Case Name:
Authorson (Litigation administrator of) v. Canada
(Attorney General)
PROCEEDINGS UNDER the Class Proceedings Act, 1992
Between
Joseph Patrick Authorson, deceased, by his Litigation
Administrator, Peter Mountney and by his Litigation Guardian,
Lenore Majoros, plaintiff, and
The Attorney General of Canada, defendant
[2003] O.J. No. 1045
63 O.R. (3d) 707
[2003] O.T.C. 222
36 C.C.P.B. 1
104 C.R.R. (2d) 256
121 A.C.W.S. (3d) 844
Court File No. 99-GD-45963
Ontario Superior Court of Justice
Brockenshire J.
Heard: October 28-31, November 1 and 4-5, 2002.
Judgment: March 24, 2003.
(95 paras.)
Constitutional law -- Determination of validity of statutes or acts -- Government programs -- Veterans' pensions -- Entitlement -- Statutes -- Operation and effect -- Validity -- Effect of declaration of invalidity.
Application by the plaintiff estates of disabled veterans for summary judgment regarding their claim that the Crown had improperly taken money being administered for the disabled veterans when the veterans died. The money paid as pensions and allowances had been the Crown's money. The estates challenged the constitutionality of section 31 of the Pension Act and section 55 of the Veterans Treatment Regulations, which provided that veterans' pensions and allowances did not pass on to their estates where the pensions were held in trust by the Department of Veterans Affairs. The Pensions Act had been amended in 1986 after a change in policy.
HELD: Application allowed in part. The pith and substance of the impugned sections was a description of one aspect of a federal creation, pensions for veterans of federal military service. They did not intrude into provincial powers and were intra vires the authority of the federal Crown. The provisions were not contrary to the Canadian Bill of Rights by reason of discrimination. The provisions were a legislative attempt to recognize and preserve the dignity of disabled veterans and were not discriminatory under section 15 of the Canadian Charter of Rights and Freedoms. The Crown was not under an obligation to ensure that the funds passed to the legal heirs of each veteran on death. Section 55 of the Veterans Treatment Regulations was ultra vires and of no force or effect after the 1986 amendment to the Pension Act, as it was in direct conflict with that Act after the amendment. The amounts of treatment allowances being administered by the Department of Veterans Affairs on the dates of the deaths of veterans after that amendment were payable to the estates.
Statutes, Regulations and Rules Cited:
Canadian Bill of Rights, ss. 1, 1(a), 1(b), 2(e).
Canadian Charter of Rights and Freedoms, 1982. ss. 1, 15.
Class Proceedings Act, s. 34.
Constitution Act, 1867, ss. 91(7), 92(13).
Department of Soldiers Civil Re-Establishment Act, 1919, c. 29, s. 5(2)(d).
Department of the Environment Act.
Department of Veterans Affairs Act, R.S.C. 1944, c. 19.
Department of Veterans Affairs Act, R.S.C. 1985, c. V-1, ss. 5(1)(d), 5.1(4).
Financial Administration Act.
Limitation Act.
Pension Act, R.S.C. 1985, c. P-6, ss. 14, 24, 30, 30(1), 31, 31(2), 37, 37(2), 41, 41(1).
Pension Act, S.C. 1919, c. 43, s. 21(4), 21(6).
Railway Act.
Veterans Treatment Regulations, S.O.R. 78/1585, s. 55.
Counsel:
Raymond G. Colautti, David G. Greenaway and Peter Sengbusch, for the plaintiff.
Dale Yurka, William Knights, Peter Hajecek and Cynthia Koller, for the Attorney General.
REASONS FOR DECISIONS
ON MOTION FOR SUMMARY JUDGMENT RE ESTATES
BROCKENSHIRE J.:--
INTRODUCTORY MATTERS
1 This is a class action brought on behalf of disabled veterans (and their estates) whose pensions or allowances were being administered by the Department of Veterans Affairs (DVA). The claims made in the action are being dealt with separately under four distinct headings. The first is a claim for interest, alleging that while the money of a veteran was being administered, the DVA did not invest the money or credit the veteran with interest, while the government enjoyed the use of the funds. I granted a summary judgment finding the Crown liable on that head, the Court of Appeal has upheld that finding, and the decision is now under appeal to the Supreme Court of Canada. The second heading, the subject of these reasons, is a claim that the Crown improperly "took the money" being administered for a disabled veteran when that veteran died. Class counsel has now moved for a summary judgment on this second heading. The third and fourth headings, the assessment of damages under the first and second headings, will be the subjects of later decisions.
2 The particular issues before me on this motion are neatly summed up in the first paragraph of the Class factum in the following way:
"This motion concerns two statutory and regulatory provisions: s. 31 of the Pension Act and its historical antecedents and s. 55 of the Veterans Treatment Regulations (VTR's) and its antecedents. These provisions, whose validity is challenged on constitutional, quasi-constitutional, legislative, and fiduciary principals, purport to prevent administered pensions and treatment allowances held in trust on a veteran's death from passing to that veteran's estate. The plaintiff contends that these impugned provisions are inoperative, ultra vires or otherwise ineffective to allow the Crown to confiscate funds which should have been paid over to the estates. The plaintiff seeks a judgment for a full accounting of all funds so confiscated, and an order that these funds be disgorged."
3 The interest issue, previously dealt with, and the estates issue both involve the consideration of the exact legal nature of the pensions and allowances being administered. On the interest issue, the Court of Appeal, appreciating that the estates issues were still to be argued, put it this way:
"Suffice it to say that while the veteran is alive, he has at least a beneficial interest in the pension funds, which are being administered for his benefit." (paragraph 49, reasons of Austin and Goudge JJ.A. released March 13, 2002)
On this motion, the Crown argued that the beneficial interest of veterans in these pensions and allowances is subject to a number of other restrictions and limitations, in addition to the restriction on funds under administration by the Department of Veterans Affairs (DVA) passing to the veteran's estate on death, and submits that the correct characterization is that the veteran, while alive, enjoys a personal right, subject to the statute, in the monies.
4 In my view, it is fundamental to this case to appreciate that the money that was paid as pensions and allowances had been the money of the Crown, which had no obligation to make such payments, except such as it imposed on itself. Nobody argued before me, or pointed to any case law suggesting, a common law right of a veteran to make a claim against the Crown for a pension or an allowance, even if disabled in the service of his or her country. Indeed, the case law points in the opposite direction. See for instance Dunn v. The Queen (1896), 1 Q.B. 121 (C.A.) where Lord Esher M.R. said at page 122:
"... the law is as clear as it can be, and that it has been laid down over and over again as the rule on this subject that all engagements between those in the military service of the crown and the crown are voluntary only on the part of the crown and give no occasion for an action in respect of any alleged contract."
He said further at p. 123:
"It has been decided over and over again that, whatever means of redress an officer may have in respect of the supposed grievance, he cannot as between himself and the crown take proceedings in the courts of law in respect of anything which has happened between him and the crown in consequence of his being a soldier. The courts of law have nothing whatever to do with such a matter."
