits. While, as recognized in Ngo , Saskatchewan residents have the option of electing tort coverage, providing them with the right to commence an action for compensation if they are not at fault for the motor vehicle accident, such option does not extend to non-residents. Further, specific procedures are outlined in s. 40.2 and s. 40.3 of the AAIA in order to make such an election. These underscore that the tort election is an exception to the overall scheme and intent of the legislation. [ 25 ] Tucked away in

Part I, which deals with applications and certificates, ss. 18(2) does not address the recovery of damages or the manner in which a non-resident may pursue damages in a civil action. To interpret this

section as doing so is not consistent with the overall scheme of the legislation and the no-fault regime which it governs. Given the limited scope of

Part I, a more purposeful reading of ss. 18(2), as the defendants suggest, is that, in certain circumstances, a non-resident may be exempt from the comprehensive insurance requirements set out is s. 38, within

Part III, and the bodily injury liability insurance requirements set out in s. 42, within

Part IV, of the AAIA . Both s. 38 and s. 42 also reference owner’s certificates, providing a more direct link to

Part I and ss. 18(2). Thus, it does not appear that a reasonable

interpretation of ss. 18(2) would include an exemption of the operation of s. 40.1. [ 26 ] The Ngo decision, at para. 9 , recognized that Saskatchewan “adopted a comprehensiv e no-fault insurance scheme by way of The Automobile Insurance Amendment Act, 1994 , S.S. 1994, C. 34, s. 18 ”. (Emphasis added). With this recognition, it is small wonder that the court in Ngo did not consider ss. 18(2) . It simply has no application in the context of what damages may be recovered and how, and cannot be interpreted as excluding the prohibition against tort actions contemplated in s. 40.1, which is found in

Part IV of the AAIA . [ 27 ] For the reasons outlined, I find that ss. 18(2) does not exclude the operation of Parts III and IV of the AAIA, and the first question must be answered in the affirmative. I do note, however, that

Part III of the AAIA addresses the obligation of SGI to pay an insured in the event of loss or damage to a motor vehicle. As such, it may not be relevant to the claim in this particular case. Nonetheless, ss. 18(2) does not operate to exclude either

Part III or

Part IV and, most particularly, does not circumvent the operation of s. 40.1. [ 28 ] The reasoning and conclusion in relation to the first question have application in relation to the second question as well. However, further commentary will be provided specific to that query.

b) Do sections 103 and 104 of the AAIA limit the plaintiff’s claimable damages to past and future income loss, and preclude the plaintiff from otherwise seeking general damages and special damages? [ 29 ] Sections 103 and 104 are found in

Part VIII of the AAIA, which, again, is entitled “Bodily Injury Benefits (No- Fault)”. These sections state: Tort actions for economic loss 103(1) In this Part: (a) “economic loss” means the following losses resulting from bodily injury caused by a motor vehicle that arise out of an accident: (

i) in the case of an insured who is entitled to a benefit pursuant to Division 4: (

A) any past or future income loss suffered by the insured in excess of the yearly employment income attributable to the insured pursuant to Division 4; or (

B) if the insured receives a benefit pursuant to

section 117, 118, 119 or 120, any past or future income loss suffered by the insured in excess of the benefit provided; (ii) in the case of an insured who dies as a result of an accident, any past income loss or funeral expenses suffered by the insured’s surviving spouse or any dependant in excess of the benefits provided pursuant to Division 5; (iii) in the case of an insured who is entitled to any benefit pursuant to Divisions 3 and 7, any past and future loss suffered by the insured

in excess of the benefits to which the insured is entitled; (iv) in the case of an insured who is entitled to compensation for loss of earnings pursuant to The Workers’ Compensation Act, 2013 or any other Act, or any legislation of any other jurisdiction, that relates to the compensation of individuals injured in accidents: (

A) any past or future income loss suffered by the insured in excess of the benefits paid pursuant to

section 37 of The Workers’ Compensation Act, 2013 ,

section 207 of this Act or similar provisions in any other Act, or any legislation of any other jurisdiction, that relate to the compensation for income loss of individuals injured in accidents; (

B) any past and future loss suffered by the insured’s surviving spouse or dependant in excess of the benefits paid pursuant to sections 80 , 81 , 83 , 85 and 86 of The Workers’ Compensation Act, 2013 ,

section 207 of this Act or similar provisions in any other Act, or any legislation of any other jurisdiction, that relate to the compensation of individuals for the death of an individual in an accident; or (

C) any past and future loss suffered by the insured in excess of the benefits paid pursuant to sections 103 , 104 , 109 and 111 of The Workers’ Compensation Act, 2013 or similar provisions in any other Act, or any legislation of any other jurisdiction, that relate to the compensation for medical aid of individuals injured in accidents; (b) “insured” includes any prescribed person or class of prescribed persons.

(2) Notwithstanding

section 40.1 of this Act, but subject to

section 43 of The Workers’ Compensation Act, 2013 , an action may be brought in the Court of Queen’s Bench to recover any damages of the insured or of the insured’s surviving spouse or dependant for economic losses.

(3) The following rules apply in an action pursuant to this section: (

a) the rules of negligence and apportionment of liability apply; (

b) in determining economic loss pursuant to subclause (1)(a)(

i) or paragraph (1)(a)(iv)(A), the court: (

i) shall calculate any award based on the insured’s past or future income loss after deducting any applicable taxes pursuant to The Income Tax Act, 2000 and the Income Tax Act (Canada) , any premiums pursuant to the Employment Insurance Act (Canada) and any contributions pursuant to the Canada Pension Plan ; and (ii) shall not award any amount for income loss for the first seven days after the accident; (

c) subject to clause (d), in determining an insured’s or insured’s surviving spouse’s or dependant’s economic loss, the court shall deduct from any award all amounts the insured or the surviving spouse or dependant has received or is entitled to receive from any government or agency of government, from any public or private insurance scheme or from any other scheme that lessens the economic loss; (

d) in determining economic loss pursuant to subclause (1)(a)(ii) or paragraph (1)(a)(iv)(B), the court shall not deduct from any award any amounts the insured’s surviving spouse or dependant has received or is entitled to receive from a contract of life insurance as defined in The Saskatchewan Insurance Act.

