The Calculation of Pre-judgment Interest in Motor Vehicle Claims

On January 1, 2015, s. 258.3(8.1) of the Insurance Act was amended to change the rate at which pre-judgment interest ("PJI") in motor vehicle claims.  A recent Superior Court of Justice decision held that the change is retrospective, meaning it will apply to all motor vehicle claims, regardless of the date of loss.

The effect of the amendment is that the provision in r. 53.10 which sets PJI for non-pecuniary loss at 5% no longer applies.  Accordingly, PJI is to be calculated at the rates set out for each quarter in s. 127(1) of the Courts of Justice Act.

In Cirillo v. Rizzo, 2015 ONSC 2440 (S.C.J.), the plaintiff was in a motor vehicle accident on October 1, 2005.  In January 2015 the plaintiff accepted the defendant's offer of $50,000.  The question was how PJI should be calculated.  The defendant argued the amendment should have retrospective application because it is procedural in nature; the plaintiff argued it should not, as it is substantive in nature.

Justice MacKenzie agreed with the defendant.  Although entitlement to interest is a substantive right, the means by which the entitlement can be quantified are procedural.  As a result, the rates set out in s. 127 applied, which had the effect of reducing PJI from 5% to 4.5%.

Given the low interest rates in recent years, the changes to the way PJI is calculated could have a substantial impact on the amount of interest defendants must pay.

The Standard of Care for Grocery Stores

The Court of Appeal has once again confirmed that the standard of care for occupiers is reasonableness, not perfection.

In Saisho v. Loblaw Companies Ltd., 2015 ONCA 172 (C.A.) the elderly plaintiff was hit in 2007 by a customer pushing an overloaded shopping cart.  One customer (Beardy) paid for his purchases and loaded his cart.  His friend, Sakakeep, paid for his purchases independently as he was paying, Beardy loaded Sakakeep's purchases into the same cart.  As they moved toward the exit, Beardy bumped into the plaintiff.  The plaintiff suffered severe injuries and was in hospitalized from the date of the incident to his death in 2010.  The claim was dismissed at trial and the plaintiff appealed, alleging that the store should have had a specific policy on overloaded carts and required cashiers to specifically look to ensure customers did not overload the carts.

The Court of Appealed disagreed.  The store had a general policy to be alert for potentially dangerous activities.  Staff were aware that overloaded carts had the potential to cause injury or harm, and if they saw one, they would intervene.  The Court held that to require a standard specifically addressing the problem of overloaded shopping carts would present a standard of perfection, which is not what the law requires.

The trial judge concluded that it was not reasonable to expect a cashier to look behind her to ensure that two distinct customers were not loading their purchases into one cart.  He concluded it was reasonable for the cashier not to have intervened.   The Court of Appeal upheld the decision, holding that the standard of care is reasonableness in the circumstances, and the store met the standard.

Full Costs Awarded to Defendant Where Plaintiff Abandoned Case at Trial

Plaintiffs who make unsubstantiated allegations of fraud may be liable for substantial costs if they later decide to abandon their claim.

In Sienna v. State Farm, 2015 ONSC 786 (S.C.J.), the plaintiff sued her own insurer for failing to pay non-earners benefits.  The Statement of Claim sought $900,000 for punitive and aggravated damages caused by the defendant's bad faith.  It made allegations of "unlawful claims practices" and a "conspiracy" aimed at the plaintiff and other policyholders.  The matter was set for trial commencing January 26, 2015.  On January 14th, the plaintiff advised she was abandoning her case and would call no evidence.

The issue then became costs.  The defendant sought costs on a substantial indemnity basis, arguing the claim was without merit, it made a reasonable offer to settle, and the allegations against it were akin to fraud.  The plaintiff argued the allegations in her Statement of Claim were not outrageous and are commonly plead in accident benefits cases, that the defendant should have brought a motion to strike the allegations, and that the defendant should have ceased its trial preparation after a similar case ruled favourably for another insurer.

Justice Arrell did not accept the plaintiff's arguments.  He did not agree the allegations are common, when there is no foundation or evidence to support them.  They were akin to fraud.  The defendant should not be put to the expense of striking allegations made in the Statement of Claim; on the contrary, the plaintiff should have withdrawn the offensive portions.  There was no merit to the argument the defendant should have ceased trial preparation as the favourable analogous decision was being appealed, and the plaintiff had not abandoned her claim.

Justice Arrell awarded the defendant the total amount of its bill of costs, plus $2,000 for the costs motion, for a total of $35,92.97.

Westerhof v. Gee - Expert Testimony

The much anticipated appeal decision in Westerhof v. Gee was released yesterday.  It can be found at 2015 ONCA 0206 (C.A.).  In Westerhof, the trial judge refused to let in evidence on history, diagnosis, and prognosis from medical practitioners who were treating practitioners or non-party experts.