5 More recently, and in Canada, in the case of Thomas v. The King (1928), Ex. C.R. 26, Mr. Justice MacLean, president of the court, said at p. 28:
"The principle generally recognized by the courts in England, the decisions of which have been followed in Canada, is that any claim to a pension is not a claim arising out of contract between those in the military service and the crown."
He refers to the decision of Audette J. in Bacon v. The King (1921), Ex. C.R. 25, which referred at p. 28 to a "gratuity" to a military officer as depending entirely upon "the grace and benevolence of the crown", and said of the matter before him, at page 29, "the whole case has to be looked at as involving an act of bounty by the crown ...".
6 It therefore appears self evident to me that the Crown would prima facie be entitled to impose any restrictions or conditions upon its "grace and bounty" as it saw fit and proper. I find support for this conclusion in the following quote, from Hogg, Constitutional Law of Canada, 4th. Ed., pages 159-160:
"It seems to me that the better view of the law is that the federal Parliament may spend or lend its funds to any government or institution or individual it chooses, for any purpose it chooses; and that it may attach to any grant or loan any conditions it chooses, including conditions it could not directly legislate. There is a distinction, in my view, between compulsory regulation, which can obviously be accomplished only by legislation enacted within the limits of legislative power, and spending or lending or contracting, which either imposes no obligations on the recipient (as in the case of family allowances) or obligations which are voluntarily assumed by the recipient (as in the case of a conditional grant, a loan or a commercial contract). There is no compelling reason to confine spending or lending or contracting within the limits of legislative power, because in those functions the government is not purporting to exercise any peculiarly governmental authority over its subjects."
7 The background in this part of this case is very different from the position in the "interest" branch of the case, where there was no legislative provision, during the time in question, dealing with interest, and the issues were whether an obligation was imposed in equity, and whether legislation purporting to block court claims to enforce such in obligation could stand. Here there are specific legislated "lapsing" provisions, and the issues on this motion for judgment revolve around the particulars of the legislation and regulations relating to the pensions and allowances, attacks on the "lapsing" provisions imposed therein under the Constitution, the Bill of Rights and the Charter, an argument that the limiting regulations on allowances are ultra vires the enabling statute, and an argument that the Crown breached a fiduciary duty in not transferring funds it administered to outside administrators, to avoid the restriction on Crown administered pension and allowance funds passing to the estate.
THE LEGISLATIVE PROVISIONS
8 The wording of s. 31 of the Pension Act, R.S.C. 1985, c. P-6 is as follows:
"31.(1) Any pension or allowance held in trust by the Commission or the Department and due to a deceased pensioner at the time of his death does not form part of the estate of the deceased pensioner.
(2) The Commission may, in its discretion, direct the payment of a pension or an allowance referred to in subsection (1) either to the surviving spouse or child or children of the pensioner, or the surviving spouse and child or children, or may direct that it be paid in whole or in part to any person who has maintained, or been maintained by, the pensioner or toward the expenses of the pensioner's last sickness and burial.
(3) If no order for the payment of a pension or an allowance referred to in subsection (1) is made by the Commission, the pension or allowance shall not be paid."
9 The Veterans Treatment Regulations, S.O.R. 78/1585, s. 55 provides as follows:
55. Where on the death of a veteran or qualified person his account shows a credit resulting from an award made pursuant to these Regulations or any other Regulations respecting treatment of a veteran made prior to enactment of these Regulations, the amount of that credit shall not form part of his estate but may, where the Deputy Minister so orders, be paid in whole or in part
(a) to or on behalf of a dependant of that veteran or qualified person;
(b) to a person who maintained that veteran or qualified person or has been maintained by that veteran or qualified person; or
(c) towards the expenses of the last sickness and the funeral and burial of that veteran or qualified person, where such expenses have not been paid in full from public funds.
10 These are the two sections which were referred to in the plaintiff's factum, quoted in paragraph 2, supra. The legislative histories of both the Pension Act and the Treatment Regulations were laid out in complete detail in the materials filed. However briefly, from 1919 to 1933, the Pension Act provided, as in S.C. 1919, c. 43, in section 21(4) as follows:
"(4) The unpaid balance of pension due to a deceased pensioner shall not be deemed to form part of the assets of his estate. The Commission may, in its discretion, pay such balance to his widow or children or to any other person who has been maintained by him, or may apply it, or a portion of it, in payment of the expenses of his last sickness and burial. If no order for the payment of such balance is made by the Commission such balance shall be paid into the Consolidated Revenue Fund of Canada."
11 In 1933, the Pension Act was amended by S.C. 1932-33 c. 45 s. 9 to take out the reference to paying a balance into the Consolidated Revenue Fund in simply providing by subsection 6 as follows:
"If no order for the payment of such pension or balance of pension is made by the Commission, such pension, or balance of pension, shall not be paid."
12 In 1986, by S.C. 1986 c. 12 s. 6 section 31(2) of the Pension Act, supra was amended to permit payment to a pensioner's estate, as follows:
"The Commission may, in its discretion, direct the payment of any pension or allowance referred to in subsection (1) either to the pensioners estate or to the surviving spouse or children, or may direct that it be paid in whole or in part to any person who has maintained, or been maintained by, the pensioner or towards the expenses of the pensioners last sickness and burial."
13 No such change was made in the Veterans Treatment Regulations, which still contain the provision that a credit on death shall not form part of the veteran's estate.
14 The Crown referred to "other restrictions and limitations". Principal among them would be s. 30 of the Pension Act, R.S.C. 1985, c. P-6 which provides as follows:
"30.(1) No pension or allowance shall be assigned, charged, attached, anticipated, commuted or given as security, and the Commission may, in its discretion, refuse to recognize any power of attorney granted by a pensioner with reference to the payment of a pension or an allowance."
15 There are other provisions throughout the legislation. For instance s. 24 of the Pension Act, supra provides that when a pensioner is sentenced to imprisonment for a term of six months or more the payment of his pension shall be discontinued, with a discretion to the Commission to direct payment of the pension or part of it to someone the pensioner had been supporting, and with a proviso that on release from imprisonment, payment of the veteran's pension would be reconsidered.
16 Pensions are conditional on continuing disability, which is perhaps most concisely stated in s. 37 of the Act:
"37.(2) Permanent pensions for disability shall be awarded, or pensions for disability shall be continued permanently, whenever the disability is, or becomes, apparently permanent in extent, but if it subsequently appears that the disability has changed in extent, the pension shall be adjusted accordingly."
17 The jurisdiction and power of the Commission is set out in s. 14 of the Act as follows:
"14. Subject to this Act and any Regulations, the Commission has full and unrestricted power and authority and exclusive jurisdiction to deal with and adjudicate on all matters and questions relating to the award, increase, decrease, suspension or cancellation of any pension or other payment under this Act and to the recovery of any overpayment that may have been made, and effect shall be given by the Department and the Receiver General to the decisions of the Commission."