(4) The deductions mentioned in subclause (3)(b)(

i) are to be calculated using the insured’s total income at the date of the accident and not the portion of income representing the past or future income loss.

(5) Notwithstanding any other Act or law, no government, agency of any government, public or private insurer or other person who is required or liable to pay an amount mentioned in clause (3)(

c) has any right of subrogation to recover that amount.

(6) In an action pursuant to this section, on the application of any party, the court may, in accordance with the regulations, direct that any compensation payable respecting all or any claimed categories of damages be provided for in the form of a structured compensation order.

(7) The court may make a direction pursuant to subsection (6) at any stage in the proceedings. Tort action for non-economic loss 104(1) In this section: (a) “insured” includes any prescribed person or class of persons; (b) “non-economic loss” means any non-pecuniary loss respecting, arising out of or stemming from bodily injury caused by a motor vehicle arising out of an accident less any benefits provided pursuant to this Part for permanent impairment to an insured who is bringing an action pursuant to this

section to recover non-economic loss; (c) “third party” means: (

i) a motor vehicle manufacturer; (ii) a maker or supplier of motor vehicle parts; (iii) a person engaged in the business of selling motor vehicles;

(iv) a person engaged in the business of or whose business includes a motor vehicle garage, repair shop or service station; (

v) the holder of a restaurant permit or a tavern permit issued pursuant to The Alcohol Control Regulations, 1994 authorizing the permit holder to deal in beverage alcohol; or (vi) any other prescribed person or member of a prescribed class of persons.

(2) Notwithstanding

section 40.1 of this Act, but subject to subsection (3) and

section 43 of The Workers’ Compensation Act, 2013 , an insured who is entitled to a benefit pursuant to this Part may bring an action for damages in the Court of Queen’s Bench to recover a non- economic loss: (

a) against the operator of a motor vehicle if: (

i) the loss is caused by a motor vehicle and, as a result of the operation of the motor vehicle, the operator is convicted of an offence pursuant to paragraph 253 (

a) or (b), subsection 254(5) or subsection 255(2) or (3) of the Criminal Code ; or (ii) the loss is caused by a motor vehicle and: (

A) the operator of the motor vehicle intentionally caused or attempted to cause bodily injury to another person; and (

B) as a result of the operation of the motor vehicle, the operator is convicted of an offence pursuant to

section 235 , 236 , 239 , 249 , 266 , 267 , 268 or 269 of the Criminal Code ; or (

b) subject to subsections (3) and (4) and to the regulations, against a third party if the loss is caused by, contributed to, or exacerbated by the acts or omissions of the third party.

(3) For the purposes of clause (2)(b): (

a) a motor vehicle manufacturer is liable only with respect to its business activities and role in manufacturing motor vehicles; (

b) a maker or supplier of motor vehicle parts is liable only with respect to its business activities and role in making or supplying motor vehicle parts; (

c) a person engaged in the business of selling motor vehicles is liable only with respect to its business activities; (

d) a person engaged in the business of or whose business includes a motor vehicle garage, repair shop or service station is liable only with respect to its business activities and role in repairing and servicing motor vehicles; and (

e) the holder of a restaurant permit or tavern permit issued pursuant to The Alcohol Control Regulations, 1994 authorizing the permit holder to deal in beverage alcohol is liable only with respect to its business activities and role in supplying beverage alcohol.

(4) A third party is not liable pursuant to this

section only by reason of the fact that a motor vehicle owned by the third party caused or contributed to the accident.

(5) Notwithstanding any Act or law, an insured entitled to bring an action pursuant to subsection (2) is only entitled to recover that portion of his or her non-economic loss that is caused by or attributable to those operators or third parties identified in clauses (2)(

a) and (b).

(6) Notwithstanding The Pre-Judgment Interest Act or any other Act or law, the court shall not award any interest on that part of the judgment that represents a person’s non-economic loss. [Emphasis added] [ 30 ] In Harding , following a brief synopsis of the implementation of the no-fault scheme, Laing J., quoting from Popescul C.J. in Harding v Skopyk, 2014 SKQB 104 , noted, at para. 9 , the limited right to sue pursuant to ss. 103 and 104 : [9] Effective January 1, 1995, amendments to the AAIA moved away from the common law tort system as the main mechanism to determine liability and fault with respect to automobile accidents in Saskatchewan to what has been described as a modified no fault system.

In the 2014 fiat above referred to, Popescul C.J. provided an overview of the modified system . . . . . . [17] Subsequently, the legislators enacted The Automobile Accident Insurance Amendment Act , 2002, S.S. 2002, c. 44, s. 30(1) , which retained and enhanced the limited right to sue by enabling an injured person to sue to recover damages for any past or future income loss suffered in excess of the yearly employment income attributable to the insured through the AAIA scheme.

In addition, and of significance to the circumstances before this Court, the legislature also amended the AAIA to permit an injured person to sue for non-pecuniary loss (i.e. pain and suffering) where the injury was caused by someone subsequently convicted, in relation to that incident, of impaired driving, or driving while over the legal limit prescribed by the Criminal Code . [At that time the AAIA was also amended to give an insured the right to choose between no-fault coverage and tort coverage – which is of no relevance to the circumstances before this Court]. [18] In essence, therefore, there are two concurrent, and not mutually exclusive avenues open to an injured party who has not opted for the tort coverage option.

