FRUSTRATION OF THE EMPLOYMENT CONTRACT: NO HARM, NO FOUL? NOT NECESSARILY!

By Michael Kealy

Sep2

What is Frustration of Contract?

Most wrongful dismissals involve two scenarios: Either the employee essentially ends the employment contract because he or she does something horribly wrong (i.e. steals from the employer), or more commonly, the employer ends the contract “without cause.” The former scenario results in no damages owing to the employee; the latter results in the employer having to provide reasonable notice of the end of the employment contract, or payment in lieu.

A third scenario involves a legal concept known as “frustration of contract.” Frustration of contract occurs when it becomes impossible, through no fault of either party, to continue with the employment relationship because the terms of the contract are incapable of being performed.

Employers may allege frustration of contract when an employee develops an injury or condition and is required to take time off work. In order to defend this decision, the employer must establish that, based on objective evidence, the condition was such that it rendered the employee incapable of returning to work. Recent cases confirm that an employer who does not have this evidence in hand when it alleges frustration of contract will not succeed with this argument, and will have to pay damages to the employee.

What are the Courts Saying?

Frustration of contract was considered by Justice Perell in Dragone v. Riva Plumbing Ltd. [2007] O.J. No. 3710. In this case, the employee was being treated for metastasized breast cancer. Her employer took the position that her employment contract had been frustrated, as it had become impossible to perform due to no fault of either the employer or employee.

Justice Perell noted that a permanent illness which disables the employee is a frustrating event that will end the employment contract. However, Justice Perell found that it had not been established that the employee had no prospect of returning to work. This was a key finding. The evidence before Justice Perell included that:

  • the employee had not worked for 14 months,
  • the employee’s doctor had recommended she not work at present,
  • the employee’s treatments were continuing,
  • the employee wanted to return to work if possible, and
  • the employee did not know if she would get better.

Based on this evidence, there was at least hope that the employee would eventually be able to return to work, and as such, a permanent incapacity to return to work had not been proven. As a result, Justice Perell found that the employer failed to prove that the contract had been frustrated.

In another recent case, Naccarato v. Costco Wholesale Canada Ltd., [2010] O.J. No. 2565, an employee was dismissed on the basis of frustration of contract. Justice Pollak found that the employment contract was not frustrated for the 37-year-old employee, who was on leave and had been receiving disability benefits for nearly four years.

In rejecting the employer’s frustration of contract argument, Justice Pollak found that there was no prognosis as to when the employee could return to work. The employee’s doctor had not provided an opinion with respect to the possibility of attendance at work in the reasonably foreseeable future (and could not predict when the employee would be able to return to work). These findings are central to Justice Pollak’s decision.

These Cases Will Become More Common

The message from these cases is clear: If an employer wants to allege frustration of contract, and receive the “benefit” of this legal doctrine (i.e. firing an employee without having to pay any money), the employer must base its decision on clear and convincing medical evidence of the employee’s condition at the time of dismissal.

We expect frustration of contract cases will become more common with an aging workforce and employers bent on saving money where and when they can. Suffice to say, trying to save money by alleging frustration of contract without a proper medical basis is not the way to save money. It is also not the way to treat a sick employee.

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SLIPPERY SIDEWALK, EH? BETTER WATCH YOUR STEP!

By Ian Mair

Sep1

It was a cold, grey and dreary day in the middle of an endless Toronto winter. The plaintiff, Wally (not his real name), parked his taxi cab in a parking spot on Bloor Street. He had to see his travel agent to pick up tickets for his warm-weather vacation.

As he was walking past a shoe store, he suddenly slipped and fell, breaking his wrist. After Wally had fallen, he noticed there was a small patch of ice on the municipal sidewalk. Apart from that icy patch, the sidewalk appeared to be clear and dry.

An employee of the shoe store called for an ambulance and Wally was taken to the hospital. The emergency room doctor set his wrist fracture and put his arm into a cast. Wally had to wear the cast for four months. During that time, he was not able to drive his taxi cab and he lost income. After the cast was removed, he returned to driving but his wrist continued to bother him despite continuing physiotherapy.

Wally consulted a lawyer and the lawyer advised him to sue the shoe store and the City of Toronto on whose sidewalk he had fallen. Unfortunately for Wally, his lawsuit was destined to fail from the outset.