18 The power to "administer" was provided by statute. The wording changed from time to time, and there were differences between the wording under the Act and the Regulations but the provisions in s. 41 of the Pension Act, supra are typical:
"41.(1) Where it appears to the Commission that a pensioner is
(a) by reason of infirmity, illness or other cause, incapable of managing his own affairs, or
(b) not maintaining any person that he has a legal obligation to maintain,
the Commission may direct that the pension payable to the pensioner be administered for the benefit of the pensioner or any person that the pensioner has a legal obligation to maintain, or both, by the Commission, the Department or a person or agency selected by the Commission."
THE EVIDENCE
19 The supporting evidence for the Class motion was an affidavit by Peter Sengbusch, making reference to, and often exhibiting thereto, governmental documents, reports, memorandums, correspondence, and other governmental materials that he had either turned up in his own research or had obtained from productions made by the government. These materials make up four thick volumes, supplemented by six further volumes of similar materials filed on the first motion. The responding material of the Crown consisted of a lengthy affidavit by Professor Morton, reciting what he had learned as a historian, researching the early history of the veterans' pension system, and appending chapters of a book and of a learned article that he wrote on the subject, an affidavit of Professor Jeffrey Keshen, a historian, advising of the research he did into the programs introduced by the DVA during and after World War II and appending to it an article he wrote on the subject, and affidavits of John Harvey and Gerald B. Evans, both long time employees of the DVA and the Commission, detailing aspects of departmental and Commission practices and appending many more government documents thereto. Those materials made up another five thick volumes. There was no issue as to the credibility of the various deponents. The Crown brought a preliminary objection motion seeking to strike the affidavit of Mr. Sengbusch, but for oral reasons I allowed it in except for the second sentence in paragraph 17 and the last sentence in paragraph 19. In part VIII of my previous decision on interest in this case, I discussed the admissibility of the same type of evidence and concluded it would be admissible, for what it was worth, as either public records or constitutional facts. The reasoning there applies here. Here too, I do not take various statements quoted in materials as admissions binding the Crown, or as direct evidence of the supposed intent of the Legislature. However, the documentation gives an indication of the context in which legislation and regulations was drafted, and the DVA operated. This was not a situation in which there was conflicting evidence, in which a finding on the facts had to be made. Rather, the argument was over the interpretation of the impugned statutory provisions, in light of the background and context as provided by the evidence filed. As such, in my view, it was appropriate to deal with these issues on a summary judgment application.
20 The pensions and allowances being dealt with here were and are part of a vast network of benefits and support systems initially set up after the first World War and added to ever since, all directed to aiding and assisting veterans, their spouses and children, and their other dependants. I am satisfied, from reading the lengthy affidavit of Professor Desmond Morton, and the chapters of his book on the development of the pension system, filed by the Crown, as well as copies of House of Commons debates, Parliamentary Committee and Royal Commission proceedings and debates and extensive other materials filed by the Crown, that following World War 1, the Government of Canada was concerned to set up a system of aiding and assisting veterans in re-integrating into society if possible, and of taking care of the thousands of veterans who had been disabled, physically, mentally, or both, in the war, and their spouses, dependant children and other dependants, if any. Many of these were young single men who had no dependants.
21 In setting up its legislation for veterans, Canada looked to other jurisdictions, notably England and especially the United States, and paid heed to concerns expressed over scandalous excesses in the U.S.A., where at one point pensions and allowances made up one-fifth of the national expense, and anecdotes about young girls marrying elderly civil war veterans on their death beds to collect their pensions were well known. It appears from the records in the evidence, and the debates, that from the beginning the intent was that pensions and allowances help the veterans, and those that were dependant on, or who had helped them, and not other persons. There were early concerns over "fifth cousins" making claims. There were concerns over "red tape" and expense in probate applications. There were also concerns over creditors claiming in priority to spouses and dependants. Professor Morton in his affidavit notes the concerns over protecting the public purse, and the political and other difficulties of dealing with individual claims. The interposing of the Commission, with discretionary powers, was seen as the instrument to do all of this. It did not seem that federal money ending up in provincial coffers by way of escheat was an initial concern, although it did come up later, when consideration was given to the possible role of provincial public trustees in administering the pension monies of incompetent veterans. The Parliament and Government clearly, from the evidence, intended to, and felt it had, responded to and dealt with those concerns, in the legislation and regulations.
22 The idea of a transfer of money, subject to later divestment or conditions subsequent, now seems strange to us. However, grants of this kind have a very long history, particularly in land law. See for instance Anger and Honsberger, Law of Real Property, 2nd Edition 1985 Canada Law Book Inc. chapter 2 "Historical Background of Real Property" particularly section 209.1(d) "Qualified Freehold Estates". It has not escaped me that s. 37(2) of the Pension Act, (supra, para. 16), is worded to provide for "permanent" pensions, but subject to subsequent adjustment.
23 I conclude from the many volumes of materials provided that the "lapsing" provisions, were not introduced and maintained by some mere fluke or accident, but were there to give effect to a policy of the federal government. Given that background, the issues then are whether these "lapsing" provisions can be challenged on constitutional, quasi-constitutional, legislative and fiduciary principles.
FIRST ISSUE - ULTRA VIRES UNDER THE CONSTITUTION ACT, 1867
24 The Class argument was that s. 31 of the Pension Act and s. 55 of the Veterans Treatment Regulations deal with property of the veteran, and with civil rights, which would include the right of succession, both of which would fall under provincial, rather than federal jurisdiction per s. 92(13).
25 The Crown raised preliminary objections that firstly, the provision in the Pension Act to which the Class objects, has been repealed and so the issue would be moot, and secondly that the case law appears to indicate that constitutional challenges have to be brought by or on behalf of living persons who can show that they were "exceptionally prejudiced". There is certainly case law supporting both of these positions, but, I conclude it is better to directly address the issue.
26 On the substantive issue, the position of the Crown is that this legislation falls within s. 91(7) of the Constitution Act, 1867, which authorizes the federal government to make laws in relation to "militia, military and naval service and defence".
27 The Crown factum sets out in paragraph 57, starting at page 18 and carrying on through page 23, a partial list of the current legislation and regulations dealing with veterans and their dependants. It is obvious, as I have said before, that a vast network of legislation has been created. The two sections being challenged here constitute a small part of that network of legislation. The two sections provide for the divestment of property rights on death in pensions and allowances that emanated from the Crown in direct relation to military service, and that were being administered by the Crown for the benefit of a veteran of military service, with the estates affected being those of military veterans. Class counsel characterizes these sections as designed to interfere with the property rights of a veteran and his estate. My view, as above stated, is that these sections describe one of the limitations on the beneficial interest of a veteran in pension or allowance money that emanated from the Crown, namely that if being administered for the veteran at the time of his death, the funds on hand could not pass to his estate. As such, in my view, these sections do not intrude at all into provincial powers, and the pith and substance of them is a description of one of the aspects of a peculiarly federal creation, mainly pensions and allowances for veterans of federal military service. These pensions and allowances would be an integral part of the network of legislation designed to create a "social safety net" for veterans and their dependants. As such I find, pursuant to the authority of General Motors of Canada Ltd. v. City National Leasing Ltd., [1989] S.C.J. No. 28 (S.C.C.) that these provisions are intra vires the authority of the federal government.