Firstly, one can apply for no-fault benefits. If unsatisfied with what is provided by SGI, the injured person has the right to avail himself or herself of a variety of appeal mechanisms including an appeal to the Automobile Injury Appeal Commission or an appeal, commenced by statement of claim, to this Court. See s. 191 and I.K. v. Saskatchewan Government Insurance , 2007 SKQB

44 , 292 Sask.R. 306 . Secondly, an injured person can commence an action in the Court of Queen’s Bench for economic loss as contemplated by s. 103 or for non-economic loss, as defined in s. 104 . [Emphasis added] [ 31 ] With respect to s. 104, Laing J. commented, at para. 29: [29] In enacting s. 104, and in combination with the amendments to s. 103 , the legislature clearly intended to expand the right of persons injured in motor vehicle accidents by impaired drivers to what was available to them in the tort system prior to the amendments introduced in 1995.

It is not every injured person who has the right to bring an action for non-economic loss. By restricting a right to sue for non-economic loss to persons injured by drivers who commit certain designated offences in the Criminal Code , R.S.C. 1985, c. C-46 , the legislature clearly intended to make such drivers accountable (as evidenced by SGI’s right of subrogation for any payments made) and thereby discourage such behaviour. [Emphasis added] [ 32 ] In the case at hand, the defendant, Ms. Leer, was not convicted of an offence. Accordingly, the plaintiff has acknowledged that s. 104 is not applicable.

As such, given the operation of the no-fault scheme outlined in the AAIA , Mr. Howarth would not be able to pursue a claim for non-economic loss. [ 33 ] With respect to s. 103 , as noted in the portions emphasized above, this constitutes a very limited exception to s. 40.1 of the AAIA . It does not enable the plaintiff to claim general damages or special damages. As explained in Harding, at para. 26, s. 103 does not outline a benefit but, rather, identifies a particular and limited right of action: [26]

Section 103 does not provide a benefit under the AAIA . Section 103(1) (a)(iv) identifies the action that may be brought by a person receiving Workers’ Compensation. Section 103(2) provides a right of action in the Court of Queen’s Bench. No money is payable as a benefit pursuant to s. 103 . [ 34 ] This right of action is for the recovery of damages for economic loss, as noted in ss. 103(2). The term “economic loss” is defined in ss. 103(1)(a). It appears from the facts available that Mr. Horwath could fit within the provisions of ss. 103(1)(a)(iv).

Such, however, does not provide him with the right to claim general damages or special damages, such as travelling costs. [ 35 ] The operation of s. 103—and s. 104 had it applied in this case—limits the plaintiff’s claim for damages to past income or future income loss. Accordingly, the second question must also be answered in the affirmative. [ 36 ] Mr. Howarth’s status as a non-resident must also be borne in mind. In this regard, ss. 109(1) (

a) of the AAIA operates: 109(1) Subject to this Part , a person injured in an accident that occurs in Saskatchewan who is not resident in Saskatchewan, and any surviving spouse or dependant of that person, is entitled to benefits: (

a) in accordance with any agreement between the insurer and a government or an agency of the government of the place of residence of the person injured ; … [Emphasis added] [ 37 ] This brings us to the third question, which addresses the reciprocity agreement between Alberta and SGI.

c) Does the reciprocity agreement, otherwise known as the K4K agreement, dated July 9, 1997, between Alberta and SGI, preclude the WCB from maintaining a subrogated claim? [ 38 ] The July 9, 1997 memorandum of agreement, is found at Tab A of the agreed statement of facts. The parties to the K4K are SGI and Her Majesty the Queen in Right of Alberta. The first paragraph of the

preamble to the K4K states: The Province of Saskatchewan has enacted a system of no-fault insurance that applies principally to residents of Saskatchewan who suffer bodily injuries in automobile accidents. SGI is authorized by statute to enter into agreements with governments of other provinces respecting compensation for bodily injury of (

a) residents of other provinces who are involved in accidents in Saskatchewan, and (

b) Saskatchewan residents who are involved in accidents outside Saskatchewan. [ 39 ] Regarding accidents occurring in Saskatchewan, the K4K considers rights of subrogation in para. 4, subparas. 4.1-4.4 of which are particularly pertinent to this application: 4.1 Compensation by SGI - SGI will not be obligated to compensate an Alberta Resident injured in an Accident in Saskatchewan, regardless of whether the Alberta Resident was responsible for causing the Accident. 4.2 Waiver of Subrogated Claim - SGI waives any right of subrogation it may have against an Alberta Resident involved in an Accident in Saskatchewan. 4.3 Owner's Vicarious Liability - The waiver in

section 4.2 extends to a right of subrogation against an owner of an Alberta Finance - Insurance - Memorandum of Agreement - Saskatchewan Page 2 of 5 automobile vicariously liable for the negligence of the Alberta Resident where the owner is an Alberta Resident. 4.4 Other Subrogation Rights - Except as provided in sections 4.2 and 4.3, this Agreement does not affect any right of subrogation

exercisable by SGI. [ 40 ] The defendants seek to rely on the K4K, claiming that it precludes the WCB from pursuing its rights of subrogation against them. The WCB, however, notes that it is not a signatory to the K4K and maintains that any agreement by SGI to limit its own statutory rights of subrogation does not apply to bind the WCB. [ 41 ] The provisions of s. 40.1 of the AAIA , quoted earlier, underpin the no-fault regime, effectively limiting lawsuits for injuries arising from motor vehicle accidents to the specific exceptions referenced in the legislation.

