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annual report of the LAW REFORM COMMISSION OF BRITISH COLUMBIA 1980 British Columbia. Legislative Assembly 1981

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 ISSN 0381-2510
annual report
of the
  The Law Reform Commission of British Columbia was established by the Law
m Commission Act in 1969 and began functioning in 1970.
She Commissioners are:
The Honourable Mr. Justice John S. Aikins, Chairman
Peter Fraser
Kenneth C. Mackenzie
Bryan Williams
Anthony F. Sheppard
Arthur L. Close
I-l ^nthony J. Spence is Counsel to the Commission,
frederick W. Hansford and Thomas G. Anderson are Assistant Counsel to the
The Commission offices are located on the 10th Floor, 1055 West Hastings
_| Vancouver, B.C. V6E 2E9.
^haron St. Michael is Secretary to the Commission.
Mitroduction  5
■ r he Role of the Commission    5
IJ'he Programme
8 Carrying out the Programme     8
1. Research and Writing .' ;..».     8
2. The Consultation Process .;     8
I. The Projects •••     8
1. Debtor-Creditor Relationships     8
(a) Crown Liens  8
(b) Reviewable Transactions  9
(c) Joint Liability  9
(d) Enforcement of Judgments  9
2. Personal Injury Compensation ,  9
(a) Periodic Payments  9
(b) Discount Rates  10
3. Applicability of English Statute Law  10
4. Arbitration .:.„  11
5. Civil Procedure  11
(a) Civil Litigation in the Public Interest  11
(b) Class Actions  11
(c) Prejudgment Interest  11
6. Estates Projects..-..™...  12
(a) The Making and Revocation of Wills  12
(b) Statutory Succession Rights  12
(c) The Interpretation of Wills .Z:  12
(d) The Effect of Testamentary Instruments  12
(e) Probate Procedure and Administration „:.  13
7. Sale of Goods Legislation  13
8. Extrinsic Aids to Statutory Interpretation  13
9. Accounting on Foreclosure  13
10. Office of the Sheriff  14
11. Benefits Conferred under a Mistake of Law  14
12. The Recovery of Unauthorized Disbursements of Public Funds.. 14
13. Illegal Contracts  15
14. Distress for Rent and Other Debts ,  15
15. Subjects of Interest „,..  15
,the AvailabiMty of Commission Publications  16
Action on Commission Recommendations  16
Relationship With Other Agencies  17
Acknowledgments  17
gndix A—Reports and Recommendations Made By The Law Reform
Sommission of British Columbia   19
endix B—Matters Under Consideration  21
endix C—Letter Concerning Discount Rates  22
  fl: Honourable Allan Williams, Q.C.
1 Attorney General of the Province of British Columbia
ie Law Reform Commission of British Columbia has the honour to present
4J:ual Report for 1980, outlining the progress made by the Commission during
she Law Reform Commission of British Columbia was constituted by the Law
rin Commission Act which became law on July 1, 1969. The Commission
BSs work in March 1970. During the past year, formal Reports were submitted
M on Civil Litigation in the Public Interest, Calculation of Interest on Fore-
m and the Recovery of Unauthorized Disbursements of Public Funds. The
njiission has also issued Working Papers on The Making and Revocation of
pistress for Rent and Other Debts, and Benefits Conferred under a Mistake
i The contents of these documents are described more particularly below,
firing 1980 the composition of the Commission underwent a significant
with the appointment of The Honourable Mr. Justice John S. Aikins as
nan of the Commission, effective July 1,1980. This was a welcome develop-
Ss during the nine months preceding the appointment the Commission was
|it a Chairman. Mr. Justice Aikins will serve the Commission substantially on
|ime basis.
Is presently constituted the Commission consists of six members: the Chair-
mid Messrs. Peter Fraser, Kenneth C. Mackenzie, Bryan Williams, Professor
ny F Sheppard and Arthur L. Close. Mr. Close serves full-time and the other
grs serve part-time.
lie appointment of the Chairman has reinforced the revitalization of the
Eission that commenced in 1979. One aspect of this revitalization has been an
|e in the size and strength of our research establishment. As a result, the
aission is now better equipped to carry out its functions than at any time in its
$-. The work of the Commission has gained a momentum that is now beginning
Id tangible results and which is expected to continue through 1981. The only
j liment is that the Commission's suite of offices is now too small to house
Btely its research staff and library. We are currently exploring the possibility
Gaining more commodious premises with the officials within your Ministry
nsible for facilities management.
p March of 1980 the Commission had its tenth anniversary. It seems appropri-
foffer some reflections on the work of the Commission during the past ten
E the view that has emerged of its role, and the way it has approached the
ions entrusted to it by the Legislature.
Hie purposes of the Commission are set out in the Law Reform Commission
Section 2 of that Act provides:
The Commission is to take and keep under review all the law of the Province,
including statute law, common law, and judicial decisions, with a view to its systematic
development and reform, including the codification, elimination of anomalies, repeal of
obsolete and unnecessary enactments, reduction in the number of separate enactments
and generally the simplification and modernization of the law . . .
e broad, flexible terms of reference are similar to those of other law reform
~Tes in the Commonwealth. The projects undertaken and reported on by the
mission have covered a wide range. Some have concerned technical and
Kcal topics such as our Report on the Absconding Debtors Act and Bail Act
(LRC 37, 1978) while others have dealt with more controversial matters sue!
expropriation (LRC 5, 1971) and landlord and tenant relationships (LRC 13,19!
A general mandate to simplify and modernize the law, however, requires-
priorities be developed and that consideration be given to the role of the CqB
sion. In its 1974 Annual Report the Commission made its only prior pu]
pronouncement which attempted to define the role of the Law Reform CommH
All the Commissioners, and the entire professional staff of the Commission, are
lawyers, and this in itself imposes certain constraints upon us. While lawyers' skills and
values are important in the social process, they are not the whole of it. Lawyers are no
specialists in omniscience, and while they do have a considerable and distinct™
contribution to make to modernization and improvement of the legal system, theirs is ra
no means the only contribution.
Lawyers, as lawyers, probably have little more to contribute than other citizens in
the resolution of pressing social issues, except perhaps in the sense that they may have
heightened appreciation of the limitations of the law and its processes in the resolution of
such issues. The distinctive contribution that the Commission can make to the improvrj
ment of the legal system lies in its capacity for careful research and thoughtful analysis:
The Law Reform Commission is not an omnibus vehicle for law reform of all
kinds. It is but one among a variety of mechanisms available for the purpose. There are
matters of law reform that should not be left to lawyers alone, although what those
matters are cannot be stated with any precision. The judgment of when the Law Reform
Commission is an apt vehicle is a sensitive one that must be made in the light on
experience and an informed intuition.
The view set out above is negative in the sense that it says what a Commission i
and should not do.
The Commission's view of what it is and should be doing emerges onljL
an examination of the subject matter of its past Reports and work in handB
themes are visible. The first is that the work has been concentrated princS
although not exclusively, in areas having a high degree of legal complexityH
flows from our mandate to "simplify" the law. That which is in need of simpH
tion must perforce be complex. The second is that legal relationships beS
citizen and citizen as opposed to the legal relationship between citizen and a
have been emphasized in our programme, (see Appendices A and B.)