Wally’s lawyer relied on the Occupier’s Liability Act in support of the suit against the shoe store. That is a piece of legislation that requires an occupier to take reasonable steps to see that its premises are reasonably safe. The difficulty here is that the shoe store was not an “occupier” of the sidewalk. An occupier is defined as a person who has physical possession of premises; or, a person who has responsibility for and control over the condition of premises or the activities carried on, or control over persons allowed to enter the premises.

Wally fell on a public sidewalk owned by the City of Toronto. The fact that the shoe store undertook to remove the snow and ice from the front of the sidewalk in front of the shoe store is not sufficient to make the shoe store an occupier. There are two recent cases from the Ontario Superior Court of Justice which confirm this.

In Baker v. Perth East Township, [2009] O.J. 793, the plaintiff was injured when he fell on a icy sidewalk in front of Gerber’s Workwear in the Township of Perth East. Gerber’s Workwear rented the store from the co-defendant Mitchell. The plaintiff was on his way into the store when he fell. He was helped by a friend into the store where an employee acknowledged that there was an ice problem in front. The employee said that she intended to put salt down on the sidewalk. The plaintiff’s claim against Gerber’s Workwear was based on an argument that the store had assumed responsibility for clearing snow from the sidewalk, and that made it an occupier of the sidewalk.

Gerber’s Workwear brought a motion for summary judgment. Mr. Justice Hambly heard the motion and dismissed the plaintiff’s case. The judge found that the Township was the occupier of the sidewalk and not the store. Gerber’s Workwear did not become an occupier by virtue of the fact it cleared snow from the sidewalk.

Similarly, in Graham v. 7 Eleven Canada Inc., [2003] O.J. No. 544, the plaintiff slipped and fell on an icy sidewalk adjacent to a convenience store operated by the defendant 7 Eleven and owned by the defendant Monk Realty. The City of Toronto owned the sidewalk where the plaintiff fell.

The court held that the fact the adjacent property owner, Monk Realty, cleared the snow and ice from the sidewalk in front of the store and did not render them liable at common law. Madam Justice Sachs cited at the decision of the Court of Appeal in Bongiardina v. Vaughan (City), which held that a municipal by-law requiring an adjacent landlord to clear snow from the municipal sidewalk cannot render the adjacent landlord liable at common law.

“The snow and ice accumulating on public sidewalks and the potholes on the street in front of the houses are the legal responsibility of the municipality, not the adjacent property owner.”

Generally, an adjacent property owner will not be liable for the condition of adjacent municipal sidewalk.

However, there are a couple of exceptions to this principle. First, where an adjacent owner of property has assumed sufficient control over the sidewalk, it can be considered an occupier of the sidewalk and can be found liable. (Examples include a merchant who uses the sidewalk to sell its goods, or a restaurant owner who uses the sidewalk to operate a patio.)

Second, an adjacent owner can be liable where a nuisance flows onto the sidewalk from the adjacent property. (For example, where water leaks from an adjacent building onto the municipal sidewalk and then freezes, the building owner may be liable.)

Wally’s case did not fit within one of these exceptions, and so the shoe store’s lawyer was able to argue that the shoe store was not an occupier of the sidewalk and it was not liable for an accumulation of ice on the sidewalk.

Wally’s case against the City did not go so well either. The City of Toronto is not governed by the Occupier’s Liability Act. Rather, there is special legislation that governs the City of Toronto’s obligations to maintain its sidewalks, called the City of Toronto Act.

The City’s lawyer raised two defences provided by the City of Toronto Act, which applied in Wally’s case. First, the City did not know there was a problem in front of the shoe store and it could not be expected to know there was a small patch of ice there. Second, the City had in place a reasonable system to look after the sidewalk on Bloor Street.

The City’s system was not required to be perfect. The City of Toronto maintains more than 4,100 kilometres of streets. Double that for the sidewalks. That is the distance from Brazil to the middle of Africa. The City’s employees cannot possibly be everywhere during the winter months to remove snow and ice and the law recognizes this.

The City’s lawyer was able to point to records that showed its employees had patrolled Bloor Street several times in the four to five days before Wally’s accident. The records showed the City applied salt and sand. The City’s lawyer argued these attendances were evidence of a reasonable system.

