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					                 SUPREME COURT OF NOVA SCOTIA
     Citation: Hartling v. Nova Scotia (Attorney General), 2009 NSSC 38

                                                                 Date: 20090209
                                                         Docket: Hfx No. 236705
                                                               Registry: Halifax
Between:
              Helen Hartling, Melissa Gionet, Anna Marie MacDonald
                                                                        Applicants
                                       and

  The Attorney General of Nova Scotia, representing Her Majesty the Queen in
                    Right of the Province of Nova Scotia
                                                                    Respondent

                                       and

              Insurance Bureau of Canada, an incorporated association
                                                                         Intervenor

                                                          Docket: Pic No. 217706
                                                                Registry: Pictou
Between:
             Saquoia McKinnon, an infant by her Litigation Guardian,
                  Kathryn Jean McKinnon and John McKinnon
                                                                        Applicants
                                       and

                                Adam Thomas Roy
                                                                        Respondent
                                       and

                The Attorney General of Nova Scotia, representing
           Her Majesty the Queen in Right of the Province of Nova Scotia

                                                             Statutory Respondent


                               LIBRARY HEADING


Judge:       The Honourable Justice Walter R.E. Goodfellow
Heard:      October 6, 7, 8, 9, 14, 15, 16, 20, 21, 22, 28, 29, 30 and 31, 2008

Subject:    Section 1 Canadian Charter of Rights and Freedoms

Summary: Part I of this decision dealt with a number of Charter challenges and
         ultra vires challenges, all of which were dismissed in a written decision
         released January 12, 2009. There remained outstanding the application
         of the Oakes test relating to s. 1 of the Charter.

Issue:      Has the Attorney General of Nova Scotia met the onus upon it to
            establish on a balance of probabilities the four requirements of the
            Oakes test?

Result:     The Attorney General of Nova Scotia met the first three requirements,
            however, on the assumption that I was in error in finding the evidence
            overwhelmingly against any stereotyping and marginalizing then the
            deleterious consequence of the legislation would not justify such
            stereotyping and marginalization. Failure of any branch of the Oakes
            test results in the conclusion that the legislation is not protected by s. 1
            of the Charter.




    THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION.
          QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET.
                 SUPREME COURT OF NOVA SCOTIA
     Citation: Hartling v. Nova Scotia (Attorney General), 2009 NSSC 38

                                                                 Date: 20090209
                                                         Docket: Hfx No. 236705
                                                               Registry: Halifax
Between:

              Helen Hartling, Melissa Gionet, Anna Marie MacDonald
                                                                        Applicants
                                       and

  The Attorney General of Nova Scotia, representing Her Majesty the Queen in
                    Right of the Province of Nova Scotia
                                                                    Respondent

                                       and

              Insurance Bureau of Canada, an incorporated association
                                                                         Intervenor

                                                          Docket: Pic No. 217706
                                                                Registry: Pictou
Between:

             Saquoia McKinnon, an infant by her Litigation Guardian,
                  Kathryn Jean McKinnon and John McKinnon
                                                                        Applicants
                                       and

                                Adam Thomas Roy
                                                                        Respondent
                                       and

                The Attorney General of Nova Scotia, representing
           Her Majesty the Queen in Right of the Province of Nova Scotia

                                                            Statutory Respondent
                                                                                Page: 2

Judge:       The Honourable Justice Walter R.E. Goodfellow

Heard:       October 6, 7, 8, 9, 14, 15, 16, 20, 21, 22, 28, 29, 30 and 31, 2008, in
             Halifax, Nova Scotia

Counsel:     Mr. Barry J. Mason and Mr. Glenn E. Jones, on behalf of the Applicants,
             Gionet and MacDonald

             Mr. Janus Siebrits, on behalf of the Applicant, McKinnon

             Mr. D. Geoffrey Machum, Q.C. and Ms. Christa M. Hellstrom, on behalf
             of the Respondent, Adam Roy

             Mr. Alexander M. Cameron, on behalf of the Attorney General of Nova
             Scotia

             Mr. Jeffrey W. Galway and Ms. Rahat Godil, on behalf of the Insurance
             Bureau of Canada



                                      PART II

By the Court:

BACKGROUND:

[1] The applicants Gionet and MacDonald advanced Charter challenges to s.
113B(1) of the Insurance Act, R.S.N.S. 1989, c. 231 (as amended) and to Regulation
2(1)(d)(ii) of the Automobile Insurance Tort Recovery Limitation Regulations plus
they advanced that Regulations 2(1)(f), (g) and (h) were ultra vires the Insurance Act.


[2] The applicant Saquoia McKinnon advanced a Charter challenge against s.
113(B)(1) of the Insurance Act and against, in Ms. MacKinnon’s view, Regulation
2(1)(g) of the Automobile Insurance Tort Recovery Limitation Regulations. The latter
in my view is really a matter of interpretation.
                                                                                                Page: 3

[3] All of the Charter challenges and the ultra vires challenges were dismissed in
my written decision released January 12, 2009 as Part I of my decision.

[4] This Part II addresses the remaining issue of the Canadian Charter of Rights
and Freedoms, s. 1 which, for ease of reference, is repeated:

                              Guarantee of Rights and Freedoms

      Rights and freedoms in Canada

              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.

[5] By virtue of dismissing the challenges it is technically not necessary to consider
the s. 1 Charter issue; however, in line with the practice where the issues of liability
and damages are both tried and liability is found wanting, it is generally reasonable
and appropriate to proceed with the assessment of damages given the time, effort and
expense the parties gave to the damages issue. Similarly, in these applications the
parties advanced considerable evidence (except MacKinnon), time, effort and expense
and, therefore, I conclude that the s. 1 Charter issue should be addressed. In addition,
it has been clear from the outset that the importance of the issues in these challenges
will undoubtedly go to the Nova Scotia Court of Appeal with a distinct possibility of
ending up in the Supreme Court of Canada.

[6] The onus of showing the existence of reasonable limits as can be demonstrably
justified in a free and democratic society is upon the Attorney General of Nova Scotia
representing Her Majesty the Queen in Right of the Province of Nova Scotia. Law
v. Canada (Minister of Employment and Immigration), [1999] 1 S.C.R., Iacobucci,
J. stated:

               There is nothing new in requiring a Charter claimant to establish that his or
      her right has been infringed in a manner which brings into play the purpose of the
      right in question. Both the principle that Charter rights are to be interpreted
      purposively, and the principle that the Charter claimant bears the onus of
      establishing an infringement of his or her right before the onus shifts to the state to
      justify the infringement, are fundamental and well established....

[7] I will be conducting an s. 1 analysis as it relates to the applications of Gionet
and MacDonald, but not as it relates to MacKinnon. In the MacKinnon application,
by agreement, it is acknowledged as a matter of record that Ms. MacKinnon has
                                                                                                   Page: 4

serious Post Traumatic Stress Disorder (“PTSD”) and that such is physical in nature.
In addition, the evidence is educational, enlightening and unequivocal that PTSD does
have a detectable through advanced imagery physical impact on the brain which is a
part of the body. Ms. MacKinnon called no evidence and, in summation, her solicitor
acknowledged and accepted the expert evidence. I see no reason to spend any time
on a s. 1 analysis as relates to the MacKinnon file.

[8] With respect to the applications of Gionet and MacDonald, proceeding to a s. 1
analysis has to be on the basis that I assume (as hard as it is) that my determination the
applicants failed to establish their Charter challenges was in error. My further
reflection on these applications, review of the documentation, evidence, et cetera for
this Part II of the decision confirms my factual determination that Gionet and
MacDonald relied almost exclusively in their challenge on establishing disadvantage,
stereotyping and stigmatization. As convinced as I am that the evidence before me
was heavily weighted to the contrary, I now proceed on the basis of my being in error.

THE LAW:

[9] Chief Justice Brian Dickson in R. v. Oakes, [1986] 1 S.C.R. 103, observed that
there are two functions of s. 1.

      It is important to observe at the outset that s. 1 has two functions: first, it
      constitutionally guarantees the rights and freedoms set out in the provisions which
      follow; and, second, it states explicitly the exclusive justificatory criteria (outside of
      s. 33 of the Constitution Act, 1982) against which limitations on those rights and
      freedoms must be measured. Accordingly, any s. 1 inquiry must be premised on an
      understanding that the impugned limit violates constitutional rights and freedoms --
      rights and freedoms which are part of the supreme law of Canada. As Wilson J.
      stated in Singh et al. v. Minister of Employment and Immigration, supra, at p. 218:
      "... it is important to remember that the courts are conducting this inquiry in light of
      a commitment to uphold the rights and freedoms set out in the other sections of the
      Charter."

      A second contextual element of interpretation of s. 1 is provided by the words "free
      and democratic society". Inclusion of these words as the final standard of
      justification for limits on rights and freedoms refers the Court to the very purpose for
      which the Charter was originally entrenched in the Constitution: Canadian society
      is to be free and democratic. The Court must be guided by the values and principles
      essential to a free and democratic society which I believe embody, to name but a few,
      respect for the inherent dignity of the human person, commitment to social justice
      and equality, accommodation of a wide variety of beliefs, respect for cultural and
      group identity, and faith in social and political institutions which enhance the
      participation of individuals and groups in society. The underlying values and
                                                                                                  Page: 5

      principles of a free and democratic society are the genesis of the rights and freedoms
      guaranteed by the Charter and the ultimate standard against which a limit on a right
      or freedom must be shown, despite its effect, to be reasonable and demonstrably
      justified.

Chief Justice Dickson at p. 137 commented on the standard of proof as follows:

      The standard of proof under s. 1 is the civil standard, namely, proof by a
      preponderance of probability.

And he went on to say that the standard must be applied rigorously. Chief Justice
Dickson went on to state the two central criteria:

      To establish that a limit is reasonable and demonstrably justified in a free and
      democratic society, two central criteria must be satisfied. First, the objective, which
      the measures responsible for a limit on a Charter right or freedom are designed to
      serve, must be "of sufficient importance to warrant overriding a constitutionally
      protected right or freedom": R. v. Big M Drug Mart Ltd., supra, at p. 352. The
      standard must be high in order to ensure that objectives which are trivial or
      discordant with the principles integral to a free and democratic society do not gain
      s. 1 protection. It is necessary, at a minimum, that an objective relate to concerns
      which are pressing and substantial in a free and democratic society before it can be
      characterized as sufficiently important....

      Second, once a sufficiently significant objective is recognized, then the party
      invoking s. 1 must show that the means chosen are reasonable and demonstrably
      justified. This involves "a form of proportionality test": R. v. Big M Drug Mart Ltd.,
      supra, at p. 352. ...

Chief Justice Dickson went on to outline the three components of a proportionality
test:

      ...There are, in my view, three important components of a proportionality test. First,
      the measures adopted must be carefully designed to achieve the objective in question.
      They must not be arbitrary, unfair or based on irrational considerations. In short, they
      must be rationally connected to the objective. Second, the means, even if rationally
      connected to the objective in this first sense, should impair "as little as possible" the
      right or freedom in question: R. v. Big M Drug Mart Ltd., supra, at p. 352. Third,
      there must be a proportionality between the effects of the measures which are
      responsible for limiting the Charter right or freedom, and the objective which has
      been identified as of "sufficient importance".

      With respect to the third component, it is clear that the general effect of any measure
      impugned under s. 1 will be the infringement of a right or freedom guaranteed by the
                                                                                                    Page: 6

      Charter; this is the reason why resort to s. 1 is necessary. The inquiry into effects
      must, however, go further. A wide range of rights and freedoms are guaranteed by
      the Charter, and an almost infinite number of factual situations may arise in respect
      of these. Some limits on rights and freedoms protected by the Charter will be more
      serious than others in terms of the nature of the right or freedom violated, the extent
      of the violation, and the degree to which the measures which impose the limit trench
      upon the integral principles of a free and democratic society. Even if an objective is
      of sufficient importance, and the first two elements of the proportionality test are
      satisfied, it is still possible that, because of the severity of the deleterious effects of
      a measure on individuals or groups, the measure will not be justified by the purposes
      it is intended to serve. The more severe the deleterious effects of a measure, the more
      important the objective must be if the measure is to be reasonable and demonstrably
      justified in a free and democratic society.