The Law Reform Commission began active work in 1970. Like any insj
tion, it has profited from experience; and, while none of the past Reports seerrB
to us to have been inappropriate, it is probably true that we have a more sopB
cated understanding of the important factors governing the selection of projeB
relation to our time and resources. What emerges is a cautious approam
developing our programme, but one which we are anxious should not be mis
derstood. Some of our Reports such as those on Security Interests in Real ProrS
Remedies on Default (LRC 24, 1975) or Proof of Marriage in Civil Proceerl
(LRC 32, 1977) may seem to deal with obscure issues but studies like thesS
important. They have a very substantial impact, either in terms of altering theB
rights of members of the public or in terms of a saving of expense to both the pro
and to the government. Our recent Report on Civil Litigation in the Public Inta
has similar implications.
There are pragmatic reasons for our cautious approach. First, much of a
was said in 1974 concerning the role of the Commission as set out above rerrl
true today. It should not be regarded as an omnibus vehicle for broad social refof
Its work should be confined to those areas in which its views are credible in the!
of government and the public. To fail in this would be to waste our resources ann
the long run, be harmful to the Commission.
Secondly, the Commission's methodology imposes certain limitations. FcS
the six members serve on a part-time basis. The work of the Commission revel
around periodic meetings of the Commissioners at which research materials!
J.eports are considered. This pattern means that certain kinds of projects
■present grave difficulties if undertaken by us. These would include projects
I by their nature, call for the day-to-day involvement of all Commissioners, or
jjs calling for extensive empirical research. Experience has demonstrated
Ken the existing structure and methodology of the Commission, it functions
■fectively in addressing short, discrete topics. This does not preclude large,
Bjfm studies but we are limited in the number of such projects that can be given
^consideration at any one time.
Rbject to those observations and the limitations imposed by our size and
■pes, we wish to make it clear that the Commission would not seek to avoid
J on a project merely hecause it raises highly visible or contentious issues.
■he Commission has traditionally drawn on a number of sources in developing
■gramme. Suggestions are received from bench and bar and from the general
■These suggestions are often stimulated by our published Reports and
ing Papers which are circulated widely among the legal profession and the
■Issues arise out of the professional experience of Commission members.
Ijal decisions and developments in other jurisdictions suggest possibilities,
lis may also be inspired by the work of other law reform bodies or agencies
■ government concerned with policy development. We are, of course, con-
j of the need to avoid wasteful duplication of effort.
In addition, topics are added to the programme at the request of the Attorney
hral under the terms of the Law Reform Commission Act. These form a
aicant part of our programme. Two of the Reports submitted in 1980 were the
Kf such requests: our Reports on Civil Litigation in the Public Interest, and on
Hculation of Interest on Foreclosure. This source of projects raises the more
Lai issue of the relationship of the Commission to other branches of the
D.try and to the government in general. It is desirable to clarify our views on the
Hto which the programme of a law reform agency should reflect the needs and
[ties of government.
litis clear that once a matter is before a law reform agency it must be free to
Bp its recommendations as it sees fit. This independence must exist in both
Knee and appearance. Less clear cut, however, is the degree of independence
Epriate in the development of the programme of a law reform agency. In British
ftnbia the Commission is almost entirely funded by government and, moreover,
Knv Reform Commission Act plainly states that the Attorney General has
Kant responsibilities in the development of the Commission's programme for
im. It is equally plain that the Commission, while recognizing the statutory role
■Attorney General, must also exercise its independent judgment in developing
Rgramme. In the Commission's view the Act contemplates a balance between
Kpiirements of government and the views of the Commission but leaves the
ese equilibrium to be worked out between the Commission and the Attorney
BVe are anxious to ensure, and indeed must do so, that the work of the
Rission is relevant and responsive to the needs of government. At the same
■we are equally anxious to retain the independence to undertake work in areas
Bjlieve to be important, even if government has not indicated a similar belief.
Ipidependence is critical to the Commission's credibility and usefulness to the
Be of the Province. In saying this we do not suggest that there is any issue as to
liommission's independence. There is none. The Commission's present pro-
mine comprises topics of importance referred to us and like topics initiated by
1. Research and Writing
The research to carry out the programme calls for time consuming work
qualified persons. This can be achieved by having the research done by persS
who are employed as full-time staff, or by persons with special expertise wffl
retained on a part-time or occasional basis. Although in the early years
Commission relied heavily on outside consultants, our experience has leoB
preference for the former approach. Consequently, most of the research and vS
is now done by full-time members of the Commission staff.
2. The Consultation Process
The Commission is making a general practice of inviting comment ai
criticism on its research and analysis before submitting a formal Report to you
any particular subject. This process of consultation greatly assists the Commissi^
in the making of proposals for the reform of the law that are both relevant and sous!
The chief means by which the Commission carries out this process is throul
the circulation of Working Papers to those persons, groups or organizations w
would find the subject under study of interest. The Working Paper sets out the viel
of the Commission, and the background on which these views are based, and invili
Occasionally, when the topic under consideration makes wide circulatioitHI
Working Paper inappropriate, copies of a draft Report may be given limit:
circulation for comment.
Whatever consultation mechanism is adopted, the tentative conclusionSBl
thoroughly re-examined in the light of the comment and criticism received and fill
recommendations developed accordingly.
During 1980 significant initiatives were taken by the Chairman to improveol
consultation process. This involved establishing new procedures, and strengthel
ing existing procedures, to facilitate our communication with the various organsjl
the legal profession and the two law schools in the Province.
The description below is limited to those projects upon which Reports ha
been made in the past year or upon which work is in progress. Details of ott
Reports, and projects which have been discontinued may be found in earlier Anni
Reports. Included as Appendix A is a table setting out all Reports whichfl
Commission has made to date, and references to legislation in which the re
ommendations have been implemented in whole or in part. In Appendix B there
another table setting out those matters which are now under consideratkawH
1. Debtor-Creditor Relationships
(a) Crown Liens
A large number of provincial statutes create liens over real and persoi
property to secure money that is payable to the government or its agencies. So
liens tend to be legislated on an ad hoc basis and their scope and priority are ofp
uncertain. There is no evidence in the statutes of any uniform policy or oi
consistent set of principles with respect to such liens.
fj. the project on Crown liens we hope to rationalize this area of the law and
a; an appropriate balance between the needs and expectations of government,
itors. and third parties.
lesearch on this project was commenced in 1979 and continued throughout
fflThe preparation of a Working Paper is in its final stages and we hope to
ate it early in 1981.
'^viewable Transactions
■study on the operation of the Sale of Goods in Bulk Act, Fraudulent
Whance Act and Fraudulent Preference Act is currently in progress. Back-
ul research on the law respecting the current operation of the Fraudulent
mance Act and the Fraudulent Preference Act is virtually complete. Research
mSale of Goods in Bulk Act will commence shortly.
■lis project is a large one and we do not anticipate that we will be in a position
■e a Working Paper until late in 1981. Preliminary research has, however,
Kjuestions about the utility of these Acts, particularly the Fraudulent Prefer-
Kf. It seems safe to say at this point that among the options for reform which
111 be considering will be one for the outright repeal of one or more of the Acts,
srationalization and modernization of what remains.