SECOND ISSUE - BILL OF RIGHTS
28 Class counsel argues that s. 31 of the Pension Act and s. 55 of the Veterans Treatment Regulations, and their predecessors, contravene sections 1(a) and (b) and section 2(e) of the Canadian Bill of Rights.
29 In the previous motion for judgment in this case, I had found s. 5.1(4) of the Department of Veterans Affairs Act, which purported to bar claims for interest on monies under administration, was of no force and effect, because that section infringed the right to the enjoyment of property, the right not to be deprived of property except by due process of law, and the right of a fair hearing, all of which were guaranteed to the veterans by the above sections of the Bill of Rights. In that application, I had found that the veterans had a beneficial interest in the pensions and allowances being credited to them and being administered for them by the government, and that the government had voluntarily assumed a fiduciary relationship with the veterans in undertaking those administrations. There was no legislative provision that I found could be effective in those circumstances, to interfere with the normal fiduciary obligation to invest and credit interest on funds under administration.
30 I had, in that previous decision, reviewed a number of cases and authorities, and had, at paragraph 97 of the decision, summarized the principles I had found as follows:
1. The Bill of Rights is still in full force, but because it relates only to Federal Legislation, and only empowers a court to declare a statutory provision to be inoperative in a particular factual situation, it has had a limited effect.
2. The Bill of Rights can protect rights that existed (or were declared by it to exist) when it was passed, but it does not create new rights.
3. Impugned legislation will be looked at in a general way to see if it was in pursuit of a valid federal legislative objective, and if so found, the courts will then look to see if the alleged discrimination or other breech is necessarily incidental to such objective, and if so found, may decline to declare the legislation inoperative. However, inequality before the courts will be looked at more stringently.
4. The right to a fair hearing in accordance with the principles of fundamental justice is a free standing right, not qualified by the due process concept.
31 Class counsel proposes to apply those principles to the sections impugned here, saying that the "lapsing" provisions amount to confiscation of property, that they discriminate against mentally and physically disabled veterans, and deprive those veterans of important property rights without the benefit of a fair hearing.
32 It must be remembered that the Bill of Rights came into force on August 10, 1960.
33 I will deal firstly with the issue of discrimination under the Bill of Rights.
34 The Bill of Rights s. 1 provides as follows:
"It is hereby recognized and declared that in Canada there have existed and shall continue to exist without discrimination by reason of race, national origin, colour, religion or sex the following human rights and fundamental freedoms namely:
(a) the right of the individual to life, liberty, security of the person and enjoyment of property and the right not to be deprived thereof except by due process of law;
(b) the right of the individual to equality before the law and the protection of the law; ...".
35 The concept of "equality before the law" was interpreted in Attorney General of Canada v. Lavell, [1974] S.C.R. 1349 which defined the concept as follows:
"... "equality before the law" as recognized by Dicey as a segment of the rule of law, carries the meaning of equal subjection of all classes to the ordinary law of the land as administered by the ordinary courts and in my opinion the phrase "equally before the law" as employed in s. 1(b) of the Bill of Rights is to be treated as meaning equality in the administration or application of the law by the law enforcement authorities and the ordinary courts of the land."
36 In the Queen v. Beauregard, [1986] 2 S.C.R. 56 Dixon C.J. speaking for the court, in a case which factually has some parallels with this, because it spoke of pensions and restrictions relating to them (although those were the pensions of federally appointed judges) had this to say on "equality before the law" at p. 90, after reviewing all of the Supreme Court decisions to that date on that issue:
"... a majority of the court was consistently prepared to look in a general way to whether the legislation was in pursuit of a valid federal legislative objective. This approach was followed in cases involving legislative distinctions on the basis of race, sex and age, and in cases involving profoundly important interests of the person asserting the equality right."
37 He concluded on p. 91, after briefly reviewing the pension provisions for the judges as follows:
"Once it is accepted that the general substance of the law is consistent with the valid federal objective of providing for remuneration of s. 96 judges and that it is not discriminatory of Parliament to draw some line between present encumbrants and future appointees, I do not think the jurisprudence I have summarized above allows the courts to be overly critical in reviewing the precise line drawn by parliament in Canadian Bill of Rights cases."
38 This case of course has nothing whatever to do with the administration or application of the law by law enforcement authorities. It has to do with what I have concluded were limitations on property rights imposed by the government on property, namely pensions and allowances, that it was giving to veterans. The government clearly drew a line by making its act of "grace and bounty" subject to a "lapsing" provision. However, the government also provided broad exceptions to that provision by providing, as the Pension Act provided, that the Commission might pay the balance to the veterans' widow or children or any other person who had been maintained by him or apply it in payment of the expenses of his last sickness and burial, free from the claims of creditors or probate fees or expenses. This, in my view, is in complete accord with the oft repeated policy that these pensions and allowances were primarily to assist a veteran in covering his living expenses and obligations, including obligations to his spouse and children, if any. The undisputed evidence would tend to show that veterans whose pensions and allowances were being administered by the DVA, and who died with substantial amounts on hand, were primarily hospitalized veterans without spouses, children, or others who were prepared to come forward and seek and accept the responsibility of caring for the veteran and/or his affairs. The "lapsing" provision would, in those circumstances, appear to be perfectly in line with the policy and purpose of the government.
39 Applying the reasoning in Beauregard, I cannot say that the "lapsing" provision was contrary to the Canadian Bill of Rights, by reason of discrimination.
40 In my view, the difficulty with the argument that the "lapsing" provisions act to confiscate property, and do so without a fair hearing, is that the Bill of Rights does not create new rights. I have found, supra, that the property rights of a veteran in a pension or allowance - that is the continuing flow of funds - and in the accumulated unspent balance on death, are subject to limitations, and that the limitation contained in the "lapsing" provisions were in place in the authorizing statutes before the "act of bounty" of the government in granting any of the pensions and allowances in issue here. Therefore, on the death of a veteran whose pension or allowance was being administered by the government, the government did not "take" the accumulated balance. Simply, it was an incident of the property right granted that if, on the death of the veteran, there was accumulated pension or allowance funds on hand in a government administration, those funds did not pass by operation of law to anyone else and if the Commission did not make a specific order for disposal to spouses, dependants, etc., the funds would simply remain in the hands of the government. That specific limitation on the property rights of the veterans continues to this day, although in 1986 the powers of the Commission to make a disposition at least in relation to pensions was widened to include the estate of the veteran.
41 Because this limitation was pre-ordained in the statutory definition of the property interest, and because there was no "taking" there obviously was and is no need for a hearing.