Faced with the legal arguments put forward by the shoe store’s lawyer and the City’s lawyer, Wally’s lawyer had to explain to Wally that his case was not going to succeed. Wally agreed to settle his case on the basis that he would simply walk away. The City and the shoe store agreed to let Wally abandon his case without costs.

Poor Wally. In addition to suffering a painful injury and a loss of income, he had the unpleasant experience of starting a lawsuit that had no merit.

Slip and falls on public sidewalks are difficult to cases for plaintiffs to win. Only in exceptional circumstances will liability be found against the adjacent property owner. And to win a lawsuit against a municipality, an injured person must demonstrate that the municipality failed to have in place a reasonable system to maintain the sidewalk.

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HOSPITAL CHAIR COLLAPSES – WOMAN RECEIVES HIGHEST-EVER CHRONIC PAIN AWARD

By Colin Chant

Aug2

Many of the claims referred to our law firm concern chronic pain claims. The medical experts tell us that while most people who sustain soft tissue injury heal uneventfully, some people do not. Somewhere between 10 to 15 percent of persons who sustain soft tissue injuries continue to experience pain long after the original injury has healed.

The recent Ontario Court of Appeal decision in Degennaro v Oakville Trafalgar Memorial Hospital 2011 (Ont. C.A.) provides a helpful reminder that the diagnosis of chronic pain is accepted by our courts, that the extent of damages which can be awarded in chronic pain cases can be quite high, and that the value of these damages continues to increase.

In May 1999, while visiting her son in the hospital, the folding chair bed on which Mrs. Degennaro was sitting collapsed, causing her to fall to the floor and land on her tailbone. Mrs. Degennaro, who was 30 years old at the time, was diagnosed with a cracked sacrum. She underwent a number of treatments but the pain never resolved. In May 2001, on the advice of her doctor, she stopped working. In February 2002, Ms. Degennaro was involved in a motor vehicle accident. In June 2003, she was diagnosed as having fibromyalgia and despite undergoing a number of treatments and seeing several doctors, was never able to return to work.

The trial judge found that Mrs. Degennaro’s fibromyalgia was caused by the fall from the chair at the hospital, and awarded damages totalling more than $3 million, including $175,000 for general damages and $1.7 million for future care costs.

The case was a new high-water-mark for general damages in chronic pain cases in Ontario. Prior to Degennaro, the leading case on the assessment of damages in chronic pain cases in Ontario was Rizzi v. Marvos, in which the Court of Appeal set the range as $55,000.00 to $120,000.00.

The hospital appealed the decision, arguing that the trial judge had erred by: 1) improperly rejecting the evidence of the appellants’ medical experts on the basis that they were not treating physicians; 2) concluding that it was foreseeable that Mrs. Degennaro would develop fibromyalgia four years after her fall and after her intervening car accident; and 3) awarding Mrs. Degennaro $1,679,410 in future care costs damages. Significantly, the general damages award was not appealed.

The Court of Appeal held that the trial judge had an ample basis for preferring the opinions of Mrs. Degennaro’s treating physicians to the experts retained by the hospital, and that the preference did not amount to an error of law.

The Court of Appeal rejected the hospital’s argument that the trial judge ought to have applied the Supreme Court of Canada’s decision in Mustapha v Culligan of Canada Ltd., and found that the onset of fibromyalgia four years after Ms. DeGennaro’s fall from the chair and an intervening motor vehicle accident was too remote to warrant recovery. The Court opined that the trial judge’s conclusions that it was foreseeable that chronic pain may result from a physical injury, and that Mrs. Degennaro was a classic thin-skulled plaintiff were well supported in the evidence and warranted deference.

The Court held that the trial judge had erred in his assessment of future care costs, and ordered that the damages under that head be reduced by $374,640.65.

We expect that general damages for chronic pain cases will remain in the range established in Rizzi, and that the general damages awarded in Degennaro, while a new high-watermark, will be considered an outlier.

In the meantime, we believe that this case is important for three reasons. First, it does establish a new high-watermark for chronic pain cases; second, it underscores the importance of expert evidence at trial; and third, it illustrates the broad scope of foreseeable injuries which can lead to compensable chronic pain.