Under its governing legislation, The Workers’ Compensation Act, 2013, SS 2013, c W-17.11 , at, for example, s. 39, the WCB has its own rights of subrogation vis- à -vis an injured worker. However, those rights of subrogation are, at first blush, barred by s. 40.1. [ 42 ] However, the AAIA , by s. 204 , then establishes a separate right of subrogation for the WCB vis- à -vis the insured: 204(1) In this section, “compensation legislation” means: (

a) The Workers’ Compensation Act, 2013 ; (

b) The Saskatchewan Hospitalization Act ; or (

c) The Saskatchewan Medical Care Insurance Ac t.

(2) Subject to

section 103 , if an insured receives compensation pursuant to compensation legislation, the body authorizing compensation pursuant to compensation legislation: (

a) is subrogated to the insured’s rights; and (

b) has the same remedies as the insurer to recover the compensation from any person who is not resident in Saskatchewan and is responsible for the accident, or who is liable to pay compensation for bodily injury caused by the non-resident. [Emphasis added] [ 43 ] The WCB, by ss. 204(2)(

a) is subrogated to the rights of the insured. However, the wording is different in relation to SGI. By ss. 204(2)(b), the WCB “has the same remedies as the insurer”. It is not a situation where the WCB is subrogated to the rights of SGI. [ 44 ] By s. 212 of the AAIA , the rights on subrogation are explained: 212(1) If the insurer or another body is given a right of subrogation pursuant to this Part by reason of paying or becoming liable to pay a benefit or compensation, the insurer or other body is deemed to be an assignee and is subrogated to all rights of recovery of the person to whom or with respect to whom or for whose benefit the benefit or compensation was paid or is payable.

(2) For the purposes of subsection (1), the insurer or other body may: (

a) bring an action in its own name to recover the amount of the benefit or compensation paid or payable; or (

b) join with the person to whom or with respect to whom or for whose benefit the benefit or compensation was paid or is payable to bring an action in the name of that person for the recovery of damages resulting from the bodily injury caused by a motor vehicle of an insured. [Emphasis added] [ 45 ] As noted above, ss. 204(2) of the AAIA makes the WCB’s right of subrogation “subject to” s. 103, which

section grants insured persons the ability to commence action for recovery of economic losses. Specifically, ss. 103(2) states: 103(2) Notwithstanding

section 40.1 of this Act, but subject to

section 43 of The Workers’ Compensation Act, 2013 , an action may be brought in the Court of Queen’s Bench to recover any damages of the insured or of the insured’s surviving spouse or dependant for economic losses . [Emphasis added] The reference to s. 43 of The Workers’ Compensation Act, 2013 incorporates the barring of employers, workers and workers’ dependents from commencing proceedings regarding injuries to workers arising out of and in the course of the workers’ employment. [ 46 ] Included in the definition of economic loss recoverable by an insured is any past or future income loss incurred by the insured in excess of the benefits paid by the WCB.

Rules governing the recovery of economic losses are also outlined in s. 103 , including those which bar government or insurers from recovering amounts paid to insureds: 103 . . .

(3) The following rules apply in an action pursuant to this section: . . .

(

c) subject to clause (d), in determining an insured’s or insured’s surviving spouse’s or dependant’s economic loss, the court shall deduct from any award all amounts the insured or the surviving spouse or dependant has received or is entitled to receive from any government or agency of government, from any public or private insurance scheme or from any other scheme that lessens the economic loss; (

d) in determining economic loss pursuant to subclause (1)(a)(ii) or paragraph (1)(a)(iv)(B), the court shall not deduct from any award any amounts the insured’s surviving spouse or dependant has received or is entitled to receive from a contract of life insurance as defined in The Saskatchewan Insurance Act . . . .

(5) Notwithstanding any other Act or law, no government, agency of any government, public or private insurer or other person who is required or liable to pay an amount mentioned in clause (3)(

c) has any right of subrogation to recover that amount. . . . [Emphasis added] [ 47 ] In interpreting ss. 103(5), the court in Moen v Sandras, 2004 SKQB 181 , 248 Sask R 99 [ Moen ] , first noted the definition of “subrogation”, at para. 17, then concluded, at paras. 21 -22 that ss. 103(5) had not removed the WCB’s right of subrogation: [17] The term “subrogation” is defined in Black’s Law Dictionary , 7 th ed. (St. Paul, Minn.: West Group, 1999) as: 2.

The principle under which an insurer that has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy. . . . [21] It could be argued that subsection 103(5) has statutorily removed any right of subrogation to any government or agency of government, public or private insurer or any person who is required or liable to pay an amount mentioned in clause 103(3) (

d) of the AAIA . However, it is critical to underscore s. 103 of the AAIA deals with tort claims of economic loss and as such s. 103 does not impact on the right of subrogation in relation to primary benefits . A plaintiff’s ability to bring a tort action under the no-fault provisions of the AAIA are limited to claims for economic loss over and above the maximum yearly insurable earnings amount as prescribed by subsection 138(1) of the AAIA .

Section 103 thus limits the Workers’ Compensation Board’s ability to recover amounts in excess of the maximum yearly insurable earnings amount. [22] In my view the provisions of the AAIA are not ambiguous.

Section 208 [which in 2016 was s. 204 ] grants the Workers’ Compensation Board the right to subrogation. This right to subrogation is limited by the provisions of s. 103 which restricts the Workers’ Compensation Board’s right to subrogation to the maximum yearly insurable earnings (primary benefits) that it has paid to each plaintiff .

Here the plaintiffs did not receive in any given year an amount above the maximum yearly insurable earnings and as such the Workers’ Compensation Board is entitled to recover, from the defendants, the entire amount it has paid to the plaintiffs. [ Emphasis added] [ 48 ] Moen emphasizes that the rights of subrogation conferred on the WCB are not pursuant to “any other Act or law” but have been conferred by the AAIA .