[10] In R. v. Big M. Drug Mart (1985), 18 D.L.R. (4th) 321, Dickson, J. (as he then
was) indicated that the purpose of legislation was to be ascertained as “at the time” the
legislation was enacted:

              Furthermore, the theory of a shifting purpose stands in stark contrast to
      fundamental notions developed in our law concerning the nature of "Parliamentary
      intention". Purpose is a function of the intent of those who drafted and enacted the
      legislation at the time, and not of any shifting variable.

               As Laskin C.J. has suggested in R. v. Zelensky et al., (1978), 41 C.C.C. (2d)
      97 at pp. 104-5, 86 D.L.R. (3d) 179 at pp. 186-7, [1978] 2 S.C.R. 940, at p. 951,
      "new appreciations" and "re-assessments" may justify a re-interpretation of the scope
      of legislative power. While this may alter over time the breadth of the various heads
      of power and thereby affect the classification of legislation, it does not affect the
      characterization of the purpose of legislation, in this case the Lord's Day Act. As the
      Law Reform Commission of Canada observed in its Report on Sunday Observance
      (1978) at p. 42:

                     While the Supreme Court has never said so explicitly, it
              would seem apparent that any recharacterization of the Lord's Day
              Act in a modern context so as to provide a clarification of the
              province's role with respect to Sunday legislation is a task the
              Parliament of Canada and the provincial legislatures will have to take
              up directly.

              While the effect of such legislation as the Lord's Day Act may be more
      secular today than it was in 1677 or in 1906, such a finding cannot justify a
      conclusion that its purpose has similarly changed. In result, therefore, the Lord's Day
      Act must be characterized as it has always been, a law the primary purpose of which
      is the compulsion of sabbatical observance.
                                                                                               Page: 7

[11] Mr. Mason in argument drew the court’s attention to R. v. Butler, [1992] 1
S.C.R. 452; 1992 CarswellMAN 100 and specifically paras. 79-84. It is at para. 84
that Mr. Mason is really looking to, to advance his argument that you do not
necessarily limit yourself to the time the legislation was introduced in determining its
purpose. Sopinka, J. at S.C.R. p. 494, para 85:

      ...Second, and more importantly, I am of the view that with the enactment of s. 163,
      Parliament explicitly sought to address the harms which are linked to certain types
      of obscene materials. The prohibition of such materials was based on a belief that
      they had a detrimental impact on individuals exposed to them and consequently on
      society as a whole. Our understanding of the harms caused by these materials has
      developed considerably since that time; however this does not detract from the fact
      that the purpose of this legislation remains, as it was in 1959, the protection of
      society from harms caused by the exposure to obscene materials...

[12] Mr. Mason makes reference to Sopinka, J. referring to R. v. Fringe Product
Inc. in para. 85, however the full quote must be viewed:

      Even though one can still find an emphasis on the enforcement of moral standards
      of decency in relation to expression in sexual matters in the jurisprudence subsequent
      to the enactment of s-s.(8), it is clear that, by the very words it has chosen,
      Parliament in 1959 moved beyond such narrow concern and expanded the scope of
      the legislation to include further concerns with respect to sex combined with crime,
      horror, cruelty and violence.

       It is the harm to society resulting from the undue exploitation of such matters which
      is aimed by the section. The "harm" conceived by Parliament in 1959 may not have
      been expressed in the same words as one would today. The court is not limited to a
      1959 perspective in the determination of this matter. As noted in Irwin Toy Ltd. v.
      Quebec (Attorney-General), supra, at p. 618:

             In showing that the legislation pursues a pressing and substantial
             objective, it is not open to the government to assert post facto a
             purpose which did not animate the legislation in the first place ...
             However, in proving that the original objective remains pressing and
             substantial, the government surely can and should draw upon the best
             evidence currently available. The same is true as regards proof that
             the measure is proportional to its objective ... It is equally possible
             that a purpose which was not demonstrably pressing and substantial
             at the time of the legislative enactment becomes demonstrably
             pressing and substantial with the passing of time and the changing of
             circumstances.
                                                                                               Page: 8

      In 1959, the harm to society caused by the undue exploitation of sex or of sex and
      other named matters may well have been defined more strictly in terms of public
      morality, i.e., that such expression offended society's sense of right and wrong. It
      may well be that if such was the only identifiable harm today that the legislation
      could not be said to pertain to pressing and substantial concerns thereby warranting
      an infringement of the right of expression. But that is not so. The harm goes beyond
      public morality in this narrow sense.

Sopinka also stated at para. 88 [S.C.R. para. 86]:

      A permissible shift in emphasis was built into the legislation when, as interpreted by
      the courts, it adopted the community standards test. Community standards as to what
      is harmful have changed since 1959.

[13] Ferraiuolo Estate v. Olson, [2004] CarswellAlta 1260. Chief Justice Catherine
Fraser stated that this case is about grief:

      1       This case is about grief - the grief and loss felt by surviving children when
      their parent is killed through the wrongful act of another. It is also about which
      children grieve and which ones are entitled to sue the wrongdoer for the grief they
      suffer on death of their father or mother.

[14] The case therefore is one dealing with the question of entitlement to sue. That
is not the question Gionet or MacDonald are confronted with. They, like all other
citizens, are entitled to sue and, like all other citizens, are subject to a payment cap of
$2,500.00 if they are not able to establish their injury is greater than the defined
“minor injury.”

[15] Chief Justice Fraser goes on to make it clear the Act in question, the Fatal
Accidents Act, R.S.A. 1980, c. F-5 as amended by the Fatal Accidents Amendment Act,
S.A. 1994, c. 16, conferred on certain surviving children only, an entitlement to
$25,000.00 for grief and loss of care, guidance and companionship when their parent
is killed by a wrongdoer provided they fit into the group defined as under 26,
unmarried and not living with a co-habitant. Chief Justice Fraser went on to note that
this was not a case such as Law, above, where claimants sought access to publicly
funded social programs on terms available to others but not to them because of their
age. The issue before the Court of Appeal is new as stated by Chief Justice Fraser.
Para 3, page 14:

      However, no case has addressed the issue before this Court. To what extent is the
      government entitled to deny benefits to certain claimants based on their age and
      marital status, not for the purpose of limiting entitlement to publicly funded social
                                                                                                 Page: 9

      programs, but rather for the purpose of restricting legal action against private parties
      for tortious conduct causing death?

[16] Again it is to be noted that in the case before me neither Gionet nor MacDonald
are restricted in a legal action by virtue of any enumerated class in s. 15(1) of the
Charter. It is helpful to set out the specific section of the Fatal Accidents Act of
Alberta under consideration. S. 8(2)(c) provided:

      If an action is brought under this Act, the court, ... without evidence of damage, shall
      award damages for grief and loss of the guidance, care and companionship of the
      deceased person of:

                                               ***

             (c)     $25 000 to each child of the deceased person who at the time of the
                     death of the deceased person is:

                     (i)     a minor, or

                     (ii)     unmarried and 18 years of age or older and has not reached
                           th
                     his 26 birthday and is not living with a cohabitant.

[17] There was therefore a clear exclusion of entitlement limitation and exclusion
of entitlement to sue based upon marital status, age and co-habitation. The
contention advanced by Mr. Ferraiuolo, who was over 26 years of age and married
when his mother died, was that this section discriminated against him on the grounds
of both age and marital status.

[18] Chief Justice Fraser concluded in para. 10:

      10      Thus, as matters stand today in Alberta, the only group of children unable to
      recover damages for grief and loss of guidance, care and companionship when their
      parent is killed by a wrongful act are children 18 and over who are married or living
      with a cohabitant. However, the New FAA only applies to deceased persons who die
      after the coming-into-force date, that is November 1, 2002. This explains why the
      FAA, with both its age and marital status limitations, applies to Ferraiuolo's claim.

[19] Fraser, C.J.A. commented at para. 78:

      78     Therefore, it is not enough for a claimant to simply establish differential
      treatment by the state; it is discriminatory treatment that is proscribed by the
      Charter. However, therein rests the challenge of any claimed breach of equality
      rights - where does difference end and discrimination begin? To establish
                                                                                            Page: 10

      discrimination, Law confirmed there must be a conflict between the purpose or effect
      of the impugned law and the purpose of the s. 15(1) equality guarantee. The purpose
      of the equality guarantee is to ensure that governments respect the innate and equal
      dignity of every individual: Law, supra, at para. 51; Gosselin, supra, at para. 20. As
      Iacobucci J., speaking for a unanimous Supreme Court stated in Law at para. 51:

             [T]he purpose of s. 15(1) is to prevent the violation of essential
             human dignity and freedom through the imposition of disadvantage,
             stereotyping, or political or social prejudice, and to promote a society
             in which all persons enjoy equal recognition at law as human beings
             or as members of Canadian society, equally capable and equally
             deserving of concern, respect and consideration.

Fraser, C.J.A. concluded:

      120      Therefore, the FAA, with both its age and marital status limitations, sends a
      clear message that surviving married or older children of the victim of a wrongful
      death are not, in comparison to other members of society, equally valued and
      deserving of respect and recognition for the harm inflicted on them as a result of a
      wrongful act. A reasonable person in Ferraiuolo's position would recognize that the
      challenged legislation was specifically designed to exclude all married or older
      children, regardless of individual needs and circumstances, regardless of how close
      they might have been to their parent at the time of wrongful death and regardless of
      the circumstances of death. That person would also understand that without a claim
      for the grief suffered, he or she would effectively be deprived of suing the wrongdoer
      for any non-pecuniary damages arising out of the parent's wrongful death, whether
      personally or on behalf of the parent's estate.

      121 A reasonable person would recognize that the principle of compensatory
      damages constitutes a central foundation of our tort system and that financial
      compensation is the general measure used to value "losses" suffered by a victim.
      That is why the reasonable person would be offended by the proposition that the
      grief they suffer essentially counts for nothing; they will not be compensated for their
      loss on the same basis as their unmarried sibling under the age of 26, or for that
      matter, at all. The harm caused to the dignity of those in the claimant group is
      exacerbated by the knowledge that the motivation for the absence of compensation
      - for preventing them from suing a wrongdoer for the harm inflicted on them - is
      unvarnished self-interest.

      122 Thus, this factor too supports a finding of discrimination. The challenged
      legislative scheme does not correspond to the needs and circumstances of married
      or older children so as to avoid a finding of discrimination. Neither the age nor
      marital status restriction under s. 8(2)(c) of the FAA reflects the reality of the
      claimant group. Worse yet, these restrictions are motivated in significant part by
      considerations that cannot help but harm human dignity.
                                                                                 Page: 11


[20] The conclusion by Fraser, C.J.A. is that an existing group in society, namely,
surviving, married or older children of the victim of a wrongful death are not accorded
equality with other members of society who are deserving of and should receive
respect and recognition to the harm inflicted on them as a result of wrongful act. This
group in society is denied the right to sue and, therefore, the entitlement granted by
the statute automatically without proof of loss to all surviving children who come
within s. 8 of the legislation. I should not be taken as stating the view that one has to
be denied the right to sue for discrimination to exist. The denial of the right to sue to
an existing category of children is discriminatory, as would be in a redefined s. 8(2)(c)
of the Alberta legislation that limited the recovery to one half of the existing $25,000
based on the same criteria, namely, if you were married, over 18 years of age or
older, et cetera. Such would still be a clear case of discrimination based upon age and
marital status. It would value grief related to the loss of a parent by a wrongful act as
being greater or less totally on the basis of age and marital status.