Wit Liability
■here are a number of aspects to the project on joint liability. The first is an
Ration of the distinction between joint liability and joint and several liability,
Kan be crucial. For example, a judgment obtained against a person jointly
Kill bar any action against the others with whom he is liable. If the liability is
find several, judgment obtained against one will not bar any action against the
IVe also propose to examine the law concerning joint obligations and its
ijinship with the law of contributory negligence. In particular, the provisions of
fgligence Act relating to the apportionment of liability, and rights of contribu-
limong persons jointly liable need to be examined. We expect to profit from the
lof the Uniform Law Conference in this area. The work of the Conference in
King new uniform legislation is nearing completion.
nforcement cf Judgments
four work on execution against shares and securities has been deferred pending
Bcome of our study on the office of the sheriff. The latter study will provide us
ilnuch needed information concerning current practices in relation to execution
Et shares and any conclusions arising out of that study may well have an impact
Is direction taken by our research and recommendations in respect of shares.
Lrsonal Iniury Compensation
eriodic Payments
|& project on personal injury claims was added to the Commission's pro-
Ke in 1978, largely as a result of the dissatisfaction with the present system of
rmal injury compensation that had been voiced in the Supreme Court of Canada
|Bat arose out of work and studies in other jurisdictions. The scope and
IBsis of the project were left undefined while background materials were
lired and certain preliminary research undertaken with a view to developing
Kiriate terms of reference. The work on this project has accelerated as a result
of an interest shown in it by the Chief Justice of the Supreme Court of Brit
Columbia and the Deputy Attorney General.
During 1980 our views sharpened considerably and we have identified
principal issue in this project as whether a credible scheme can be devjH
whereby, as an alternative to the present "lump sum" awards, a court avwj
compensation for personal injuries can take the form of a stream of peB
(b) Discount Rates
Where an award of damages is intended to compensate for losses or expen1
to be incurred in the future, the calculation of that award involves determinSM
"present value" of the loss. An essential component of this calculation is the
called discount rate. This rate is usually identified with the predicted diffM
between the long term investment rate of interest and the long term rate of pr
At present, the discount rate is a question of fact to be determined in eachc
on the evidence adduced. In the result, much court time is taken up in heari
evidence from economists and actuaries with respect to the appropriate discoi
rate. This evidence is repetitive and to relatively little purpose as the recomrrM
rates usually fall within a very narrow range. This adds to the expense whicH
be borne by litigants and detracts from the efficient administration of justi
Moreover, the discount rate is intended to reflect general economic conditioM
interest rate factors. Thus the rate should not vary from case to case dependjB
the vagaries of the evidence called with respect to those conditions in par^
This suggests that it would be beneficial to devise other ways of determini
the discount rate. Ontario has recently amended its Judicature Act to provirH
the discount rate in that Province may be set by its Rules Committee subjeeBJ
approval of the Lieutenant Governor in Council.
Early in 1980 we received a request from the Deputy Attorney General to asi
in the development of a scheme that might be adopted in British Columbia for fix:
discount rates. This was done in consultation with the Chief Justice of the Supre
Court of British Columbia, whose concerns inspired the request.
The Commission's suggestions as to an appropriate scheme were forwards
the Chief Justice in November. A copy of our letter to the Chief Justice and i
suggested legislation is set out as Appendix C to this Report.
3. Applicability of English Statute Law
Section 2 of the Law and Equity Act, R.S.B.C. 1979, c. 224 provides that I
laws of England, as they existed on November 19, 1858, are in force in Brit;
Columbia to the extent that they are not inapplicable through local circumsWl
and have not been repealed or superseded by federal or provincial legislat«l
follows from this that an uncertain number of English statutes are in force in f t
The aim of this project is to introduce a degree of certainty concerning'
extent to which English statute law is in force here. We hope to identifjM
statutes which are in force, with a view to rationalizing this aspect of our statu™
This has always been recognized as a long-term project and much of our w >,
has been devoted to gathering background information. Considerable progressf
been made in organizing these materials, and a preliminary list of statutes has h '
established. Our research in this area will continue in 1981.
Jhe law covering Arbitration was the subject of intense research by the
fjiission in 1978 and 1979. The focus of our attention was commercial arbitra-
rflid the imperfections of the existing Arbitration Act. In April 1979 the
isiiission circulated a Working Paper that set out a number of proposals for
J;. We are in the process of evaluating the response to the Working Paper and
i*ping our final recommendations. We hope to submit our final Report in 1981.
(fiL Procedure
in:v/7 Litigation in the Public Interest
Benerally speaking, a.private individual has no standing to sue to protect the
Bat large from a wrongful invasion of its rights. He may only sue when the
3i;rence with the public right is such as to interfere with a private right of his
J>r where he has suffered special damage or has some interest peculiar to
illf. Where such factors are absent only the Attorney General, suing either
"_w, more usually, on the relation of a private individual or public authority,
■eek redress in the courts in respect of a wrongful invasion of a public right,
ilale of the Attorney-General has recently been a matter of particular controls in England owing to the decision of the House of Lords in Gouriet v. U.P.W.,
mJa..C. 435.
p 1976 your predecessor requested that the Commission examine this area of
Bl-This has been done and in June 1980 we submitted our final Report setting
ar conclusions and recommendations for change,
jrhe recommendations made in the Report would, if implemented, enable
i v e individuals, in certain circumstances, to bring public interest proceedings in
lown name without the joinder of the Attorney General as a party and would
in their gaining greater access to the courts to vindicate public rights.
uass Actions
It has long been recognized there are situations in which it is appropriate to
jl litigant to bring an action on his own behalf and on behalf of numerous other
ins who may have similar claims. Rule 5(11) of the Supreme Court Rules
aits such actions but the scope and operation of the Rule is often uncertain, and
lope has been criticized as undesirably narrow.
[j is particularly desirable that the law in this area be uniform throughout
iida and we intend, as far as possible, to co-ordinate this project with similar
oi being done within the Province of Quebec and by the Law Reform Commis-
ncof Ontario and, through the Uniform Law Conference, with the reforms
isted or under consideration in other provinces.
prejudgment Interest
1 The Court Order Interest Act (formerly entitled the Prejudgment Interest Act)
Kiacted to implement recommendations made in a Report (LRC 12) submitted
^e Commission in 1973. Six years of experience under the Act has produced a
King body of jurisprudence and is sufficient time for any difficulties in the
Motion to have emerged. The Commission has embarked on an examination of
■[Deration of the Act and will be reporting in due course on what, if any, changes
JBomplementing our own work in respect of prejudgment interest is the work of
Hjhiform Law Conference of Canada aimed at developing a uniform model act
lible for adoption across Canada. At the 1980 meeting of the Conference the
underlying policy issues were the subject of intense consideration and it is exaaB
that in 1981 a draft act will be available for consideration by that body.
6. Estates Projects
(a) The Making and Revocation of Wills
In April 1980 the Commission issued Working Paper No. 28 on the Makit
and Revocation of Wills. This Paper explores a number of issues of concern to
person contemplating the execution of a will, and to a Court of Probate called upc
to determine the validity of a testamentary instrument. These issues include tl
capacity of minors, soldiers' and mariners' wills, the international form of willBj
impact of marriage breakdown on prior wills, gifts to witnesses, the designations
beneficiary under a plan such as a RHOSP, and conflict of laws. Proposals are Mt
with respect to all these matters.