While such rights are limited by s. 103 , they are not ousted. [ 49 ] In addition to being subrogated to the insured’s rights by ss. 204(2)(a), the WCB, by ss. 204(2)(b), has the same remedies as SGI as against non-residents.

These remedies are outlined in s. 110 and ss. 111(1) of the AAIA : Accidents outside Saskatchewan 110 If an insured or insured’s surviving spouse or dependant is entitled to benefits respecting an accident that occurred outside Saskatchewan, the insurer is subrogated to that insured’s or insured’s surviving spouse’s or dependant’s rights and is entitled to recover the amount of those benefits from: (

a) any person who is not resident in Saskatchewan and who is responsible for the accident pursuant to the law of the place where the accident occurred; or (

b) any other person who is liable to pay compensation for bodily injuries caused by a person described in clause (a). Subrogation re accidents in Saskatchewan 111(1) Subject to

section 105, if an insured or insured’s surviving spouse or dependant is entitled to benefits pursuant to this Act respecting an accident, the insurer has the right to recover the amount of the benefits from: (

a) any person who is not resident in Saskatchewan and who is responsible for the accident, to the extent that he or she is responsible for the accident; and

(

b) any other person who is liable to pay compensation for bodily injury caused by the person described in clause (a). [ 50 ] Subrogation for non-economic loss is provided for in s. 105, to which s. 111, quoted above, is subject: 105(1) If the insurer makes a payment pursuant to

section 104 with respect to a non-economic loss for damages or bodily injury, the insurer is subrogated to and deemed to be an assignee of the person to whom or on whose behalf or with respect to whom benefits or insurance money is to be paid or provided.

(2) The insurer may bring an action in its own name for recovery of the benefits or insurance money paid for the damages sustained.

(3) An action may be brought against any person at fault whether or not that person is a Saskatchewan resident. [ 51 ] Reading these sections together, and recognizing that the WCB, pursuant to s. 204, has the same remedies as SGI, it appears that, pursuant to s. 110 , where an accident occurs outside of Saskatchewan, SGI and the WCB are subrogated to the insured’s rights to recover the amount of the benefits paid from those responsible for the motor vehicle accident.

Where the accident occurs in Saskatchewan, both SGI and the WCB have a similar right to recover the amount of the benefits paid, pursuant to s. 111 , and, in relation to non-economic losses, are, by s. 105, subrogated to or an assignee of the insured. [ 52 ] The AAIA does not provide for any contractual limitation of the above noted rights of recovery except in the case of a non-resident injured in Saskatchewan, such as Mr. Howarth in the instant case.

Section 109 states: 109(1) Subject to this Part , a person injured in an accident that occurs in Saskatchewan who is not resident in Saskatchewan, and any surviving spouse or dependant of that person, is entitled to benefits: (

a) in accordance with any agreement between the insurer and a government or an agency of the government of the place of residence of the person injured ; or (

b) if no agreement exists, to the extent that the insurer determines that the person injured is not responsible for the accident.

(2) A person injured or any surviving spouse or dependant of that person who disagrees with a decision of the insurer pursuant to clause (1)(

b) may appeal that decision to the Court of Queen’s Bench or to the appeal commission, in the prescribed manner, within 180 days after receiving the insurer’s written decision. [Emphasis added] [ 53 ] As has been emphasized by counsel for the defendant applicants, SGI is expressly authorized to enter into such agreements by s. 209, which states: 209 The insurer may enter into agreements that the insurer considers necessary or appropriate to advance the purposes of this Part with: (

a) the Government of Canada or the government of any other province of Canada or a minister, agent or official of that government; (

b) the government of any other country or any jurisdiction within that country; or (

c) any person, agency, organization, association, enterprise, institution or body within or outside Saskatchewan. [Emphasis added] [ 54 ] Neither the WCB nor the plaintiff challenges SGI’s authority to have entered the K4K with the Province of Alberta. However, what is challenged is the defendants’ position that the K4K, along with limiting the subrogation rights of SGI, also limits the subrogation rights of the WCB. The plaintiff and the WCB maintain that the WCB is not a signatory to the K4K.

They further emphasize that the K4K does not contractually waive WCB’s statutory rights of subrogation and cannot be interpreted as doing so as SGI had no authority to make such a waiver on behalf of the WCB. [ 55 ]

Part VIII of the AAIA, which, again, is entitled “Body Injury Benefits (No Fault)”, is at the core of the no-fault statutory compensation scheme. The purpose of any agreement, as noted in s. 209, which is found in

Part VIII, is “to advance the purposes of this Part”. Accordingly, the intended results outlined in para. 2.1 of the K4K, not surprisingly, advance the concept of compensation on a no-fault basis: 2.1 Intended Results - This Agreement is intended to produce the following results: a. where an Alberta Resident is injured in an Accident in Saskatchewan, he or she will be compensated on a no-fault basis by his or her own insurer, and will not be compensated by SGI;

b. where an Uninsured Alberta Resident is injured in Accidents in Saskatchewan, he or she will receive compensation from SGI inaccordance with the Saskatchewan Statute, but only to the extent that the Uninsured Alberta Resident is not responsible for causing theAccident; c. where an Alberta Resident causes an Accident in Saskatchewan, SGI will not pursue a subrogated claim against the Alberta Resident; d. where a Saskatchewan Resident is injured in an Accident in Alberta, SGI will pay no-fault benefits to the Saskatchewan Resident, andwill not pursue any subrogated claim against an Alberta Resident responsible for the Accident. [56] These provisions of the K4K reference only compensation from insurers, being either SGI or the injured Albertaresident’s Alberta insurer.