[21] It is possible that the legislation in Ferraiuolo Estate v. Olson, above, would
have been Charter compliant if the basis of the legislation provided the automatic
entitlement was available to all citizens who could come within a defined category
such as a son or daughter of a parent killed through the wrongful act of another where
the child at the time of the parent’s death had a legal entitlement to the comfort and
support of that parent or was at the time of the parent’s death receiving comfort and
support from that parent. Undoubtedly such a provision would eliminate a substantial
number of older children, however, there would be no bar on the basis of marital
status or age to pursuing a claim and establishing entitlement based upon need from
that parent or existing support from the deceased parent. The relief available would
not be based upon grief but rather on a loss provided the applicant would bring
herself/himself within entitlement requirement of the legislation. Similarly, in the
Nova Scotia legislation there is no bar to the right to sue and any injured person suing
has the opportunity to establish her/his injuries are beyond the definition of “minor
injury”.

[22] The Nova Scotia cases, first Morine v. L. & J. Parker Equipment Inc. (2001),
193 N.S.R. (2nd) 51 concluded the introduction of a six-month time limit is ultra vires
because the Regulation cannot take away a right granted by the statute. In Way v.
Covert (1997), 147 D.L.R. (4th) 505 the appellant’s entitlement to shelter allowance
could not be extinguished by a Regulation requiring taking into account her brother’s
income level. Again, this was an ultra vires determination. In the case before me,
Gionet and MacDonald are not deprived of their entitlement to sue. They have the
                                                                                           Page: 12

same entitlement as any other citizen and they are subject to the same damages proof
of requirements as any other citizen in tort legislation. Any citizen that cannot
establish her or his injury is beyond a minor injury is treated the same as any other
citizen who fails that threshold.

[23] In the pre-hearing brief filed on behalf of the applicants Gionet and MacDonald
it is advanced that there has been a s. 15 violation and that it is not justified pursuant
to s. 1 of the Charter of Rights and Freedoms. The brief goes on to say:

      The Section 1 analysis, or the Oakes test, consists of the following four branches:

      1.     [It, sic] Is the objective of the legislation pressing and substantial?

      2.     Is there a rational connection between the Government’s Legislation and it’s
             objective?

      3.     Does the legislation minimally impair the charter right or the freedom at
             stake?

      4.     Does the deleterious effect of the Charter breach outweigh by the salutary
             effect of the legislation?

      The burden of proof is on the Crown and The Insurance Bureau of Canada in relation
      to each branch of the Section 1 analysis. If the legislation fails on any one of the
      above four branches it cannot be justified. (Hislop v. Canada (Attorney General)
      2007 SCC 10.)

[24] The applicants’ brief states:

      The applicants submit that controlling insurance premiums for the benefit of the
      majority at the expense of the rights of a minority (those subject to the threshold) is
      not a pressing and substantial objective. Budgetary considerations seldom can be
      invoked as a free standing pressing and substantial objective.

      In Martin, the Supreme Court of Canada, Gonthier, J. stated at paragraph 109:

             “...Budgetary consideration in of [sic, in and of] themselves cannot
             normally be invoked as a free standing, pressing and substantial
             objective for the purposes of [s. 1 of] the Charter.”

      Justice Binnie in Newfoundland (Treasury Board) v. N.A.P.E., [2004] 3 S.C.R. 318,
      stated at paragraph 72:
                                                                                              Page: 13

              “...Courts will continue to look with strong skepticism at attempts to
              justify infringements of Charter rights on the basis of budgetary
              constraints. To do otherwise would devalue the Charter because
              there are always budgetary constraints and there are always other
              pressing Government priorities. Nevertheless the Courts cannot close
              their eyes to the periodic occurrence of financial emergencies when
              measures must be taken to juggle priorities to see a government
              through a crisis.”

[25] The case before me has nothing to do with a governmental budgetary crisis but
rather a crisis perceived by the government of Nova Scotia and the Legislature of
Nova Scotia in that the citizens of the province were being confronted with sky-
rocketing insurance premium rate increases. The applicants position is that there was
no crisis in the insurance industry and that it was merely a cyclical situation.

[26] I note at this time as well, Chief Justice Fraser’s comments in Ferraiuolo,
supra:

      152     I now turn to consider whether avoiding unacceptable insurance premium
      increases constitutes a pressing and substantial objective. I have considerable
      reservations whether a limitation on a Charter right for some can be justified because
      of concerns about rising insurance premiums for others. The Supreme Court has
      made it clear that budgetary considerations by themselves cannot ordinarily be relied
      on as a free-standing pressing and substantial objective in their own right for
      purposes of s. 1: Martin, supra, at para. 109, R. v. Campbell, [1997] 3 S.C.R. 3
      (S.C.C.) at para. 281; Schachter v. Canada [1992] 2 S.C.R. 679 at 709. It may be that
      this same reasoning applies all the more so when government seeks to rely on the
      fact that state action will have financial implications, not for the state itself, but for
      third parties, such as, for example, insurers and the insurance rates charged to the
      public generally. In these circumstances, the state action does not involve allocating
      scarce public resources amongst different disadvantaged groups but rather denying
      victims of a private cause of action for compensation for injuries suffered by them.

[27] Chief Justice Fraser noted that outdated evidence of the incremental costs to
extend the benefit to all children was in the range of being no higher than $22.00 per
annum per vehicle and again I note that in Ferraiuolo there was a denial of a cause
of action. In Nova Scotia the evidence clearly establishes that at the time of the
legislation impugned coming into existence the “crisis” existed with respect to
skyrocketing insurance premiums.

[28] With the foregoing in mind I now turn to the Oakes test as advanced by Gionet
and MacDonald.
                                                                                           Page: 14

1.    Is the objective of the legislation pressing and substantial?


[29] Mr. Mason is convinced that the purpose and intent of the legislation was to
protect accident victims. He seems to take the position that that was the objective
from the outset, and certainly takes the position that was the objective throughout the
Assembly debates and Law Amendment Committee hearings. It was a consideration
during the debates but not the objective or intent of the legislation.

[30] To begin with, the legislation in question is not entitled an “act to protect
accident victims”. It is entitled the Automobile Insurance Reform Act. The Assembly
debates of September 30, 2003 cite the Minister of Transportation and Public Works
remarks on moving the second reading of the Bill.

               MR. SPEAKER:          The honourable Minister of Transportation and Public
      Works.

              HON. RONALD RUSSELL: Mr. Speaker, I’m pleased today to speak on Bill
      No. 1, the Automobile Insurance Reform Act, and to move second reading of that
      bill.

              Mr. Speaker, rising auto insurance rates have had an impact on all Nova
      Scotians, especially students, seniors, working families and businesses. In Nova
      Scotia all drivers are required by law to carry auto insurance. Nova Scotians expect
      their insurance policy to be fair and affordable but for many years the rates have
      become virtually unaffordable. Even worse, consumers haven’t received clear
      explanations on why their insurance rates are so high. This is completely
      unacceptable. Insurance companies have gone too far and it stops today with this
      bill.

              This bill will implement the strongest auto insurance legislation in this
      country, auto insurance that legislates a 20 per cent rollback in rates, auto insurance
      that protects consumers from unfair rate increases in the future, auto insurance that
      eliminates unfair discrimination. This legislation was created by listening to what
      Nova Scotians need from their auto insurance system. It incorporates many of the
      recommendations identified by the consumer advocate in his report of last week.


             The Automobile Insurance Reform Act is strong, effective legislation that
      addresses the heart of the problem and affects substantial reform to the automobile
      insurance system. This Act will amend five separate pieces of legislation – the
      Insurance Act, the Judicature Act, the Summary Proceedings Act, the Limitation of
      Actions Act and the Motor Vehicle Act. It has taken a lot of work over the past few
                                                                                          Page: 15

      months but the result is a thorough and complete package. This legislation will
      benefit consumers by making auto insurance more affordable and more fair. It will
      give consumers better protection. It gives consumers the power to make new
      choices.

[31] Similar remarks were made by the Minister on October 27, 2003 on moving to
third reading. The Minister at this time noted the amended definition of “minor
injury” being one that resolves within twelve months, was moved from Regulation
to be included directly in the legislation. The Minister in the Assembly debates of
May 6, 2003 noted that rising insurance premiums are a global issue.

[32] The extent and incidents of dramatic rate increases were recited at some length
by the NDP Member, Mr. Steele, and the concerns including fear of losing one’s job
because of the cost to attend and carry out one’s work. The Liberal Member, Mr.
Wayne Gaudet, made reference to the fact that insurance premiums in Canada rose 30
percent between February, 2002 and February, 2003, and in Nova Scotia the rates rose
65 percent.

[33] In the Assembly debates of May 6, 2003, the NDP Member for Cape Breton
Centre spoke at some length about seniors, especially seniors in rural areas, advising
him of the devastating impact on the seniors not being able to afford automobile
insurance (p. 2222 and following).

[34] One opposition Member during the debates noted the dramatic increase in
drivers being charged with operating their motor vehicle without auto insurance
(Assembly debates, May 9, 2003):

      The worst thing that can possibly happen in the Province of Nova Scotia, and it is
      happening now, some 2700 in the last two years have been charged for driving
      without auto insurance. That number has gone up some 45 per cent from previous
      years. That should be an indicator that the government has to step in to address a
      very important issue.

[35] Mr. Michel Samson, the Liberal Member for Richmond, described the problem
in the following terms (Assembly debates, September 30, 2003):

      This insurance crisis, the problem within the industry itself did not occur overnight.
      This has been underway for over a year.

[36] Mr. John MacDonell, the NDP Member for Hants East, commented in the
Assembly debates of October 3, 2003 as follows:
                                                                                          Page: 16


      In this day and age, you have to have an automobile. In a country like Canada, with
      a large rural component, not everybody lives in a world where you have public
      transit. Certainly in my constituency that’s not the case. I wish we did have some
      type of public transit system. When I think about people with low incomes or
      seniors, we really could use a system that could help them get around. But the reality
      is that for most of the population in Nova Scotia and even that significant portion of
      the population who live in the city here and have access to public transit, they still
      have automobiles, as well. In order to get around, you need to have an automobile.
      So to have insurance rates that are so high that people are willing to risk driving
      without it, this is an extreme situation and it’s extreme for the people who they run
      into.

[37] Mr. David Wilson, NDP Member for Sackville-Cobequid, expressed his view
on the impact of increased insurance rates in the following terms in the Assembly
debates of October 3, 2003:

      People are going without insurance. An increasing number in this province are being
      charged with having no insurance when they are stopped by the RCMP or by their
      local police in their communities. The convictions for driving without insurance
      have increased almost 50 per cent in the last five years. On a personal side, as a
      paramedic attending many accidents and calls throughout my career, it’s amazing
      how many more people I see every day who tell me – while I’m trying to assist them
      – that they’ve been injured and they don’t have any insurance. Here I am trying to
      provide some care for them, and their main concern is the large cost they are going
      to incur because they haven’t been able to afford insurance on their vehicle.

[38] The seriousness of insurance premiums was related time and time again by
speakers in the Assembly debates and they recited enumerable specific instances of
elderly, youths, rural working people, fishermen, low income households, et cetera,
et cetera, et cetera being unable to handle the skyrocketing insurance rates with dire
consequences.

