NOVA SCOTIA COURT OF APPEAL
Citation: Thermo Dynamics Ltd. v. Nova Scotia (Workers’ Compensation Appeals Tribunal), 2005 NSCA 150
Date: 20051123
Docket: CA 247203
Registry: Halifax
Between:
Thermo Dynamics Ltd.
Appellant
v.
Nova Scotia Workers’ Compensation Appeals Tribunal and
The Workers’ Compensation Board of Nova Scotia
Respondent
Judge(s): Roscoe, Saunders & Fichaud, JJ.A.
Appeal Heard: November 16, 2005, in Halifax, Nova Scotia
Held: Appeal allowed and matter remitted to the Board for a rehearing whereby the effective date of the appellant’s reclassification and the refund of any monies due on account of improper over-assessments may be determined, having due regard to the Board’s broad statutory discretion, as per reasons for judgment of Saunders, J.A.; Roscoe & Fichaud, JJ.A. concurring
Counsel: David S. Green & Martha Mann, for the appellant
Alexander C. W. MacIntosh, for the respondent, WCAT
Madeleine F. Hearns & Janet Curry, for the respondent WCB
Edward A. Gores, for the Attorney General of Nova Scotia, (Not appearing)
Reasons for judgment:
[1] Suspecting that it had lost considerable money over the years after being assigned a faulty classification, the appellant sought redress from the Board and the tribunal and a refund of whatever sums had been collected through improper over-assessments.
[2] This appeal involves a consideration of the exercise of discretion by a statutory body in order to correct an injustice. Leave has previously been granted on consent of the parties.
[3] For the reasons that follow I would allow the appeal and send the case back to the Board for a determination of how that discretion might properly be exercised in this case.
Background
[4] The appellant, Thermo Dynamics Ltd., (“TDL”) manufactures residential solar/electric hot water heating systems which produce hot water heat as an alternative to more traditional oil fired furnaces. The company was first registered with the Workers’ Compensation Board of Nova Scotia (“WCB” or the “Board”) in 1983. Its business activities have remained virtually unchanged since that time.
[5] Beginning in 1983 and for many years thereafter it is acknowledged that TDL had been mis-classified under the Board’s system of industrial classification. TDL’s president, Mr. Peter Allen, was unaware of the ongoing erroneous classification until his company received an experience rating statement from the Board for the year 1998 which purported to describe the appellant’s activities for prior years, and defined the group under which the company was coded. Receipt of this statement prompted Mr. Allen to press Board officials for an immediate classification review of TDL’s operations.
[6] Despite the fact that the appellant requested reclassification in 1998 and renewed those requests on an annual basis, the Board failed to act upon the appellant’s demands in a timely manner.
[7] A reclassification audit was finally conducted which resulted in an increase to the appellant’s assessment rate effective January 1, 2004. TDL appealed the classification officer’s decision to a hearing officer. The hearing officer rendered his decision on June 24, 2004, which confirmed the classification officer’s decision.
[8] TDL then appealed the hearing officer’s decision to the Workers’ Compensation Appeals Tribunal (“WCAT”) which rendered a decision on July 29, 2004. The WCAT determined that the appellant had not been properly classified under the appropriate rating code, with the result that the appellant’s rate was reduced. However, the Board’s classification officer determined that the new rate should become effective January 1, 2002.
[9] TDL challenged that conclusion, arguing that the Board’s own failure to conduct a reclassification audit - notwithstanding its president’s repeated demands from 1998 to 2003 to investigate his complaints - entitled the appellant to a refund of all over-assessments paid, retroactive to at least 1998.
[10] TDL appealed the classification officer’s decision to a hearing officer who confirmed the reclassification as being appropriately backdated to January 1, 2002, and no earlier.
[11] TDL then appealed the hearing officer’s ruling to WCAT. By a decision dated April 22, 2005, the tribunal confirmed the January 1, 2002 cut-off date.
[12] TDL then filed a notice of application for leave to appeal WCAT’s decision. By consent of the parties, leave to appeal to this court was ordered on August 8, 2005.