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A WOMAN WALKS INTO A BAR…

By Bronwyn Martin

Aug2

A woman walks into a pole that is resting in the back of a parked truck, hits her head and suffers an injury. The Ontario Court of Appeal finds that she was struck by a car. These are essentially the facts in Lewis v. Economical Insurance Group, 2010 ONCA 528, in which Justice Laskin held, for the Court, that the plaintiff was entitled to coverage pursuant to s.265(2)(c) of the Insurance Act which extends coverage to pedestrians who are “struck by an uninsured or unidentified automobile.”

In his reasons, Justice Laskin emphasized the need to interpret the Insurance Act broadly, and within the context of the remedial and compensatory goals of the legislation. Further, Justice Laskin concluded that an ordinary understanding of the words “struck by” simply connote “coming into contact with” and do not specifically ascribe movement to either object involved.

Although the principles of interpretation with respect to unidentified and uninsured motorist coverage require a broad and liberal approach, the Court of Appeal’s determination that the plaintiff was struck by a vehicle moves beyond this approach. This decision leads to the conclusion that any time a plaintiff comes into contact with a car and is injured they have been struck by a car.

The three cases upon which Justice Laskin relied to reach this decision suggest that although a plaintiff may be found to have been hit or struck by a vehicle where they have been “notionally touched” by a vehicle, there must be a sufficient degree of proximity between the pedestrian and the action of the car. In particular, the court in Tucci v. Pugilese held:

I have no difficulty extending the ordinary meaning the words “hit” or “strike” to cover the situations of “notional striking” such as I have described. That said, the words still plainly imply a significant degree of proximity between the automobile and the pedestrian, and the real apprehension by the pedestrian of imminent peril due to the actions of the motorist, the “immediate sensory invasion”.

While these decisions support the finding that a pedestrian has been “struck by” a car even though they have not actually come in contact with the car, there must be a significant degree of proximity between the action of the car and the pedestrian. Thus, where a car swerves into a bike lane and a cyclist is injured when manoeuvring out of the way, the cyclist is “struck by the car” (see Talbot v. GAN General Insurance Co. (1999), 44 O.R. (3d) 252). Similarly, where a pedestrian suffers injures from a street sign that was struck by a passing car, she is “struck by the car” (see Re Strum and Co-Operators Insurance Association (1974), 2 O.R. (2d) 70). However, where a woman walks into a pole that is in the back of a truck can it really be said that there is a significant degree of proximity between the action of the car and the resultant injury to the pedestrian?

The legislation ought to be interpreted broadly, but there must be a limit, and perhaps this decision has stepped beyond that limit. This approach essentially removes the requirement that the vehicle be the precipitous or causal event when considering whether a pedestrian has been struck by a vehicle. What is left is a statutory interpretation that ignores how a pedestrian was hit and simply focuses on the fact that a pedestrian was injured in some manner involving an automobile.

Whether this decision will be followed remains to be seen. In the meantime, insurers must be prepared to be broadminded when dealing with pedestrians who walk into parked cars.

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LESSEE’S INSURER NEED NOT DEFEND LESSOR

By Sandra MacKenzie

Jul4

On April 13, 2011 the Court of Appeal released a decision that will change the way motor vehicle accident cases are  defended  in situations where a defendant was driving or had leased a rented vehicle. The case of Nguyet v. King, [2011], O.J. No. 1699 (ONCA),  stands for the proposition that even if the lessee’s insurer responds first in priority in accordance with section 277 (1.1) of the Insurance Act, that insurer need not defend the lessor.

According to section 277(1.1) of the Insurance Act, and section 3.3.5 of the Ontario Auto Policy (OAP-1), if you are driving a rented car and are involved in a car accident causing loss or damage and your own auto insurance policy has third party liability coverage, then your own auto insurer must respond first. The car rental company’s insurer is last in priority. The priority of policies to respond is as follows: (1) the lessee’s policy, (2) the driver’s policy, and (3) the owner’s/lessor’s policy. The lessor’s liability is capped at $1 million. If the lessee or renter had her own auto insurance with $1 million or more in liability coverage, the lessor’s liability would be fully satisfied by this prior liability policy.