42 I therefore conclude that the Bill of Rights has no application in connection with the alleged property rights of the veterans in the present application.
THIRD ISSUE - THE CHARTER
43 Class counsel allege that the "lapsing" provisions breach s. 15 of the Charter as they are discriminatory.
44 The Canadian Charter of Rights and Freedoms provides as follows:
"15.(1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and in particular without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.
(2) Subsection (1) does not preclude any law, program or activity that has as its object the amelioration of conditions of disadvantaged individuals or groups including those that are disadvantaged because of race, national or ethnic origin, colour, religion, sex, age or mental or physical ability.
45 Although the rest of the Charter was proclaimed in force and affect on April 17, 1982, s. 15 did not become effective until April 17, 1985.
46 Section 41(1) of the Pension Act, supra authorized the Commission to direct the administration of a veteran's affairs when it appeared that by reason of "infirmity, illness, or other cause" the veteran was incapable of managing his own affairs. The admitted principal reason for creating administrations was mental or physical disability, two of the enumerated grounds under s. 15. Class counsel argues that the "lapsing" provision, applicable only to pensions or allowances under administration by the DVA, is discriminatory in that it singles out those veterans for differential treatment - the disadvantage of deprivation of their property on death. Further, Class counsel say this is a violation of essential human dignity as these veterans are singled out as being somehow less deserving of concern, respect and consideration, and less capable or less worthy of recognition or value.
47 It is clear that those veterans whose pensions and allowances were subject to the "lapsing" provisions were treated differently than others. However, in Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143, McIntyre J. said at p. 168:
"It is not every distinction or differentiation in treatment at law which will transgress the equality guarantees of s. 15 of the Charter. It is, of course, obvious that legislatures may - and to govern effectively - must treat different individuals and groups in different ways. Indeed, such distinctions are one of the main preoccupations legislatures. The classifying of individuals in groups, the making of different provisions respecting such groups, the application of different rules, regulations, requirements and qualifications to different persons is necessary for the governance of modern society. As noted above, for the accommodation of differences, which is the essence of true equality, it will frequently be necessary to make distinctions."
48 In Law v. Canada, [1999] 1 S.C.R. 497, Iacobucci J. for the Court said at p. 545:
"... in cases where it is clear that a law draws a formal distinction upon enumerated or established analogous grounds, the issue in the case will largely be limited to that of whether the law discriminates in a sense which interferes with the claimant's dignity".
49 At p. 530 he discussed at length the question of human dignity and said in relation to the Charter:
"Human dignity within the meaning of the equality guarantee does not relate to the status or position of an individual in society per se, but rather concerns the manner in which a person legitimately feels when confronted with a particular law. Does the law treat him or her unfairly, taking into account all of the circumstances regarding the individuals affected and excluded by the law?"
50 Under the famous Guidelines laid down by Iacobucci J. starting at p. 547, it is I think clear that the "lapsing" provision does impose a differential treatment upon those affected, and the statutory provisions authorizing the administration make it clear that the differential treatment is based upon enumerated grounds. The issue then is under the third heading of "whether the law in question has a purpose or effect that is discriminatory within the meaning of the equality guarantee".
51 Iacobucci J. makes clear, starting at p. 550 that, context is very important in analyzing impugned legislation, and observes at 551 that,
"... it will generally be more difficult to establish discrimination to the extent that the law takes into account the claimant's actual situation in a manner that respects his or her value as a human being or member of Canadian society ...".
52 The context here is that of a broad Government program designed primarily to rehabilitate veterans and assist them in taking their place back in society. Part of the program was relatively modest pensions and allowances, which were intended primarily for the support of the veteran, and secondarily for the support of his spouse, children and dependents, if any. The pensions and allowances were subject to review and reduction or cancellation in the event there were changes in circumstances, with any funds thus saved intended to go back into the general program. Within this general context there was a recognition that there were some veterans who would be unable to manage their pensions and allowances and a provision was made for the Commission to appoint members of the veteran's family, or friends to take care of this task for the veteran. Failing any such person coming forward or being available, the Commission could appoint the DVA to carry out such task. Even then, the legislation provided protection for dependents and did it through the "lapsing" provision, which effectively barred the claims of creditors, the costs of a probate, and possible claims of distant relatives or others that might otherwise have claims under a will or at common law (the example was given of an animal shelter in the Crown Factum), and then through giving the Commission power to transfer funds on hand to dependents etc. All of this applied only to pensions and allowances, which of course were originally granted for the limited purposes above outlined.
53 In the case of the accumulating accounts, it was of course within the power of the Crown to stop the pensions and allowances at any time, and the evidence discloses there was a discussion of that option, but the conclusion was that it would be unfair to treat those veterans differently from others, and if the veteran did recover, the accumulation in his account would provide a nest egg to assist his re-entry into society. In the result then, the veteran continued to draw the pension or allowance during his lifetime whether he needed it or not. This surely in Charter terms must be seen as preserving rather than denying the dignity of the veteran while living. True, the veteran could no longer freely dispose of those funds on death, but the circumstances of the finding of incompetency, and its continuance, would appear to preclude his power to make testamentary dispositions in any event.
54 Looked at in context, it appears that the "lapsing" provision, together with the administration provision can be regarded, as a legislative attempt to recognize and preserve the dignity of the disabled veteran who was without anyone able or prepared to take care of his affairs, and to see to a just and proper distribution of any accumulated proceeds of pensions and allowances, in accordance with the intended purposes of such pensions and allowances. Class counsel has not made out a persuasive case otherwise.
55 My conclusion is that the "lapsing" provisions are not discriminatory within the meaning of s. 15 of the Charter.
THE CHARTER S. 1
56 In the event that I should be found to be in error in my conclusion under s. 15 of the Charter, I have continued on to consider the question from the point of view of s. 1, which provides as follows:
1. "The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society."
57 Here the subject matter of the complaint - the "lapsing" provisions - are set out and prescribed by the legislation and regulations, so the question is whether they create a reasonable limit that can be demonstrably justified in a free and democratic society. The tests used to determine the issue were laid out in R. v. Oakes, [1986] 1 S.C.R. 103 by Dickson C.J., commencing at p. 138, and summarized in the head note starting at p. 105 as follows:
"First the objective to be served by the measures limiting a Charter right must be sufficiently important to warrant overriding a constitutionally protected right or freedom. ... At a minimum an objective must relate to societal concerns which are pressing and substantial in a free and democratic society before it can be characterized as sufficiently important. Second, the party invoking s. 1 must show the means to be reasonable and demonstrably justified. This involves a form of proportionality test involving three important components. To begin, the measures must be fair and not arbitrary, carefully designed to achieve the objective in question and rationally connected it to that objective. In addition, the means should impair the right in question as little as possible. Lastly there must a proportionality between the effects of the limiting measure and the objective - the more severe the deleterious effects of a measure, the more important the objective must be."