Issues
[13] I would restate the issues as framed by counsel in their submissions. More simply put, they are:
(i) what is the appropriate standard of review?
(ii) did WCAT err in its interpretation and application of s. 122(2) of its enabling statute in deciding that the year in which the correction was made was 2003?
(iii) did WCAT err in its interpretation and application of ss. 190 and 240 of its enabling statute, causing it to refuse to exercise a discretion in favour of the appellant?
Analysis
(i) Standard of Review
[14] Pursuant to s. 256(1) of the Workers’ Compensation Act, S.N.S. 1994-1995, c. 10 (“the Act”), an appeal from a decision of the WCAT lies with this court on any question as to the jurisdiction of the WCAT, or on any question of law, but not on a question of fact. While questions of law, as well as questions surrounding the WCAT’s own jurisdiction are matters which may be reviewed by this court, questions of fact remain within the sole purview of the Board, and on appeal, to the WCAT. See for example Meechan v. Nova Scotia (Workers’ Appeals Tribunal), [2001] N.S.J. No. 335 (C. A.); Jonsson v. Nova Scotia (Workers’ Compensation Board), [2000] N.S.J. No. 104; Workers’ Compensation Board (Nova Scotia) v. Johnstone et al (1999), 181 N.S.R. (2d) 247.
[15] The standard of review for administrative decisions has been thoroughly addressed by the Supreme Court of Canada. In Dr. Q v. College of Physicians and Surgeons of B.C., (2001) 196 N.S.R. (2d) 313, and Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, the Court affirmed the application of the “pragmatic and functional” approach, while encouraging both counsel and lower courts not to lose sight of its purpose, which is to provide a principled conceptual model in every case where dispositions by a statutorily empowered administrative decision-maker, are the subject of judicial review.
[16] A consistent and principled application of the pragmatic and functional approach will determine the appropriate standard of review to apply to each of the issues on appeal. The reviewing court is obliged to consider the cumulative effect of four contextual factors: the presence, absence or wording of a privative clause or statutory right of appeal; the comparative expertise of the tribunal and the court, bearing on the appealed issue; the purpose of the governing legislation; and the nature of the question: whether fact, law or a hybrid of both. From this matrix the court selects, for each issue, a standard of review of correctness, reasonableness or patent unreasonableness. See for example Dr. Q at ¶ 22 and ¶ 26 - 35; Ryan at ¶ 27; and Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, at ¶ 55 - 62.
[17] I will consider each of the four contextual factors in turn.
Privative Clause or Statutory Right of Appeal
[18] On this, the first of the four contextual factors, I have considered the WCAT’s enabling statute, in this case Part II of the Act. A statutory right of appeal is found in s. 256(1) which establishes a significant privative barrier in that it limits appeals to questions of law and jurisdiction. This suggests that whereas substantial deference will be paid to the tribunal’s factual findings, decisions concerning matters of law or jurisdiction will be accorded less deference.
Relative Expertise
[19] I next considered what effect the WCAT’s own expertise in the subject matter at the heart of this appeal, would have on the various “postures” of deference. As the Supreme Court of Canada recognized in Dr. Q, supra, at ¶ 28:
. . . legislatures will sometimes remit an issue to a decision-making body that has particular topical expertise or is adept in the determination of particular issues. Where this is so, courts will seek to respect this legislative choice when conducting judicial review. Yet expertise is a relative concept, not an absolute one. Greater deference will be called for only where the decision-making body is, in some way, more expert than the courts and the question under consideration is one that falls within the scope of this greater expertise. [McLachlin, C.J.’s emphasis]
Where, as here, the required investigation involves the coding and classification of businesses for assessment purposes, I would conclude that the tribunal brings a high level of sophistication and expertise to the task, and that its findings ought to be accorded a significant degree of deference.
Purpose of the Statute
[20] In Dr. Q, supra, the Court described a number of potential lines of inquiry which will assist in isolating the “purpose of the legislative scheme and the particular provision(s) in issue.” In cases where, as here, the legislation is intended to resolve and balance competing policy objectives or the interests of various constituencies, a greater degree of deference will often be due to the tribunal upon which the legislature has conferred jurisdiction. Accordingly, I have applied a heightened level of deference on account of this particular contextual factor.