In Nguyet v. King, the defendant King rented a car from Hertz because her car was being repaired. While driving the rental car, King allegedly struck and seriously injured Thi Anh Ton Nguyet. Ms. Nguyet sued Ms. King and Hertz Canada for damages. Ms. King held a personal motor vehicle liability policy with CAA. The issue in the original motion was which policy would respond first to the claim against Ms. King and Hertz. After the hearing of the motion, Justice Belobaba determined that the King policy with CAA responds first. He also found that CAA has a duty to defend Hertz and indemnify up to its policy limit of one million dollars.

Counsel for King appealed this decision with respect to the finding s.277(1.1) of the Insurance Act and s.3.3.5 of the OAP-1 required King’s insurer to defend and indemnify the lessor. The Court of Appeal found that Justice Belobaba wrongfully assumed that because King’s insurer was obliged to respond first under s.277(1.1) of the Insurance Act, that King’s insurer was obliged to defend on behalf of Hertz and to indemnify Hertz.

With respect to the duty to defend, the Court found that s.277(1.1) imposes no duty on King’s insurer to defend on behalf of Hertz. There is no contractual relationship between the two parties. Section 277(1.1) speaks to the priorities of payment of losses by third party plaintiffs and not to an obligation to defend. With respect to the indemnity issue, the Court ruled it could not be decided on the evidence before it. This issue should not be resolved as between the two insurers, as the plaintiff may have an interest in this question. The question of indemnity was therefore not addressed.

This decision has not been appealed. If you would like more information regarding this case, please contact me.

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MMW NEWS

By Ian Mair

Jul4

Sandra MacKenzie selected Co-Chair of CDL, Vice-Chair of OBA.
Sandra MacKenzie has been chosen to serve as a Co-Chair of the CDL Canadian Defence Lawyers, Young Lawyers Division.

Sandra has also recently been appointed Vice-Chair of the Ontario Bar Association, Young Lawyers’ Division Executive Committee for the 2011-2012 term.  Sandra has served on the Young Lawyers’ Executive since her call to the bar in 2008.

Movember
In November, four of our lawyers grew their moustaches to help promote awareness of men’s health issues and to raise money to support the fight against prostate cancer.  Colin Chant, Michael Kealy, Ian Mair and Robin Moodie are shown below sporting very fashionable and sophisticated facial hair.


Our Movember team raised over $4,000.00 for this worthy cause.  The campaign raised over $27,000,000.00 in Canada alone.  Thank you to our clients, friends and family who supported us.

Three MMW Lawyers listed in “Best Lawyers” for 2011
Vern Rogers, Robin Moodie and Ian Mair have been selected by their peers to be listed the Best Lawyers in Canada, 2011, in the area of Insurance Law.

OBA – “Insurance Law – What You Need To Know” (YLD)– October 21, 2010
Ian Mair and Sandra MacKenzie spoke at this Ontario Bar Association Continuing Legal Education program aimed at young lawyers.  Their topic was entitled “What Is It Worth? The Quantification of Damages in Personal Injury Cases”.  If you would like a copy of their paper, please e-mail Sandra or Ian.

Michael Kealy Candidate for Ontario Bar Association Executive
The OBA is the voice of the legal profession in Ontario.

Michael has had the privilege of serving on the OBA’s Council since 2008. In April 2011, Michael was nominated to run for a seat on the OBA’s Board of Directors as an Executive-at-Large for Toronto. Michael was one of four candidates in an election held on June 17, 2011. Although he did not win, he received many compliments for his strong campaign.

Michael Kealy Speaks on Using the iPad in Practice
On June 3, 2011, Michael presented at the 6th Annual Solo and Small Firm Conference and Expo in Toronto on Running a Mac ® and iPad ® Law Office in a PC World.  Michael spoke on how the iPad has changed his practice, and offered suggestions to lawyers looking to unlock the power of this innovative device.

Colin Chant Participates in 2011 Ride to Conquer Cancer
On June 10-11, 2011, Colin rode in the 200 mile cycling trip from Toronto to Niagara Falls. He had been in training since January.  He raised a total of $4,600.00 to help support cancer programs at the Princess Margaret Hospital.