58 The undisputed evidence before me on this application was that the "lapsing" provisions were a very small part of a very large network of legislation, all designed to provide what some called the "Veterans Charter". The general thrust of the scheme was to reintegrate the veterans into society but it was recognized that sadly, there were some veterans who had been so badly injured physically or mentally that their reintegration was unlikely, and continuing care including for some, the management of their entitlements would be necessary. At the same time the evidence shows that Canada looked to the experience of other countries, and was particularly concerned over the experiences in the United States where both the totality of the claims and the particulars of some claims were looked on as scandalous. The Government therefore developed a policy of regarding pensions and allowances as being intended for the benefit and assistance of veterans and their families and dependents to the exclusion of others. Those concerns were perceived as fair to the veterans, and as very important to society, after the first World War when the legislation was being formulated.
59 Given the importance of the concerns, and the resulting policy, the response, through the "lapsing" provision built into the grants of pensions and allowances was surprisingly limited. The prohibition on assigning or pledging pensions, by way of comparison, applied to all veterans receiving them. The "lapsing" provision applied only to the balances of pensions and allowances held in an administered estate on the death of the veteran, and then only if the administrator of those funds was the DVA. Excluded from its effect were the funds of veterans who managed their own funds, or if unable, where a spouse, relative or friend had come forward to take care of the veteran's affairs, or where the Commission had chosen to appoint an outside administrator. The "lapsing" provision had no effect unless the veteran died while his pension and/or allowance was under DVA administration, where the expressed thought had been that if he recovered he would have a nest egg with which to start his rehabilitation.
60 The evidence shows that the "lapsing" provision, coupled with the power in the Commission to pay out after death to a limited group, had been carefully designed and was rationally connected to the general objectives, namely to make sure that funds on hand went to dependants or to pay the costs of the last illness and burial, and did not go outside of the group of relatives and others for which the benefit was initially designed, so as to include creditors, distant and unconnected relatives, and Provincial Governments.
61 I find that the "lapsing" provisions meet the criteria of the Oakes test, particularly as explained in later Supreme Court of Canada cases. See for example the following: Irwin Toy v. Quebec, [1989] 1 S.C.R. 927; McKinney v. University of Guelph, [1990] 3 S.C.R. 229; R. v. Butler, [1992] 1 S.C.R. 452; R. v. Keegstra, [1990] 3 S.C.R. 697; Vriend v. Alberta, [1998] 1 S.C.R. 493.
BREACH OF FIDUCIARY DUTIES
62 Class counsel, on the basis of the determination previously made that the Crown stood in a fiduciary position with respect to the veterans whose funds were under administration, now argues that one of the fiduciary obligations of the Crown was "to take all reasonably prudent and necessary steps to ensure that these funds were not confiscated by the Crown, but were passed on to the veterans legal heirs." (paragraph 132 Class counsel's factum)
63 Class counsel expands on that, citing Guerin v. The Queen, [1984] 2 S.C.R. 335. From the judgment of Dickson J. Class counsel distills the principles that where one party has an obligation to act for the benefit of another, and that obligation carries with it a discretionary power, the party thus empowered becomes a fiduciary, and equity will supervise the relationship by holding that person to a fiduciary's strict standard of conduct, which duty includes the utmost loyalty to the principal of the fiduciary.
64 Class counsel argues that the obligation of the Crown is to hold the pensions and allowances so that the benefit of that property would accrue to the beneficiary, not the trustee, and the failure of the Crown to ensure that the funds passed to the veterans legal heirs, as well as the Crown co-mingling the funds with those of others and using the funds for its own benefit are all breaches of trust.
65 It appears that although the funds all went into the same account, the funds of each veteran can be traced in the DVA records which answers the co-mingling issue. A judgment has already been given finding the Crown liable for breach of its obligation to invest and pay interest during the lifetime of each affected veteran. The remaining issue is whether the Crown was under an obligation to ensure that the funds passed to the legal heirs of each veteran on death.
66 I return to the nature of the property that came into the trust for administration. I have earlier found that the pensions and allowances were paid by virtue of the "grace and bounty" of the Crown, not because of legal obligation, and so the Crown was free to impose whatever limitations and conditions on the pensions and allowances that it felt were fit and proper. A trustee receives in property, and is under a duty to administer it. However, the trustee is not in a position to change the fundamental nature of the property received in for administration.
67 In the factual situation in this motion, the trustee was the DVA - represented in the case of each veteran, by a DVA officer. The "lapsing" provisions were part of the legislative provisions that created the pensions and allowances. Any obligation of the DVA in its position as trustee would be tempered by its obligation to comply with the statutes and regulations duly passed by parliament, not only because of the subservient position of the DVA in the governmental scheme of things, but because of the general rule of law in effect in Canada. See Tito v. Waddell (No. 2), [1977] 3 All E.R. 129 (Ch.D) at 239-240, where Megarry V-C says:
"What the statute enacts, the official must obey; and he must do this even if the statute makes provisions which produce results which are far from according with ordinary ideas of justice or equity."
68 This, in my view, is completely different from the situation regarding investing trust funds and paying interest. In that situation, there was legislation creating the trust, but the legislation was silent on investing the money. There, equitable and fiduciary principles stepped in and added a requirement that the legislation had not recognized but which I and the Court of Appeal found had to be met and satisfied. Here the legislation is explicit and the obligation of the trustee would be to administer the funds on behalf of the veteran while living, on the premise that the veteran might at any time recover, when the balance of the account would be turned over to him, and then on the death of a veteran to simply note the account as frozen, subject to the ruling, if any, of the Commission, which would be binding on the trustee.
69 True, the "lapsing" provision only applied when the DVA was the trustee. However, the latin maxim "delegatus non potest delegare" has been referred to as the traditional and fundamental rule for executors, administrators and trustees. Turner v. Corney (1841), 5 Beav. 515 at 517 is often cited for the quote:
"Trustees who take on themselves the management of property for the benefit of others have no right to shift their duty on other persons."
This rule has in recent times been softened by exceptions, but still, a trustee is not allowed to completely delegate his duties. In Wagner v. Van Cleeff (1991), 5 O.R. (3d) 477 (Div. Ct.), the head note puts it this way:
"Although an administrator may select agents to perform certain tasks when it is prudent in the ordinary course of business to delegate those duties, an administrator may not delegate all of his duties as this amounts to a complete abdication of his responsibility. Although it is not a breach of trust for an administrator to grant a general power of attorney, an administrator must continue to control the matters which should not be delegated. An administrator who puts the assets of an estate in the hands of an agent and takes no steps to ensure that the assets are properly dealt with has breached the duty to supervise."
I conclude that it would be legally impossible for the DVA to "appoint" another trustee to take its place.
70 Further, in my view, the DVA was in no position to resign because the DVA was perfectly able to administer the estate that it had received - that is an estate which included a "lapsing" provision. A purported resignation based on attempted avoidance of a statutory provision would be impossible for the DVA, as a creature of statute.
