• Awards for Loss of Income in Nova Scotia in the Wake of Bill 52
  • October 29, 2010 | Author: Chad Garnet Horton
  • Law Firm: Stewart McKelvey - Halifax Office
  • Before Nova Scotia’s insurance legislation was reformed in 2003 (the “2003 Reforms”), damage awards for personal injury claims arising in connection with motor vehicle accidents (“MVAs”) were assessed on the basis of full tort recovery.  Under this common law system, awards for past and future loss of income were calculated based on the plaintiff’s “gross” income.

    The 2003 Reforms introduced a “net” income approach to the calculation of awards for loss of income.  Under this new legislative regime, defendants would not be liable for loss of income, whether past or future, in excess of a plaintiff’s total income minus income tax, employment insurance, union dues and pension contributions.

    On July 1, 2010, Bill 52, An Act to Amend Chapter 231 of the Revised Statutes, 1989, the Insurance Act, came into effect.  The primary purpose for this amending legislation was to increase the limit for general damage recovery for “minor” injuries to $7,500 and to narrow the definition of what constitutes a “minor injury” [cf. J. Gregory Clooney’s paper “A Triumvirate of Guidelines”].  For the purpose of implementing these changes, a number of provisions previously introduced in the 2003 Reforms were repealed and substituted.

    Among the repealed provisions are (former) sections 113B (2) & (3).  These sections were implemented as part of the 2003 Reforms and provided for the calculation of past and future loss of income based on net amounts.  Bill 52 reintroduces the net method of calculation as part of the new section 113BA.

    Because the previous sections providing for the net income approach have been repealed, while the new sections reintroducing this method of calculation have only recently come into force, questions have arisen as to whether the method of calculating damages for loss of income should revert back to the gross income approach (in relation to bodily injury claims arising out of MVAs occurring prior to the effective date of Bill 52).

    According to Nova Scotia’s Interpretation Act, repealed statutes do not generally cease to exist:  section 23 specifically provides for the survival or continued application of repealed legislation to facts arising prior to the date of repeal.  The only way section 23 of the Interpretation Act may be overridden is if the repeal of (former) sections 113B (2) & (3) is either retroactive to the original date of enactment (November 1, 2003), or the replacement provisions are retrospective in their effect.

    As a principle of statutory interpretation, there is a presumption that legislation is not intended to be retroactive or retrospective.  Before proceeding, it may be useful to consider the (somewhat academic) distinction between retroactive and retrospective effects.  The Supreme Court of Canada has relied on the words of Professor Driedger in explaining this difference, in Épiciers Unis Métro-Richelieu Inc., division “Éconogros” v. Collin (2004):

    Professor Driedger gave a good explanation of this distinction between retroactive and retrospective effect:

    A retroactive statute is one that operates as of a time prior to its enactment.  A retrospective statute is one that operates for the future only.  It is prospective, but it imposes new results in respect of a past event.  A retroactive statute operates backwards.

    A retrospective statute operates forwards, but it looks backwards in that it attaches new consequences for the future to an event that took place before the statute was enacted.  A retroactive statute changes the law from what it was; a retrospective statute changes the law from what it otherwise would be with respect to a prior event.

    The presumption against retroactivity/retrospectivity may be rebutted, either through express statutory language or through necessary implication (where there is a sufficient indication of legislative intent contained within the statute as a whole).

    The portions of Bill 52 that specifically provide for retroactive application include the following:

    • section 2(2) provides that section 113B of the Insurance Act (containing the “old” definition for “minor injury”) will not apply to actions for damages arising from incidents occurring on or after April 28, 2010; and,

    • section 5 provides that the newly implemented section 113E (containing the narrower definition of “minor injury”) and any associated regulations will apply to any ac-cident claim with respect to an accident that occurs on or after April 28, 2010. 

    Both of these sections represent good examples of retroactivity pursuant to Driedger’s definition.

    Section 3 of Bill 52 implements a new section 113BA.  As stated above, section 113BA reintroduces the net income method of calculation into the Insurance Act.  What is interesting, for the purposes of this discussion, is the fact that subsection 113BA(1) operates “subject” to subsections 113B(6) and 113E(4).

    Because section 113B is effective between the dates of November 1, 2003 through to April 27, 2010, while section 113E is effective as of April 28, 2010 going forward, the necessary implication appears to be that the new section 113BA must have retrospective effect in relation to all MVAs occurring after the 2003 Reforms (which initially implemented subsection 113B(6)).  This interpretation is supported by the fact that subsection 113BA(2) provides that the net income method of calculation applies to “all actions” (falling within the purview of the legislation).

    Accordingly, we have concluded that the net income method of calculation shall remain in effect with respect to MVAs occurring between November 1, 2003 and February 27, 2010, although under the purview of section 113BA.

    The following is a summary of the governing regimes and the appropriate method of calculating loss of income under each regime:

    MVAs occurring prior to November 1, 2003 (full tort recovery)

    • Loss of income is based on gross income.

    MVAs occurring between November 1, 2003 and April 27, 2010 (2003 insurance reforms)

    • Loss of income is net of deductions for income tax, employment insurance, union dues and pension contributions.

    MVAs occurring on or after April 28, 2010 (post-Bill 52)

    • Loss of income continues to be net of deductions for income tax, employment insurance, union dues and pension contributions.