Sandra MacKenzie Spearheads Young Lawyers’ Charity Event
Sandra organized a charity event at South of Temperance on June 9, 2011. Young lawyers from the Ontario Bar Association, the Advocates’ Society, Ontario Trial Lawyers’ Association, Young Women in the Law and The Toronto Litigators Group co-hosted an event in support of Dress for Success. Attendees were asked to bring a gently used suit or to make a cash donation at the door.

Dress for Success is devoted to helping disadvantaged men and women succeed both professionally and personally. Sandra hopes this fundraiser will become an annual event for young lawyers.

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PERSONAL INJURY DAMAGES ARE ON THE RISE

By Michael Kealy

Jul4

There are two main sets of damages available in personal injury cases:  non-pecuniary general damages (generally known as damages for pain and suffering) and pecuniary loss (i.e. the financial cost to an injured person).

Non-pecuniary general damages in Canada are limited by a cap which was imposed by the Supreme Court of Canada in 1978.  In a “trilogy” of cases involving catastrophically injured youths, the Supreme Court of Canada capped general damage awards for pain and suffering at $100,000.00[1]. This cap on general damages, however, is indexed to inflation.  As of December 2010, the cap was roughly $330,000.00.

Despite the cap on non-pecuniary general damages, in recent years, we have seen significant increases in damages for pecuniary loss.  There are two factors behind the trend.

First, plaintiffs’ counsel in Canada have become more sophisticated.  Organizations such as the Ontario Trial Lawyers Association provide education to their members on methods to enhance damage awards.  Canadian trial lawyers regularly attend presentations and seminars in the United States and share ideas with their American colleagues on how to build their damages cases and develop new heads of damages for pecuniary loss.

Second, our courts have been willing to grant large awards for such pecuniary loss as future care costs, particularly in cases where injured plaintiffs require round the clock care.

In his recent posting Care Costs Drive Large Damages Awards, Ian Mair discusses three recent personal injury awards arising from car accidents which led to large damages awards (Marcoccia v. Gill, Sandhu v. Wellington, and Morrison v. Greig).

However, large general damages awards are not limited to car accident cases.  They extend to any number of scenarios in which people get hurt.  We have discussed four of these recent cases below.

1) $5.6M MOTOR VEHICLE – BICYCLE ACCIDENT

Aberdeen v. Langley (Township), 2008 BCCA 420

The plaintiff was catastrophically injured when he lost control of his bicycle while riding downhill. He veered right to avoid an oncoming van and fell down a ravine.  He was rendered a paraplegic and sustained a mild traumatic brain injury.  He was 50 years old at the time of the accident. The plaintiff commenced an action against the township for negligent road design and construction.

The plaintiff was successful at trial. The defendant appealed the issue of contributory negligence and quantum of damages. The Court of Appeal upheld the trial judge’s determination of damages.

The plaintiff’s award was over $5.6 million.  He was awarded general damages at the cap at the time, $311,000.00.  In addition to a large income loss award and other damages, the plaintiff was awarded over $4 million in future care costs.

2) $3.2M TRIP AND FALL ACCIDENT

Musselman v. 875667 Ontario Inc., 2010 ONSC 3177

In February 2004, 71 year old Gloria Musselman fell while walking up the basement stairs in a restaurant. She was rendered a paraplegic.

Gloria Musselman and her family brought an action against the owner of the restaurant and the City of Toronto, which was responsible for building and construction codes, and the landlord of the property.

The trial judge determined that the staircase was unsafe and grossly non-compliant with the relevant building code and by-laws.  The City of Toronto, which was responsible for control and approval of building and construction and the restaurant were held jointly and severability liable for all damages suffered by Mrs. Musselman. The City of Toronto was found 30% liable. The restaurant, at the occupier of the premises, found 70% liable.

The plaintiffs were awarded a total of $3,243,349.48 in damages. The plaintiff received the cap on general damages of $326,000, which was the highest general damages award available in Canada as of June 1, 2010.

3) $25M TAINTED MEAT CLASS ACTION

Bilodeau v. Maple Leaf Foods Inc. [2009] O.J. No. 1006

In the summer of 2008, Maple Leaf Foods announced a recall of meat products because of possible contamination with the bacteria listeria monocutogenes. The likely source of the contamination was two slicing machines at the plant.  Listeriosis, the infection caused by the bacteria, is a potentially fatal disease.  Its symptoms include nausea, vomiting, cramps, diarrhea, headache, constipation, and fever.  An outbreak in 2008 led to 56 cases of listeriosis and caused or contributed to 20 deaths.