71 Further, the DVA had received its appointment not from the Crown but from the Commission, which was an independent administrative tribunal created by the Crown for, among other reasons, the purpose of isolating individual decisions relating to veterans from the Crown. The evidence presented indicated that the Commission would, in fact, appoint family members or friends to act as administrators if any came forward and were themselves capable of so acting, and that appointments of the DVA were made when no one connected with the veteran was able or willing to undertake the task. If the DVA was permitted to resign, who or what would take its place?
72 I conclude that the DVA, as trustee, was obliged to administer the property received, respecting its statutory limitation under the "lapse" provision, and was not able to delegate, or resile from that responsibility.
73 After the very critical comments in two Auditor-General's reports, and further departmental and inter-departmental considerations, policy and legislative changes were made by the Government, and the Commission started to actively seek out external administrators to be appointed, instead of the DVA, resulting in a very substantial reduction in the administered accounts subject to the "lapsing" clause. Also, in 1986, while retaining the "lapsing" clauses, Parliament added to the clause in the Pension Act, authority for the Commission to direct payment out, after death, of accumulated pensions to the estate of the veteran. These were not changes that the Government was obliged to make, in law or in equity - they were changes it chose to make, after re-considering the past administrative practices of the DVA and the Commission, and the changes in societal views, and perhaps in political realities since the "veterans charter" was originally formulated.
74 In response to the claims under this heading in the factum of Class counsel, the Crown responded in its factum with, among other things, a number of arguments based upon limitation periods. In view of my conclusion on the principle substantive issue under this heading, I have chosen not to discuss the limitation issues, appreciating that those issues may well be raised again in some other context in this case.
ULTRA VIRES
75 Class counsel argues that s. 55 of the Veterans Treatment Regulations, and its predecessor provisions, are ultra vires s. 5(1)(d) of the Department of Veterans' Affairs Act, and its antecedents, and are therefore void.
76 The original authority for passing regulations was contained in the Department of Soldiers Civil Re-Establishment Act, 1919, chapter 29. The relevant provision was s. 5(2)(d), authorizing regulations dealing with, among other things:
"(d) For the disposal of any monies payable by the Crown to the estates of deceased or insane officers, soldiers or other persons, or any properties or monies in the possession or control of the Department belying (sic) to such officers, soldiers or other persons or otherwise;"
77 The current provision in the Department of Veterans Affairs Act, chapter v-1, R.S.C. 1985 provides in s. 5(1)(d), after authorizing regulations for the receipt and retention of money and property, then continues on to authorize regulations:
"... for the disposal of such properties or monies to such persons or their dependants, or as may be deemed expedient or the disposal thereof to the estates of such persons if deceased;"
That wording is unchanged from that in the Department of Veterans Affairs Act, R.S.C. 1944, c. 19.
78 Class counsel argues that s. 55 of the Veterans Treatment Regulations, which provides, on the death of a veteran with a credit in his account with the DVA: "the amount of that credit shall not form part of the estate but may ..." and then continues to provide that the Deputy Minister can direct the funds be paid to a dependant, a person who maintained or had been maintained by the veteran, or towards the last expenses of the veteran, is in direct conflict with the authorizing statute, and so ultra vires.
79 The predecessors of that regulation, back to P.C. 2139 passed September 15, 1920, have all provided that allowances on hand on death of the veteran shall not be payable to his estate or shall not form part of his estate.
80 Class counsel simply argue that the regulation, on its face, exceeds the bounds of the enabling statute, and does so in a serious way by authorizing the "confiscation" of monies that were owned by or owing to a deceased veteran.
81 Crown counsel responds that Class counsel is not using the appropriate legal test. The appropriate test, says the Crown, is not, as Class counsel suggests, that the regulation must be clearly consistent with the statute, but rather that unless the regulation is clearly inconsistent with the statute, it should stand. The authority quoted for this is two Supreme Court of Canada decisions; Belanger v. Canada, and Friends of the Oldman River Society v. Canada.
82 In Belanger v. Canada (1916), 54 S.C.R. 265 the issue was an apparent conflict between a section of the Railway Act that required, where the railway crossed a highway, that the rails not be more than an inch above the highway level, and a maintenance order, given under the authority of regulations under the Railway Act, that directed the removal of the planking between the rails, that did the necessary leveling, during the winter time to facilitate snowplowing the railway line. Anglin J. at p. 280 said:
"But no regulation, although passed by the Governor in Council under s. 49, can be allowed to override the explicit requirements of s. 16 of the statute. If no construction can be placed upon regulation number 48 which will bring it into harmony with that section, it cannot be regarded as having been made within the authority conferred by s. 49, or if so made, it must be treated as subordinate to the precise and definite prohibition of s. 16. On the other hand it must if possible be given a construction which will not conflict with the statute:"
Anglin J. interpreted the regulation as permitting the removal of the planks only when the space created was actually filled with other material (snow and ice, or gravel).
83 In Friends of the Oldman River Society v. Canada, [1992] 1 S.C.R. 3 the issue was, in relation to the construction of a dam in Alberta, whether the Federal Minister of Transport, in authorizing the project, had to be concerned only with issues of navigation, or whether, as the plaintiffs contended, he should have ordered an environmental assessment, which under a regulation passed under the Department of the Environment Act, was required for any project for which the Government of Canada had a decision making responsibility. La Forest J., for the majority, at p. 38, after citing Belanger v. The King with approval, and other case law saying regulations cannot conflict with other acts of parliament, went on to say as follows:
"Ordinarily, then, an act of parliament must prevail over inconsistent or conflicting subordinate legislation. However, as a matter of construction a court will, where possible, prefer an interpretation that permits reconciliation of the two. "Inconsistency" in this context refers to a situation where two legislative enactments cannot stand together; ... there is a presumption that the legislature did not intend to make or empower the making of contradictory enactments. There is also some doctrinal similarity to the principle of paramountcy in constitutional division of powers cases where inconsistency has also been defined in terms of contradiction - i.e., "compliance with one law involves breach of the other";"
84 La Forest J. continued on to conclude that while the Minister was naturally concerned with navigation, that did not preclude his also being concerned over other things, such as the environment.
85 Section 5(1)(d) of the Department of Veterans Affairs Act is not mandatory. It is permissive. It authorizes the Minister to make regulations in a broad area dealing with the handling of money for veterans. It clearly authorizes the retention of such money. It authorizes the disposal of such money to a variety of alternatives - to the persons to whom the Crown originally made the monies payable, to the dependants of such persons, to the estates of such persons if deceased, or "as may be deemed expedient". The Minister was not required to pass regulations dealing with all of those alternatives. The Minister in s. 55 of the regulations fleshed out the authorization to make payment to dependants, and in my view also fleshed out the authority to make payments "as deemed expedient" by providing for payment to persons who had maintained or been maintained by the veteran or payment of final expenses. The provision that the funds on hand should not form part of the veterans' estate could be interpreted as simply continuing the unlimited authority for retention given in s. 5(1)(d). The result was a regulation, dealing with treatment allowances, that mirrored the provisions relating to pensions in s. 31 of the Pension Act, at least until 1986.
