Summaries Sunday: OnPoint Legal Research

One Sunday each month OnPoint Legal Research provides Slaw with an extended summary of, and counsel’s commentary on, an important case from the British Columbia, Alberta, or Ontario court of appeal.

Colwill v. Workers’ Compensation Board, 2019 BCCA 453

AREAS OF LAW:   Workers’ Compensation Act; Reviewing Workers’ Compensation Board Policies; Minimum Compensation under s. 22(2) of the Act

~WCB Policies #37.21 and #39.30, which restrict when the minimum compensation payable under s. 22(2) of the Workers’ Compensation Act is payable, are reasonable and valid. ~

Overview

The petitioner had been injured at work in 2009. The Workers’ Compensation board (“WCB”) determined that this rendered him unemployable and entitled to permanent disability benefits under the Workers’ Compensation Act. Section 22(2) of that Act sets out a certain minimum compensation when a worker suffers permanent disability. However, the WCB determined that this minimum did not apply to the petitioner because of two WCB policies, both of which refer to s. 23 of the Act. Section 23(1) provides for a method of calculating a worker’s loss of earning capacity known as the “Loss of Function Method”; s. 23(3) provides an alternative method, the “Loss of Earnings Method”. Policy #37.21 provides that the s. 22(2) minimum only applies to workers found to be 100% disabled under s. 23(1) (the “Loss of Function Method”), and Policy #39.30 sets out that a worker is not entitled to the s. 22(2) minimum “simply because a worker is found to be totally unemployable under s. 23(3)” (the “Loss of Earnings Method”).

The petitioner’s earning capacity was determined to be 73.014% impaired under the Loss of Function Method, or 100% under the Loss of Earnings Method. As a result of these two policies, the WCB decided he was not entitled to the s. 22(2) minimum.

The Act itself provides for a method of challenging WCB policies. The worker must first appeal the WCB decision to the Worker’s Compensation Appeal Tribunal (“WCAT”). If the WCAT decides the policy is “so patently unreasonable that it is not capable of being supported by the Act and its regulations”, the policy is referred to the chair of the WCAT, who may then determine whether the policy should be applied or be referred to the WCAT’s board of directors for further review.

The petitioner in this case sought an appeal to the WCAT, who determined that the policies were not unreasonable, and so declined to refer the question to the chair. The petitioner sought judicial review on the basis that the policies are inconsistent with the Act.

The first issue was whether the policies were directly reviewable by the courts, which turned on whether the petitioner had exhausted the statutory review procedures. The judicial review judge found that he had: the WCAT decision that the policies were not unreasonable ended the administrative review process, and so the courts had jurisdiction to directly review the policies.

The key question was therefore whether the policies were consistent with the Act. The judicial review judge found they were not. In the judge’s reading, s. 22(2) applies to any compensation awarded under s. 22, but the policies prevent the s. 22(2) minimum from applying in some circumstances even where the worker is permanently and totally disabled. The impugned policies were therefore inconsistent with a “plain and literal” reading of s. 22 and the judicial review judge found them to be of no force and effect.

On Appeal

The WCB and WCAT appealed. The first issue was whether the judicial review judge had been correct that the policies were directly reviewable, or if the judicial review was limited to challenging the WCAT’s decision to not refer the policies to the chair for review. The Court of Appeal agreed with the judge below that the policies were directly reviewable. As a general proposition, a judicial review will usually be premature until any internal administrative remedies have been exhausted. The petitioner had done so; after the WCAT decision to not refer the policies to the chair there was nothing more he could do. Further, the bar to judicial review where internal administrative remedies have not been exhausted is discretionary – a judge may proceed with judicial review in appropriate circumstances. The judicial review judge here had explained her rationale for proceeding, which was entitled to deference. An earlier Court of Appeal case (Jozipovic v. British Columbia (Workers’ Compensation Board), 2012 BCCA 174) had concluded that WCAT policies were directly reviewable and there was no basis to distinguish that case.

On the substantive issue of whether the policies were unreasonable, however, the Court of Appeal disagreed with the judicial review judge. Reading the Act as a whole, the policies distinguished between “total” and “partial” disability. “Total disability” is used in the statute but is not defined. While the policies effectively define “totally disabled” restrictively, that did not meet the standard of them being “inconsistent with the objective of the enabling statute or the scope of the statutory mandate to the point, for example, of being ‘irrelevant’, ‘extraneous’ or ‘completely unrelated’”. The policies are one reasonable way of distinguishing between “total disability” and “partial disability”, and so the appeal was allowed.

Counsel Comment – Ben Parkin, Counsel for the Appellant

“This is an important decision because it settles the legal process for challenging WorkSafeBC board of directors’ (“BOD”) policy. The case also upholds the reasonableness of two particular policies relating to calculation of permanent disability pensions.

The BOD is empowered to set policy by s. 82(1) of the Workers’ Compensation Act, RSBC 1996, c 492 (the “Act”). WorkSafeBC decision makers, including front line adjudicators and the Review Division, are required to apply such policy pursuant to s. 99(2) of the Act. WCAT is required to apply BOD policy unless they find it patently unreasonable, pursuant to s. 251(1) of the Act.

A litigant wishing to challenge BOD policy must use the process set out in s. 251 of the Act which allows them to ask WCAT to find the policy patently unreasonable and refer it to the BOD for reconsideration. The patent unreasonableness standard remains in place as a result of the legislation, notwithstanding developments in the common law eliminating that as a standard of review. If WCAT finds the policy patently unreasonable and refers it to the BOD for reconsideration, the BOD undertakes consultation and makes a decision on the reasonableness of the policy.