On March 9, 2009, the court certified a national class action which included nearly all Canadian provinces, and concurrently approved a settlement.  The class members included all persons who consumed or purchased certain products manufactured between January 1, 2008 and August 20, 2008 inclusive and their family members (excluding persons and corporations who purchased those food products for resale purposes). 

A minimum of $25 million in compensation is to be paid.  The actual value of the anticipated claims was estimated $14,259,050.00.  The presiding judge was informed that this case was the largest consumer food contamination class proceeding in Canadian history.

[1] Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229; Thornton v. Prince George School District No. 57, [1978] 2 S.C.R. 267; and, Arnold v. Teno, [1978] 2 S.C.R. 287.

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CLAIMING LOSS OF OPPORTUNITY TO FORM INTERDEPENDENT RELATIONSHIPS

By Sandra MacKenzie

Jul1

Where the plaintiff’s injuries are such that they can no longer form or maintain certain types of relationships, the court may award damages for the loss of an interdependent relationship. Not all relationships will attract such damages, nor is it the loss of the relationship itself that is compensable. Rather, these damages are aimed at compensating the plaintiff for the loss of the opportunity to form a relationship which may provide the plaintiff with an economic benefit.

The types of financial benefits which are contemplated under this claim are those which typically flow from a permanent shared living relationship. Put simply, it is based on the fact that “two people can live together less expensively than they can live apart.”

The assessment will usually depend on both statistical evidence and the particular circumstances of the individual. Lost opportunity to form an interdependent relationship has been said to include three aspects: (1) loss of the benefit of increased income; (2) loss of the benefit of shared expenses; and (3) loss of the benefit of shared homemaking. Awards are generally reserved for catastrophic and more serious injury, and claims must be supported by expert as well as lay evidence.

Other factors that will be considered may include: the age of the plaintiff; whether the plaintiff has been married before; the education level of the plaintiff’s parents; and the education level that the plaintiff would have attained, had he/she not been injured. All of these factors assist the court in creating a profile of the hypothetical partner and relationship.

Although this is a relatively new head of damage, there are a number of Ontario cases in which it has been awarded. While it is not explicitly gender dependent, it is interesting to note that such awards are more common where the plaintiff is a female:

  • Osborne (Litigation Guardian of) v. Bruce (County), [1999] O.J. No. 50 was the first Ontario case in which this head of damage was considered. The 14-year old female plaintiff suffered serious cognitive and physical injuries as a result of a motor vehicle accident. The plaintiff presented evidence from an economist who considered that prior to the accident there was a 23% chance the plaintiff would not have married; that the plaintiff would have married at the age of 26 and that she would marry a man aged 28; and the chance that the plaintiff would marry a high school graduate or that he would have less than a high school diploma. After considering all the statistical evidence, the court awarded the plaintiff $125,000.00 for loss of interdependent relationship.
  • In Walker v. Ritchie, [2003] O.J. No. 18, the plaintiff was a 17 year old female who sustained a major head injury and other physical injuries as a result of a motor vehicle accident. Prior to the accident, the plaintiff had been an outgoing young woman who had dated throughout high school. Accordingly, the court found that her chances at marriage or of entering any kind of interdependent relationship had been greatly reduced. On this basis, the court awarded her $125,000.00.
  • In Bartosek (Litigation Guardian of) v. Turret Realties, [2001] O.J. No. 4735, the infant male plaintiff suffered catastrophic injuries when he was hit by a motor vehicle while riding his bike. While the court acknowledged that this was an evolving head of damage, it did not award the plaintiff damages for loss of interdependent relationships as it found the evidence too speculative and remote.
  • In Latta v. Ontario, [2004] O.T.C. 802, the plaintiff injured his back when he tripped and fell down a stairwell at a reformatory where he was an inmate. The court dismissed his claim for loss of interdependent relationship as it found that he was in a common law relationship. Moreover, the court concluded that this head of damage should be reserved for catastrophic and more serious injuries.

