Canada: Court Of Appeal: PJI/Deductible/Costs Changes Are Retroactive, SABS Fully Deductible And Punitive Damages Not Appropriate

Last Updated: September 28 2017
Article by Nawaz Tahir

On September 19th, 2017, the Ontario Court of Appeal released it's much anticipated decision on whether or not changes to how pre-judgment interest is calculated would be a retroactive change or not.  The Court also adjudicated upon a number of other items that are extremely important to the litigation of personal injury claims.

On the issue of pre-judgment interest, the Court decided that the changes had retrospective application.  The Court held that pre-judgment interest only "vests" with a litigant upon obtaining a damage award, and is subject to judicial discretion – both principles in accordance with the Courts of Justice Act.   There is no entitlement to pre-judgment interest until a trial judge determines it.  Thus, a litigant is bound by the calculation methodology that is in effect at the time the right is vested – the time of the judgment – and not the date of the accident.  Thus, the new method applies to all cases, regardless of the date of loss.

The Court determined that the changes to the statutory deductible for non-pecuniary general damages also had retrospective application.  In the absence of a transitional provision, the drafters of the legislations were presumed to know about section 59 of the Legislation Act which holds that absent a transitional provision, the current version of legislation applies.  Thus, the deductible at the time of the accident would not be applicable.  Instead, the new, inflation adjusted deductible applies to all cases.

Similarly, the Court determined that the changes to calculating costs – now taking costs to be determined on the "net" amount for non-pecuniary general damages (ie. after subtracting the applicable deductible) – also had retrospective application.  Costs are to be calculated after the statutory deductible is applied.

For the above changes, the Court also referred to the intention of the underlying legislation – to reduce the cost of insurance in the short term as stated by the Legislature.    That could only be achieved if the changes were retrospective.  Otherwise, it would take years for the changes to filter through the system, with no immediate cost savings.

The Court also adjudicated upon the issue of the deductibility of income replacement benefits and housekeeping benefits (past and future) from a jury award.  The plaintiff had settled the accident benefits claim for a lump sum.  The release included wording for a bad faith claim, but the settlement disclosure notice had no reference to any settlement amounts for bad faith.  The Court held that this fact along with the wording of the Insurance Act did not mean that a tort defendant had the onus to delineate the past credit and future credit, in order to obtain the credit for the full income replacement benefits and housekeeping benefits settled upon.

Next, the Court held that since the defendant tortfeasor had been found guilty of impaired driving, the trial judge could not be faulted for not putting the issue of punitive damages to the jury.  The tortfeasor had already been punished for impaired driving.

Finally, in analyzing the appropriateness of costs, the court made these comments about soft-tissue/chronic pain cases:

[154]   The trial judge's assessment of costs, in any event, at approximately $409,000 on a judgment of $22,136.60, (or $34,000, as the trial judge found) is out of all proportion and cannot stand. This was a chronic pain case. These sorts of cases are never a sure thing from the plaintiff's perspective. The defence will, as here, put the plaintiff to the strict proof of his case. There was nothing "wrong" with the defence expert giving evidence that he found signs suggestive of malingering in the plaintiff's test scores.

  [155]   A defendant is not expected to sit back and simply take a plaintiff's evidence at face value. This plaintiff had, between the time of the accident and the time of trial, managed to earn a black belt in martial arts. Given that fact, it is not surprising that the defence argued that the plaintiff was not as disabled as the plaintiff had suggested in his evidence, nor was it inappropriate for the defence to lead psychiatric evidence to suggest that the plaintiff was a "malingerer". This defence evidence did not waste court time, as the plaintiff argues. Indeed, it is apparent from the verdict that the jury preferred and accepted the defence version of the case.

Given the comments of the Court of Appeal, and the number of areas touched on, this case is a "must-read" for all involved in personal injury litigation.   The case can be found at: 2017 ONCA 717 (CanLII).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Nawaz Tahir
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