Hank Charles Appellant (Plaintiff) v. Saskatchewan Government Insurance, 2021 SKCA 11

Court of Appeal for Saskatchewan Docket: CACV3545 Citation: Charles v Saskatchewan Government Insurance , 2021 SKCA 11 Date: 2021-01-21 Between: Hank Charles Appellant (Plaintiff) And Saskatchewan Government Insurance Respondent (Defendant) Before: Ottenbreit, Leurer and Tholl JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr. Justice Tholl In concurrence: The Honourable Mr. Justice Ottenbreit The Honourable Mr. Justice Leurer On appeal from: 2019 SKQB 316 , Prince Albert Appeal heard: November 5, 2020 Counsel: Peter V. Abrametz for the Appellant Dale Brown for the Respondent Tholl J.A. I.

Introduction [ 1 ] As a result of his father’s passing, Hank Charles became entitled to a lump-sum death benefit from Saskatchewan Government Insurance [SGI]. However, Mr. Charles owed money to SGI, so it deducted that amount and paid the difference to him. SGI relied on s. 11.1 of The Automobile Accident Insurance Act , RSS 1978, c A-35 [ AAIA ], as authority to do so. Mr. Charles challenged SGI’s ability to make any such deductions after the passage of more than two years and commenced an action, in the nature of an appeal of SGI’s decision, seeking payment of the amounts that had been withheld.

A Chambers judge dismissed the action, finding that SGI’s statutory authority to make the deduction was not barred by the general two-year limitation period set out in s. 5 of The Limitations Act , SS 2004, c L-16.1 : Charles v Saskatchewan Government Insurance , 2019 SKQB 316 , 54 CPC (8th) 429 [ Chambers Decision ]. [ 2 ] On appeal, Mr. Charles asserts the Chambers judge erred by finding that the AAIA is not governed or limited by The Limitations Act , although his arguments regarding the applicability of the limitation period are more focussed. In response, SGI asserts Mr.

Charles overstates the findings of the Chambers judge and argues she correctly interpreted the narrow issue of the applicability of The Limitations Act to s. 11.1 of the AAIA . [ 3 ] For the reasons that follow, the appeal must be dismissed. II. Background [ 4 ] Mr. Charles owed $7,515 to SGI. Mr. Charles was indebted to SGI for $4,665 arising out of a theft of a truck in 2008, $100 for a surcharge in 2008, $500 for another surcharge in 2008 and $2,250 for a further surcharge in 2018. Invoices for these charges were sent when they were incurred but no payments were made.

While there was some suggestion in the Chambers Decision that part of this debt may have been owed by Mr. Charles’s father, Mr. Charles did not contest in this Court that the monies were owed by him to SGI. He simply contends that the provisions of The Limitations Act bar SGI from asserting its rights to collect the debt from him under s. 11.1 of the AAIA because of the passage of time. [ 5 ] On September 8, 2017, Mr. Charles’s father was struck and killed by a vehicle. As his sole heir, Mr. Charles became entitled to a death benefit from SGI in the amount of $15,620. On November 29, 2018, SGI informed Mr.

Charles that it would be retaining the amounts owed to it. Relying on s. 11.1 of the AAIA , SGI deducted $7,315 from the death benefit and sent his counsel a cheque for the difference. As a result of a clerical error, it mistakenly deducted only $4,465 for the charges related to the 2008 stolen truck. This $200 shortfall is not at issue in this appeal. [ 6 ] Mr. Charles, through counsel, made inquiries with SGI about the deductions from the death benefit, but SGI did not change its position. Mr.

Charles has never challenged the fact that the money is owed to SGI, but, on the other hand, at no point did he acknowledge the indebtedness. Mr. Charles appealed SGI’s decision by commencing an action by statement of claim, pursuant to s. 191 of the AAIA . The parties drafted an agreed statement of facts and Mr. Charles applied for a determination on a question of law pursuant to Rule 7-1 of The Queen’s Bench Rules. He requested that the Chambers judge determine whether The Limitations Act barred SGI from deducting the amounts under s. 11.1 of the AAIA .

Neither party sought to supplement the record with additional affidavits. III. Chambers decision

[7] In order to provide context for the Chambers Decision, I will set out the legislative provisions in question.

