Authorson Estate v. Canada (Attorney General)
PROCEEDINGS UNDER the Class Proceedings Act, 1992
Joseph Patrick Authorson, deceased, by his Litigation
Administrator, Peter Mountney and by his Litigation Guardian,
Lenore Majoros, plaintiff (appellant, respondent by way of
The Attorney General of Canada, defendant (respondent,
appellant by way of cross-appeal)
 O.J. No. 1201
70 O.R. (3d) 451
238 D.L.R. (4th) 517
185 O.A.C. 60
39 C.C.P.B. 159
129 A.C.W.S. (3d) 1216
2004 CarswellOnt 1117
Docket No. C39953
Ontario Court of Appeal
Abella and Blair JJ.A. and Benotto J. (ad hoc)
Heard: March 15-16, 2004.
Judgment: March 25, 2004.
Government programs -- Veterans' pension -- Entitlement of estate to receive benefits -- Appeals or judicial review -- Statutes -- Operation and effect -- Delegated legislation -- Regulations -- Validity of, conflict with statute authorizing the regulation.
Appeal by Authorson Estate and cross-appeal by the Crown from a judgment regarding the payment of allowances of deceased veterans' to their estates. Authorson was certified as a representative plaintiff in a class action that concerned several veterans' benefits statutes. This litigation concerned the claim that the Crown was obliged to pay administered funds to veterans' estates when veterans died. The Estate conceded that the Crown had the power to divest such funds on the death of a veteran. It submitted that the clear statutory language to accomplish this result did not exist in this case. The judge decided that the Crown could impose restriction on the payment of benefits since there was no common law right to these payments. Section 55 of the Veteran Treatment Regulations, which barred veterans' allowances from passing to their estates, was intra vires by the Department of Veterans Affairs Act until section 31 of the Pension Act was amended in 1986. Section 31 initially did not require properties to pass to veterans' estates. The amendment required funds to be paid to their estates. Once the amendment occurred section 55 was void. All treatment allowances of veterans who died after 1986 were ordered to devolve to their estates. The Estate submitted that section 55 should have been found ultra vires from 1954, when the Department received statutory authority to dispose of treatment allowances. The Crown cross-appealed the ultra vires finding.
HELD: The Estate's appeal was dismissed. The Crown's appeal was allowed. The judge correctly interpreted sections 31 and 55. However, he should have found that section 55 remained valid after the change to section 31. The enabling legislation for section 55 was the Department of Veterans Affairs Act and not the Pension Act. The fact that section 55 did not provide for the payment of treatment allowances to the veteran's estates, a possibility provided for in the enabling legislation, did not make the regulation ultra vires. Subordinate legislation did not have to exactly mirror the enabling statute. The enabling legislation to section 55 was permissive. The fact that section 31, which was traditionally mirrored by section 55, provided a wider range of options on the veteran's death, did not render ultra vires the narrower range of options found in section 55.
Statutes, Regulations and Rules Cited:
Canadian Bill of Rights, ss. 1(a), 1(b), 2(e).
Canadian Charter of Rights and Freedoms, 1982, s. 15.
Constitution Act, 1867, s. 91(7).
Department of Veterans Affairs Act, R.S.C. 1985, c. V-1, s.
Pension Act, R.S.C. 1985, c. P-6, s. 31.
Veterans Treatment Regulations, C.R.C., c. 1585, s. 55.
On appeal from the order of Justice John H. Brockenshire of the Superior Court of Justice in Windsor dated March 24, 2003.
Raymond G. Colautti, David G. Greenaway and Peter Sengbusch, for the appellant.
Dale Yurka and Cynthia Koller, for the respondent.
The following judgment was delivered by
1 THE COURT:-- The issue in this appeal is whether the government scheme for the economic protection of veterans and their dependants should be interpreted in a way that interferes with the priority currently given to spouses and dependants of deceased veterans.
2 The appellant was certified by the Superior Court of Justice to act as a representative plaintiff in a class action concerning a network of veterans' benefit statutes, collectively referred to as the Veterans' Charter. Brockenshire J. divided the litigation into two separate proceedings dealing with liability. The first part related to disabled veterans' entitlement to interest on money administered on their behalf by the Department of Veterans Affairs (DVA). On July 17, 2003, the Supreme Court of Canada denied this claim. (See Authorson v. Canada (Attorney General), 2003 SCC 39, rev'g (2002), 58 O.R. (3d) 417 (C.A.), aff'g (2000), 53 O.R. (3d) 221 (Ont. S.C.).)
3 The second part of the litigation concerned the argument that the Crown is obliged to pay administered funds to veterans' estates when veterans died. That is the issue on this appeal.
4 The appellant concedes that the Crown has the power to divest such funds on the death of a veteran. His argument, however, is that to do so, there must be clear statutory language, and that no such clarity exists here. He therefore argues that the funds should pass automatically to the veteran's estate, rather than revert to the Crown to be dispersed to the veteran's spouse and dependants.