No mention is made of workers’ compensation benefits. Further, by subpara. 2.1 c., the commitment is that, incircumstances such as occurred in this case, where an Alberta resident caused an accident in Saskatchewan, “SGI will not pursue asubrogated claim”. Similarly, by para. 4.2 of the K4K, quoted above at para. 39 of this decision, “SGI waives any right of subrogation itmay have against an Alberta Resident involved in an Accident in Saskatchewan”. [57] Notably, s. 103, s. 204, and s. 212, are also in

Part VIII of the AAIA. Given that s. 209 authorizes SGI to enteragreements which advance the purposes of

Part VIII, the K4K’s silence on waivers of any other rights beyond certain of SGI’s rights isunderstandable. Protection of the right of Alberta residents to bring an action for economic loss pursuant to s. 103 and maintenance of therights of the WCB would both be consistent with the purposes of

Part VIII. In relation to the former, para. 4.6 of the K4K expresslystates that, “Nothing in this Agreement affects the right of an Alberta Resident to bring an action pursuant to

section 103 of theSaskatchewan Statute”. Regarding the latter, the wording of the K4K, in several paragraphs, references only SGI’s waiver of itssubrogation rights. See, for example, paras. 2.1 c., 4.2, and 5.1. [58] The defendants submit that as the WCB has the same remedies as SGI, by ss. 204(2) of the AAIA, and, as SGIhas contractually waived its own remedies in the K4K, the waiver likewise binds the WCB. However, such a waiver of statutoryremedies ought to be expressly undertaken by an entity privy to the contract, which the WCB is not in this case.

The K4K is solelybetween the Province of Alberta and SGI, with no mention of the WCB. [59] Before further considering the principles regarding privity of contract, I note the defendants’ position, reflectedin para. 6 of their supplemental brief of law, where they state: 6. … Parties enter into valid agreements every day that effect non-parties. Ms. Leer and Mr. Howarth are not signatories to the Knock forKnock Agreement, however, it affects their statutory rights. [60] In my view, Ms. Leer and Mr. Howarth are in an entirely different position than the WCB.

Indeed, as residentsof Alberta, it is their provincial government which has entered the K4K agreement on their behalf. At the very least, the Province ofAlberta may be considered an agent and representative of Ms. Leer and Mr. Howarth.

Such a relationship does not exist between SGI andthe WCB. [61] As stated in Gutheil v Billesberger, 2010 SKQB 337 at paras 12-13, 360 Sask R 243 [Gutheil], “The doctrine ofprivity does not allow contractual rights or obligations to be imposed on individuals who are not parties to a contract . . .” although there“are certain circumstances which can give rise to exceptions to the doctrine of privity, including agency and trusts”. [62] The case law supports the view that statutory rights and benefits may be waived but only by the persons entitledto them.

See, for example, Sunnyvale Farming Enterprises Ltd. v Lloyds Bank Canada (1990), (SK KB), [1991] 1WWR 572 (Sask QB) at paras 12-17, leave to appeal granted (1991), (SK CA), 90 Sask R 33 (CA); andNiedermeyer v Charlton, 2014 BCCA 165 at paras 61-63, [2014] 7 WWR 753.

The doctrine of privity thus requires that the statutoryrights of one entity cannot be contractually waived by another. [63] In Greenwood Shopping Plaza Ltd. v Beattie, (SCC), [1980] 2 SCR 228 [Greenwood], theSupreme Court of Canada described privity of contract as follows, at pages 236-237: The rule relating to privity of contract has been stated in many authorities in sometimes varying form, but a convenient expression maybe found in Anson’s Law of Contract, 25th ed., 1979, p. 411, in these terms: We come now to deal with the effects of a valid contract when formed, and to ask, To whom does the obligation extend?

What are thelimits of a contractual agreement? This question must be considered under two separate headings: (1) the imposition of liabilities upon athird party, and (2) the acquisition of rights by a third party. We shall see that the general rule of the common law is that no one but theparties to a contract can be bound by it, or entitled under it. This principle is known as that of privity of contract. [64] Later, at page 238 of Greenwood, the Supreme Court noted the rigid approach to analysis of the issue of privity,with reliance on specific exceptions: . . .

There have been many attempts to break out of the rigid mould imposed by the concept of privity and some statutory relief has beenprovided in special cases but the concept remains one of general application. If the case at bar cannot be brought into one or other of theexceptions which have become known in the law, or if it cannot be distinguished on its facts from the various cases which wouldotherwise bind us, this appeal would have to succeed. [65] Gutheil, as noted above, contemplated agency as an exception to the doctrine of privity.

Had SGI negotiated andexecuted the K4K on behalf of the WCB as its agent, the K4K would bind the WCB. However, no evidence has been proffered

suggesting that such is the case. Indeed, the terms of the K4K would negate such a suggestion. Only SGI and the Province of Alberta arementioned in the recitals to the agreement and there is no reference to either the WCB or workers’ compensation benefits in general inthe K4K. Further, along with only referencing SGI’s waiver of subrogation in various sections, as noted above, the terminology in para.4.4 of the K4K is “subrogation exercisable by SGI”. Similarly, in para. 5.1 SGI commits to “not exercise its subrogation rights”.(Emphasis added).

Any right of subrogation exercisable by the WCB is not considered, much less waived, by the K4K. [66] Had the intention been to waive subrogation rights of the WCB, or either of the other two bodies authorizingcompensation referenced in ss. 204(1) of the AAIA, the language of the K4K ought to have more clearly indicated subrogation rightsexercisable by those bodies which, in addition to SGI, provide compensation benefits. [67] Additionally, it cannot be ignored that, by ss. 204(2) of the AAIA, the rights of WCB are subrogated to those ofthe insured but are not subrogated to those of SGI.