Section 11.1 of theAAIA is as follows: Deduction of moneys owing 11.1 The insurer may deduct from any benefit, indemnity or insurance moneys payable to a person any of the following amounts that theperson owes to the insurer: (

a) the amount of any unpaid premium; (

b) the amount of any surcharge; (

c) any other amount arising out of the administration of this Act. [8] The following are the relevant portions from The Limitations Act: Application of Act 3(1) Subject to subsections (2) to (5), this Act applies to claims pursued in court proceedings that: (

a) are commenced by statement of claim; or (

b) are commenced by originating notice and are not proceedings in the nature of an application. … Basic limitation period 5 Unless otherwise provided in this Act, no proceedings shall be commenced with respect to a claim after two years from the day on whichthe claim is discovered. [9] The Chambers judge listed these provisions from the AAIA and The Limitations Act, reviewed the uncontroverted facts andreferenced Mr. Charles’s position regarding the applicability of s. 5 of The Limitations Act. She reviewed other sections of the AAIA thatmention The Limitations Act and noted the principles of statutory

interpretation set out in McQuarrie v Saskatchewan GovernmentInsurance, (SK CA), [1999] 12 WWR 508 (Sask CA), and Lozinski v Thiesen Bros. Farms Ltd., 2014 SKQB 81,[2014] 7 WWR 548. After this review, she determined that the Legislature did not intend s. 11.1 of the AAIA to be bound by the two-yearlimitation period set out in The Limitations Act. In doing so, she found that the references to The Limitations Act in s. 35.85, s. 111 ands. 198 of the AAIA did not assist in the

interpretation of s. 11.1. [10] After noting that the

interpretation of the provisions must be one that the text of the statute can bear, the Chambers judge statedthe following: [22] If one accepts the proposition by counsel for the plaintiff that every amount that is owed to SGI under s. 11.1 of the AAIA is subjectto the two-year limit in The Limitation Act, SGI must pursue a claim for each amount owed within two years of the charge or premiumarising. SGI could never predict when, or even if, a benefit might be payable to a person.

Otherwise, by not commencing an action withintwo years of the amount being owed to SGI, SGI would run the risk of only being able to offset any amounts owed by a person within thetwo-year period of a potential benefit, if any, being paid to the person. [23] That

interpretation leads to an absurd result. The Legislature would not have intended to require SGI to commence lawsuits againstpersons for these amounts owed, and then renew any judgments within ten years to ensure it can collect on the judgment, in order toensure that The Limitations Act does not bar recovery from the person, should SGI ever have to pay that person a benefit under the AAIA. [24] The absurdity principle is explained by the Supreme Court of Canada in Ontario v Canadian Pacific Ltd., (SCC),[1995] 2 SCR 1031 at para 65: [65] … Pierre-André Côté, The

Interpretation of Legislation in Canada (2nd ed. 1991), observes at pp. 383–84 that consideration of theconsequences of competing

interpretations will assist the courts in determining the actual meaning intended by the legislature. Since itmay be presumed that the legislature does not intend unjust or inequitable results to flow from its enactments, judicial

interpretationsshould be adopted which avoid such results. One method of avoiding absurdity is through the strict

interpretation of general words (atp. 330). Driedger on the Construction of Statutes (3rd ed. 1994) states the relationship between the absurdity principle and strictinterpretation as follows, at p. 94: “Absurdity is often relied on to justify giving a restricted application to a provision”. Where a provisionis open to two or more

interpretations, the absurdity principle may be employed to reject

interpretations which lead to negativeconsequences, as such consequences are presumed to have been unintended by the legislature. … [Emphasis added in the ChambersDecision] [25] The

interpretation of s. 11.1 of the AAIA as proposed by counsel for SGI must be the

interpretation intended by the Legislature. TheLegislature would not have intended the absurd result posed by counsel for the plaintiff. Therefore, I must conclude that the amountsowing to SGI from the benefits received by the plaintiff are not statute-barred by operation of The Limitations Act. [11] As a result of this ruling, the fact that one of the surcharges was within a two-year period from the date SGI withheld the fundsand the other charges were outside of this time frame was no longer relevant. [12] The Chambers judge dismissed Mr. Charles’s action. Because the decision required an

interpretation of the AAIA, she orderedthat there would be no costs.