Nature of the Question (Law, Fact or Mixed Law & Fact)
[21] Under this fourth and final contextual factor I have considered the nature of the question raised by this appeal. In this segment of the analysis one must characterize the question as either one of law, or of fact, or of mixed law and fact, and then determine the level of deference that the legislature intended be attached to the particular characterization. If the finding under review is one of pure fact, then this contextual factor will invite more deference towards the tribunal’s decision. Conversely an issue of pure law will trigger a more searching review. This is particularly so where the decision is one of general importance or of considerable precedential value. Finally, with respect to questions of mixed law and fact, this contextual factor will call for more deference if the question is fact-intensive, and less deference if it is law-intensive. See, for example, Dr. Q, supra, at ¶ 34.
[22] Upon applying the pragmatic and functional approach, my analysis of these four factors leads me to conclude the legislature intended that substantial deference would be accorded WCAT on issues of fact and on certain policy matters. However, the legislature has demonstrated an equally clear intent not to insulate from judicial review the WCAT’s decisions on legal issues, or matters concerning the reach of its jurisdiction. As already seen, s. 256(1) of the Act explicitly permits appeals to this court on questions of law as well as the WCAT’s own jurisdiction.
[23] The challenge mounted by the appellant in this case obliged the Board (and later the tribunal) to interpret and apply ss. 122(2), 190 and 240 of the Act when deciding first, the period of time for which an over-assessment ought to be calculated following the appellant’s reclassification, and second whether a discretion lay to extend the time period so as to avoid an injustice. I would classify the necessary statutory interpretation and resulting disposition that arose in this case as giving rise to a question of law.
[24] I recognize that not every question of law which the WCAT must decide will necessarily attract a correctness standard on appeal to this court. See for example, Ferneyhough v. Nova Scotia Workers’ Compensation Board (2000), 189 N.S.R. (2d) 76; Doward v. Workers’ Compensation Board (NS) (1997), 160 N.S.R. (2d) 22; MacDonald v. WCB (NS), [2000] N.S.J. No. 370, 2000 (C.A.); and Boyle Estate v. Nova Scotia (Workers’ Compensation Appeals Tribunal) (2004), 225 N.S.R. (2d) 69 where this court held at ¶ 11 that where entitlement to benefits is based on the interpretation of the Act and the principles drawn from the case law, the standard was one of correctness.
[25] The question of law in this case is whether the WCAT erred in interpreting and then applying s. 122(2) of the Act to the “correction” in the appellant’s reclassification, and then concluding that it was precluded from exercising any discretion to extend time limits in favour of the appellant either pursuant to s. 190 or s. 240(2) of the Act. To answer the question raised by the appellant’s challenge, general principles of statutory interpretation were engaged. The tribunal also considered the jurisprudence of this court in conducting its analysis. While so engaged the tribunal was not acting as an expert in a unique or specialized, sensitive area unfamiliar to this court. Rather, it was interpreting and applying the law and rules of construction to what is acknowledged to have been over-assessments charged to the appellant, and then deciding as a matter of law and policy that it could not exercise any statutory discretion to relieve the applicant and correct an injustice. As I have said, that particular task gave rise to a question of law. A standard of correctness should be applied where the inquiry calls for the interpretation of statutory language that stipulates the preconditions for the exercise of the Board’s discretion. I will therefore apply the standard of correctness in my consideration of whether the WCAT erred in its analysis and disposition.
(ii) did the WCAT err in its interpretation and application of s. 122(2) of its enabling statute in deciding that the year in which the correction was made was 2003?
[26] The appellant submits that the WCAT erred in its interpretation and application of s. 122(2) of the Act by deciding that the effective date of the reclassification for TDL was January 1, 2002.
[27] Section 122 of the Act states:
Adjustment of funds, reserves and accounts
122 (1) Where the Board exercises any power pursuant to Section 120, the Board may adjust the funds, reserves and accounts of any class or subclass of employer affected.