Rather, the WCB has the same remedies available to it as SGI does in relation torecovery of the compensation paid. This language reinforces that the interests and rights of the WCB are not subsumed in those of SGI.The two entities have parallel rights. Thus, SGI would have no authority to unilaterally waive the rights of the WCB. [68] In London Drugs Ltd. v Kuehne & Nagel International Ltd., (SCC), [1992] 3 SCR 299 (WL)[London Drugs], the Supreme Court of Canada notes, at para. 202, the agency exception to the doctrine of privity of contract.

LondonDrugs, however, is also seen as a decision in which a more principled approach to the doctrine was considered, moving away fromslavish adherence to recognized exceptions, particularly where a benefit is being denied to a non-party to an agreement. The courtcommented, at paras. 241 and 242: 241 As we have seen earlier, the doctrine of privity has come under serious attack for its refusal to recognize the right of a third partybeneficiary to enforce contractual provisions made for his or her benefit.

Law reformers, commentators and judges have pointed out thegaps that sometimes exist between contract theory on the one hand, and commercial reality and justice on the other. We have also seenthat many jurisdictions around the world, including Quebec and the United States, have chosen from an early point (as early as thedoctrine became "settled" in the English common law) to recognize third party beneficiary rights in certain circumstances.

As noted bythe appellant, the common law recognizes certain exceptions to the doctrine, such as agency and trust, which enable courts, in appropriatecircumstances, to arrive at results which conform with the true intentions of the contracting parties and commercial reality. However, asmany have observed, the availability of these exceptions does not always correspond with their need.

Accordingly, this Court should notbe precluded from developing the common law so as to recognize a further exception to privity of contract merely on the ground thatsome exceptions already exist. 242 While these comments may not, in themselves, justify doing away with the doctrine of privity, they nonetheless give a certaincontext to the principles that this Court is now dealing with. This context clearly supports in my view some type of reform or relaxationto the law relating to third party beneficiaries.

Again, I reiterate that any substantial amendment to the doctrine of privity is a matterproperly left with the legislature.

But this does not mean that courts should shut their eyes to criticisms when faced with an opportunity,as in the case at bar, to make a very specific incremental change to the common law. [69] Using this principled approach, the court in London Drugs addressed the specific fact scenario before it andproposed an incremental change to the common law, as outlined at paras. 257-262: 257 In my opinion, a threshold requirement for employees to obtain the benefit of their employer's contractual limitation of liabilityclause is the express or implied stipulation by the contracting parties that the benefit of the clause will also be shared by saidemployees.

Without such a stipulation, it is my view that the employees are in a no better situation than this Court held those employeesinvolved in Greenwood Shopping Plaza, supra, to be in, and should not therefore be able to rely on the clause as a means of defence.This Court found that the employees were strangers to the contract, as I discussed above.

As for the other requirements proposed by therespondents, I agree with their substance although I would express them in a different manner. 258 In the end, the narrow question before this Court is: in what circumstances should employees be entitled to benefit from a limitationof liability clause found in a contract between their employer and the plaintiff (customer)?

Keeping in mind the comments made earlierand the circumstances of this appeal, I am of the view that employees may obtain such a benefit if the following requirements aresatisfied: 1) The limitation of liability clause must, either expressly or impliedly, extend its benefit to the employees (or employee) seeking to relyon it; and 2) the employees (or employee) seeking the benefit of the limitation of liability clause must have been acting in the course of theiremployment and must have been performing the very services provided for in the contract between their employer and the plaintiff(customer) when the loss occurred.

Although these requirements, if satisfied, permit a departure from the strict application of the doctrine of privity of contract, theyrepresent an incremental change to the common law. I say "incremental change" for a number of reasons. 259 First and foremost, this new exception to privity is dependent on the intention of the contracting parties. An employer and hisor her customer may choose the appropriate language when drafting their contacts so as to extend, expressly or impliedly, thebenefit of any limitation of liability to employees.

It is their intention as stipulated in the contract which will determine whether the firstrequirement is met. In this connection, I agree with the view that the intention to extend the benefit of a limitation of liability clause toemployees may be express or implied in all the circumstances: see e.g. Mayfair Fabrics v. Henley, 244 A.2d 344 (N.J. 1968); EmployersCasualty Co. v. Wainwright, 473 P.2d 181 (Colo. Ct. App. 1970) (cert, denied).

260 Second, taken as a whole, this new exception involves very similar benchmarks to the recognized agency exception, applied in The Eurymedon and by this Court in ITO — International Terminal Operators , supra .

As discussed in the latter decision, the four requirements for the agency exception were inspired from the following passage of Lord Reid's judgment in Midland Silicones , supra (at p. 474): I can see a possibility of success of the agency argument if (first) the bill of lading makes it clear that the stevedore is intended to be protected by the provisions in it which limit liability, (secondly) the bill of lading makes it clear that the carrier, in addition to contracting for these provisions on his own behalf, is also contracting as agent for the stevedore that these provisions should apply to the stevedore, (thirdly) the carrier has authority from the stevedore to do that, or perhaps later ratification by the stevedore would suffice, and (fourthly) that any difficulties about consideration moving from the stevedore were overcome.

The first requirement of both exceptions is virtually identical. The second and third requirements of the agency exception are supplied by the identity of interest between an employer and his or her employees as far as the performance of contractual obligations is concerned; this is implicit in the recognition of this new exception.

As for the fourth requirement of agency, while this new exception makes no specific mention of consideration moving from the employees to the customer, the second requirement of the new exception embraces the same elements which were adopted by courts to recognize consideration moving from stevedores in cases involving " Himalaya clauses". 261 Third, it must be remembered that I am proposing a very specific and limited exception to privity in the case at bar; viz. permitting employees who qualify as third party beneficiaries to use their employer's limitation of liability clauses as "shields" in actions brought against them, when the damage they have caused was done in the course of their employment and while they were carrying out the very services for which the plaintiff (customer) had contracted with their employer.