The Court of Appeal overturned the Divisional Court decision, which held that the key factor in determining whether r. 53.03 applies is whether the evidence is fact or opinion.  Instead, the Court held:

[60]     Instead, I conclude that a witness with special skill, knowledge, training, or experience who has not been engaged by or on behalf of a party to the litigation may give opinion evidence for the truth of its contents without complying with rule 53.03 where:

·        the opinion to be given is based on the witness’s observation of or participation in the events at issue; and

·        the witness formed the opinion to be given as part of the ordinary exercise of his or her skill, knowledge, training and experience while observing or participating in such events.

Rule 53.03 does not apply to the opinion evidence of a non-party expert where that person has formed a relevant opinion based on personal observations or examinations relating to the subject matter of the litigation for a purpose other than the litigation.  The court retains its gatekeeper function and may require compliance with r. 53.03 if the expert goes beyond the scope of opinion formed in the course of treatment or observation for purposes outside of the litigation.

Given the decision in Westerhof  it will now be permissible for treating practitioners and accident benefits assessors to testify without complying with r. 53.03.

Surveillance Must be Disclosed Before Trial

A recent decision from the Ontario Court of Appeal dealt with the use of surveillance evidence at trial.

In Iannarella v Corbett, 2015 ONCA 110 (C.A.), the plaintiff (Iannarella) had been rear-ended by the defendant (Corbett) and claimed that he had injured his rotator cuff as a result of the incident. Before trial, the defence filmed 130 hours of surveillance video of the plaintiff, but failed to disclose the existence of this surveillance in an affidavit of documents. Nevertheless, the trial judge allowed the defence to play the surveillance video at trial and to cross-examine Iannarella on its contents for the limited purpose of impeaching his credibility.

The jury found that Corbett was not liable for Iannarella’s injury. In the event that Corbett had been found liable, the jury would have awarded Iannarella $32,000 in general damages, $40,571 for past income loss and nothing for future income loss. Iannarella appealed.

In its decision, the Ontario Court of Appeal first concluded that the trial judge had incorrectly directed the jury on the issue of liability. The Court next turned its attention on the defence’s use of surveillance at trial. The Court explained that the Rules of Civil Procedure require that a party serve an affidavit of documents – whether or not the other side requests it – and this affidavit of documents must disclose the existence of any surveillance. Failure to properly disclose surveillance in this way means that said surveillance cannot be used at trial without leave of the court.

In this case, because the disclosure did not occur until the trial was well underway, the Court held that leave should not have been granted. The Court determined that the plaintiff had lost the chance to factor the surveillance’s existence into pre-trial settlement negotiations and had inadequate time to prepare an examination-in-chief that could properly respond to the surveillance. The Court said that, by allowing the defence to use the surveillance at trial, the trial judge had enabled a “trial by ambush.”

Due to these errors, among others, the Court substituted a finding of liability against the defendant and ordered a new trial on the issue of damages.

Defence counsel who wish to use surveillance at trial should be aware of Iannarella, and serve an updated Affidavit of Documents 90 days before trial in compliance with r. 30.09.

No Costs Awarded to Either Party

A recent decision confirms the decision a court has to make no award of costs to either party.

In Swatridge v. Waters Estate (2014), ONSC 5333 (S.C.J.), the defendant in a motor vehicle action made an offer to settle of $5,000 all inclusive.  The plaintiff's offer was for $85,000 ($55,000 net of the deductible) plus costs and disbursements.

At trial, the jury awarded $10,000 gross for general damages, and $0 for loss of income, housekeeping/home maintenance and medical/rehabilitation expenses.  After the deductible was applied, the new result to the plaintiff was $0.

Justice Ferguson declined to award costs to either side, holding that "The court cannot be blinded by the somewhat artificial characterizations of both the offer to settle and the trial result."  The reality was that an offer to settle amounting to zero dollars was made and rejected, and a trial was held and the result was a judgment for zero dollars. 

No Duty on Municipality to Stop Teens from Climbing Trees

The Court of Appeal has dismissed an appeal from a trial decision which held that a municipality was not liable for a teenager who fell out of a tree and was rendered paraplegic.

In Winters v. Haldimand (County), 2015 ONCA 98 (C.A.), the 16-year-old plaintiff was "hanging out" with friends at a municipal park.  The tree from which he fell was one he and friends had climbed numerous times and was a type of willow found all over Ontario.  The evidence was that generations of teenagers had climbed the tree and there had never been a report of an injury before the plaintiff's incident, save when someone twisted an ankle getting out of the tree.  None of the park personnel who were at the park weekly observed anyone in the tree.  The plaintiff's mother had never seen anyone in the tree and was unaware her son and his friends used it.

The Court of Appeal held that there was no error in the trial judge's decision, stating:

[16]      Any danger posed by this tree was an obvious one.  If you chose to climb it you could fall and be injured. There is no duty to warn of such an obvious and self-evident danger nor any duty to monitor beyond what the Township is doing at the time of this most unfortunate accident.

The Court also upheld the trial judge's decision to award costs against FLA claimants, holding that there is no general rule that no costs should be awarded against FLA claimants.

Congratulations to Sheila Handler and Brian McCall of McCall Dawson Osterberg Hanlder LLP, who were counsel at trial and on appeal.