(2) Where the Board reclassifies an employer in order to correct a mistake of law or fact, a refund of any amount over-assessed or the collection of any amount under-assessed is limited to one year preceding the year in which the correction is made.
Subsection (2) does not apply
(3) The limitation on collection of an under-assessment in subsection (2) does not apply where, the mistake was due to a misrepresentation by or on behalf of the employer.
[28] In Boyle, supra, this court took the approach to statutory interpretation approved by Chief Justice McLachlin in R. v. Sharpe, [2001] 1 S.C.R. 45 wherein the Chief Justice declared:
33 . . . However, E. A. Driedger in Construction of Statutes (2nd ed. 1983) best captures the approach upon which I prefer to rely. He recognizes that statutory interpretation cannot be founded on the wording of the legislation alone. At p. 87, Driedger states: “Today there is only one principle or approach, namely, the words of 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 Parliament.”
(Additional authorities omitted)
[29] Here, TDL argues that the words “the year in which the correction is made” ought to be considered within the overall scheme of the statute, as opposed to simply giving the words their grammatical and ordinary sense. It would be useful at this point to consider exactly what the WCAT commissioner said when applying s. 122(2). He wrote:
This appeal turns upon the correct application of s. 122(2). Sub-section 122(2) is a portion of Part I of the Act under the heading, “ACCIDENT FUND AND ASSESSMENTS.” These provisions are central to workers’ compensation schemes. In order for the Board to implement the scheme of the Act, it is necessary for the Board to assure and maintain the existence of a stable accident fund through contributions from employers.
As was noted by Fichaud, J.A. in Boyle Estate v. Nova Scotia (Workers’ Compensation Board) (2004), 225 N.S.R. (2d) 69 (C.A.), at para. 36, the first step in an interpretation of a provision of the Act is an analysis of its plain and ordinary meaning. In this case, the statutory language in question is “the year in which the correction is made.”
‘Correction’ is defined in the Oxford Concise English Dictionary (10th revised ed., 2001), as “the action or process of correcting something.” In my view, the words ‘the year in which’ and ‘is made’ reinforce the notion that the action is taken in the present, not the past. Furthermore, it would not make sense to provide a time limitation if the Board was permitted to designate the year of the correction, other than the current year.
The Board did not investigate the appropriateness of the Firm’s classification until 2003. That was the year it conducted a field audit and received the recommendation to alter the existing classification. Until 2003, virtually no ‘action or process’ had been undertaken to consider the classification. It follows that the plain and ordinary meaning of s. 122(2) does not allow for a refund of over-assessments for any period prior to 2002.
[30] It is apparent that the appeal commissioner considered both the scheme of the Act as well as both the grammatical and ordinary meaning of the words, before determining that the phrase “the year in which the correction is made” speaks to the present tense, not the past. In my opinion the language of s. 122(2) is clear and is unambiguous. Any change to a classification rate as a result of a reclassification is limited to the year preceding the year in which the correction is made.
[31] As the correction here in reclassifying the appellant’s business was made in 2003, the Board and the WCAT were right in finding that the earliest date the over-payment could be back-dated is January 1, 2002. I would dismiss this first ground of appeal.
(iii) did the WCAT err in its interpretation and application of ss. 190 and 240 of its enabling statute, causing it to refuse to exercise a discretion in favour of the appellant?
[32] Whether the Board and the WCAT were correct in their interpretation and application of s. 122 does not, however, end the matter. TDL argues that the tribunal erred in refusing to recognize a discretion under s. 190 of the Act to allow for the retroactive reclassification to January 1, 1997. While this point was apparently not referred to the Board, it was certainly raised in argument before the tribunal, and counsel agreed that it was an issue which the WCAT ought to have addressed. The appellant says the WCAT’s approach to the question constitutes an error in law, obliging us to intervene.
[33] Section 190 of the Act states:
Extension of time limits
190 Subject to Section 83, the Board may, at any time, extend any time limit prescribed by this Part of the regulations where, in the opinion of the Board, an injustice would otherwise result.
