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Supreme Court of Canada

Workmen’s compensation—“Special” or “demerit” assessments—Interpretation of “industry”—Workmen’s Compensation Act, R.S.N.B. 1952, c. 255, s. 52.

On appeal from a decision of the Workmen’s Compensation Board of New Brunswick affirming two “special” or “demerit” assessments imposed upon the respondent stevedoring company because of a higher than average claim experience, the Court of Appeal, in allowing the appeal, held: (a) that the word “industry” as used in the context of s. 52(1) of the Workmen’s Compensation Act, R.S.N.B. 1952, c. 255, and amendments, must be interpreted so as to apply collectively to all stevedoring employers; and (b) that “merit” does not include “demerit”. An appeal by the Board from the judgment of the Court of Appeal was brought to this Court.

Held: The appeal should be allowed, the judgment of the Appeal Division reversed and the appeal from the assessments dismissed.

On the first point, the Court concluded that the word “industry” in the context of s. 52(1) means a particular industrial undertaking, not a group or class of similar undertakings.

As to the meaning of the term “merit rating” in s. 52(2), the preponderant view is that merit rating includes both merit and demerit. However, the “demerit” rate being already authorized by subs. (1) it was not essential in this case to decide whether it was also covered by subs. (2).

Wisconsin Compensation Rating & Inspection Bureau et al. v. Mortensen et al. (1938), 277 N.W. 679, considered.

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APPEAL from a judgment of the Supreme Court of New Brunswick, Appeal Division[1], allowing an appeal from a decision of the Workmen’s Compensation Board. Appeal allowed.

T.B. Drummie, for the appellant.

J.W. Turnbull, for the respondent.

The judgment of the Court was delivered by

PIGEON J.—This appeal is from a judgment of the Appeal Division of the Supreme Court of New Brunswick1 allowing an appeal from a decision of the present appellant (the Board) affirming two “special” or “demerit” assessments imposed upon the present respondent (the Company).

Section 52 of the Workmen’s Compensation Act, R.S.N.B. 1952, c. 255, and amendments, (the Act) reads:

52. (1) The Board may establish such sub-classifications, differentials and proportions in the rates as between the different kinds of employment in the same class as may be deemed just; and where any particular industry as shown to be so circumstanced or conducted that the hazard is greater than the average of the class or sub-class to which such industry is assigned, the Board may impose upon such industry a special rate, differential or assessment, to correspond with the excessive hazard of such industry.

(2) A system of merit rating may, if deemed proper, be adopted by the Board.

The Court of Appeal held:

(a) that the word “industry” as used in the context of s. 52(1) must be interpreted so as to apply collectively to all stevedoring employers; and

(b) that “merit” does not include “demerit”.

On the first point, the decision appears to rest essentially on the meaning ascribed to “industry” by the Random House Dictionary. As against this, one must first note the following meanings in Webster’s Third New International Dictionary:

3. b: a department or branch of a craft, art, business, or manufacture: a division of productive

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or profit-making labor; esp: one that employs a large personnel and capital esp. in manufacturing (put his money into an industry that sold its goods on an international scale) (all the large industries in the city) c: a group of productive or profit-making enterprises or organizations that have a similar technological structure of production and that produce or supply technically substitutable goods, services, or sources of income (the automobile industry) (the air transport industry) (the poultry industry)

Then, and this is no doubt of greater importance, due consideration must be given to the statutory definition of the word in para. (k) of the first section of the Act:

(k) “industry” means and refers to the whole or any part of any industry, operation, undertaking or employment within the scope of this Part; and in the case of any industry, operation, undertaking or employment not as a whole within the scope of this Part shall mean any department or part of such industry, operation, undertaking or employment as would, if carried on by itself, be within the scope of this Part;

The words “undertaking” and “employment” in this definition make it clear that “industry” is there taken in the sense found in Webster’s under b, not under c, and this is further indicated by the definition of “employer” in para. (i) of the same section of the Act:

(i) “employer” includes

(i) every person having in his service under contract or hire or apprenticeship, written or oral, express or implied, any workman engaged in any work in or about an industry,

* * *

Turning now to the context of s. 52, the following provisions under the same heading “ASSESSMENT” must be noted.