[39] The Honourable Leader of the Liberal Party, Daniel Graham, spoke at some
length on Monday, October 27, 2003 beginning at page 1707 commenting that the
final bill was the result of overall cooperation and made specific comments, for
example, with respect to the definition that the NDP view was not in the
circumstances a fair reading of what had been put before the house. He noted
specifically that the definition was in the statute and not in regulations, that there is
specific reference (page 1709) to particular injuries that are explicitly stated to be not
minor injuries in the circumstances. In his view the Act was a balance. At page 1709:
                                                                                          Page: 17

      Auto insurance rates have been unacceptably high and, most importantly, what we’ve
      seen is that they have risen at a rate that Nova Scotians are simply unprepared to
      accept. What we have before you is a bill that I hope and expect will lead to a better
      day for drivers in Nova Scotia, but will also provide for a reasonable balance in
      compensation for people who have been injured as a result of automobile accidents.
      I would point out, when we speak about a cap on compensation that people receive
      for automobile accident injuries, that most Canadians - when you consider just the
      Provinces of Quebec and Ontario alone, which have the majority of the population
      of this country – drivers operate under some system where there is a cap on certain
      types of injuries. We are not reinventing the wheel here in Nova Scotia; what we are
      providing for is a balance.

Evidence of Barbara Jones-Gordon:

[40] Ms. Jones-Gordon is the Executive Director of Policy in the Department of
Labour and Workforce Development since January 1, 2006 and prior to that worked
with Consumer Policy issues related to insurance since 1988 and held various
positions in the Department of Environment and Labour back to 1988. Ms. Jones-
Gordon swore an affidavit with substantial attachments and also gave evidence on the
subject through extensive cross-examination.

[41] In her affidavit she indicated that in 2002 there became an awareness from
conference call discussions with staff in the insurance division in other provinces and
the federal insurance regulator from the office of the Superintendent of Financial
Institutions, the insurance industry in Nova Scotia and increasing calls from the
general public in Nova Scotia complaining of rising auto insurance rates and difficulty
in obtaining insurance. She recites considerable background, including the IBC
report, February 28, 2002; the proceedings in the New Brunswick House of Assembly;
the Nova Scotia Private Passenger Automobile Insurance study prepared for the IBC
by R.R. Miller; a concern expressed by the Chair of the Nova Scotia Utility and
Review Board on January 24, 2002. The latter resulted in the Minister, pursuant to
s. 157 of the Insurance Act, referring the issue of rising automobile insurance
premiums to the UARB with the request the Board determine whether the rates were
excessive, inadequate, unfairly discriminatory or unreasonable. The Board engaged
MMC Enterprises Risk Consulting Limited as actuary and released the Board’s report
in 2002. Ms. Jones-Gordon’s evidence is that amongst the significant findings in the
report was the conclusion that despite large premium increases since 2001, insurance
premiums were approximately 10 - 20 percent below adequate pricing and combined
with continued escalation of claim costs and low investment returns, insurance
premiums would continue to rise. I see no need to recite chapter and verse of her
                                                                                          Page: 18

lengthy 44-paragraph affidavit and will move on to discussion and assessment of her
evidence in open court.

[42] Ms. Jones-Gordon was asked if she was the point person for this insurance
crisis and she acknowledged that she was the coordinator for a team of people who
were working on the whole issue around insurance at that time, the time frame is from
2001 forward. She confirmed that the Superintendent of Insurance advised they had
received approximately 500 complaints of automobile insurance rates increases since
January 2002 to October 2002. In addition, the UARB had received a significant
number of applications about automobile insurance rate increases and this was from
about 50 percent of the companies in Nova Scotia. Apparently there was concern of
the so-called file in use system and it looks as though the insurance company could
just file and anticipate receiving the increased rates. In 2003 there is a broad range of
premium increases, some as high as 39 to 45 percent.

                      Q.      Correct?    It was becoming a crisis in 2003, from your
      perspective, is that right?

                    A.     Well, certainly getting into that stage. I would say some, you
      know, were of the view, “Well, maybe it was just a hard market” and things would
      come around, the market would adjust on its own.”

                     Q.      Sure.

                      A.      But certainly with the layering, too, of previous increases on
      increases, it was getting more serious.

                      Q.      So in 2002, we had some increases in premiums. You’re
      aware of that, correct?

                     A.      Um-hmm.

                     Q.      But – yes?

                     A.      Yes.

                      Q.       Okay. But 2003, would you agree with me that that’s when
      it was really starting to get into this crisis ---

                     A.      Yes.

                                               ***
                                                                                      Page: 19


                      Q.      Okay, thank you. And the reason that automobile insurance
      rates were increasing, from your understanding and the Government’s understanding,
      was that claims costs were going up? Correct?

                    A.      There were several reports that indicated that was the case,
      yes.

                    Q.     And that was your understanding, as well, that claims costs
      were going up in 2001, 2002, 2003? Correct?

                    A.      Yes.

[43] There were other issues with respect to insurance that were being reviewed as
well (trial transcript, p. 532). The province had set up a Consumer Advocate who was
a former CBC investigative reporter with apparently no specific experience in the
insurance industry. The Consumer Advocate released his first report to the Minister
of Environment and Labour on June 4, 2003. Ms. Jones-Gordon referenced this in her
affidavit evidence quoted by Mr. Mason (trial transcript p. 536):

                            ... He had reported receipt of some
                            3,000 responses or comments from
                            consumers since his appointment
                            expressing concerns, including
                            unreasonable rate increases,
                            discriminatory rates, and lack of
                            consumer access to information.
                            Many indicated they had experienced
                            insurance rate increases ranging from
                            20 to 110- percent, notwithstanding
                            they had no new accidents or
                            convictions.”

[44] The full Consumer Advocate’s interim report is at Tab 24 to Ms. Jones-
Gordon’s affidavit.

[45] About 33 percent of the complaints Ms. Jones-Gordon received were as a result
of the campaign by the Nova Scotia Coalition Against No Fault Insurance. They had
underlying concerns about the rights of injured parties. Ms. Jones-Gordon speaks to
her experience in the assessment of answers as the result of such a campaign.
                                                                                     Page: 20

[46] Mr. Mason was entitled to wide latitude in cross-examination as is accorded to
any party, however, I did not find it particularly helpful to get into the political points
of view, suggestions of duping and deception, et cetera. Ms. Jones-Gordon, by way
of example was asked the following:

                      Q.     Yeah. Was there direction from anyone in government that
      the definition of a minor injury should not be circulated before the election?

                    A.      Absolutely not, no.

[47] I see no reason to recite questions by Mr. Mason to Ms. Jones-Gordon asking
her to acknowledge his view that the Premier of the day was duped, the public
deceived, et cetera, et cetera.

[48] Ms. Jones-Gordon was cross-examined and confirmed that claims costs were,
to her understanding, going up in 2001, 2002 and 2003. That was being looked at by
government because they were concerned from the consumers’ perspective. Ms.
Jones-Gordon was aware when she received the Paula Elliott report that in 2001
claims costs were actually going down and this was from new data available around
November 2003. She noted that there is always delay in terms of reports and this even
applied to the insurance premiums tax which takes about six months before they
would know how things were really tracking. In 2003, her evidence is that everything
was up. “We knew premiums tax was up, all our complaints were showing up, our
CPI was tracking up”, et cetera. She was asked:

                     Q.     But I thought what you said earlier was the government
      wouldn’t have been looking at capping injuries if claims costs were going down. I
      thought that’s what you said.

                      A.     The government was really looking at trying to create
      sustainability and stability in the insurance market. We wanted companies to stay
      in Nova Scotia and to be here to have insurance – you know, the stability of
      insurance companies is very important.

                    Q.      Sure it is.

                   A.      We had gone through issues back in the ‘80s with respect to
      insurance companies going broke.

                    Q.      Yeah.
                                                                                          Page: 21

                      A.    So their financial stability is generally monitored by the OSFI,
      by the federal government, but we had to work in partnership with them in terms of
      the whole system in terms of making sure that that system was sustainable.

                     Q.     Well you’re taking me off track a little bit, but I do want to
      follow up with that. What the IBC was telling you is that companies were going to
      go broke in Nova Scotia if they didn’t get this cap. Correct?

                     A.      That would be one of the things they were saying.

                     Q.      Yeah.

                    A.     But also, you know, I mean, you look at the general market
      and what was happening. And we had had a bit of a recession in 2000/2001. So it
      was taking them a while to get back on track.

                     Q.    And they were telling you that they were going to pull out of
      the market too. Correct?

                     A.      There were some that said that. That’s correct.

                    Q.     Yeah. But it’s clear, at least in 2001, that claims costs appear
      to have been going down based on this chart. Correct?

                     A.      Based on his chart, yes.

                       Q.     And you didn’t track this data because you say you weren’t
      able to get it until November 2003?

                     A.      That’s correct.

[49] Another example of the political discussion introduced by Mr. Mason is at p.
566 of the trial transcript:

                     Q.    My question is why didn’t the Premier demand this
      information from the Insurance Bureau of Canada before taking away Nova
      Scotians’ rights. Why didn’t he do it?

                      A.     Well, I think we accessed as much information as was
      available at the time.

                   Q.        But you didn’t do a direct ask, so how do you know, Ms.
      Jones-Gordon?
                                                                                          Page: 22


                      A.     Well, like, for Ms. Cantin’s study, we paid over two hundred
      and fifty thousand dollars ($250,000). We were trying to get the best information we
      could for Nova Scotians, so —

                      Q.     You should get it back, get the money back. Let’s – what I’d
      like to do is move to Mr. Miller’s report. I don’t believe that’s in evidence yet, but
      —

[50] Mr. Mason had Ms. Jones-Gordon confirm that the Green Book data indicated
costs of claims in Nova Scotia in 2001 were $167,000,000.00 and in 2002
$147,000,000.00, an actual decrease in claims costs and she responded that they did
not have that specific data at that time. Her evidence went on:

                     Q.      You’d agree with me that’s about a 15 percent drop.

                      A.      Yes. And from our discussions with the insurance agents and
      people on the street and that type of thing, people were stopping their claims. Like,
      in other words, “I’ll cover that. I didn’t want the insurance companies to know I had
      an accident.” I remember speaking with Co-operators and they were saying that they
      weren’t seeing much action or activity at all in claims, collision shops and repair
      shops and things like that. People were either covering it themselves or not getting
      the work done. So there was a general shift in consumer behaviour in that year.

[51] In cross-examination she acknowledged that in 2003 claims costs dropped to
$138,000,000.00. Ms. Jones-Gordon noted that this was “in terms of the whole
universe of claims”. Ms. Jones-Gordon acknowledged that it would have been nice
to have current information:

                     A.     It wouldn’t – it would have been good information to have,
             but it would just be one piece of the puzzle.

                     Q.      Sure.

                      A.      You know, we would still be having seniors that were calling
      in saying, “I’m being increased like 500 percent,” or whatever. So it would just have
      been one piece of the picture.

                     Q.    As I understood it, that was in 2003, is that correct, that you
      were getting hose complaints?

                     A.      And some in 2002 for seniors, yeah.
                                                                                          Page: 23

                     Q.    But the real concern, as I understood it from your evidence
      earlier, was 2003 when the insurance industry was really starting to ratchet up the
      premium increases.

                     A.      Um-hmm.

                     Q.      Correct?

                     A.      That’s right, yeah.

                     Q.      And that’s why the rate freeze came in in May of 2003.
      Correct?

                     A.      Correct, yeah.

[52] Her response to Mr. Mason’s question as to the insurance industry making four
billion nationally in 2003, she responded:

                       A.      I knew from OSFI data that about 46 insurance companies in
      property and casual were on their watch list. So that would mean they were under
      capitalized. So whether they had – you know, maybe one or two might have had a
      good profit and returning good results in Nova Scotia. Several were on the watch
      list, and quite a few – in fact, maybe even – out of maybe 70 insurers, that’s quite a
      few to have, over 46 on the watch list. So it would be of concern.

[53] Ms. Jones-Gordon vindicated the reliance on national information because she
indicated the Nova Scotia market was very small in terms of the overall Canadian
picture.