The Commission has received a number of thoughtful responses to Workix
Paper No. 28 from academics, the Bench, and the Bar. These responses are beii
collated and will be useful in assisting the Commission in formulating fin;
recommendations. We hope to issue our final Report early in 1981.
(b) Statutory Succession Rights
The right of a person to succeed to the property of another on death may ans
by will or by statute. In Working Paper No. 28, we were concerned mainly m
testamentary succession rights. In this part of the project we propose to exaraii
rights which flow from statute, and which exist regardless of a deceased person
intent. Such rights may be mandatory, such as those which arise upon an intesffi
under the Estate Administration Act, or they may be discretionary — such as ugj
accorded to certain persons under the Wills Variation Act.
A number of fundamental issues arise. Who should enjoy a statutory succft
sion right? On what basis should courts interfere with other vested rights i
exercising their discretion under the Wills Variation Act? What relief should*
granted under such an act? What should be the position of a surviving spouse havg
regard to interests that may arise upon marriage breakdown under the Fantt
Relations Act?
Our background research in this area is in its final stages.
(c) The Interpretation of Wills
Once a will has been admitted to probate, doubts may arise concerning^
meaning of words used by the testator. Over several hundred years the common la
has developed a bewildering array of rules concerning the construction of won
used in a will. Many of these rules are both archaic and obscure. In this part offfl
project we will examine these rules with a view to proposing reforms which wj
enable courts more readily to ascertain and give effect to the testator's true intea
Intensive research is underway, and it is hoped that a Working Paper vnT^
distributed in 1981.
(d) The Effect of Testamentary Instruments
Even where the testator's original intent is beyond dispute, events may occj
which render it impossible to give effect to his intent. A beneficiary may predecT
the testator. Property disposed of by will may have altered in form. In this f<T
part of the Wills and Estates Project the Commission will examine a numbta
issues arising out of such occurrences. In particular, we will examine the legal ruj
concerning lapse, ademption, conversion, election, disclaimer, and survivors!
hbate Procedure and Administration
|is planned that this study will examine the law of British Columbia con-
ig the procedure used in obtaining letters probate or letters of administration,
ie law relating to the administration of the estates of deceased persons, with a
:o its consolidation, rationalization, and simplification. We will also consider
ocedural implications of recommendations made in other parts of the project,
phanges in the law concerning procedure depends to some extent upon the
Intive law, it is anticipated that aspects of our work on this topic will be
pd until the completion of the other parts of the Wills and Estates Project.
Le of Goods Legislation
Early in 1979 the Ontario Law Reform Commission submitted a massive
ft on the law concerning the sale of goods. It recommended the enactment of
egislation to replace a statute similar to the Sale cf Goods Act in force in this
ffce. The adoption of the recommended Act in Ontario only, however, would
to a serious departure from the high degree of legislative uniformity that
ntly exists among the common law provinces.
To meet this concern a special Committee of the Uniform Law Conference was
sto consider the desirability of promulgating a new Uniform Sale of Goods
nd whether the proposed Ontario legislation should form the basis of such a
rm Act. Those law reform agencies concerned with this issue are providing
|l assistance. We have engaged Professor David Vaver of the Faculty of Law,
ersity of British Columbia, as a consultant on this project and he is working
|y with the Committee.
[The Committee made satisfactory progress during 1980 and its work will
id into 1981. We acknowledge, with gratitude, the support of the LawFounda-
h connection with this project.
ctrinsic Aids to Statutory Interpretation
Section 8 of the Interpretation Act provides that a statute shall be given "such
large and liberal construction as best ensures the attainment of its objects." In
Jaining these "objects," however, the courts are largely confined to an
Bnation of the legislation itself. As a general rule a court may not have regard to
sources that may assist in discovering the "objects" of legislation or the
Intion" of the legislature that enacted it.
Two such sources that are frequently cited as being of potential assistance are
sports of legislative debates (Hansard) and the reports of Royal Commissions,
ieform agencies and the like that may have preceded legislation. The generally
pted legal position is that the former are wholly inadmissible as an aid to
Ipretation and that the latter are admissible only to identify the "evil" sought to
medied by the legislation.
A study on extrinsic aids to statutory interpretation was added to our Pro-
lime in 1979. It will examine the desirability of modifying the law so as to allow
materials to be introduced, for what they are worth, as an aid to construction.
fccouNTiNG on Foreclosure
In 1975 the Commission submitted a Report entitled "Security Interests in
I Property: Remedies on Default" (LRC 24). That Report explained, and made
mmendations concerning, the rights and remedies available to lenders and
pwers following default by the borrower on a loan secured by a mortgage or
«ment for sale of real property.
One aspect of foreclosure that was not explored in the Report and whicljt
not emerged as an issue was the form of the "usual order" so far as it conceal
calculation of interest payable if the borrower is to redeem the property by discha
ing the debt. In two recent cases the courts have reached opposite concliH
In 1977 the Supreme Court of British Columbia in Avco Finance Semi
Realty v. Gustafson, (1977) 3 B .C.L.R. 67 held that the mortgagee in a foreoB
proceeding was entitled only to collect interest to the date of redemption. In 19'
the Court of Appeal in North West Trust Co. v. Paramount Management!^
(1979) 8 B.C.L.R. 199 overruled the Avco decision and re-established then
practice that entitled mortgagees to interest for the full period of redenm
regardless of the actual date of redemption.
In June 1979, at the request of your predecessor, this matter was added toi
Programme for study. Early in 1980 we circulated a Working Paper (No. 27)M
examined these issues and interests at stake. In the light of the comment receivi
the Commission concluded that the form of usual order endorsed in Avco should
adopted, subject to an explicit discretion in the court to order the payment of intei
for a longer period in appropriate circumstances. A recommendation to this eff
was embodied in our final Report which we submitted in September 1980.K
10. Office of the Sheriff
A recent addition to the Commission's programme is a study of the office ofi
sheriff. It entails a comprehensive examination of the powers and dutiesrM
sheriff and current practices in the day-to-day operation of the sheriff's offfl
historical review of the evolution of the sheriff's office in British Columbia fl
examination of the practice in other jurisdictions is also being undertaken
The Commission has engaged Mr. Gordon Turriff of the British Columbia]
to carry out the research and assist the Commission in the preparation of a pa
which will be circulated for comment. We hope that it will be completed
available by the middle of 1981. The Law Foundation has provided the m;
financial support for this study.
11. Benefits Conferred Under a Mistake of Law
The accelerating pace of change in the common law combined with-
increasing number of enactments which regulate the lives of Canadians has
creased the possibility of acting under a mistake of law. Nevertheless, thf
concerning the recovery of benefits conferred under a mistake of law is rooa
18th century jurisprudence. The current law is unduly complex and irrationa
one commentator has noted:
Few subjects are more confused than recovery of money paid under a mistake of law.
Working Paper No. 30, addressing the issues which arise where a party el
into a transaction under a mistake of law, was issued in December, 1980. In
Working Paper the Commission tentatively proposes the abrogation of the gel
rule that benefits conferred under a mistake of law are not recoverable. March!
1981 has been set as the deadline for responses to Working Paper No. 30.1
expected that a final Report will be tendered to you in 1981.