54. (1) Assessments may be made in such manner and form, and at such times, and by such procedure as the Board deems adequate and expedient, and

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may be general as applicable to any class or subclass, or special as applicable to any industry or part or department of any industry, or any employer.

* * *

55. The Board shall give notice to each employer, in such manner as may be deemed by the Board adequate and proper, of the amount of the assessments due from time to time in respect of his industry or industries, and the time or time when such assessments are due and payable.

It is perfectly obvious that when in s. 55 the statute provides that the Board shall give notice to each employer of the amount of the assessments in respect of his industry or industries, the word “industry” means a particular industrial undertaking, not a group or class of similar undertakings. Seeing that this provision closely follows the section authorizing the making of special assessments, I fail to see how it could be supposed that the word is not used in the same sense in both provisions. I might also note that in ss. 46 and 59 of the Act, the context clearly shows that the word “industry” is used to designate a particular industrial establishment in relation to matters closely related to the point in question.

In view of the stress laid in the Court below on the principle that words in an enactment are to be taken in their ordinary and natural sense, I must observe that this cannot avail against a statutory definition because it would deprive it of any effect. Of course, the statutory meaning is subject to the proviso “unless the context otherwise requires”, but this requires some definite indication in the context. Here the definite indications in the context, far from contradicting the intention of following the statutory definition actually reinforce it very strongly.

Turning now to the second point, it must be noted that there again the Court below relied exclusively on the definition of “merit” in the same single dictionary. However, turning again to

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Webster’s Third New International Dictionary, one finds the following under “merit”:

(a) obs. reward or punishment earned or deserved: just deserts; (b) one’s character regarded as the basis of his deserts; laudable or blameworthy traits or actions …

In the same dictionary, the following definition is also found for “merit rating”:

1: computation of an insurance premium for a particular risk on the basis of its individual loss-causing characteristics—see experience rating 2: the rating of an employee by systematic evaluation of his proficiency in a job.

Under “experience rating” the entry is as follows:

merit rating (as in a state unemployment compensation system) that consists of the manual rate modified by the loss experience of the particular risk.

In 1938, the Supreme Court of Wisconsin, having to construe a statute of that State providing for merit rating in workmen’s compensation insurance (Wisconsin Compensation Rating & Inspection Bureau et al. v. Mortensen et al.[2]), came to the conclusion “that merit rating includes experience rating” and “that an experience rating plan should include charges as well as credits”. Of course, this conclusion was reached on a differently worded statute and taking account of its own history and circumstances. However, it does support the preponderant view that merit rating includes both merit and demerit in accordance with what is historically the first meaning of “merit” as given in the Oxford English Dictionary:

That which is deserved or has been earned, whether good or evil; due reward or punishment; …

In view of the conclusion reached on the first point, it is really not necessary to express a firm view respecting the meaning of “merit rating”.

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Even before the addition of subs. (2) in the 1932 re-enactment (c. 36), there was in what is now subs. (1) of s. 52 ample provision for “demerit rating”, that is a special rate applicable to “any particular industry” “so conducted that the hazard is greater than the average of the class or subclass to which such industry is assigned”. However, there was nothing to authorize the Board to allow a lower rate to the particular industries so conducted that the hazard was smaller than the average. Therefore, a scheme such as that which was adopted in recent years on the advice of an actuary and whereby the Board provided for a lower rate in the case of employers with a favourable loss experience and a higher rate for those with an unfavourable experience was not possible without subs. (2). However, the “demerit” rate being already authorized by subs. (1) it is not essential in this case to decide whether it is also covered by subs. (2).

For those reasons I would allow the appeal, reverse the judgment of the Appeal Division and dismiss the appeal from the assessments. As requested by counsel for the appellant, there will be no order as to costs.

Appeal allowed; assessments confirmed.

Solicitors for the appellant: Drummie, Drummie, Clark & Pappas, Saint John.

Solicitors for the respondent: Palmer, O’Connell Leger, Turnbull & Turnbull, Saint John.

 



[1] (1969), 1 N.B.R. (2d) 621, 5 D.L.R. (3d) 632.

[2] (1938), 277 N.W. 679.

 

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