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: Client Update: The "historic trade-off" prevails

August 7, 2013
The Supreme Court of Canada has now released the much anticipated decision in the case of Marine Services International Ltd. v Ryan Estate, 2013 SCC 44. In doing so, the high court has signaled, at least in the area of workplace compensation, a deference to provincial laws which is atypical in its maritime law decisions.

At issue was the interplay between a provincial workers' compensation regime and the federal Marine Liability Act, the latter of which permits without qualification a private cause of action in any case in which a claim for injury or death is governed by the principles of Canadian maritime law.

This issue engaged the constitutional doctrines of Federal Paramountcy and Interjurisdictional Immunity. Put most simply, those doctrines provide that a federal statute or authority must prevail in the face of a provincial statute that either:

a. conflicts with an existing federal statute (here, the Marine Liability
Act
); or

b. impairs a constitutionally guaranteed sphere of federal authority (here, the federal power over navigation and shipping).

The facts of the case are simple, yet tragic. Two men were killed when their vessel capsized while returning from a fishing expedition off the coast of Newfoundland and Labrador. Their spouses and dependants obtained compensation from the provincial workers' compensation regime. Thereafter, they commenced a civil claim against certain parties and asserted negligent design and construction of the fishing vessel. They also asserted that Transport Canada had negligently failed in its inspection of the vessel. These civil claims were brought pursuant to the federal Marine Liability Act.

A determination was then sought from the Newfoundland and Labrador Workplace Health, Safety and Compensation Commission as to whether the civil claims were statute-barred by virtue of the "historic trade-off" as confirmed by section 44 of the Newfoundland and Labrador Workplace Health, Safety and Compensation Act ("WHSCA"). The WHSCA states that workers give up their right of civil action for workplace injuries in favour of no-fault compensation. In other words, it was argued that the federal statute does not permit or maintain a parallel cause of action in relation to workplace injuries.

The Newfoundland and Labrador Workplace Health, Safety and Compensation Commission agreed that the civil action was statute-barred and therefore could not proceed. This decision was overturned by both the Supreme Court of Newfoundland and Labrador and a majority of the Court of Appeal. The lone dissenting voice at the Court of Appeal would have restored the Commission's decision.

At the Supreme Court of Canada, the Commission's original decision was unanimously restored. This means that the "historic trade-off" prevails and the civil claim cannot proceed under the Marine Liability Act.

In reaching this conclusion, the high court had to manoeuvre around its own past precedent. A prior decision seemed to suggest a federal priority in response to any interference by a provincial statute with the federal power to regulate claims of maritime negligence. In response, the court noted that we now have a more modern appreciation of the type of deference to provincial authority that is required by a flexible and co-operative commitment to the balance of powers between federal Parliament and the provincial legislatures.

With this in mind, the court concluded that although the "historic trade-off" does entrench upon the federal power over claims of maritime negligence, it does not "impair" the federal power to the level of constitutional concern.

This is because:

The intrusion of s. 44 is not significant or serious when one considers the breadth of the federal power over navigation and shipping, the absence of an impact on the uniformity of Canadian maritime law and the historical application of workers' compensation schemes in the maritime context. For these reasons, s. 44 of the WHSCA does not impair the federal power over navigation and shipping.

The Supreme Court concluded that, properly interpreted, there is no actual conflict between the two statutes in any event. In the court's view, the provincial statute "provides for a different regime for compensation that is distinct and separate from tort."

The analysis provided by the Supreme Court is relatively short and conclusory in comparison to that previously given in decisions engaging these complicated doctrines of constitutional law. The most that can be said is that this decision signals respect for and a confirmation of the "historic trade-off" embedded in provincial workers' compensation statutes despite federal statute law generally governing navigation and shipping that does not expressly provide for it.

At least in the context of workers' compensation, this means that employers can rest easier with the knowledge that the "historic trade-off" will prevail to a considerable extent, even where a federal statute would seem to permit a parallel cause of action. Put differently, our constitutional framework should ensure that employers of seafarers will not be "twice vexed" for workplace injuries.

The full reasons of the Supreme Court of Canada can be read here.

The foregoing is intended for general information only and is not intended as legal advice. If you have any questions, visit our Labour and Employment Group or Marine Group. For more on our firm see www.stewartmckelvey.com.
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