[34] While she was not specifically referred to s. 190, the Hearing Officer for the Board, in her decision dated December 21, 2004, wrote:
In the case at hand, the Firm requests a backdating of its reclassification to SIC 3311 effective January 1997 - the year in which the Firm requested review and reclassification.
A review of the Firm’s assessment file demonstrates that on February 27, 1998, the Firm . . . spoke with the Board’s Manager of Assessment Services.
. . .
Given this, the Manager . . . requested the Firm . . . be contacted to arrange classification review of their operation. Unfortunately, this did not occur. It was not until the Firms (sic) August 29, 2003 written correspondence and request for reclassification to SIC 3321 that a thorough review of the Firm’s classification took place in September 2003. As a result of the review and the appeal process, the Firm has been reclassified under SIC 3311, effective January 1, 2002. The Firm disputes this date of classification. However, it should be understood, pursuant to Section 122(2) of the Act, the Board is limited in its discretion in determining the effective date of reclassification. In particular, this Section specially states that where the Board reclassifies an employer to correct a mistake of law or fact, a refund of any amount over assessed or collection of any amount under assessed is limited to one year preceding the year in which the correction is made. In the case at hand, it is acknowledged that the Firm initially inquired about its classification in 1998. However, the Firm was only reclassified in 2003 following its classification review in September 2003. As such, the Board is limited to refund any amount owed to the Firm to one year preceding the year in which the correction was made - in this case, to January 1, 2002. It should be understood that this Section of the Act is mandatory in nature and not discretionary, and as such, the effective date of the Firm reclassification and any amount owing thereof can only be backdated to January 1, 2002.
[Underlining mine]
[35] In upholding the Board’s decision on the merits and then specifically referencing s. 190, the WCAT commissioner in his decision dated April 22, 2005 said:
Turning to s. 190, it provides that the Board may extend time limits where, in the opinion of the Board, an injustice would otherwise result. In my opinion, it is not appropriate to apply s. 190 to the circumstances in this appeal. By definition, an over-assessment involves an inherent injustice. There would never be an instance of a correction pursuant to s. 122(2) where an injustice would not result if the over-assessment occurred earlier than one year prior to the correction. Hence, s. 190, a more general provision, would render the specific prohibition against refunding over-assessments for earlier periods a nullity or absurdity. The Legislature could not have intended such a result.
. . .
Even accepting, as I do, that the Firm requested reclassification in 1998 and the Board failed to act upon this request in a timely manner, I am unable to accept the Firm’s position. The express provisions of the Act preclude it. As discussed, s. 122(2) does not permit a refund of over-assessments prior to one year before the year of the correction. While there may be some question as to whether the reclassification was made in 2003 or 2004, it was not made prior to 2003. Accordingly the earliest point in time from which a refund could be calculated under the Act was January 1, 2002.
The over-assessments incurred by the Firm were indeed unfortunate. However, some hardship must be tolerated to meet one of the central requirements of the Legislative scheme, a stable accident fund. Moreover, the Firm may not have been entirely without recourse. An application to the courts for extraordinary relief may have been available.
For the reasons mentioned, the Firm’s appeal must be denied.
CONCLUSION:
The appeal is denied. Sub-section 122(2) of the Act precludes the Board from providing the Firm the relief it seeks. The Board may not refund amounts erroneously over-assessed prior to one year before the correction was made.
[Underlining mine]
[36] With respect, the WCAT erred in its interpretation and application of s. 190. WCAT’s mistake amounts to an error in law, requiring this court’s intervention. The tribunal found that it was limited to a strict application of s. 122(2) without recourse or reference to any statutory discretion pursuant to s. 190. This omission led to the tribunal’s erroneous conclusion that the Board was, in effect, precluded from even contemplating a calculation of the appellant’s over-assessment to a date earlier than January 1, 2002. The WCAT considered s. 190 but declined to approve its application in this or any other case after forming the opinion that any over-assessment would always involve an inherent injustice and that therefore the application of s. 190 (said to be “a more general provision”) would render the one year limitation set out in s. 122(2) “a nullity or absurdity” which the “Legislature could not have intended.”
