Christopher Dunn
The answer to the question “What makes us uniquely Canadian?” often depends upon whom you ask. Ask a doctor, and the response might be “public medicare.” A political scientist might answer: “The Charter of Rights and Freedoms.” But ask any member of the personal injury bar and you will most likely hear: “The Cdn$100,000 cap on general damages.”
No other common law principle more aptly symbolizes and defines the difference between the approach taken by the Canadian judiciary to personal injury damages and that taken by their counterparts south of the border. The Cdn$100,000 limit placed on catastrophic personal injury damages in Canada, also known as the “cap,” is clearly the most substantial difference between what are otherwise remarkably similar tort liability systems in Canada and the United States.
We have come to take this principle for granted, and so some people in the industry may not be aware that this cap has been under attack of late on a number of fronts. The most recent attack came from the British Columbia Court of Appeal’s decision in Lee v. Dawson. Before reviewing the Lee case, and why it should be of concern to the industry, it’s time first to reminisce…
DEATH OF DISCO: LIMITS ON NON-PECUNIARY DAMAGES
The year is 1978. Lapels are wide, platform shoes are in, disco music is playing on the 8-track tape deck and the sky is the limit in Canada when it comes to non-pecuniary general damages for personal injuries. All four are soon to go the way of the dodo, with only disco to rise later from the ashes and haunt us forever.
But back to 1978: the Supreme Court of Canada acted at this time on the opportunity to forge a uniquely Canadian approach to personal injury damages. In Thornton (Next Friend of) v. Prince George School District No. 57, Andrews v. Grand & Toy and Teno v. Arnold, the court was asked to address the appropriate range of general damages for, respectively, a 17-year-old who suffered a serious neck injury resulting in loss of use of all limbs, a 21-year-old quadriplegic and a four-year-old suffering serious brain damage and debilitating physical injuries.
The court began by defining what losses were covered under “non-pecuniary” general damages. These damages were meant to compensate a victim of personal injury for the loss of enjoyment of the life they had once led. In Andrews, Supreme Court of Canada Chief Justice Brian Dickson described such an award as intended to provide the victim with “solace.”
“‘Solace’ in this sense is taken to mean physical arrangements [that] can make his life more endurable rather than ‘solace’ in the sense of sympathy,” Dickson wrote. “It provides a rationale as to why money is considered compensation for non-pecuniary losses such as loss of amenities, pain and suffering, and loss of expectation of life. Money is awarded because it will serve a useful function in making up for what has been lost in the only way possible, accepting that what has been lost is incapable of being replaced in any direct way…”
Although pecuniary losses such as income loss, medical care and out-of-pocket expenses are often easily calculated, non-pecuniary general damages are by their very nature difficult to assess. Justice Dickson described the difficulty in the following terms:
“The monetary evaluation of non-pecuniary losses is a philosophical and policy exercise more than a legal or logical one. The award must be fair and reasonable, fairness being gauged by earlier decisions; but the award must also of necessity be arbitrary or conventional. No money can provide true restitution…”
RISE OF “THE TRILOGY”
The court noted how non-pecuniary general damages are frequently open to wildly extravagant claims. In fact, such damages soared dramatically in the United States in the years prior to Andrews in 1990, the court observed. Clearly disturbed by this trend, the Supreme Court set out to define a unique approach for Canada. Recognizing the arbitrary nature of its assessment, the court chose to impose a Cdn$100,000 cap on catastrophic personal injuries. It added a caveat that the cap must increase over the years in line with the rate of inflation. (As of August 2006, the cap sits at approximately Cdn$313,000.). This amount was not intended as an absolute limit, but it was to be seen as a “rough, upper parameter” on non-pecuniary general damages.