12. The Recovery of Unauthorized Disbursements of Public Funds
In September 1980 the Commission reported on the law respecting thl
authorized disbursement of public funds. This Report was in part a response to a
by the Ministry of Finance for responses to its Discussion Paper concerning ad
Financial Administration Act. It was concluded in the Report that alfhougfl
Jihould continue to enjoy a prima facie right to the return of money disbursed
Tfstatutory authority, that right should not be unqualified. The Report
ronds that the recipient of funds disbursed without statutory authority be
Id to raise any defence to the action which would have been available had the
framed its action as one to recover money paid under a mistake of fact.
gGAL Contracts
a general rule, Canadian Courts decline to grant relief to parties who have
[deliberately or unwittingly entered into an "illegal" contract. The law
ning when a contract may be characterized as illegal, and the exceptions to
Eeral rule, are uncertain and inconsistent. It may be doubted whether the
Kesults which flow from characterizing a contract as "illegal" are necessary
I Bid public policy.
ns anticipated that a Working Paper examining the issues arising out of a total
1 Sal abrogation of the general rule denying parties to an illegal contract the
i a have their relationship settled by a court will be issued by mid-1981.
Stress for Rent and Other Debts
'his project, added to our programme in 1980, examines the desirability of
ng the present right of a landlord of commercial premises to seize goods
|»ing to the tenant and to sell them to satisfy unpaid arrears of rent. The effect
present law is to give the landlord a priority over the rights of other creditors
nay also wish to see their debts satisfied out of the tenant's property. It may
iopardize the interests of innocent third parties.
Phese issues were explored in a Working Paper which the Commission
ated in November 1980. In the Working Paper it was tentatively concluded
ie landlord's common law right of distress and a number of similar statutory
| [should be abolished. We expect to submit our final Report in 1981.
obiects of Interest
B-1 Breliminary research or the gathering of materials is proceeding on a number of
_, ffs which are not yet part of the Commission's programme. In most cases this is
lermine if a particular topic is appropriate for formal inclusion in the Pro-
pie as a Commission project. An example of this is product liability.
Inspired in part by a recent report of the Law Reform Commission of Ontario,
aliform Law Conference of Canada at its 1980 meeting added to its agenda the
ir of possible uniform legislation concerning product liability and a committee
Struck to examine the matter in detail. Legal change in this area is a matter of
est to our Commission and accordingly we have taken steps to keep abreast of
lopments in this area and to monitor and, if possible, participate in the work of
gmmittee. It is uncertain at this stage whether product liability will emerge as a
fledged Commission project.
BV further example is contracts of adhesion. A matter of concern is the
irness which can frequently arise when one party to a transaction, for any one
Variety of reasons, may be in a position to impose unfavourable or onerous
factual terms on the other. Contracts formed in such circumstances are fre-
Mly referred to as "contracts of adhesion." We are currently considering the
Eon of a project on such contracts to our programme as a matter for further
«. Progress is being made in examining particular areas which give rise to
^ern and in considering the legislation, experience, and proposals of other
Bictions where this issue has received attention.
Many of these matters which are under preliminary consideration arise oi[
particular suggestions made and problems drawn to the Commission's attentig
the legal profession and by members of the public. This kind of assistance is 91
welcome. Even if the particular suggestion or problem is not one which is apflf
ate for Commission study we are often able to transmit it to a person or all
which is in a position to act.
All final Reports issued by the Commission have been published in a tyjj
format, with the intention that they be available to the public. Our Annual Rep
are distributed by the Commission and are available on request and free of chfl
long as stocks last.
The Provincial Queen's Printer is responsible for the distribution of all
Reports made by the Commission. A nominal charge is made for copies of tl
Reports. Orders and inquiries as to prices should be directed to:
The Queen's Printer,
Parliament Buildings,
Victoria, B.C. V8V 4R6
A number of our early Reports are now out of print and are not available!
purchase. Those Reports are indicated with an asterisk in Appendix A.
Working Papers are produced in a typescript format by an offset process J
the Commission is responsible for their distribution. Working Papers are usul
produced in limited quantities and our supplies of them are invariably exhausted
or shortly after, their initial distribution. Usually, therefore, we are unarS
respond to requests for copies of past Working Papers.
Appendix A lists all the Reports that we have made together with a note oi
legislation implementing recommendations made in those Reports. We thouH
might be helpful, however, if we were to highlight legislation enacted durinj
past year that directly relates to recommendations we have made. Although duri
the past year there have not been any major pieces of legislation directly relata
recommendations that we have made there have been a number of important, alt)
minor, amendments to various statutes that are based in whole or in part uporB
recommendations. These particular amendments were made by the Attorney Ge
eral Statutes Amendment Act, 1980.
In sections 7 and 17 of that Act the Estate Administration Act and t)
Negligence Act were amended to provide that the time within which an action rrf
be brought where the defendant had died will be determined by the Limitation At
We recommended such an amendment by letter to the Attorney General dated Api
3, 1979, the text of which can be found in Appendix C of our Annual Report j
Section 8 of the Act amended section 58 of the Evidence Act dealing withpS
of marriage in civil proceedings. The section as amended is now in accord with tE
recommendation made in our Report on Proof of Marriage in Civil Proceeding
1977, LRC 32.
Section 11 of the Act amended section 7 of the Power of Attorney Act and i
based on a recommendation made by us in our Report on Powers of Attorney an
Mental Incapacity, 1975, LRC 22.
IBally Section 15 of the Act amended the Law and Equity Act to enable the
on terms it considers appropriate, to grant relief from an "acceleration"
Jn, for example, a mortgage, before final disposition in a proceeding to
f>that security. We recommended legislation similar to this in our Report on
fey Interests in Real Property: Remedies on Default, 1975, LRC 24.
)ur ties with other law reform agencies continue to strengthen and prosper,
hrough the reciprocal arrangements for the exchange of documents and
p personal contacts. As has been usual in recent years a meeting of Canadian
aorm bodies was held in August. It was attended on behalf of British
ibia by the Chairman, K.C. Mackenzie and A.L. Close. This resulted in a
il exchange of information and discussion of mutual concerns. That meeting
flowed by the Annual meeting of the Uniform Law Conference of Canada,
jhairman, Mr. Mackenzie and Mr. Close were members of the British Colum-
ilegation to the Conference.
k useful result of our ties with the Uniform Law Conference has been our
ipation in the Committee on sale of goods legislation described earlier in this
rt. We welcome the opportunity to co-operate with other law reform agencies
gnture of this kind.
although the Commission reported on Personal Property Security in 1975, it
nues to keep abreast of more recent developments in this area through the
Bpation of Mr. Close in the Special Committee of the Canadian Bar Associa-
on a Model Personal Property Security Act under the Chairmanship of Prop-Jacob Ziegel.
■Our relationship with other agencies of Government, both within and without
Kmistry of Attorney General, continues to be wholly satisfactory.
■ As we have pointed out in previous Annual Reports, our policy of doing the
■er part of our research work internally, rather than relying upon outside
Kiltants, has placed a heavy burden of responsibility upon the shoulders of our
Banent staff. As usual they have responded to the challenge with energy,
^fisiasm and careful scholarship.
