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CIVIL PROCEDURE - Interest - Calculation of - Pre-judgment interest

Tuesday, October 03, 2017 @ 8:41 AM  

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Appeal by defendants from the award of damages. The respondent was catastrophically injured when the tow truck he was operating was rear-ended by the appellants’ vehicle. Following trial, the jury awarded the respondent damages totaling $2,931,006. The trial judge made the following rulings: prejudgment interest on the general damage award was to be calculated at 5 per cent (the rate that was in effect prior to January 1, 2015 when s. 258.3(8.1) of the Insurance Act was amended); the respondent was required to assign his future income replacement benefit from his statutory accident benefits (SABs) insurer only to the age of 60 and not thereafter; the jury was to treat the existence of the Ontario Drug Benefit Program, which would cover the cost of the respondent’s medication after the age of 65, as a “contingency” only rather than as a certainty; and there was to be no assignment to the appellant of any future payments to be made to the respondent by the SABs insurer in relation to medication and assistive devices, or professional services. These rulings comprised the subject matter of the appeal.

HELD: Appeal allowed. The amendment to s. 258.3(8.1) of the Insurance Act was effective from the day it came into force and applied to all actions then in the system. As a result, the default interest rate to be applied on the general damage award was 2.5 per cent. Consequently, interest on general damages ought to have been $44,583 rather than the $89,167 awarded. As the respondent was never questioned about when he planned to retire or retirement dates other than those in his proposed scenarios, it was a misapprehension of the evidence to suggest that the jury might have based its award of future income loss on a retirement date other than those specifically referenced in the evidence. As the jury’s award for past loss of income matched exactly the scenario based on a retirement age of 64 and its award for future loss of income was closest to the amount in that same scenario, the only reasonable conclusion was that the jury concluded that the respondent would have retired at the age of 64 had the accident not occurred. As a result, the obligation to assign the income replacement benefits to the defendant’s insurer was to be changed to age 64. The judge also erred in instructing the jury to regard the Ontario Drug Benefit Plan as a contingency because there was uncertainty about whether the plan would exist in 2028, the year in which the respondent would reach age 65. The judge should have instructed the jury to award damages based on the law as it existed. Given the respondent’s eligibility under the plan at age 65, the liability insurer should have only been required to pay for drug benefits until the age of 65. Because the jury was instructed to treat drug benefits as a contingency, it was not possible to determine what portion of the award for drug benefits, if any, extended past age 65. Accordingly, while the plaintiff may have been overcompensated for his loss, the Court could not make any order that would correct the error. The trial judge erred in not ordering that there be an assignment in relation to the awards for the cost of future medication and assistive devices and future professional services. Strict qualitative and temporal matching requirements should not be applied to s. 267.8 of the Insurance Act. The risk of under-compensation due to assignment of future statutory benefits was small. The respondent was entitled to SABs by reason of his catastrophic impairment for life and there were no benefits for which the assignment was requested that were not covered by the SABs. All of the claims that made up the awards for future professional service and future medication and assistive devices were sufficiently itemized and all were covered by the SABs schedule. They were claimed for the same period that the SABs would cover. As the plaintiff was paid the full amount of the judgment, he had been fully compensated in respect of his losses arising from the motor vehicle accident. If there was no trust or assignment in respect of the SABs to which the respondent would be entitled and would receive in the future for medication, assistive devices and professional services, he would be over-compensated and his receipt of such benefits would constitute double recovery.

El-Khodr v. Lackie, [2017] O.J. No. 4828, Ontario Court of Appeal, D.H. Doherty, J.L. MacFarland and P.S. Rouleau JJ.A., September 19, 2017. Digest No. TLD-Oct22017006