The Court held that the Workers’ Compensation Board (“WCB”) was not entitled to withhold payment of a 1989 continuing award because of the worker’s 1991 receipt of settlement funds from his employer

Administrative law – Workers compensation – Benefits – Statutory provisions – Statutory interpretation – Damages – Settlement monies from other jurisdictions – Decisions of administrative tribunals – Workers Compensation Boards – Judicial review – Jurisdiction – Compliance with legislation – Standard of review – Correctness

Dipersio v. Nova Scotia (Workers’ Compensation Appeals Tribunal), [2004] N.S.J. No. 442, Nova Scotia Court of Appeal, November 19, 2004, Cromwell, Saunders and Fichaud JJ.A.

The Applicant on judicial review was a Nova Scotia resident who was injured in 1986 while working in the Gulf of Mexico. The Applicant sued his employer in a Texas Court in 1988 for damages under the U.S. Merchant Marine Act. The Applicant also claimed Workers’ Compensation benefits under the Nova Scotia Workers’ Compensation Act, R.S.N.S. 1989, c. 508. The Applicant was entitled to benefits under the legislation and was paid such until March 1995 when those benefits were suspended.

In 1991, the Applicant settled his Texas claim with his employer. In 1995, the WCB sued the Applicant in the Nova Scotia Supreme Court, claiming entitlement by subrogation to the proceeds of those settlement funds. In the same year, the WCB suspended the Applicant’s benefits pending the resolution of the WCB’s lawsuit.

In 1996, the former Workers’ Compensation Act was replaced by a new act, of the same name, which introduced a statutory power to withhold benefits in section 32, which was central to this case.

In 1998, the Nova Scotia Supreme Court issued a Consent Dismissal Order of the WCB’s 1995 lawsuit against the Applicant, on the basis that the parties had reached a settlement in the matter. In 1998, the Applicant began a chain of correspondence with the WCB requesting that his benefits be reinstated. WCB released its final written decision in 2002 stating that the Applicant’s monthly pension would be reinstated, but it would be credited against his settlement monies from the Texas lawsuit and that there would be no monthly benefits paid until the settlement monies were exhausted. The Applicant’s appeals to the Hearing Officer and the Workers’ Compensation Appeal Tribunal (“WCAT”) were both dismissed. The WCAT’s decision was the subject of this appeal.

The Court first considered the appropriate standard of review. The Court held that while not every issue of law invokes the correctness standard, an appeal which turns on the interpretation of the Workers’ Compensation legislation and application of principles from the judicial case law usually attracts Appellate review based on correctness. Correctness was held to be the appropriate standard of review in this case.

The Court considered whether the WCAT erred by ruling that the current Act entitled the WCB to withhold compensation. Section 32 of the current Act, provided that where a worker was entitled to compensation pursuant to the Act, and also had a right of action in a jurisdiction other than Nova Scotia in connection with the same loss of earnings or permanent impairment, the Board could request the worker to take an action in the other jurisdiction and assign the right to damages recoverable under that action to the Board.

The Court held that the WCAT’s Chairman failed to analyze the triggering words in section 32. Section 32 applies to a worker who “has a right of action” on or after February 1, 1996. The Applicant’s right of action ceased to exist in 1991 when he settled his Texas lawsuit against his employer. Section 32 does not apply to the right of action which generated the settlement funds received by the Applicant in 1991. The WCB had no right to “withhold payment of compensation” to the Applicant under section 32 of the Act.

A consideration of the statutory context confirmed that the legislature had not intended section 32 to cover a worker who had, but no longer has, a right of action. The Court also considered the transitional provisions of the new Act and held that they in no way supported the Appeal Tribunal’s conclusion that section 32 applied to the Applicant’s 1991 settlement with his employer.

Finally, the WCAT’s Chairman cited the “historic trade-off” whereby workers relinquished their cause of action against their employers, and, in return, gained compensation under the statutory scheme. The Court held that the historic trade-off does not amend the statute and that the statute governs.

The appeal was allowed and the matter remitted to the WCB for proper calculation and payment of the Applicant’s benefits, without withholding.

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