IV. Issue and Standard of Review [13] The sole issue in this appeal is whether the statutory authority conferred on SGI by s. 11.1 of the AAIA is subject to thelimitation period set out in s. 5 of The Limitations Act. [14] Mr. Charles appealed the Chambers Decision pursuant to s. 194(1) of the AAIA. An appeal under that

section is limited to aquestion of law. An issue of statutory

interpretation is a question of law, so the standard of correctness applies: Housen v Nikolaisen, 2002SCC 33 at paras 8–9, [2002] 2 SCR 235, and Arslan v Şekerbank T.A.Ş., 2018 SKCA 77 at para 43, 38 CPC (8th) 311. V. Analysis A. Preliminary observations [15] The first preliminary observation to be made is that Mr. Charles has not argued that the expiration of the limitation periodextinguished the debt.

In my view, it is doubtful that the debt has been extinguished: see Karkut v Saskatchewan (Highway Traffic Board)(1969), (SK KB), 9 DLR (3d) 746 at para 10 (Sask QB); Phaneuf Fertilizer Sales Ltd. v LeBlanc (1998), (SK KB), 170 Sask R 161 (QB) at para 56; and Law Society (Saskatchewan) v Lamontagne, 2013 SKCA 27 at para 9, 414Sask R 1.

However, to the extent that case law from the Court of Queen’s Bench has suggested that the underlying debt may also beextinguished when it becomes unenforceable through court proceedings, I find that argument is best left for another day when it is raisedand fully argued by the parties: see Chalupiak & Associates Accounting Services Inc. v Piapot First Nation, 2018 SKQB 131, and NeudorfEstate v Sellmeyer, 2012 SKQB 463, 407 Sask R 156. [16] This is also not a case about the applicability of limitations legislation to the doctrines of legal set-off or equitable set-off.

Here,we are interpreting a statutory right given to SGI to withhold moneys owed to it from moneys it owes to the debtor. While this legislatedpower has some of the characteristics of legal set-off, it is a statutory right in question not a common law one. [17] As a final preliminary observation, despite Mr. Charles’s lengthy submissions about subrogation, the matter at hand does notinvolve the principles of subrogation. SGI is not pursuing a subrogated claim, which is governed by s. 80 of the AAIA. B.

Interpretation of s. 11.1 of the AAIA and The Limitations Act [18] This appeal raises an issue of statutory

interpretation. The approach to be applied to such an analysis is set out in Rizzo & RizzoShoes Ltd. (Re), (SCC), [1998] 1 SCR 27 [Rizzo]. The application of the modern principle from Rizzo requires apurposive analysis, having regard for the legislative scheme and the intention of the Legislature.

Section 2-10(1) of The Legislation Act,SS 2019, c L-10.2, mandates that, in interpreting legislation, the words of

an Act are to be “read in their entire context, and in theirgrammatical and ordinary sense, harmoniously with the scheme of the Act, the object of the Act and the intention of the Legislature”. [19] Mr. Charles does not challenge SGI’s ability to utilize s. 11.1 to deduct the type of charges he owes to it from the death benefit.That is not in issue in this appeal. However, he asserts SGI cannot make such a deduction once two years has passed since the chargearose. He relies on s. 5 of The Limitations Act for this assertion. [20] In my view, a proper

interpretation of the two legislative schemes leads to the conclusion that SGI’s power to deduct fundsunder s. 11.1 of the AAIA is not limited by a limitation period under s. 5 of The Limitations Act. This does not mean SGI can commence acourt action to collect such charges after the expiration of the limitation period in s. 5 of The Limitations Act. It simply means that SGI canutilize the method provided by s. 11.1 of the AAIA to collect money owed to it. [21] The purpose of

section 11.1 of the AAIA is to provide SGI with an efficient and effective method by which to recover amountsowing to it by a debtor when it becomes liable to pay amounts out to that same debtor. I agree with the Chambers judge that theLegislature would not have provided SGI with this simple mechanism to collect amounts owed to it but then required SGI to commence aseparate action in court within two years of every charge it levies on every motorist in order to preserve this right.

Section 11.1 of theAAIA is drafted broadly, but clearly, and does not place a temporal limit on its use. The straight-forward text of s. 11.1, read in the contextof the entire Act, indicates that, in creating this collection method, the Legislature chose to not limit the time period over which it could beput to use. [22] Equally important, when reading s. 3 and s. 5 of The Limitations Act, with the aid of the interpretative principles set out above, Icannot arrive at an

interpretation of s. 5 that results in the two-year limitation period from that

section applying to SGI’s statutory rightunder s. 11.1 of the AAIA.

Section 3 of The Limitations Act states that the Act applies to “claims pursued in court proceedings” that areinitiated by statement of claim or originating notice.