[54] Ms. Jones-Gordon acknowledged that she was not aware of the return on equity,
in Mr. Zubulake’s report, in Nova Scotia was 10.8 percent return on equity in 2002.
Mr. Mason pressed Ms. Jones-Gordon in an attempt to have her agree with him that
had she known of the return on equity in 2002 that she would not have recommended
to government they bring in a cap. She clearly responded that she would have to
analyse the matter, that increases were still coming to consumers. There were options
they might have considered such as extending the freeze, that she was seeing people
having difficulty getting insurance, people being cut off from insurance for virtually
no reason, seniors getting increases that were very, very high and that in her view it
required some kind of action, intervention by government.
                                                                                           Page: 24

[55] She was cross-examined on Mr. Zubulake’s report which showed a return on
equity of 32.9 percent. At the end she was asked if this would change things and her
response was:

                       A.      Well, as I say, it’s easy to have 20/20 hindsight, and knowing
      this is one of the factors, but overall I don’t know.

                                               ***

                   Q.      But you didn’t ask them for the updated information for
      2002/2003 before you brought the cap in, correct?

                     A.      Well, as I say, it would have been one factor. It would have
      been another factor, thought, to say should I just disregard what I’m hearing from the
      federal regulator who’s saying that many of these companies are on his watch list
      and that they’re not functioning well.

                     So, I don’t know what I would do at that point in time.

[56] Ms. Jones-Gordon acknowledged that the initial resolves in time provision was
for 18 months and that was costed and it was changed to 12 months and the 12 months
specifically was not costed. My comment in argument was that simply appeared to
me to be a government judgement call and that it is quite possible the expense to cost
it on a reduced basis was not warranted and, that in any event, it was not my function
to second guess or sit in judgement of a government judgement call.

[57] Ms. Jones-Gordon acknowledged that the legislation with the new definition of
“minor injury” was democratically passed by the House on October 30, 2003 and
enacted for November 1, 2003.

[58] In response to repeated attempts by Mr. Mason to have Ms. Jones-Gordon
characterize the IBC information as inadequate, misleading, or whatever, she had this
to say:

                     Q.     In light of the report Mr. Zubulake has put forward with
      respect to 2002 private passenger automobile insurance, do you feel that the
      Insurance Bureau of Canada and its representatives misrepresented their financial
      statement to you in 2002/2003 before the cap came in place?

                     A.      I don’t feel there was a misrepresentation.

                     Q.      All right. That’s fine.
                                                                                         Page: 25


                      A.      I feel that they gave us the information that they had at the
      time. I think you’d have to ask them if they were withholding information or if they
      were not proffering it to government.

And in re-direct examination:

                     Q.      Can you say when the 2002 information would have become
      available?

                     A.      I don’t know. Usually after – you know, in about February or
      March of any year, the IBC might make some kind of a report on how they had fared
      the year before. But I wouldn’t have seen this.

                                              ***

                   Q.      Okay. Now, with respect to the figure for 2003, can you say
      when that would have been available?

                     A.      Sometime in 2004 or ‘05.

                                              ***

                      Q.       Oh, okay. My Friend asked you in the latter part of his
      examination whether what was going on in the early part of 2000 and 2001 and so
      on reflected simply a market cycle in the insurance industry or a crisis. Do you
      recall specifically if the report of the UARB addressed that?

                       A.     Yes, it did. The Chair of the UARB called it abysmal, and he
      thought it was, you know, a very serious situation. Reading over his case, you know,
      it really did appear that it was, you know, something that – and he talked about rate
      shock and used words that were pretty, you know, confirming of our opinion, I
      thought, that it was, you know, a serious – a serious situation.
                                                                                            Page: 26

Evidence of Michael Trebilcock:

[59] Professor Michael Trebilcock is a Professor of Law and Economics at the
University of Toronto. His curriculum vitae discloses numerous honours and awards,
including an Honourary Doctorate in Laws from the Law Society of Upper Canada
in 2003. Counsel agreed that he is an expert in comparative Canada and U.S.
automobile accident compensation regimes. His evidence was by way of affidavit and
attendance at and participation in the applications.

[60] In para. 15 of his affidavit he gives us a quick glimpse as to the various
positions taken across Canada as relates to pain and suffering damages as follows:

      It is important to note, in the context of the present litigation, that Newfoundland and
      Labrador imposes a $2,500 deductible for pain and suffering damages; Nova Scotia,
      New Brunswick and Prince Edward Island a $2,500 cap for pain and suffering
      damages for minor injuries; Ontario only permits claims for pain and suffering
      damages for permanent and serious injuries and then only subject to a deductible of
      $30,000; Quebec prohibits claims for pain and suffering damages but does provide
      scheduled no-fault impairment benefits in addition to economic losses; Manitoba and
      Saskatchewan prohibit all claims for pain and suffering damages; and Alberta
      imposes a cap on non-pecuniary damages of just over $4,000 for minor injuries (for
      Alberta, however, see footnote 4...) British Columbia, the Northwest Territories and
      Yukon impose no constraints on claims for pain and suffering damages.

      4
      Recently held constitutionally invalid by Court of Queen’s Bench of Alberta in
      Morrow v. Zhang, [2008] A.J. No. 125 (currently on appeal to the Alberta Court of
      Appeal)

[61] He outlined three substantive values dealing with tort law and its alternatives
and what is of particular significance is the third value. A portion of his evidence is
as follows:

                     Q.      And the third value, affordability?

                     A.     The third value, affordability, relates to concerns that because
      automobile insurance and most schemes in place, first party or third party is
      mandatory, insurance costs become a necessary cost of driving. And in our society
      we tend to place a high value on mobility of economic and social reasons.

                    And insurance premiums are likely to have a regressive impact on low
      income drivers because typically they’re not geared to or rated by income.
                                                                                              Page: 27

[62] This evidence is particularly supportive of the concern expressed from so many
quarters and examples given of the dire consequences of skyrocketing insurance rates,
particularly on people of low income and limited means.

[63] In Professor Trebilcock’s view what was done in Nova Scotia affects what has
transpired in other jurisdictions:

      As will be evidence from my survey of U.S. and Canadian threshold no-fault
      systems, this kind of cap on recovery of non-pecuniary damages for minor injuries,
      off-set by stipulated no-fault benefits, and in the case of Nova Scotia a 20 percent
      roll-back in premiums, when the cap was introduced; reflects a common trade-off in
      all these jurisdictions. While, as I have acknowledged, no single legal regime for
      compensating victims of traffic accidents is optimal on all three values which I have
      identified – individual responsibility, distributive justice, and affordability – the sort
      of trade-offs among these values reflected in the Nova Scotia system fall comfortably
      within the range of choices made in many other jurisdictions.

[64] As I have already commented in Part I, he expresses views contrary to that of
Dr. Lynch and Professor Finley and, as I have indicated, I have an overall preference
for his expert opinions based on an exceptionally extensive background in his field of
expertise.

[65] Professor Trebilcock was cross-examined at some length by Mr. Jones and quite
quickly had Professor Trebilcock acknowledge that he was not professing to be an
expert in pain or pain management or in the areas of constitutional law or
discrimination or in the areas of gender law or feminist law. He acknowledged, as he
did in his affidavit, that the Newfoundland scheme was a straight deductable so that
if a claimant’s claim is worth $25,000.00 the recovery would be $17,500.00.

[66] An interesting portion of the cross-examination was as follows:

                     Q.      But I’m just asking you generally under the Workers’
      Compensation scheme that’s set up you give up your rights to sue but nevertheless
      you can access benefits under the Workers’ Compensation scheme as long as you
      have sustained an injury arising out of or in the course of employment, can you not?

                      Are you saying you can’t access any of those benefits?

                      A.      No, I’m obviously not saying that.

                      Q.      No.
                                                                                        Page: 28

                     A.     It would be non-sensical.

                     Q.     Right.

                     A.    What I thought we were focussed on will these schemes
      provide access to compensation for non-pecuniary losses and the point I’m making
      in paragraph 31 is that for non-economic losses and the most Workers’
      Compensation schemes recovery of any benefits is contingent on proving a
      permanent impairment.

                      And secondly the benefits are scheduled according to a kind of the
      nature that defines different levels of disability.

                     Q.     Right.

                      A.    So there is a distinction drawn between minor or transitory
      injuries and permanent injuries which seems to be at the heart of these proceedings.
      So I don’t know why you want to —

                     Q.     I – sorry you’re not –

                     A.     — set this aside.

[67] Professor Trebilcock was also cross-examined by Mr. Siebrits.

Statistics, Convictions for Operating a Motor Vehicle Without Insurance:

[68] The evidence of Crystal Rafuse, Deputy Registrar of Motor Vehicle Records
and Compliance was by affidavit tendered by consent and referred to the following:

      ¶3.    S. 230(1) of the Motor Vehicle Act provides as follows:

                     230 (1)          No person shall drive a motor vehicle
                     registered or required to be registered under this Act
                     unless there is in force in respect of the motor vehicle
                     or in respect of the driver of the motor vehicle a
                     motor vehicle liability policy.

      ¶4.     From and including 1997 - 2007, the number of convictions annually for
      violation of s. 230(1), was as follows:

                            Year                     # of Convictions
                                                                                 Page: 29

                           1997                        1628
                           1998                        1910
                           1999                        1908
                           2000                        1916
                           2001                        2100
                           2002                        2294
                           2003                        2751
                           2004                        2117
                           2005                        1954
                           2006                        2231
                           2007                        1852

[69] The foregoing confirms generally the comments of Members of the Provincial
Assembly in expressing concern for the ability of Nova Scotians to afford what they
described as skyrocketing premium increases.

Evidence of Ronald R. Miller:

[70] Mr. Miller holds a Master of Science (Statistics) degree, a Doctor of Philosophy
(Mathematics - Theory of Probability) and is a Fellow of the Casualty Actuarial
Society and a Fellow of the Canadian Institute of Actuaries. He was engaged by the
law firm representing IBC to review and provide an analysis of recent experience up
to June 30, 2007 of the Nova Scotia All-Industry Private Passenger Automobile
Insurance (excluding farmers) and to provide an analysis of the changes in costs of
this class of business resulting from recent automobile insurance reforms enacted in
the Automobile Insurance Reform Act.

[71] His report is Exhibit A to his affidavit. In paragraph 1.2 he gives a summary
of conclusions. His entire report should be read and I will not incorporate substantial
portions of his report. His report indicates insurers starting to implement significant
increases in third party liability premium rates in late 2001 and that this process
continued until the government imposed a rate freeze in the Spring of 2003 which, in
his view, the rate increase led to a return of marginal profitability for all coverage
results in 2003 which results, although still unprofitable, were significantly better than
in the past for third party liability coverage. He expresses the opinion that assuming
the cap on pain and suffering for minor injuries is unconstitutional, there would be
need for about a $340.00 increase in average rates per car; equivalent to about a 65
percent rate of increase to consumers for compulsory coverages for the private
passenger (excluding farmers) class of business to coverage additional claim costs.
I have never fully accepted any actuarial report in any tort case that I have presided
over and I must confess to having difficulty in understanding much of the statistical
                                                                                Page: 30

data in this rather extensive report. Mr. Miller was subject to aggressive cross-
examination and it was clear from the nature of Mr. Mason’s cross-examination that
Mr. Mason had some experience in dealing with this area before regulatory bodies.
I turn to the evidence of Mr. Miller before me. The solicitor for IBC presented Mr.
Miller and briefly covered some of his qualifications and the fact that at two periods
of time in his professional career, Mr. Miller was an employee of IBC and a consultant
for other periods of time. His evidence therefore should be carefully viewed not as
an entirely independent expert. However, having said that, I have no difficulty in
concluding that he gave his evidence in an entirely ethical, credible and professional
manner.

