Canadian tort awards increase 20-fold over eight-year period

Canadian tort awards in catastrophic cases over the past eight years have increased from

between Cdn$600,000 and Cdn$7000,000 to between Cdn$10 million and Cdn$15 million, Jess Bush, partner with Blaney McMurtry LLP, told delegates at the Insurance Law: Spring Update 2008 in Toronto on May 15.

Health care costs are “going through the roof,” he noted, by way of explanation. Further to that, discounts for future awards have decreased generally and on future care costs specifically. The discount rate is the rate applied to the value of a future stream of payments to reflect the fact that it is going to be paid now in a lump sum. It is assumed the lump sum will be invested and will earn income at a rate higher than inflation.

Future health care costs are often the largest component of a damage award. A reduction in the discount rate thus creates a significant increase in the award, Bush noted.

Guardianship and legal fees have also become a prominent component of these damage awards, he added.

In addition, due to no-fault auto insurance, the plaintiff’s bar is better and more organized, Bush noted. Therefore, the onus is very much on the defense to marshal resources and strategies.