Section 5 provides a two-year time limit for the commencement of proceedings withrespect to a claim. The term proceedings is not defined in The Limitations Act. In my view, the operation of these two sections confines theapplicability of s. 5 of The Limitations Act to proceedings that are commenced in court by statement of claim or originating notice. [23] In Hanson v Hanson, 2019 SKCA 102, 32 RFL (8th) 257 [Hanson], Barrington-Foote J.A. found that the Chambers judge haderred in applying the two-year limitation period from s. 5 of The Limitations Act to a claim for unpaid medical, dental and RESPcontributions.

He determined that because the claim was not brought by statement of claim or originating notice – it had been initiated bya notice of application filed in a divorce action, which was commenced by petition – it was not subject to the provisions of The LimitationsAct. Although Barrington-Foote J.A. noted that the interpretative approach he adopted, which focused on the form of the originatingdocument, “may seem unusual”, he stressed that “the language of s. 3 must be given meaning” (at para 47).

I observe that if a courtapplication seeking payment of money is not a proceeding within the meaning of s. 5, it is difficult to see how SGI exercising its statutoryright under s. 11.1, which is a process that does not even involve a court or an adjudication, could be a proceeding.

[24] This same interpretive approach to the meaning of court proceeding and proceedings under The Limitations Act was applied inFecyk v Bracken, 2017 SKQB 85. There, Currie J. determined that a claim made by a tenant under The Residential Tenancies Act, 2006,SS 2006, c R-22.0001, was not subject to the two-year limitation period set out in s. 5 of The Limitations Act because the claim was notbrought by statement of claim or originating notice. [25] The definition of proceeding in the equivalent Ontario legislation was considered in Giglio v Peters, 2009 ONCA 681, 99 OR(3d) 129 [Giglio].

After litigation between two business partners was settled, one of the partners brought a motion seeking an order thatthe other partner’s lawyer personally pay costs of the litigation. The moving partner had uncovered the basis for the motion in 2002, at thelatest, but did not bring his motion until 2008. The lawyer against whom costs were sought responded with a motion to strike the claim onthe basis that the motion for the order was barred by the two-year limitation period found in s. 4 of the Ontario Limitations Act, 2002, SO2002, c 24, Sch B [OLA].

The Ontario Court of Appeal held the motion did not fall within the definition of proceeding and it was thereforenot statute barred. As set out in the following passage, Laskin J.A. examined the contention that the meaning of proceeding should begiven an expansive

interpretation: [15] The resolution of this issue turns on whether Peters’ motion is a “proceeding ... in respect of a claim”. Thus, we must decide whetherPeters’ motion is a “proceeding” and if it is, whether it is in respect of a “claim”. For the reasons set out below, I have concluded thatPeters’ motion is not a “proceeding”. That conclusion is supported by recent case law from our court, and by the context and legislativepurpose of the statute. It is therefore not necessary to decide whether Peters’ motion is in respect of a “claim”. [16] The word “proceeding” is not defined in the Limitations Act, 2002.

Battiston submits that it should be given a very broad meaning,which would encompass Peters’ motion, in order to achieve the overriding purpose of the statute: to prevent stale claims from goingforward. Battiston notes that he was not a party to the litigation and ceased to have any role in it after 2002. Yet six years later, Petersseeks a costs order against him. [17] In support of his submission, Battiston relies on the definition of “proceeding” in Black’s Law Dictionary, and on cases in theSuperior Court such as Imoney Corp. v Quebecor Communications Inc., [2002] O.T.C. 486 (Ont. S.C.J.), aff’d [2002] O.S.

No. 4447(C.A.) defining “proceeding” in other contexts. Black’s Law Dictionary, 9th ed., defines “proceeding” as “an act or step that is part of alarger action”. On its face, this definition is broad enough to include a motion in an action. [18] In the Imoney case the defendant brought a motion under s. 106 of the Courts of Justice Act, R.S.O. 1990 c. C.43 to stay theplaintiff’s

summary judgment motion.