[72] Mr. Galway took Mr. Miller through his summary of conclusions. He
explained in the chart of loss ratios he uses the term “fiscal accident year” which runs
by way of his example, from July 1, 1994 to June 30, 1995. Whereas Mr. Zubulake’s
report dealt with calendar accident years running from January to December. He
explained the colour-code of his chart and that measured by premium volume the
insurance industry experienced very unprofitable results over the period 1995 - 2002
and that this unprofitability was mainly driven by the unprofitability of third party
liability coverage until 2003. He confirmed his view that the unprofitability of the
third liability coverage was driven by high and rapidly increasing claims costs for
bodily injury coupled with inadequate earned premiums. In reading and assessing his
report, the time frame of the availability of information is crucial. I noted a major
difference between his statistical information and that of Mr. Zubulake was that he
used strictly a third party liability bodily injury number and not all coverages number.
Crucial was the pending position at the time reforms were being contemplated,
essentially December 31, 2002. The evidence showed increasing loss costs over the
period 1995 - 2002. The significant portion of his evidence is the need for a trend
line. He acknowledged post-reform that it was observed a decrease in third party
liability bodily injury and uninsured motors claim frequency and claim severity. His
understanding is that in none of the provinces where reforms were taking place, none
of the actuaries expected a drop in frequency. He also indicated that there were a
number of reforms in Nova Scotia (trial transcript p. 1207) that had an impact with the
lion’s share of the cost reduction in all actuaries views was the cap itself. He
explained the situation in Nova Scotia with respect to the 20 percent roll-back and of
the precise situation with Royal and SunAlliance in that the 20 percent roll-back did
not come off the actual frozen rates, it came off higher rates that never went into
affect.

[73] Mr. Mason’s cross-examination of Mr. Miller commences as p. 1222 of the trial
transcript. He acknowledged in early cross-examination the data since 2006 came
                                                                                        Page: 31

from GISA and before that it was from IBC. He has been the IBC actuary for the
supplemental reserve, at least as a consulting actuary for 2001, 2002 and 2003. He
acknowledged very early in cross-examination that upon endeavouring to make
predictions on future events in the insurance industry:

                      A.      There’s a lot of uncertainty, yeah.

      (p. 1224, trial transcript)

[74] He went on to acknowledge increased uncertainty because the product of reform
could not have been effect for a very long period. He confirmed my general view that
actuarial evidence does not give you a definitive prediction as follows:

                      Q.    An you would agree with me, Mr. Miller, that really you’re
      not in a position to make any kind of definitive – or make any type of definitive
      statement or judgment on what the impact of these reforms – or what the impact
      would be on premiums and costs if these reforms were declared unconstitutional,
      correct?

                    A.      Definitive? No, I can’t make a definitive prediction, but I’ve
      used my expertise to give my best estimate.

[75] Mr. Miller acknowledged at p. 1234 of the cross-examination:

                      A.      No, I did not go into the return on equity issue.



Evidence of Joe S. Cheng:

[76] Mr. Cheng gave evidence by way of affidavit and in open Court. He has
extensive experience as an actuary and some 34 years of property casualty insurance
experience. Included in his extensive curriculum vitae is that he was the actuary to
assist The Honourable Mr. Justice Coulter A. Osborne, Supreme Court of Ontario in
the Osborne Commission 1987/1988. Mr. Cheng was engaged by the law firm acting
for the IBC. He prepared a report with respect to the automobile insurance industry
in Nova Scotia from 1998 to 2002 using the 2002 GISA Green Book to the extent it
provided information. He also gathered information from the office of the
Superintendent of Financial Institution for Canada. His report is attached to his
affidavit and it also contains the Nova Scotia Utility and Review Board’s decision of
May 13, 2003, excerpts from Mr. Justice Osborne’s report and various other reports
including from Alberta, New Brunswick and Newfoundland along with closed claim
                                                                                Page: 32

surveys for private passenger automobile insurance tort bodily injury 2001 in Nova
Scotia, 2001 in New Brunswick and 2004 in Newfoundland and Labrador and, finally,
2006 Alberta.

[77] Mr. Cheng’s report sets out the return on equity (ROE) earned by Nova Scotian
insurers in 2002 and also from 1998 through 2002. This is the information that was
available in the Fall of 2003. The benchmark used by the UARB was 10 percent and
Mr. Cheng’s evidence was to effect that the typical ROE for insurers would be
something more in the range of 12 ½ percent. Without going into great detail and
noting the particular statistical information provided in the compendium of the
Insurance Bureau of Canada for argument, they accept essentially his conclusion that
based on the available information at the time of the crisis the conclusion was
basically as at December 1, 2002 the industry was clearly facing escalating third party
liability injury claim costs and the major cause of such was the rising bodily injury
claims costs for non-pecuniary damages. Mr. Mason did, as I said, an extensive cross
examination and did cause some concern as to the determination a crisis existed,
however, after careful reflection on the totality of the evidence advanced I have no
basis to fault the government or the insurance industry with respect to the data and
statistical information available at the time of the introduction of the legislation and
I accept the evidence of Mr. Cheng which is shown very clearly in the chart at page
13 of Mr. Miller’s report entitled Review and Analysis of Nova Scotia PPAxf recent
experience to 30/06/2007 claim crossed graft - view as of 30/6/2007 (except where
noted otherwise). The red squares indicate the rise in costs of third party liability BI
the only way a downward trend in 3rd party liability BI as of 2002 is ascertainable if
as suggested by Mr. Mason you take the last two asterisks and draw a straight line
down through them. Mr. Miller’s evidence which I accept is “on no basis would that
constitute a reasonable trending procedure”. Mr. Cheng’s evidence is helpful and his
analysis shows that the logical place to look was non-pecuniary damages given the
significant percentage such comprised of total damage awards. The insurance
industry were increasing claim costs rapidly increasing over the period 1997 through
to 2001 resulting in a substantial premium increases starting in 2001. In 2002 a
further increase of 23.5 percent followed by a number of applications on the part of
the insurance companies to further to raise rates anywhere from 15 to 33 percent.
                                                                                        Page: 33

Report on the Property and Casualty (P&C) Insurance Industry in Canada:

[78] This report was in response to a request from the Federal Secretary of State
(International Financial Institutions) August 25, 2003 for information on the property
and casualty insurance industry in Canada to better understand the recent increases in
the insurance premiums in certain regions of the country. The significance of this
report and bearing in mind its source, requires it to be weighed very carefully the
finding that:

      In terms of trends, the financial position of the property and casualty industry has
      been deteriorating for several years.

[79] The report acknowledged the factors included a scale of claims has been
growing, especially for automobile insurance (which represents more than half of the
insurance market), competition controls over automobile insurance premium rates so
that premium revenue has not kept pace with rising claims and the revenues from
investment portfolios declined. The latter, of course, has not been solely a feature of
the insurance industry, but a North American and global phenomena.

Nova Scotia Utility and Review Board Report:

[80]     The involvement of the Board was prompted by a letter dated January 24,
2002 from the Chair of the UARB to the Nova Scotia Minister of Environment and
Labour relating the number of complaints received by the Board about the rapid
increases in automobile insurance in Nova Scotia because at that time the Board
supervised the rates of insurance. The Minister of Environment and Labour asked the
UARB to “examine the rates for private passenger automobile insurance in Nova
Scotia” (specifics are contained in para. 6 and the Exhibits referenced there in the
affidavit of Barbara Jones-Gordon).

[81] The Bill freezing automobile insurance rates was introduced May 5, 2003 and
intentionally made retroactive to May 1, 2003 to prevent the filed rate of increases
with the UARB from coming into effect. On May 13, 2003 the UARB released its
report to the government that had been requested February 7, 2002 and the full report
is Exhibit 23 to the affidavit of Barbara Jones-Gordon. The UARB relying in part on
expert advice described premium increases as “rate shock”; described insurance
company financial results as “nothing short of abysmal” and identified the principle
cost driver as “claims for compensation for body injuries”. It is worthwhile to set out
in detail the Board’s conclusions:
                                                                                      Page: 34

7.0    Board Conclusions

[143]           As the evidence submitted during this hearing indicates, for insurance
companies writing private passenger automobile insurance business in Nova Scotia,
their financial results in recent years have been nothing short of abysmal. Their
earnings from this line of business have not been adequate by any reasonable
standard. As can be seen from Table III at paragraph 92, the industry incurred total
losses of $224 million during the accident years 1997 to 2001.

 [144]         Given these large losses, it is not surprising that the automobile
insurers have been taking drastic action to restore profitability.

[145]           Based on the evidence submitted at the hearing, the Board is of the
view that, as at August 2002, the date of MMC report, the overall level of private
passenger automobile insurance rates was not excessive, inadequate, unfairly
discriminatory, or otherwise unreasonable.

[146]           In the Board’s view, the major reason for the losses experienced by
the industry is the increasing cost of claims. In this regard, the Board finds that the
evidence is compelling that the primary cause of the increased claim costs is claims
for compensation for bodily injuries.

[147]           The evidence shows that third party liability claim costs have been
increasing much faster than collision and comprehensive claim costs. The increase
in the average cost of a bodily injury claim over the last five years has been dramatic.

[148]          MMC has concluded that, assuming an after-tax return on equity of
10% for private passenger automobile insurance, premiums should have been 47%
higher in 2001 than those which were charged. MMC noted that if a ROE of
7.5%were assumed, the earned premium inadequacy would have been about 43%,
and at an assumed ROE of 5%, the earned premium inadequacy would have been
about 38%. MMC further stated that even after the increases which had occurred to
the date of their report, current average premiums for the year 2002 were
approximately 10% to 20% below the level necessary to achieve an after-tax ROE
of 10%. MMC has indicated that the evidence shows that future increases will be
concentrated in the third party liability coverage.

[149]           MMC has also indicated that, barring unforeseen changes, claim costs
being incurred by insurance companies will continue to increase at approximately
7% a year. The Board includes, for the reasons set out in the report, that continuing
cost increases are to be expected as long as the existing automobile insurance system
in Nova Scotia remains as it is today.

[150]        It is clear to the Board that the rate increases imposed by the
insurance companies on consumers have been extremely harsh, and appear to have
                                                                                           Page: 35

      been imposed without consideration of consumers’ ability to pay. If there ever was
      a case of “rate shock”, surely this is it. While the Board may have no jurisdiction to
      deal with “rate shock”, the Board has serious concerns about the methods adopted
      by the insurance industry as it seeks to “make up for lost ground”.

      [151]          The Board heard evidence, that while individual insurance companies
      were aware of the significant losses they were experiencing, they did not
      immediately act to increase rates in the expectation that conditions would improve.
      Unfortunately, this did not occur and the insurance companies had to implement
      sharper rate increases as a “catch up” measure. The Board finds that if insurance
      companies had taken action earlier than they did, a more gradual rate increase could
      have been implemented to achieve similar results.

      [152]           The Board’s concerns outlined above are heightened as a result of the
      apparent continuing increases which have been implemented since the conclusion of
      the hearing. The nature of the Board’s existing mandate pursuant to s. 157 of the Act
      is such that any review conducted by the Board has to be carried out “after the fact”.
      It is the Board’s view, after reviewing the evidence, that Government would be well
      justified in considering the desirability of alternative regulatory models or making
      other structural changes in the automobile insurance system in Nova Scotia which
      would ensure that drastic and sudden rate hikes of the sort recently experienced by
      Nova Scotians could not be visited upon them again.

      [153]           The Board finds that there appears to be evidence of restrictive
      underwriting practices being implemented by some insurance companies. The nature
      and extent of these practices is difficult to quantify based on the evidence before the
      Board. Am more comprehensive review would be required to determine the extent
      to which such practices are being adopted by the various companies.

      [154]           With respect to whether the rates are unfairly discriminatory, there is
      no question that rates are discriminatory based on a whole host of factors, such as
      age, location, etc. The Board has heard evidence that there may be unfair
      discrimination concerning rates for youths and seniors, but without further study and
      information it is not possible to reach any definitive conclusion in this regard.