In Teno, Supreme Court of Canada Justice Wishart Flett Spence noted that part of the exercise undertaken was an attempt to prevent runaway insurance premiums. “The very real and serious social burden of these exorbitant awards has been illustrated graphically in the United States in cases concerning medical malpractice,” Spence wrote. “We have a right to fear a situation where none but the very wealthy could own or drive automobiles because none but the very wealthy could afford to pay the enormous insurance premiums [that] would be required by insurers to meet such exorbitant awards.”
The three decisions listed above have become affectionately known as the Trilogy. Over the years, trial judges and provincial Courts of Appeal have consistently enforced the cap established by the trilogy, with a few notable exceptions.
Courts seem prepared to award damages exceeding the cap in circumstances where it can be demonstrated that the plaintiff’s injuries are more devastating than those in the Trilogy. For example, in Fenn v. City of Peterborough, one year after the Trilogy was established, the Ontario Court of Appeal awarded a plaintiff Cdn$125,000 on the basis that the injuries suffered by the plaintiff were more painful than those referenced in the Trilogy.
In addition, the Supreme Court of Canada has limited the application of the cap to cases of catastrophic personal injuries, refusing to impose a cap on general damages for defamation (Hill v. Church of Scientology) and most recently for loss of reputation (Young v. Bella).
The facts of Young v. Bella are interesting to say the least. Wanda Young was a university student taking courses in social work at the Memorial University of Newfoundland. As a result of a footnote missing from a paper she submitted on child abuse, her professor took a cited ‘case study’ to be a confession that Young had actually abused children. A director of the School of Social Work reported Young to Child Protection Services and the RCMP. Young was eventually cleared of the false allegations, but she suffered immense emotional and monetary loss in the interim. She sued the professors and Memorial for negligence and won.
A jury awarded Young Cdn$430,000 in non-pecuniary general damages, an amount in excess of the cap. The award was upheld on appeal to the Supreme Court of Canada, which reiterated that the cap on general damages applies only in cases of catastrophic personal injury and not to Young’s claim for loss of reputation. Of concern to those who benefit from the cap was that the court seemed to imply it was also prepared, in the right case, to revisit the ‘policy’ reasons for the existence of the cap in the personal injury context.
LEE V. DAWSON
We return now to Lee v. Dawson. In March 1997, the plaintiff, Ik Sang Lee, was seriously injured in a motor vehicle accident. The jury awarded him Cdn$2 million in non-pecuniary general damages; the trial judge reduced the amount to Cdn$294,600 (the amount of the cap at that point in time). Lee appealed the reduction to the B.C. Court of Appeal, making a creative argument that the cap violated the Charter of Rights and Freedoms. The Court of Appeal rejected this argument and upheld the trial judge’s imposition of the cap, which it recognized as the law of the land.
That being said, the B.C. Court of Appeal seems to have urged the Supreme Court of Canada to reconsider the relevance of the cap. “I agree with the plaintiff and the intervenor that the time may have come for the rationalization or conceptual underpinning for having a rough upper limit on non-pecuniary damages to be re-examined, ” B.C. Court of Appeal Justice Anne Rowles wrote for the court. “However, I am not persuaded that it is open to this court to proceed on the footing that establishing the rough upper limit is not binding on us. Some of the submissions made by the appellant and the intervenor advocating a reconsideration of the rough upper limit seem to me to be compelling but, in the end, this court cannot overturn the Trilogy.”
The plaintiff sought leave to appeal the decision to the Supreme Court of Canada, which dismissed the plaintiff’s leave application on Oct. 19, 2006. In my opinion, the Supreme Court’s decision spoke loudly and clearly: it considers this hotly debated ‘issue’ to be in reality a non-issue.
The benefits of the general damages cap for society as a whole and the insurance industry in particular cannot be understated. The cap has kept Canadian non-pecuniary general damage awards – and consequently, property and casualty insurance premiums – out of the stratosphere. In addition, the cap provided Canadian insurers with something their U.S. counterparts lack: predictability. Although non-pecuniary damages always remain a wildcard in predictive modeling, the cap at least allows insurers to know the rough upper limit. These benefits now appear to be safe.