5 The Class factum, quoted by the motions judge, summarized the relevant issues as follows:
This motion concerns two statutory and regulatory provisions: s. 31 of the Pension Act [R.S.C. 1985, c. P-6] and its historical antecedents and s. 55 of the Veterans Treatment Regulations [C.R.C., c. 1585] and its antecedents. These provisions, whose validity is challenged on constitutional, quasi-constitutional, legislative, and fiduciary principles, 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.
6 The DVA administered the funds of disabled veterans who were deemed incapable of managing their own affairs. There are two types of administered funds at issue: pensions and treatment allowances. Pensions were awarded by the Canadian Pension Commission under the Pension Act. Unspent pensions accumulated in veterans' accounts.
7 In addition to pensions, the Veterans Treatment Regulations provided for treatment allowances to veterans who were in the hospital or undergoing medical treatment. Treatment allowances made up the difference between the veterans' partial disability pension and their full pension during the period they could not work. Unspent treatment allowances remained as credits in veterans' accounts.
8 The disputed provisions have been characterized throughout these proceedings as "lapsing provisions", providing that pensions or allowances held in trust do not form part of the deceased veteran's estate. Until 1986, s. 31 of the Pension Act read:
(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 [emphasis added].
(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. [emphasis added].
9 In 1986, the Pension Act was amended to allow the Commission to pay pensions to veterans' estates, as well as to their spouses and children. The amended section states:
The Commission may, in its discretion, direct the payment of any pension or allowance referred to in subsection (5) either to the pensioner's estate or to the pensioner's widow or his child or children, or to the widow and child or children, or may direct that it be paid in whole or in part to any person who has maintained him or been maintained by him or toward the expenses of the pensioner's last sickness and burial [emphasis added].
10 In 1954, the Veterans Treatment Regulations, issued under the Department of Veterans Affairs Act, R.S.C. 1985, c. V-1 (DVAA), gave the DVA authority to dispose of deceased veterans' treatment allowances. Section 55 of these regulations, like s. 31 of the Pension Act, states that credits from treatment allowances shall not form part of veterans' estates, but may be paid to veterans' dependants, people who maintained them, or toward their funeral expenses. Section 55 states:
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 [emphasis added].
11 Unlike s. 31 of the Pension Act, there has never been any amendment allowing for payment of pensions to veterans' estates. As a matter of practice, however, payments have, in fact, sometimes been made to their estates.
12 The motions judge's findings can be summarized as follows:
* The decision to provide veterans' benefits is an act of "grace and bounty" by the Crown. There is no common law right to pensions or treatment allowances. Therefore, the Crown may prima facie impose any restrictions it wants on these benefits. (paras. 4-6)
* The lapsing provisions are not ultra vires the federal government although they affect veterans' property and civil rights in the province. The pith and substance of the legislation is pensions and allowances for veterans of federal military service, which falls under s. 91(7) of the Constitution Act, 1867. (para. 27)
* The legislation does not violate ss. 1(a), 1(b) or 2(e) of the Bill of Rights. There is no equality violation because the legislation has a valid federal purpose: to help veterans cover their living expenses, including their obligations to their dependants. (para. 38) There is no "taking" or confiscation here because pensions and allowances are subject to statutory limitations, so there is no entitlement to a fair hearing. (paras. 40-41)
* The lapsing provisions do not violate s. 15 of the Charter. They are part of a broad government program designed to rehabilitate veterans and assist them to reintegrate into society. The lapsing provisions protect veterans by barring the claims of creditors and other third parties. They therefore preserve rather than deny dignity. (paras. 52-53)
* The Crown does not have a fiduciary duty to transfer administered funds to veterans' heirs. As trustee, the DVA could not change the fundamental nature of the property it administered as "grace and bounty". Instead, the DVA had to comply with the statutes and regulations governing veterans' funds. (paras. 66-68)
* The Veterans Treatment Regulations were intra vires the DVAA until 1986. The DVAA authorizes regulations "for the disposal" of veterans' properties to them, their dependants or their estates "or as may be deemed expedient". Section 55 of the regulations bars veterans' allowances from passing to their estates. This is intra vires the DVAA, which permits but does not require properties to pass to veterans' estates.
After 1986, the Pension Act was amended to allow veterans' funds to be paid to their estates. As of 1986, the Veterans Treatment Regulations conflict with the statutory scheme (though not directly with their enabling statute, the DVAA) and become ultra vires. (paras. 88-91) Partial summary judgment was granted on this point, s. 55 was declared void, and all treatment allowances of veterans who died after 1986 were ordered to devolve to their estates.