[82] The nature of the Board’s existing mandate pursuant to s. 157 of the Insurance
Act is such that any review conducted by the Board has to be carried out “after the
fact”.
                                                                                                      Page: 36

Consumer Advocate:

[83] The Consumer Advocate appointed by the province reported “for many their
insurance bill is now proving to be a major financial challenge that threatens their
lifestyle and even their livelihood”.

Facility Association Nova Scotia Market Share:

[84] The following is Exhibit IX to the affidavit of J.S. Cheng:
                                Facility Association Nova Scotia Market Share

                                Nova Scotia Written Exposure

      Year                 Facility Association                Industry      Facility Association Share
       (1)                          (2)                           (3)                    (4)

             1998                                  5,717           441,133                        1.3%
             1999                                  3,989           434,274                        0.9%
             2000                                  4,907           456,219                        1.1%
             2001                                  8,947           464,077                        1.9%
             2002                                 24,232           461,696                        5.2%
             2003                                 32,419           458,094                        7.1%

 Note:
 (2) Facility Association Loss Development Exhibit for Private Passenger Automobile in Nova Scotia as of 2006-2
 (3) Exhibit XI, Page 1, Column (1)
 (4) = (2) / (3)




[85] The evidence of Mr. Cheng and, in particular, his report which once again I
reflect upon very carefully acknowledging that he was engaged as an expert by IBC,
does show and I accept the growing premium deficiency in private passenger
automobile insurance in Nova Scotia during the period 1998 - 2002. Mr. Mason’s
criticism is that the industry ought to have had relatively low progressive increases
and like many of the personal views advanced by Mr. Mason there is a great deal of
hindsight. What Mr. Mason does, as I have indicated, is point out very clearly the
ROE increases post the introduction of the cap; however, the appropriate time frame
for consideration is that directed by the Supreme Court of Canada in R. v. Big M.
DrugMart Ltd., supra. In addition, the evidence has to be weighed carefully in light
of the increased premiums prior to the legislation the applications for the various
substantial increases in premiums that were outstanding rebate/fallback of 20% the
fact that the cap was in existence for only two months of the calendar year 2003, et
cetera. Mr. Cheng in his report outlines the contributing factors to low ROE 1993 to
2002 and the contributing factors to high underwriting losses for 1998 to 2002. His
                                                                                          Page: 37

opinion that the low ROE between 1998 and 2002 is a result of a high underwriting
losses is well substantiated as is his determination that for the period 1998 to 2002
third party liability had a very significant underwriting loss and he produces a table
at page 9 of his report. Mr. Cheng in the conclusion of his report noted that in early
2002 Nova Scotia premium rates were still rising but at a slower pace than in 2002.
He also noted the number of Nova Scotia facility association customers was rising and
the total number of insured private passenger vehicles was experiencing further
decline which as indicated by some of the Members of the Provincial Legislature was
quite probably a reflection of an increasing number of Nova Scotians unable to afford
the skyrocketing costs of insurance and opting to drive without insurance.

Oliver Wyman Consulting Limited Report:

[86] This firm was retained by the Attorney General’s office on behalf of the
Province of Nova Scotia and prepared a report which included the market conditions
with respect to private passenger automobile insurance in Nova Scotia over the period
1997 to 2002 and I certainly agree with the opening statement “the financial results
reported by insurance companies are difficult to understand”. I also accept the
comment “this is because of the nature of insurance (setting premiums today to cover
costs that will not be known for several years in the future) and the accounting rules
that apply to insurance”.

[87] The initial report is helpful in having an appreciation of the complexity of the
problem and the reality that the insurance industry was in very poor financial shape
in Nova Scotia leading up to 2003. There is an addendum prepared by Oliver,
Whyman that comments on the insurance industry’s financial results and market
conditions as respecting private passenger automobile insurance of Nova Scotia over
the period 2003 to 2004. The addendum noted a number of features including an
unexpected improvement in automobile claim frequency beginning in 2002 and a
considerable improvement in ROE for insurance companies for the period 2003 to
2007. In addition the Facility Association market share declined in 2007 and indicates
a further decline in 2008 but they note it remains relatively high. I do not attach any
weight to the addendum because it deals entirely with the period post the introduction
and passing of the legislation challenged, a time frame after that directed by R. v. Big
M DrugMart Ltd., supra. Oliver Wyman in its report had a section entitled “Impact
Of Government Actions On Automobile Insurance Premiums”:

      As a result of the rate freeze, the mandated 20% rate level reduction, and the Board’s
      review and approval of all automobile insurance rates charged in the province at the
      end of 2004, following an average premium increase of 23.5% in 2002, premiums
                                                                                          Page: 38

      rose on average by 4.1% in 2003, declined by 3.4% in 2004, declined again by 6.2%
      in 2005, declined by 2.3% in 2006, and declined by 0.7% in 2007. ....

[88] Again, while of interest, I attach no weight to what occurred entirely post the
introduction of the impugned legislation, the objective of which was to address crisis
faced by Nova Scotians related to skyrocketing private passenger automobile
insurance rates.

[89] If I am wrong as to the appropriate time frame and should have attached weight
to the late and subsequent statistical data and, in particular, the increased ROE’s the
impact would have been to diminish the strength of my conclusion on the first
requirement of the Oakes test, however, I still would have reached the same
conclusion.

CONCLUSION:

[90] I have referred to much of the evidence relevant to part one of the Oakes test
and my weighing and assessing this evidence leads me clearly to the conclusion that
the Attorney General of Nova Scotia has established quite readily on a balance of
probabilities that the objective of the impugned legislation was pressing and
substantial leading up to and at the time of its enactment.

2.    Is there a rational connection between the Government’s legislation and
      it’s objective?

[91] Mr. Mason, in argument, took the position that the only rational connection was
that “[A]ccident victims rights have been given up to pad the profits of insurance
companies of this province. That’s the connection.” In his view insurance profits
have gone through the roof and that it is a matter of the insurance industry being
greedy and wanting to take as much money as they can from consumers and, in
particular, take as much money as they can from accident victims. In his view the
rational connection is between insurance caps and profits. At page 95 of the pre-
hearing brief of the Attorney General:

                                   (b) Rational Connection

      As Wilson, J. noted in Lavigne v. O.P.S.E.U. [1991] 2 S.C.R. 211, the point of the
      rational connection test is to examine whether the legislative objective is “logically
      furthered by the means adopted”.
                                                                                             Page: 39

      The enactment of the provisions impugned by the Applicants enabled the legislature
      to roll-back automobile insurance premiums by 20%. The 20% roll-back was
      specifically ordered by legislative enactment (Insurance Act, R.S.N.S. 1989 c. 231,
      s. 154, as amended by S.N.S. 2003 (2nd session) c. 1, s. 18). The actuarial reports
      commissioned by the Crown in the period prior to the legislative reform, reveal an
      analysis of the financial effect of proposed reforms on insurance premiums....

[92] The Oliver Wyman report confirms the reduction in premiums and benefit to
the automotive public such occurred in the context of previous rising “skyrocketing
premiums” applications for increased premiums all on overwhelming evidence that
the dramatic increases were being given by claims costs for relatively minor, non-
pecuniary damages. Of specific note is Nova Scotia’s “Tort Bodily Injury 2001
Closed Claim Survey” and they were prepared by Mr. Miller.

[93] There can be no doubt that there is a clear rational connection between the
imposition of insurance caps and limitation on the dramatic increases on insurance
premiums and reduction of insurance premiums caused by rising claims costs
primarily related to minor injuries.

3.    Does the legislation minimally impair the charter right or the freedom at
      stake?

[94] Mr. Mason suggests that the government could have adopted a deductable type
of system that applied to all accident victims and pointed to the deductable system
introduced in Newfoundland. In addition he suggests Section B benefits could have
been increased and that to do so was in his personal view consistent with the objective
of the legislation in protecting the rights of accident victims and minimally impairing
their rights. In the pre-hearing brief of the Attorney General at pp. 96 - 99:

                                    (c) Minimal Impairment

      In a number of cases, the Supreme Court of Canada has acknowledged the policy-
      making role of the legislature and the impropriety of judges substituting their own
      policy preferences. In R. v. Edwards Books and Arts Limited [1986] 2 S.C.R. 713,
      for example, Dickson, C.J. writing for two others, said in discussing s. 1 that “the
      courts are not called upon to substitute judicial opinions for legislative ones as to the
      place at which to draw a precise line” )o. 781-782). LaForest, J. agreed that where
      an objective is pressing and substantial, “The legislature must be allowed adequate
      scope to achieve that objective” (p. 794-795). In Harvey v. New Brunswick [1996]
      2 S.C.R. 876, Justice LaForest noted that “This court has on several occasions
      asserted its unwillingness to second-guess the legislature in choosing between
      acceptable options” (p. 906). In R.JR-MacDonald Inc. v. Canada (Attorney General)
                                                                                     Page: 40

[1995] 3 S.C.R. 199, McLachlin, J. (as she was) said, “The tailoring process seldom
admits of perfection and the courts must accord some leeway to the legislator”. To
the same effect see United States of America v. Cotroni [1989] 1 S.C.R. 1469, at p.
1489-1490; Re ss. 193 & 195.1(1)(c) of Criminal Code (Canada); [1990] 1 S.C.R.
1123, at 1199, 1138; M. v. H. [1999] S.C.J. No. 223, at Paragraph 311; Sauvé v.
Canada [2002] 3 S.C.R. 519, Gonthier, J. at Paragraph 161.

In a passage that has particular resonance here, Dickson, C.J. said this respecting the
minimal impairment test in Irwin Toy Ltd. v. Quebec (Attorney General) [1989] 1
S.C.R. 927, at p. 993-994:

       ...in matching means to ends and asking whether rights or freedoms
       are impaired as little as possible, a legislature mediating between the
       claims of competing groups will be forced to strike a balance without
       the benefit of absolute certainty concerning how that balance is best
       struck...

       ...when striking a balance between the claims of competing groups,
       the choice of means like the choice of ends, frequently will require an
       assessment of conflicting scientific evidence and differing justified
       demands on scarce resources. Democratic institutions are meant to
       lt us all share in the responsibility for these difficult choices. Thus as
       courts review the results of the legislature’s deliberations, particularly
       with respect to the protection of vulnerable groups, they must be
       mindful of the legislature’s representative function.

In the present case, there were a number of competing groups including the driving
public, insurance companies, insurance brokers, victims of automobile injuries and
the personal injury bar, whose interests would be affected by the legislative choice.
There were also a wide range of policy alternatives available - at least theoretically
- to government. It could have left market forces to work on their own. This would
have imposed significant economic strain on a large segment of the driving public.
It could have implemented a publically owned automobile insurance system. In fact,
such a system was examined, but its $200 million cost appears to have been
unpalatable (Affidavit of Barbara Jones-Gordon, Exhibit 31, “Study of cost-benefit
and legal implications of an Atlantic public automobile insurance system” Executive
Summary , p. 3). It could have imposed significant restrictions upon recovery of
economic loss resulting from injuries sustained in automobile accidents. But this
would have involved the legislature interfering in the “basic principle” of personal
injury damages “to compensate for measurable losses” (Lindal, supra, p. 634-635,
per Dickson, C.J.). The legislature restricted the changes to economic loss recovery
to the limited measures described above. The legislative focus became pain and
suffering damages is relevant to the s. 1 analysis. In R. v. Keegstra [1990] 3 S.C.R.
697, at 737 - 738,. Dickson, J. noted that “The application of the Oakes approach will
vary depending on the circumstances of the case, including the nature of the interest
at stake” (emphasis added).
                                                                                      Page: 41


It was, possibly, open to the legislature to sweepingly restrict pain and suffering
awards in all cases of automobile injury, without distinguishing between the severity
of the injuries. Those severely injured would have their non-pecuniary damages
curtailed along with all others. But there seems to be something wrong with the idea
of equating a broken neck with a bruised finger and restricting non-pecuniary
damages in severe cases even further than they have been restricted by the Supreme
Court of Canada in the trilogy. The Consumer Advocate commented that “I strongly
believe that if there is a real, permanent loss of function, then there ought to be
compensation over and above the actual loss of income and expenses” (Affidavit of
Barbara Jones-Gordon, Exhibit 37, p. 13).