■Our research staff currently consists of Mr. Anthony J. Spence, Counsel to the
Knission, and Messrs. Frederick Hansford and Thomas Anderson, Assistant
lisel. We wish to thank them for the very significant contribution they make to
■TOur support staff also make a notable contribution to the work of the Commis-
K They bring intelligence and efficiency to their duties and share a concern that
Rvork should be of the highest quality in every respect. Our support staff
Bently consists of Sharon St. Michael, Secretary to the Commission, and Terry
Iperance and Dorothy Findlay, stenographers. We thank them for their efforts on
I behalf.
Ii The support which we have received from the organized bar and its individual
Kbers in past years continued in 1980. We rely heavily on the assistance of the
111 profession in a number of ways. At the research stage of our projects,
■vidual lawyers assist us in gathering facts and in acting as a "sounding board"
with respect to various approaches to difficult issues. Requests for help of this I
are invariably the subject of a generous response. At the more formal sftl
consultation, various Sections of the British Columbia Branch of the Canadian
Association assist our deliberations with thoughtful submissions on the var.
proposals and tentative conclusions set out in our Working Papers. We wish to th
all members of the bar who gave generously of their time and experience in the
Our particular thanks goes to the Law Foundation of British ColumbW
Foundation responded swiftly and generously to our requests for financial
tance in connection with the sale of goods study and with respect to our studi^B
office of the sheriff. The latter is a project which would have been totally beydfflj
resources at the present time if the Law Foundation had not responded to our reqi
for funding.
We also wish to aknowledge the contribution of the Judges Law RefJ
Committee. This Committee provides a continuing point of contact with
judiciary. The members of the Committee are Mr. Justice Lambert of the Cour
Appeal, Mr. Justice Taylor and Mr. Justice Hinds of the Supreme Court.H
Spencer of the County Court and Judge Collings of the Provincial CourB
members of the Committee assist us through responding to our working papeH
other consultative documents and through bringing to our attention defects™
law that they are well situated to identify. They bring a unique perspective to beaj
our work and we are grateful for their participation.
Finally, we wish to thank you, Mr. Attorney,' and others within your Mini]
for the attention that has been given to the Commission and its activities in 19
1 January 1981
Appendix A
Title Date
dilations—Abolition     of Dec. 17, 1970
Uual Report, 1970* «„...  Dec. 31, 1970
Hfrated Contracts Legislation* Feb. 17, 1971
Bt Collection and Collection Mar. 19, 1971
upropriation  Dec. 20, 1971
unual Report, 1971*  Dec. 31, 1971
fcichanics' Lien Act  June 30, 1971
pficiency Claims and Repos- June 22, 1972
.:gal Position of the Crown     Dec. 12, 1972
Biual Report, 1972     Dec. 31, 1972
Lterim Report on Evidence      Feb. 20, 1973
R-Judgment Interest     May 16, 1973
uandlord and Tenant—Residen- Dec. 11, 1973 Tenancies
Rinual Report, 1973  Jan. 1, 1974
Limitations—General  Mar. 25, 1974
lo.osts of Accused on Acquittal.... June 24, 1974
procedure Before Statutory Nov. 18, 1974
Hi Procedure for Judicial Review Dec. 12, 1974
I if the Actions of Statutory Bodies
Recommendations Implemented
in Whole or in Part by
Land Registry (Amendment) Act, 1971,
S.B.C. 1971, c. 30 (see now Land Title
Act, R.S.B.C. 1979, c. 219, s. 24).
Not applicable.
Frustrated Contracts Act, S.B.C. 1974,
c. 37 (see now Frustrated Contract Act,
R.S.B.C. 1979, c. 144); Landlord and
Tenant Act, S.B.C. 1974, c. 45, s. 61
(e) (see now Residential Tenancy Act,
R.S.B.C. 1979, c. 365 s. 8 (3)); Com-
merclal Tenancies Act, R.S.B.C. 1960,
c. 207, s. 34 (see now Commercial Tenancy Act, R.S.B.C. 1979, c. 54, s. 33).
Debt Collection Act, S.B.C. 1973, c. 26
(see now Debt Collection Act,
R.S.B.C. 1979, c. 88).
Not applicable.
Conditional Sales Act, S.B.C. 1973, c. 19
(see now Sale of Goods on Condition
Act, R.S.B.C. 1979, c. 373); Bills of
Sale Act, S.B.C. 1973, c. 7 (see now
Chattel Mortgage Act, R.S.B.C. 1979,
c. 48).
Crown Proceedings Act, S.B.C. 1974, c.
24 (see now Crown Proceeding Act,
R.S.B.C. 1979, c. 86); Interpretation
Act, S.B.C. 1974, c. 42, s. 13 (see now
Interpretation Act, R.S.B.C. 1979, c.
206, s. 14).
Not applicable.
Attorney-General Statutes Amendment
Act, 1975, S.B.C. 1975, c. 4, s. 6 (see
now Evidence Act, R.S.B.C. 1979, c.
116, s. 38).
Prejudgment Interest Act, S.B.C. 1974, c.
65 (see now Court Order Interest Act,
R.S.B.C. 1979, c. 76).
LandlordandTenantAct, S.B.C. 1974, c.
45 (see now Residential Tenancy Act,
R.S.B.C. 1979, c. 365).
Not applicable.
Limitations Act, S.B.C. 1975, c. 37 (see
now Limitation Act, R.S.B.C. 1979, c.
Judicial Review Procedure Act, S.B.C.
1976, c. 25 (see now Judicial Review
Procedure Act, R.S.B.C. 1979, c.
| Report is out of print.
Annual Report, 1974	
Costs of Successful Unassisted
Lay Litigants
The Termination of Agencies	
Powers of Attorney and Mental
23 Personal Property Security	
24 Security Interests in Real Property: Remedies on Default
Jan. 1, 1975
Apr. 21, 1975
Apr. 21, 1975
May 12, 1975
Oct. 27, 1975
Dec. 1, 1975
25 Annual Report, 1975  Jan. 1, 1976
26 Minors'Contracts „..<__-.i..., Feb. 24, 1976
27 Extra-Judicial Use of Sworn Apr. 26, 1976
28 Rule in Bain v. Fothergill  June 28, 1976
29 Annual Report, 1976 "..  Dec. 31, 1976
30 The   Rule   in  Hollington   v. Jan., 11, 1977
Waiver of Conditions Precedent
in Contracts
Apr. 25, 1977
32    Proof of Marriage  in  Civil    Apr. 25, 1977
33 The Statute of Frauds  June 24, 1977
34 Tort Liability of Public Bodies.... June 28, 1977
35 Offences Against the Person Act, Aug. 8, 1977
1828, Section 28
36 Annual Report, 1977  Jan. I, 1978
37 Absconding Debtors Act and Bail Mar. 17, 1978
Act: Two Obsolete Acts
38 The Replevin Act  May 19, 1978
39 The Attachment of Debts Act  Oct. 27, 1978
40 Execution Against Land  Oct. 27, 1978
41 Annual Report, 1978  Jan. 1, 1979
42 Creditor's Relief Legislation: A Jan. 2, 1979
New Approach
43 Guarantees of Consumer Debts*. June 1, 1979
44 Parol Evidence Rule  Dec. 1, 1979
45 Annual Report, 1979  Jan. 1, 1980
in Whole c
5 Implementea
in Part by
Not applicable.