13 The appellant restricted his arguments on appeal to two main issues: the interpretation of s. 31 of the Pension Act; and the finding that s. 55 was ultra vires only after 1986, but not before, the appellant arguing that the motions judge ought to have found s. 55 ultra vires as of 1954 when the DVA first received statutory authority to dispose of treatment allowances. The Crown cross-appealed on the ultra vires finding. We did not find it necessary to call on the Crown on the main appeal.
14 In our view, Brockenshire J. correctly interpreted s. 31 of the Pension Act and s. 55 of the Veterans Treatment Regulations in a manner that was consistent with the scheme of veterans' benefits, the language of the provisions, and the government's goal of ensuring that the primary beneficiaries of those public funds were the veterans, their spouses and their dependants, not distant relatives or creditors.
15 The purpose of the veterans' benefits scheme was described by the motions judge at paras. 20-21:
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, dependent children and other dependants, if any. Many of these were young single men who had no dependants.
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 dependent 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.
16 The lapsing provisions are consistent with the legislative focus on supporting only veterans and their spouses and dependants. The lapsing provisions direct that in situations where a veteran's funds are being administered and he or she dies with pension funds or treatment allowances held in trust, the pensions or treatment allowances do not form part of the veteran's estate. The Commission (now the Minister) has a discretion to direct that the funds be paid to the veteran's dependants, to those who cared for the veteran, or to last sickness and burial expenses, or, since 1986, to the veteran's estate. If the administered pension funds and treatment allowances are not paid in accordance with the governing sections, however, the funds are returned to the government.
17 To ensure that the pensions went only to provide for the needs of veterans and their dependants, as well as those who helped maintain them, the lapsing provisions in s. 31 of the Pension Act state that any pension or allowance held in trust by the Crown does not form part of the veteran's estate, where it might find its way into the hands of distant relatives or creditors. As the motions judge held:
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 dependants 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.
18 In concluding that the Crown was entitled to impose restrictions on the pensions and allowances paid to veterans, the motions judge found at para. 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.
19 In our view, there is no ambiguity in the legislation, which clearly states that no funds be paid automatically to the veteran's estate. The interpretation of the lapsing provisions sought by the appellants would defeat the purpose of the provisions of the Veterans' Charter, because it would require that surplus funds go to the veteran's estate, rather than to the surviving spouse, children or other dependants.
20 The appeal is accordingly dismissed.
21 On the cross-appeal, the Crown argued that the motions judge erred in concluding that s. 55 of the Veterans Treatment Regulations was ultra vires after 1986. The motions judge held that when s. 31 of the Pension Act was amended in 1986 to give the Commission the option of transferring the administered funds to veterans' estates, this created an inconsistency with s. 55 of the Veterans Treatment Regulations, which provided for no such discretion in connection with treatment allowances. With respect, we do not agree with the motions judge. Having found, correctly in our view, that the provisions of s. 55 were intra vires before 1986, he ought to have concluded that they remained intra vires notwithstanding changes to the Pension Act.
22 The enabling statute for s. 55 was not the Pension Act, but s. 5(1)(d) of the DVAA, which provides:
Subject to the approval of the Governor in Council, the Minister may make such regulations as he may deem necessary and advisable.
(d) for the receipt and retention of any properties or moneys held or payable by the Crown or any other authority, person or persons on behalf of any persons or their dependants whenever such persons are being or have been cared for under the provisions of this Act, either by medical treatment, training or otherwise, and for giving therefor a valid receipt, and in the case of insane persons who are being or have been so cared for under this Act, the assumption or authorization of guardianship in whole or in part in respect of such properties or moneys, and for the disposal of such properties or moneys to such persons or their dependants, or as may be deemed expedient or the disposal thereof to the estates of such persons if deceased. [emphasis added].
23 The fact that s. 55 does not provide for payment of treatment allowances to the veteran's estate, a possibility provided for in the enabling legislation, does not make the regulation ultra vires. There is no interpretive principle which requires that subordinate legislation mirror exactly the enabling statute. It cannot exceed the enabling statute's parameters, but neither is it obliged to implement full jurisdictional scope. As the motions judge correctly observed, s. 5(1)(d) of the DVAA is permissive, not mandatory. He also correctly noted that the DVAA, not the Pension Act, is the statute authorizing s. 55.
24 Having concluded that the enabling legislation is permissive, he erred, with respect, in concluding that subordinate legislation that is under-inclusive of its enabling statute is thereby ultra vires. The fact that s. 31 of the Pension Act - which was traditionally mirrored by s. 55 - provides a wider range of options on the veteran's death does not render ultra vires the narrower range of options found in s. 55 of the Veterans Treatment Regulations.
25 Accordingly, we would dismiss the appeal with costs, allow the cross-appeal with costs, set aside paragraphs 2, 3 and 4 of the order of Brockenshire J., and dismiss the motion for summary judgment in its entirety. The Crown is entitled to its costs of both the appeal and cross-appeal fixed in the total amount of $25,000.