The legislative choice, accordingly, focussed on non-pecuniary damages respecting
those suffering minor injuries. Unlike Alberta’s legislation, the Nova Scotia
definition is not directed to a narrow class of whiplash / chronic pain sufferers. It
defines the class more broadly to encompass largely temporary and less severer
injuries. It cannot be said in Nova Scotia that the impugned legislation foists upon
chronic pain victims the ‘lion’s share’ of the burden of the legislative objective (see
Morrow v. Zhang, at Paragraph 346).

Beyond this, the impugned legislation does not wholly exclude minor injury victims
from compensation. Economic damages are still payable in full. Non-pecuniary
damages are capped at $2,500 rather than eliminated. Some categories of injuries -
certain burns, certain amputations and certain chronic pain victims - are deemed by
regulation not to be minor injuries. All of this reflects, with respect, a tailoring of
the legislative scheme that is reasonable and justifiable under s. 1. In addition, while
it is not directly connected to the impugned legislation, it is of note that in the
context of chronic pain, the provincial response is not demeaning or dismissive. To
the contrary, the Department of Health has implemented measures to increase the
facilities and resources for the treatment of chronic pain (see Affidavit of Rachelle
O’Sullivan).

Further, while this Court cannot resolve the outstanding medical/scientific
controversy respecting chronic pain, neither can it ignore the fact that it is a complex
biopsychosocial phenomenon in respect of which a significant measure of medical
opinion concludes that the availability of compensation for the condition is an
aggravating factor that impedes recovery (see Cassidy Report).

Finally, reference must be made again to the “nature of the interest” at stake here;
non-pecuniary damages. By intervening in the common law, as it has through the
impugned legislation, the legislature has merely put limits on a damage award that
has been conventional and arbitrary. It has done so on the basis of broad concerns
related to availability of automobile insurance, particularly on the basis that large
awards for largely temporary and less severe bodily injuries were unsustainable....
                                                                                        Page: 42

[95] The arguments advanced orally by Mr. Mason and additionally in the brief filed
on behalf of Gionet and MacDonald has been carefully considered; however, I am
more than satisfied that the Attorney General of Nova Scotia has met its obligation as
I understand the law, establishing on a balance of probabilities that in this case there
has been minimal impairment.

4.    Does the deleterious effect of the Charter breach outweigh by the salutary
      effect of the legislation?

[96] Mr. Mason refers in his pre-trial brief of the applicants Gionet and MacDonald
dated September 23, 2008 to the following:

      Gonthier J. in Lavoie v. Canada (2002), 15 C.C.E.L., 3d, 159, at paragraph 70 stated
      the following:

             “...the final stage of the Oakes test should not be conflated with the
             first three stages. If the first three relate to reasonableness of the
             legislation itself, the fourth examines the nature of the infringement
             and asks whether its costs outway [sic] it’s benefits. The implication
             of finding a violation at the fourth stage is that even a minimum level
             of impairment is too much; the costs to the claimants so outweigh the
             benefits that no solace can be found in the fact that the legislation
             violates the Charter for as little as reasonable [sic] possible.”

[97] The harmful effect that I am considering now is based upon the assumption my
finding that the evidence overwhelmingly failed to disclose any stereotyping or
marginalizing of accident victims who suffered minor injury as defined in the
legislation is in error.

[98] In Morrow v. Zhang, the court did not have the benefit of the Supreme Court
of Canada decision in Kapp, (above) which continued the Law analysis making clear
that the factors therein cited were not exhaustive and should not be treated as being
rigidly adhered to. No one factor is paramount and I take the law to be that the trial
judge should consider all relevant factors. In the decision by McLaughlin, C.J.C. and
Abella, J., concurred by six fellow Justices quoted that the two-part test in Andrews
v. Law Society (British Columbia), [1989] 1 S.C.R. 143 (S.C.C.), namely a two-part
test for showing discrimination under s. 15(1)... (1) does the law create a distinction
based on enumerated or analogous ground? and (2) does the distinction create a
disadvantage by perpetuating prejudice or stereotyping? It was held that the Andrews
two-part test was the same in substance as the Law test. The decision goes on to note
that difficulties have arisen from the attempt in Law to employ human dignity as a
                                                                                            Page: 43

legal test. I am directed by Kapp that human dignity is an essential value underlying
the s. 15 equality guarantee, however again, as noted by the court, human dignity is
an abstract and subjective notion that can become confusing and difficult to apply.
McLaughlin, C.J. and Abella, J. went on the state at p. 25, para 23:

      ... The four factors cited in Law are based on and relate to the identification in
      Andrews of perpetuation of disadvantage and stereotyping as the primary indicators
      of discrimination.

[99] And further, para 25:

      The central purpose of combatting discrimination, as discussed, underlies both s.
      15(1) and s. 15(2). Under s. 15(2), the focus is on preventing governments from
      making distinctions based on the enumerated or analogous grounds that: have the
      effect of perpetuating group disadvantage and prejudice; or impose disadvantage on
      the basis of stereotyping. Under s. 15(2), the focus is on enabling governments to
      pro-actively combat existing discrimination through affirmative measures.

[100] What the Province of Nova Scotia did in this case cannot be labelled affirmative
measures, even though there were substantial benefits and improvements advanced in
legislation.

[101] If the stereotyping and marginalizing advanced by the applicants was
established on a balance of probabilities then the onus on the Attorney General of
Nova Scotia would be in the words of Dickson, C.J. in Oakes recited at p. 6 herein
bear repeating:

      The standard of proof under s. 1 is the civil standard, namely, proof by a
      preponderance of probabilities.

And Dickson, C.J. went on to say that the standard must be applied rigorously.

[102] I note the conclusion of Whittmann, A.C.J.Q.B. at para. 346:

      346      In my view the deleterious effect of furthering a prejudice against a defined
      group on the basis of a disability and burdening that group with the lion’s share of
      reducing mandatory insurance premiums, outweighs the reduced premiums that have
      resulted for Alberta drivers. The Other Regulations, such as the DTPR and the
      Automobile Accident Insurance Benefits Amendment Regulation have provided
      benefits to Minor Injury victims, but these do not flow from the MIR. Accordingly,
      I find that the Crown has failed to meet its burden in relation to this branch of the s.
      1 analysis.
                                                                                Page: 44


[103] A.C.J. Whittmann appears to have placed a considerable amount of weight on
the video and concluded that it was evidence of the stereotyping alleged by the
plaintiffs. I studiously avoided any comment on my personal assessment of the video
and relied on the evidence of the witnesses, the fact the extent to which the video had
any impact whatsoever is not supported by any evidence. Nor was there any evidence
of the actual impact, frequency or magnitude of impact by the other evidence
advanced such as newspaper articles. In the absence of evidence of any impact it is
not in my view appropriate to draw the conclusion that such caused or contributed to
stereotyping. There must be a clearly established connection between evidence and
any conclusion to be drawn from it.

[104] There is not doubt that there has been considerable benefit to the citizens of
Nova Scotia in the passing of this legislation. I will not attempt an exhaustive listing
of the benefits but they include the overall purpose of the legislation was to reduce
automobile insurance rates which had reached skyrocketing premiums (producing
“rate shock”) with dire consequences for Nova Scotians, particularly those with
reliance on motor vehicles for employment, access to employment, medical attention,
hospitals, doctors offices to avail themselves of the normal services necessary for
existence. A number of measures provided benefit including (1) setting up the
Insurance Review Board to examine automobile insurance rates and the factors
affecting the rates; (2) amending s. 30 of the Judicature Act, R.S.N.S. 1981 c. 240, to
allow courts to impose structured settlements; (3) eliminating double claims for
injuries that are compensated by an accident victim’s own insurance; (4) allowing
insurers to provide expanded levels of choice in Section B coverage to allow those
who want to purchase extra coverage for general damages awards; (5) moving the
review of rates for the Facility Association from the Utility and Review Board to the
Insurance Review Board and limiting the ability of the Facility Association to a apply
for rate increases only once a year; (6) increase the minimum coverage under a motor
vehicle liability policy from $200,000 to $500,000; (7) introducing the risk-
classification system to determine the rates for each category and coverage of
automobile insurance; moreover, an insurer must apply to the UARB for approval of
any change to its risk-classification system; and (8) limiting general damage awards
for minor injuries.
                                                                                        Page: 45


[105] The Consumer Advocate concluded in his final report of September 2003:

      Since June there have been additional regulatory changes that have shown positive
      results for consumers. In July, the Consumer Price Index for care insurance in NS
      went down 2.6% for the first time since March 2002. Many have been moved out
      of the Facility Association category and returned to regular insurance markets after
      the August 1st regulations came into effect. ...

[106] Concrete benefits are listed in the brief filed on behalf of Roy at para. 120
include the following:

      •      In the first months of 2007, Nova Scotia had the lowest prices for auto
             insurance in Canada.

      •      In 2004, insurance rates in Nova Scotia were down to the second lowest in
             Canada, after being among the highest in 2002 and 2003, before the
             amendments in November of 2003.

      •      Moreover, actuarial assessments done before the enactment of the cap
             demonstrated that the amendments would result in an average 18% reduction
             of motor vehicle insurance rates.

      •      Improving accessibility to insurance as the number of convictions for driving
             without insurance was reduced from 2751 in 2003, the highest number of
             convictions between 9197 and 2007, to 2117 in 2004 and 1954 in 2005.

CONCLUSION:

[107] Assuming the legislation advanced and fostered stereotyping and stigmatization
the determination of whether or not the Attorney General of Nova Scotia has met the
onus upon it for this branch of the Oakes test causes me some difficulty.

[108] Perhaps I fall into the trap of applying a personal subjective test of human
dignity. Stereotyping is most often a force diametrically opposite to equality and
human dignity. Clearly there was no intent in the legislation to cause stereotyping or
marginalization. Stereotyping almost always carries a negative, demeaning message
that those who are stereotyped are less worthy and possessed of traits that are not held
by decent, law-abiding citizens. If, however, it had been established such was a
consequence of the legislation, then I conclude the benefits of the legislation fall short
of justifying such stereotyping. Given the view I express about stereotyping I am
                                                                              Page: 46

unable to suggest what the Attorney General of Nova Scotia might otherwise have
done to overcome the consequences of stereotyping.

[109] It is clear in law if the Attorney General of Nova Scotia fails to meet all four
requirements of the Oakes test then the conclusion of the court must be legislation is
not protected by s. 1 of the Charter.

ORDER:

[110] Counsel are anxious to take out an order and I will do my best to accommodate.
I would suggest that an order can be granted citing clearly my determinations and
should comply with the new Civil Procedure Rule 78.05. If counsel want the order
to go forth before a determination of costs it should recite that the determination of
costs and disbursements and their taxation is reserved. The other alternative is to
await the determination of the costs and disbursements issue and incorporate it in a
final order.

COSTS:

[111] Counsel are entitled to be heard on costs. I have already received contrary
views as to whether representation should be written or oral and I conclude that I
would find it most beneficial to have written submissions after which I will make a
determination as to whether it would be beneficial to also have oral representations.
Representations should be made by the Attorney General of Nova Scotia, the IBC and
Roy followed by a response from MacKinnon and separately from Gionet and
MacDonald. Any parties seeking disbursements should advance and identify the
disbursements and their justification. It is always open to counsel to agree on costs
and disbursements.




                                              Walter R.E. Goodfellow, J.

				
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