Section 106 gives the court discretion to “stay any proceeding”. Although she declined to grant thestay, Hoy J. held that she had jurisdiction to do so. Relying on the definition in Black’s Law Dictionary she held that a motion forsummary judgment is a “proceeding” under s. 106. [26] Moving on in his analysis, Laskin J.A. held that the meaning of proceeding should be determined according to the principles ofstatutory

interpretation and, following earlier Court of Appeal decisions regarding the transition provision within the OLA, with referenceto the definition provided by the Rules of Civil Procedure; he wrote as follows: [19] The meaning of “proceeding” in s. 4 of the Limitations Act, 2002 is a question of statutory

interpretation. As with any question ofstatutory

interpretation, context and legislative purpose are paramount considerations. In the well-known and often quoted words of thelate Professor John Willis, “words, like people, take their colour from their surroundings” (“Statute

Interpretation in a Nutshell” (1938), 16Can. Bar. Rev. 1 at 6). Neither a dictionary meaning of a word nor the meaning of that word in a different statutory context isdeterminative. [20] Here the word “proceeding” appears in a statute that, as Battiston points out, seeks to bar stale claims.

However, in the context of aprescriptive statute, the legislation seeks to bar the commencement of stale litigation, not steps within litigation that has been commencedwithin the statutory time period. [21] In the light of this context and the statute’s purpose, and in the absence of any definition of “proceeding” in the statute itself,successive panels of this court have turned to the definition of “proceeding” in the Rules of Civil Procedure. Both Feldman J.A. in Meadyv. Greyhound Canada Transportation Corp. (2008), 2008 ONCA 468 , 90 O.R. (3d) 774 (Ont. C.A.), and later Simmons J.A. inPlaczek v.

Green (2009), 2009 ONCA 83 , 245 O.A.C. 220 (Ont. C.A.), have held that the word “proceeding” in s. 4 of theLimitations Act, 2002 has the same meaning as “proceeding” in r. 1.03 of the Rules of Civil Procedure. [22] “Proceeding” under r. 1.03 refers to the commencement of litigation either by action or application; it does not refer to a motionwithin an action.

Thus, under r. 1.03(1): • “Proceeding” means an action or application; • “Action” means a proceeding that is not an application and includes a proceeding commenced by statement of claim, noticeof action, counterclaim, cross-claim, or third or subsequent party claim; and • “Application” means a proceeding commenced by notice of application. [23] Under these

definitions, a motion within an action is not a “proceeding”. Indeed, “motion” is defined in r. 1.03(1) to mean “a motionin a proceeding or an intended proceeding”. Peters’ motion under r. 57.07 is an unusual kind of motion because it is brought against a non-party. Yet our rules provide for just such a motion. But it remains a motion, and, moreover, a motion in the existing action between Petersand Giglio and other parties.

It is not a “proceeding” under s. 4 of the Limitations Act, 2002. [27] In Saskatchewan, s. 2 of The Queen’s Bench Act, 1998, SS 1998, c Q-1.01, defines an action but does not define proceedings.There is no definition of proceedings provided in The Queen’s Bench Rules, despite the frequent use of that term within those Rules.Although the language of s. 4 of the OLA is not identical to s. 5 of The Limitations Act, I find that the reasons in Giglio lend support to thedetermination that the term proceedings in The Limitations Act should not be given an expansive meaning.

This conclusion is reinforcedby the existence of s. 3 of The Limitations Act. In my view, proceedings should be interpreted narrowly to encompass only actions initiatedby a statement of claim or an originating notice.

Section 5 of The Limitations Act does not provide a blanket prohibition against the use of

all other lawful extra-judicial collection methods after the expiry of two years from the day a claim is discovered. [ 28 ] Finally, like the Chambers judge, I am not persuaded that the various references to The Limitations Act in s. 35.85 , s. 111 and s. 198 of the AAIA assist in the

interpretation of s. 11.1 of the AAIA . Those provisions mandate how particular dates for the purposes of a limitation period are to be determined in specific circumstances that are not relevant to the matter at hand. At best, they provide an indication that The Limitations Act applies to court proceedings brought in the context of the AAIA . SGI does not dispute that general proposition. [ 29 ] All of this leads me to the simple conclusion that SGI’s exercise of its powers under s. 11.1 of the AAIA is not a proceeding within the meaning of s. 5 of The Limitations Act .

Section 5 does not provide a limitation period applicable to s. 11.1 of the AAIA and does not prevent SGI from availing itself of its statutory rights under that

section after the passage of two years from the date the charges arose. VI. Conclusion [ 30 ] The appeal is dismissed. As did the Chambers judge, I find that the nature of the issues raised with regard to the

interpretation of the AAIA should result in neither party being required to pay costs. “Tholl J.A.” Tholl J.A. I concur. “Ottenbreit J.A.” Ottenbreit J.A. I concur. “Leurer J.A.” Leurer J.A.