In sum, I am recognizing a limited jus tertii . 262 In closing on this point, I wish to add the obvious comment that nothing in the above reasons should be taken as affecting in any way recognized exceptions to privity of contract such as trust and agency.

In other words, even if the above requirements are not satisfied, an employee may still establish the existence of a trust or agency so as to obtain a benefit which the contracting parties intended him or her to have, notwithstanding lack of privity. [Emphasis added] [ 70 ] Although the facts are very different in the current circumstances of the K4K, the considerations noted in London Drugs , when applied in the instant case, do not support a finding that the WCB may somehow be considered as bound by the commitments made by SGI in the K4K.

As noted above, there is nothing expressly referencing workers’ compensation benefits in the agreement. The language pertains only to SGI and its right of subrogation. Nothing suggests an intention to limit or eliminate the rights and remedies exercisable by the WCB. [ 71 ] For the reasons discussed, I would answer the third question in the negative. The K4K does not preclude the WCB from maintaining a subrogated claim.

The K4K binds only its signatories, SGI and the Province of Alberta. [ 72 ] Although, given my conclusion, it is unnecessary to consider the WCB’s further position, I will provide some brief commentary. In this regard, the WCB submits that, even if it could be considered that SGI was authorized to, and did, limit the rights of the WCB by the terms of the K4K, there are additional grounds for declining to prevent the WCB from pursuing recovery in this case, on public policy grounds.

In Gustafson v Future Four Agro Inc., 2019 SKCA 68 , 438 DLR (4th) 647 , the court considered the principle of contracting out, noting, at para. 40: [40] These cases reflect the fact that the contracting out principle applies only if the legislation at issue has a certain sort of public policy purpose, and then only if permitting the waiver or contracting out would be inconsistent with or undermine that purpose. The principle has limited application. … [ 73 ] Counsel for the WCB emphasizes that it is constituted pursuant to The Workers’ Compensation Act, 2013 and has paid benefits to the plaintiff thereunder.

In Cebryk v Paragon Enterprises

(1984) Ltd., 2010 SKCA 146 , [2010] 12 WWR 575 , the three-fold purpose of workers’ compensation legislation was explained at para. 43: [43] … The purpose of workers’ compensation legislation is threefold: first, to provide a worker injured in a workplace accident with specific benefits, without having to establish negligence by an employer; second, to limit the liability of employers and eliminate the cost of determining culpability; and, third, to ensure funds are available to pay benefits to injured workers by means of employers’ contributions to the compensation fund. … [Emphasis added] [ 74 ] In light of this third purpose, counsel submits that the rights of the WCB to pursue non-residents for recovery of benefits paid must be preserved.

To permit waiver of such rights would be contrary to public policy and the general purpose and policy of The Workers’ Compensation Act, 2013 , according to the WCB. [ 75 ] While ensuring a workers’ compensation scheme is properly funded can be seen as being in the public interest, there is insufficient evidence before me to determine whether the quantum involved would jeopardize the WCB compensation fund. The amount in this case is $37,381.95 but how many similar cases there are annually, for example, is not in evidence.

Nonetheless, given the purpose of The Workers’ Compensation Act, 2013 and the public interest in ensuring compensation is available to injured workers, this, at the very least, underscores that a waiver of WCB rights to pursue reimbursement must be done expressly and with clear authorization. Such did not occur in the context of the K4K. Conclusion and Order [ 76 ] For the reasons outlined in the foregoing, the answer to the first question, as to whether the provisions of the

AAIA , and particularly Parts III and IV thereof, apply to this action, is “yes”. Similarly, the second question, regarding whether s. 103 and s. 104 preclude the plaintiff from seeking general damages and special damages, is also answered in the affirmative, albeit that s. 104 has no application in the particular circumstances of this case. [ 77 ] As to the question of whether the reciprocity agreement, otherwise known as the K4K agreement, dated July 9, 1997, between Alberta and SGI, precludes the WCB from maintaining a subrogated claim, the answer is “no”.

The WCB may maintain its subrogated claim. [ 78 ] The defendants, with respect to the first two questions, were successful in their application. As a consequence, pursuant to Rule 7-1(3), the amended statement of claim is to be further amended to reflect the limitations imposed by the provisions of the AAIA . This includes deletion, in para. 4, of the words, “In terms of

section 18 of The Automobile Accident Insurance Act, RSS 1978, c A-35 ( AAIA ), Parts III and IV of the AAIA do not apply to this defendant”. [ 79 ] As well, para. 27 of the amended statement of claim shall be struck and paras. 30(

a) and (

b) shall be deleted and replaced with a new para. 30(

a) to read as follows: “Judgment for past loss of income and medical aid, calculated in accordance with the provisions of ss. 103(1)(a)(iv)(

A) and (

C) of The Automobile Accident Insurance Act .” Finally, reference to the subrogated claim of the WCB is to be included in the prayer for relief, in keeping with s. 204 and s. 212 of the AAIA . Costs [ 80 ] Counsel for the plaintiff noted that issues pertaining to the K4K had not previously been considered and required determination by this court. As such, no costs were sought on behalf of the plaintiff. Counsel for the WCB and counsel for the defendants indicated they had no specific submissions regarding costs in relation to this application.

However, counsel for the WCB noted that costs regarding the WCB’s application to be added as a respondent remained outstanding. Meschishnick J. had indicated that the costs of that application were to be “costs in the cause and in the discretion of the judge hearing the Rule 7 application”. [ 81 ] Accordingly, for the reasons enunciated by Mr. Howarth’s counsel, there shall be no order as to costs in relation to this application.

However, regarding the previous application by WCB for standing as a respondent, the defendants shall pay to the WCB costs which are set at $1,400. [ 82 ] Thanks is extended to all counsel for their able submissions on the substantive issues. J. B.R. HILDEBRANDT