It has been settled since 2011 that this internal remedy must be exhausted before the litigant can seek judicial review of the policy in court because it is important to have a complete evidentiary record, and the views of WCAT and in some cases the BOD, before the court analyzes the reasonableness of a policy.[1]

A question remained, however, as to whether the internal remedy was exhausted only when WCAT referred a policy to the BOD for reconsideration, or whether it was exhausted in cases where WCAT declined to do so.

A 2012 Court of Appeal decision found the s. 251 process was exhausted, and a policy was therefore amenable to judicial review, where it had not been referred by WCAT to the BOD in the particular case on appeal, but it had been referred to the BOD and upheld by them in a parallel proceeding.[2] This, in my view, left open the question of whether the remedy was exhausted in cases where the policy had not been reconsidered by the BOD.

A 2016 BC Supreme Court decision suggested that where WCAT declined to refer a policy to the BOD for reconsideration, the proper object of review was not the policy itself, but rather the WCAT decision declining to find it patently unreasonable.[3]

Based on the above cases, I argued in Colwill that the s. 251 process was not exhausted until WCAT referred a policy to the BOD and the BOD had an opportunity to consult with stakeholders and consider its reasonableness.

The Court of Appeal disagreed, finding the s. 251 process is exhausted either where WCAT declines to refer a policy to BOD for reconsideration, or where WCAT refers it for reconsideration and the BOD upholds it as reasonable. In either case, the Court held, the policy may then be judicially reviewed by the court.

Mr. Justice Groberman, writing for the Court, indicated that Mr. Colwill had exhausted the remedies available to him under the scheme when he asked WCAT not to apply the impugned policies. Justice Groberman found it would not be sensible to require Mr. Colwill to judicially review the WCAT decision because he would have to persuade a court that WCAT erred in failing to find the policies unreasonable. If a court reached that conclusion, there would be no purpose in further administrative proceedings, because the court would already have found the policies to be invalid.[4]

Reading the three Court of Appeal decisions Johnson, Jozipovic and Colwill together it is now clear that while a litigant challenging WorkSafeBC policy must undertake the s. 251 process at WCAT, once they do so they will be able to proceed to judicial review if the policy is upheld by WCAT or by the BOD.

The Court of Appeal went on to find the policies challenged by Mr. Colwill, which relate to the calculation of permanent disability awards, are not unreasonable (applying the common law test). Therefore the chambers judgment finding the policies unreasonable was overturned and the appeal was allowed.”

[1] Johnson v. British Columbia (Workers’ Compensation Board), 2011 BCCA 255.

[2] Jozipovic v. British Columbia (Workers’ Compensation Board), 2012 BCCA 174.

[3] Bodman v. Workers’ Compensation Appeal Tribunal, 2016 BCSC 2436.

[4] Colwill v. Workers’ Compensation Board, 2019 BCCA 453 at para 38.

Comments by Kevin Love, Counsel for the Respondent, David Colwell:

“Colwill clarifies to some extent the court’s jurisdiction to assess the lawfulness of regulation, binding policy, or other subordinate legislation through judicial review. Although the worker’s challenge to the Workers’ Compensation Board (“WCB”) policies at issue ultimately failed, the decision provides helpful authority for cutting through administrative law nonsense to obtain an actual decision on the merits of the underlying challenge.

The core of the case was a challenge to binding WCB policies that restrict who can receive the minimum monthly benefit for permanently and totally disabled workers under the Workers’ Compensation Act (the “WCA”). The worker challenged the lawfulness of these policies in his appeal to the Workers’ Compensation Appeal Tribunal (“WCAT”), but WCAT refused to initiate the convoluted, multi-staged internal policy review process set out in s. 251 of the WCA. The worker subsequently petitioned for judicial review seeking not only to quash WCAT’s decision, but also declarations that the impugned policies were of no force and effect.

This decision confirms that superior courts have a broad jurisdiction to review the exercise of a wide range of statutory powers, including the power to create subordinate legislation like regulation or binding policy. Although the Court disagreed that the impugned policies were unlawful, it confirmed that superior courts have the power to directly review the WCB’s policies and to make general declarations of invalidity with respect to any unlawful policy. A reviewing court is not confined to reviewing WCAT’s decision about WCB’s policies, nor is a reviewing court required to remit the policy issues back to WCAT for reconsideration.

This decision also suggests that the exhaustion of internal remedies doctrine is primarily concerned with ensuring that litigants at least raise their issues and avail themselves of adequate avenues for redress before turning to the courts, and is less concerned with ensuring that internal review processes are run all the way to completion. In the present case, the worker’s internal options ended when WCAT refused to refer the impugned policies to the next stage of the internal policy review process. There was no mechanism for the worker to appeal or unilaterally advance to the next stage. The worker had therefore exhausted his internal options and was free to directly challenge the impugned policies through judicial review. The Court rejected the suggestion that a party must complete the entire internal policy review process before asking the court to review the actual policy.

Finally, the Court confirmed that a review of WCB policy is carried out using general administrative law principles. Applying administrative law standards of review in a challenge to the lawfulness of subordinate legislation may seem odd for counsel more accustomed to framing these issues as one of vires. However, this decision builds on previous decisions from both the BCCA and the SCC holding that, where the statutory grant of authority is broad, the issue is not one of vires in the traditional sense but rather whether the subordinate legislation is a reasonable exercise of the delegated power.”