86 Use of the broad authority given by the word "expedient" to mirror the provisions in another statute seems to me to be proper and appropriate, both juridically and legislatively. "Expedient" is a word used in many ways, including connotations of impropriety or immorality - hardly proper for a legislative act - but the Oxford Dictionary includes the definition "suitable or appropriate" and Webster's Encyclopedic Dictionary uses the definition "fit or suitable for the purpose; proper under the circumstances". In the broad scheme of the "veterans charter" the pension was the primary financial support vehicle for veterans who had been physically or mentally incapacitated, in whole or in part. Treatment allowances were intended to provide supplementary support for a pensioned veteran when that veteran was taken out of the work force by the requirements of medical treatment. Because of this, it made perfectly good sense to have the provisions relating to treatment allowances on death of a veteran mirroring the provisions for dealing with pensions.
87 In view of the foregoing interpretation, I cannot find that up until 1986, s. 55 of the regulation exceeded the authorizing parameters in s. 5(1)(d) or was in conflict with the statutory provisions in the "veterans charter".
88 However, in 1986 s. 31 of the Pension Act was amended to authorize the Commission to make payment to the pensioner's estate. Mr. Sengbusch suggests in his affidavit that this legislative change was made as a result of an awareness of the large amounts being administered for some veterans, arising out of the Auditor General's reports in 1985 and 1986. Whatever the cause, there was clearly a change of policy, exemplified not only in the amendment to the legislation but in the setting up of a special task force after the amendment was made to search out heirs of deceased veterans and pay over to their estates pension funds being held in the consolidated revenue fund.
89 In my opinion, when the 1986 amendment of the Pension Act was passed, it no longer was "expedient", as the term was above-discussed, to continue to specifically deny the passing of accumulated treatment allowances on hand to the estate of a deceased veteran. This is especially so where the explicit authority to regulate, re deceased veterans, was to pay to their estates and the rationale to instead regulate otherwise, under the power implicit in the word "expedient" is the mirroring of other legislation.
90 It is true that the Pension Act is not the statute authorizing this regulation. However, as La Forest J. pointed out in the quote from Friends of the Oldman River Society, supra subordinate legislation cannot conflict with other acts of parliament. In my view, here, the relevant other acts of parliament would be the whole complex of legislation dealing with veterans, commonly referred to as the "veterans charter". After the change in policy and the 1986 amendment to the Pension Act, s. 55 of the regulation no longer mirrored s. 31 of the statute. The prohibition against a credit on hand forming part of the veteran's estate now is in direct conflict with the authority given to the Commission by the amended s. 31 to pay out pension funds on hand to the veteran's estate. Treatment allowances were intended to "top up" pensions. The change in policy in 1986, and the amendment of s. 31 of the statute, left s. 55 of the regulation in direct conflict with a relevant act of parliament. This should have been remedied by an amendment to the regulation. It was not. This is not a Charter issue, and, I have no authority to apply the Charter remedy of "reading in" the needed words.
91 I declare that from and after the coming into force and effect of the 1986 amendment to the Pension Act, above referred to, s. 55 of the Veterans Treatment Regulations was ultra vires and of no force and effect. The result of this is that all of the amounts of treatment allowances of veterans who died after the 1986 amendment of the Pension Act would devolve to their estates, and be payable to such estates by the Crown.
DOMICILLARY ESTATES
92 Subsequent to the argument of this motion, I heard, during the week of March 3rd, argument on the further motion by Class counsel to assess the total damages re unpaid interest for which the Crown would be liable, and to issue an aggregate judgment therefore. The same counsel appeared before me, and in addition to voluminous new material, the material on this motion, and on the one re interest was referred to. On the assessment of damages motion, for the first time there was specific reference to a new type of estate - the "domicillary estate". There was affidavit evidence that in fact there were a great number of these estates, which were treated by DVA as administered estates. The essence of these was that a veteran would enter into an agreement with DVA whereby, typically, DVA would accommodate him in a nursing home/senior citizens type of residence, and in exchange for the board, lodging, care etc., he would assign to DVA his veteran's pension and allowance, and anything else he might have had, including presumably Old Age pension, etc. The DVA would then open up an administration account, and handle the funds in the same way as in its other administrations. However, in these cases, there was no finding by the Commission of incompetence, or of a need for administration. The assignment, as I pointed out in argument, appears to be directly contrary to s. 30(1) of the Pension Act, which prohibits assigning, charging or the giving as security of any pension or allowance. Class counsel pointed out in argument, citing the files on a few of these veterans, that the voluntariness of the assignments may be questionable, as at least the few referred to appeared to be suffering from mental problems and disabilities, as well as addictions. However, the agreed position of counsel was that these estates should be treated in the same way as the ones created in accord with the statutory provisions as far as liability of the government for interest thereon was concerned, and that the "lapsing" provisions in relation to pensions and allowances were to be taken as applying to them. Based on this concession, my findings in relation to the "lapsing" provisions are to be taken to extend to pensions and allowances in "domicillary estates".
OTHER MATTERS
93 There were several other subsidiary matters raised on this motion by the Crown. I earlier mentioned that issues relating to Limitations Acts were left for argument on another day. I briefly mentioned the objections raised re the evidence presented by Class counsel. Crown counsel formally objected to the use of the summary judgment procedure. That objection, and the objections re evidence, had been raised on the hearing of the earlier summary judgment motion re interest. A very useful provision of the Class Proceedings Act is s. 34, which provides that the same judge shall hear all the motions. Exactly the same objections had been raised on the interest motion, and the factual and evidentiary matrix was the same there as here. The same result follows - for the reasons briefly set out herein, and on the previous motions, the evidence, except for two small parts of the Sengbusch affidavit, is admitted, and the summary judgment procedure used here is found to be appropriate. Crown counsel presented an argument based on the Financial Administration Act. That same argument had been made on the interest motion, and the result there applies here - that statute governs the civil service, but it does not affect the power and authority of the Government to do what is appropriate, including amending legislation if necessary. As was said before, the government, not the civil service, is the defendant here.
CONCLUSION
94
(1) The claim for summary judgment on behalf of the estates of deceased veterans re pension money not paid out to them is dismissed;
(2) The claim of the same group re treatment allowances is granted in part, being from and after the date on which the 1986 amendment to s. 31 of the Pension Act came into force and effect;
(3) Sec. 55 of Veterans Treatment Regulations is declared ultra vires as of such date;
(4) After such date, the amounts of treatment allowances being administered by the DVA on the dates of death of veterans is found to be payable to the estates of such veterans by the Crown, which was and is under a continuing fiduciary duty to make such payment and to continue its administration until such payment is made.
95 The question of costs, including the fixing of same, can be dealt with on an early date to be arranged before me, or if counsel agree, can be dealt with by written submissions.
BROCKENSHIRE J.
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