Attorney-General Statutes An\
Act, 1979, S.B.C. 1979, c. 2,1
now Power of Attorney Act, rSI
1979, c. 334, s. 7).
Miscellaneous Statutes (CourtuM
Amendment Act, S.B.C. 1976H1
94 (a) [in part] (see now iait- u«r/il
Act, R.S.B.C. 1979, c. 224, <j|
Supreme Court Rules, Rule 50Hl
(2) [in part]; Land Titles Ac/, SI
1978, c. 25 [in part] (see now Lam
Act, R.S.B.C. 1979, c. 219);B|
General Statutes AmendmewA
S.B.C. 1980, c. l,s. II [in parti
Not applicable.
See, e.g., Mineral Act. 1977,S
1977, c. 54, s. 20 (2).
Conveyancing and Law of PropemBk
S.B.C.  1978, c.  16, s. 33 (se«
Property Law Act. R.S.B.C. 19!
340, s. 33).
Not applicable.
Evidence Amendment Act, 1977, HI
1977, c. 70 (see now ZTi-iV/c/icaj
R.S.B.C. 1979, c. 116, ss. 15 (31
Attorney-General Statutes AmentA
Act, 1978, S.B.C. 1978, c. ll.s. I
now Law and Equity Act, R.Slj
1979, c. 224, s. 49).
Attorney-General Statutes Amemf
Act, 1979. S.B.C. 1979, c. 2, s fl
now Evidence Act, R.S.B.C. 19J
116, s. 58).
Attornev-General Statutes Amem
Act, 1978, S.B.C. 1978, c. ll.s
now Law and Equity Act, R.S.I
1979, c. 224, s. 3).
Not applicable.
Attorney-General Statutes Amena
Act, 1978, S.B.C. 1978, c. 11,1
Not applicable.
Attorney General Statutes Amen^A
Act, 1980, S.B.C. 1980, c. 1, ssflj'
(Limitation periods in actions agi
Recommendations Implemented
"Title Date in Whole or in Part by
JJLitigation in the Public    June 16, 1980
Znlation   of   Interest   on   Sept. 30, 1980
"Recovery of Unauthorized   Sept. 30, 1980
lursements of Public Funds
Appendix B
Er-Creditor Relationships
Crown Liens
Reviewable Transactions
roint Liability
Enforcement of Judgments
onal Injury Compensation
ate Law Revision; Applicability of English Law
5 Procedure
Class Actions
Prejudgment Interest Act
ates Projects
iThe Making and Revocation of Wills
Statutory Succession Rights
pie Interpretation of Wills
|The Effect of Testamentary Instruments
Probate Procedure and Administration
e of Goods Legislation
trinsic Aids to Statutory Interpretation
Bee of the Sheriff
nefits Conferred under a Mistake of Law
igal Contracts
stress for Rent and Other Debts
Appendix C
November 18, IS
The Honourable Allan McEachern
Chief Justice
Supreme Court of British Columbia
The Law Courts
800 Smithe Street
Vancouver, B.C.
V6Z 2E1
Re: Discount Rates
Dear Chief Justice:
Thank you for your letter of November 4th. Coincidentally the matter of discount ratejl
discussed by the members of the Law Reform Commission at its meeting on November 3rd. Thei
of urgency in your own letter and the gist of our own discussions suggest that the Commiss
involvement in this matter should draw to a close.
The issue of discount rates was first referred to the Commission in a letter from the De
Attorney General in February of this year. That letter enclosed a copy of a draft Prospective Pecua
Damages Act dealing, inter alia, with discount rates and indicated that you had a special interest
Mr. Vogel requested the Commission to "assess this proposal and make constructive comments'
it was in that spirit the Commission approached it. The primary task was seen as providing]
assistance we could to you and the Ministry of Attorney General rather than undertaking this as a!
fledged Commission project, with a fully researched working paper circulated for comment culm
ing in a formal report setting out final recommendations.
In April the Commission wrote to the Attorney General suggesting an amendment to the Sum
Court Act along the following lines:
The Chief Justice, after consulting the otherjudges of the court and such other persons as 41
he considers appropriate, may prescribe from time to time the rate of interest to be used *!
in determining the capitalized value of an award in respect of future damages.
This suggestion prompted further discussion which largely centred on two principal issues:  ]|
1. Should the discount rate be set by a person or body other than the Chief Justice (S.C.B.
2. Should the discount rate prescribed be limited to one that reflects only the differ!
between the estimated rates of price inflation and investment or should the so-cj
"productivity factor" be an additional parameter?
On the first issue, the Commission adheres to the view expressed in the April letter: theC
Justice, after such consultation as he may think necessary, is the appropriate person to set the disc
rate. I should add, however, that the Commission has no reason to oppose the rate being set by^B
committee of judges consisting, say, of the Chief Justice and two puisne judges. The Comrn^M
view is that it is important that the determination of a discount rate be done by a judge or I
committee of judges. The determination of a discount rate or rates to be used in making damage™
is now an independent judicial function. This important independent quality of the functid
preserved if setting of a discount rate or rates of general application is made by the Chief Justice on
committee of judges. We do not think it appropriate that the function be performed by eithei
Legislature or by the Executive, on authorization by the Legislature, because of the close identified
in interest of Government and the Insurance Corporation of British Columbia which pays the
majority of the damage awards in personal injury cases made by the Courts of this Province!
example; the determination of a high discount rate by Act of the Legislature or authorized act afl
executive branch of Government would quite likely be construed by some as politically motivate]
order to save money for the Insurance Corporation.
The second issue is a more subtle and difficult one. As a starting point it might be useful to da
what we understand to be the "productivity factor."
The economic information that we have received suggests, as do the cases in which this facteffl
been noticed, that owing to advances in technology and the like our society as a whole is becom
more productive in terms of the number of units of goods and services produced per citizen. J
benefits of this increased productivity accrue, in part, to all citizens in the form of increases injl
earnings over and above those increases which simply reflect price inflation. It is this increase thai
J; the productivity factor. The economic information stresses that this benefit accrues to all
anrners—even those employed in a particular industry where there is no identifiable increase
ivity. This benefit is also distinct from earning increases (or decreases) that may be
in with career advancement that depends on characteristics of the individual to be compensated
sjitifiable occupational group to which he belongs.
Pi view of the productivity factor is based on a selective reading of cases and comment and on
dcmltation with a senior actuary. While we have no reason to doubt its accuracy, we cannot say
ifiidence that we have fully explored all the complexities associated with economic concepts of
*te the projected general rate of increase of earnings (including productivity factor) is greater
(orojected rate of price inflation, it appears that it would be inappropriate to apply a discount
iLtmined solely with reference to the price inflation to determine the present value of future
losses. Clearly a second discount rate, one that reflects the productivity factor, should be used
purpose. This second discount rate would be somewhat less than that used for non-income
diture losses or expenses.
Ontario, the enabling legislation appears to contemplate only a single discount rate and this
reiew adopted by the Morden Committee in developing their "rule." The enabling provision,
Jl4(10)(ba) of The Judicature Act, R.S.O. 1970, c. 228 am. S.O. 1979, c. 65, s. 6(5),
ibj ec t to the approval of the Lieutenant Governor in Council, the Rules committee may
I make . . . rules ... for
5 prescribing the rate of interest to be used in determining the capitalized value of an
i award in respect of future damages.