[37] With respect, such a conclusion eviscerates the very broad discretion imparted to the Board by the Legislature. In clear, unambiguous language the Board is empowered - if it chooses to do so - to extend any time limit prescribed in Part 1 or the regulations, at any time, if in the opinion of the Board an injustice would otherwise result. The operation of s. 190 is only made subject to s. 83, which has no bearing on the circumstances of this case. Had the Legislature intended that the Board’s discretion ought to be curtailed such that it could never be applied in circumstances where s. 122 was engaged, it could easily have said so. It is important to observe that the comparable section of the former Act extended an equally broad discretion in the collection of assessments based on changes in classification rates. Section 98 of the former Act (Workers’ Compensation Act, R.S.N.S. 1989, c. 508) provides:
Final Adjustments Upon Reclassification
98 Upon any change being made under Section 96 or 97, the Board may make such adjustments and disposition of the funds, reserves and accounts of the classes affected as may be deemed just and expedient.
[38] I respectfully disagree with respondent’s counsel’s submission that TDL’s argument is fatally flawed because if s. 190 were to be interpreted and applied as the appellant suggests, there would be no need for ss. 122 (3) which reads:
Subsection (2) does not apply
(3) The limitation on collection of an under-assessment in subsection (2) does not apply where the mistake was due to a misrepresentation by or on behalf of the employer.
Subsection (3) has nothing to do with this case. Rather, it explicitly authorizes a relaxing of the time span limitation that would otherwise be invoked in cases that involve the collection of an under-assessment, occasioned by a mistake due to the employer’s misrepresentation. Clearly that scenario does not accommodate the appellant’s predicament in this case. And it works both ways. The broad discretion granted to the Board by virtue of s. 190 may also be exercised where reclassification would justify the collection of monies owing on account of under-assessments. In this there is some merit to Mr. Green’s observation that a proper application of s. 190 should keep collection officials “on their toes” when undertaking accurate and timely classifications.
[39] I find that the Nova Scotia Legislature clearly intended the Board to be able to exercise its discretion pursuant to s. 190, whenever called upon to consider the number of years over which refunds for over-assessments or collections for under-assessments might be calculated following a reclassification to correct a mistake of law or of fact, in circumstances where an injustice would otherwise result. Even if the preconditions of s. 122 and s. 190 are met, that does not mean that the statutory discretion will be triggered automatically. The operative words in s. 190 are “. . . the Board may . . .”. Thus, it is for the Board in this case to fully consider the entire history of the appellant’s dealings from the time it first registered with the Board in 1983, armed with the knowledge that when undertaking such a calculation it is fully entitled to exercise its broad statutory discretion by extending time limits where, in its opinion, an injustice would otherwise result.
[40] This Court is ill-equipped to make such determinations. Nor, does the factual record here enable us to exercise our own discretion and substitute it for the Board’s.
[41] The power under s. 190 is discretionary. The circumstances of each particular case need to be carefully examined to see whether an “injustice” has occurred warranting an extension of the time limits. It will be for the Board to begin, anew, a thorough review of the appellant’s file in order to decide whether it is a clear case where an “injustice” has occurred, which the Board if so advised, might then decide to correct, pursuant to s. 190. Specifically it will be for the Board to consider whether TDL’s request for a review in 1998, with yearly follow-ups, and the Board’s repeated failure to do anything about it until 2003, invites the application of s. 190, thus allowing for a retroactive refund to at least January 1, 1997.
[42] I would allow this second ground of appeal.
Disposition
[43] Leave was granted on consent of the parties. I would allow the appeal and remit the matter to the Board for a rehearing whereby the effective date of the appellant’s reclassification and the refund of any monies due on account of improper over-assessments may be determined, having due regard to the Board’s broad statutory discretion.
Saunders, J. A.
Concurred in:
Roscoe, J. A.
Fichaud, J. A.