2 prescribed under that power reads as follows:
sie rate of interest to be used in determining the capitalized value of an award in respect
/i[ future pecuniary damages, to the extent that it reflects the difference between
■Emated investment and price inflation rates, is 2Vi per cent per annum.
^Bptions are to adopt the Ontario approach of providing for a single discount rate or to develop
ft legislation that would provide for the setting of two discount rates.
■Awe understand it, the object of fixing discount rates is twofold. First, it is meant to overcome
inrtunate face that is put on the administration of justice when the Courts reach disparate
inons on the same facts. Since the setting of a discount rate is, essentially, a prophecy as to
ttonomic events and unrelated to the facts of a particular case, inconsistent results from case to
ig difficult to justify,
[ondly it is meant to eliminate the need to adduce repetitive and time-consuming economic
Ii; that is presently necessary to enable the Court to set a discount rate in individual cases. This
|a significant financial burden on the parties to the litigation. Moreover the amount of Court
ijfent hearing the same evidence in numerous cases suggests the present practice causes a
ifhnt and unnecessary wastage of trial time.
Ijfw well does the Ontario solution serve the objects stated? As Mr. Justice Dickson of the
tee Court of Canada recently pointed out:
lie award of damages is not simply an exercise in mathematics which a judge indulges in,
pading to a 'correct' global figure. The evidence of actuaries and economists is of value
Karriving at a fair and just result. {Lewis v. Todd, October 28, 1980.)
ear, as it is in Ontario, that the productivity factor is not taken into account in setting the single
| [rate, expert evidence will still be of value to achieve a "fair and just result." The Court has a
rear, and the Ontario rule will not exclude, relevant and proper evidence concerning actual loss
; nto account the productivity factor. Thus a principal aim of a fixed discount rate(s)—relieving
gts and the parties of the various burdens associated with evidence on general economic
—is not fully served. Such evidence may be led whenever the potential increase in the award
itify it. Likewise the Ontario one-rate solution will not, in actions involving future loss of
s, put an end to disparate results from case to case.
fen if a rate similar to that provided by the Ontario rule would be accepted in practice as
I ble to loss of future income then, while the objects of fixing a discount rate are met, it is
ffithat justice will not be well served and imperfect compensation will result. The two discount
jroach seems to offer a sharper tool for the rational assessment of future damages and is likely to
| rore precise results in this difficult area,
wing regard to the way in which the matter of discount rates was referred to us, and the way in
ye have approached it, we do not believe that it is appropriate to make a "recommendation" as
j lhe Commission prefers the two-rate approach but, as the final decision may involve a measure
pmatic considerations, we believe it should be left to be worked out between you and the
V General. What we have done is prepare draft legislation that embodies our preferred two-rate
jch. This may provide a starting point for legislative action.
Whether the Ontario scheme or the Commission's preferred scheme is adopted, we thinii
important to note that its success in achieving its aims will depend on what the Morden ComiH
Report referred to as "a discriminating judicial interpretation which is largely informed fl
understanding of the purpose of the legislation."
I enclose our draft of an amendment to the Court Rules Act with drafting notes theretcfl
Commission's statutory obligation is to report its views concerning changes in the lawifl
Honourable Attorney General. Accordingly, I am sending copies of this letter, the draft amentB
and drafting notes to the Attorney and to his Deputy.
If there are any aspects of our views that you would like to discuss, I should be pleased tosel
at any time at your convenience.
Yours truly,
The Hon. Mr. Justice J. 91
tRulesAct< R.S.B.C. 1979, c. 77 is amended by adding the following section:
In this section
discount rate" means the rate, expressed as a percentage, used in calculating the present
value of future damages;
ffuture damages" means damages to compensate for pecuniary losses to be incurred or
expenditures to be made after the trial of a proceeding.
R\s to the definition of "proceeding" see drafting note 1, infra]
|The Chief Justice of the Supreme Court of British Columbia may from time to time
ffa) a discount rate which shall be deemed to be the future difference between the investment
rate of interest and the rate of increase of earnings due to inflation and general increases
in productivity, and
[(b) a discount rate which shall be deemed to be the future difference between the investment
rate of interest and the rate of general price inflation.
[As to "prescribe" see drafting note 2, infra]
Jin any proceeding the discount rate prescribed under subsection (2) (a) shall be used in
ig the present value of future damages that are intended to compensate for or are determined
jence to
(a) loss of future earnings because of partial or total loss of income earning capacity, or
(b) loss of dependency under the Family Compensation Act,
and the discount rate prescribed under subsection (2)(b) shall be used in calculating the
present value of all other future damages.
[N.B. Drafting notes 3 to 6 which are of general application and not specifically noted
["Proceeding" is defined in the Supreme Court Act as "an action, suit, cause, matter, appeal or
Eg application."
Tion 40(1) of the Interpretation Act provides that "the interpretation section of the Supreme
et, so far as the terms defined can be applied, extends to all enactments relating to legal
5s the definition would extend to this provision.
were the application of the provision to an arbitration.
JA rate "prescribed" under subsection (2) would seem to be caught by the general limb of the
hi of "regulation" in the Regulation Act: "every regulation, rule, order, proclamation and
f a legislative nature made under or by the authority of any Act . . ."
ns it would attract the provisions of the Regulation Act concerning filing and publication.
|The draft is silent on the source of funds to be used by the Chief Justice in the discharge of his
S(e.g. the cost of engaging experts to provide advice on economic and actuarial matters).
no general fund is available an appropriate specific provision for funding should be made.
A potential addition to the list of future loss items to which the income discount rate should
future expenditures in the form of wages. An example would be that part of an award designed
Be a quadraplegic with the 24 hour services of an orderly.
wnmon sense suggests that the wages of an orderly will accelerate more rapidly than other
Ere items and that the discount rate used for income loss should apply. This view has been
jfin at least one B.C. case (Bracey v. Johnson, unreported, Vancouver Registry 44398/75, June
8), per Gould J. at p. 21 of the decision manuscript.)
re accepted economic view is that this is not an income related loss and it should be capitalized
agher rate. This is the view reflected in the draft.
Implicit in the draft is the notion that general economic evidence is no longer relevant in the
fire "deeming" language of subsection (2), and that all evidence and valuation should be on a
ant dollar basis."
mere whether this should be made explicit in the draft. An earlier version of our draft contained
lowing provision.
In any proceeding in which a discount rate is applicable
(a) no evidence shall be admitted with respect to rates of inflation, rates of reSt
investments or increases in salary or wages resulting from inflation or general incn
in productivity, either past or future, and
(b) all matters relating to future contingencies or prospects shall be expressed in con
dollars from which all elements of prospective inflation and prospective increas
earnings attributable to general productivity increases have been removed.   I
6. It will be noted that there is some divergence between the definition of "future damages'
section 2 (a) of the Court Order Interest Act as to the point in time from which damages are i
regarded as future damages. This draft speaks of losses etc. arising after the "trial" while the t
refers to the "date of the order." Where judgment is reserved these may be two different times.
Of the two, we believe the time of trial is, in principle, correct. This was the Commission's'
in its Report on Prejudgment Interest and the COIA imperfectly implemented the recommendffl
this regard. In practice, however, nothing turns on this error.
Queen's Printer for British Columbia fl
Victoria, 1981


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