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BUT DO YOU REALLY MEAN IT? LITIGATION PRIVILEGE AND THE INVESTIGATION FILE

By Michael Kealy

Jul1

Insurance adjusters are sometimes surprised when their investigation file ends up in the hands of the other side.  This is especially true when they were suspicious of the claims being made at a very early stage.  While we routinely see this issue every day in our practice, addressing it is not necessarily routine.

At some point during the investigation of a potentially litigious file, the purpose of the investigation changes.  It changes from the dual purpose of investigation and potential litigation, to solely for the purpose of anticipated or actual litigation.  It is at this point that litigation privilege will arise over the contents of the investigation file going forward.

But when does this happen?  It depends.  It is clear that mere suspicion of potential litigation will not suffice.  Something more is required.  The entire purpose of the document in question must shift from investigation to solely preparing for litigation.

That something more was discussed in the recent case Kavanagh v. Peel Mutual Insurance Company.  In this case, the plaintiff’s car was involved in a car accident.  She claimed that her car was stolen.  The defendant insurer denied the plaintiff coverage in the context of a subsequent third party claim on a number of grounds.  One of the grounds was that the plaintiff was in breach of her policy because she allowed her drunk son, who did not have a valid driver’s licence, drive her car.

Justice Ferguson found that litigation privilege did not arise over the adjuster’s file until a number of facts arose which, cumulatively, shifted the investigation to relate solely to preparing for anticipated litigation.

The facts were as follows.

First, the insurance adjuster contacted police and learned a number of things.  An independent witness had followed the plaintiff’s car from the accident scene to the plaintiff’s driveway.  Both airbags had been deployed, and there was a red burn mark across the face of the plaintiff’s son, which the police officer said may be associated with the deployment of an airbag.  The insurance adjuster was obviously suspicious, although this was not enough for litigation privilege to arise.

Second, the insurance adjuster hired an independent adjuster to investigate.  The investigator became suspicious when he interviewed the plaintiff and her son, and the son tried to pass of an expired driver’s licence as valid.  The investigator informed the insurer that he suspected the plaintiff and/or her son were privy to this alleged “theft”.  Still, mere suspicion by the investigator was not enough.

Third, the investigator continued his investigation.  He found out that the son’s driver’s licence had been suspended for drinking and driving.

Fourth, a forensic analysis revealed that the plaintiff’s car had not been tampered with.  It had been started with a proper key.

Fifth and finally, the investigator prepared a report which included his opinion that the plaintiff and her son had attempted to mislead him.  The investigator concluded in his report that litigation would likely result.

Justice Ferguson reviewed the investigation file and decided that the “reality of litigation” crystallized only when the investigator submitted his report.  By this point, the insurer had all of the facts set out above in hand, which were enough, cumulatively, to shift the dominant purpose of the investigation from its dual purpose (investigation and preparation for litigation) to the sole purpose of preparing for litigation.

This case confirms the importance of identifying and documenting potentially litigious cases early on in order to protect the investigation file.

We recommend to our clients that, when faced with suspicious claims, they carefully document their suspicions, and explain their suspicions, in detailed reports.  They should also involve defence counsel once their suspicions crystallize.

If you have any questions about this topic, please contact Michael Kealy at mkealy@moodiemair.com or 416.340.6815.

 

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CARE COSTS DRIVE LARGE DAMAGES AWARDS

By Ian Mair

Jun30

Damages awards in recent Ontario court decisions involving catastrophic brain injury have reached unprecedented levels — in the millions of dollars.

In Marcoccia v. Gill, the plaintiff, Robert Marcoccia, was a twenty-something male who injured the frontal and temporal lobes of his brain in a car accident.  The jury assessed damages at $16.9 million.

In Sandhu v. Wellington Place Apartments, as a direct result from a fall from a fifth story window, a two-year-old boy sustained a serious frontal lobe brain injury.  The jury awarded damages in excess of $12.9 million.

In Gordon v. Greig, Ryan Morrison and Derek Gordon were passengers in a pick-up truck driven by Corey Greig.  Greig had been drinking.  Traveling at high speed, the pick-up entered a sharp turn and Greig lost control.  The pick-up left the road, rolled, and both Morrison and Gordon were thrown into the ditch and sustained serious injuries. Gordon sustained a catastrophic brain injury.  Mr. Justice Glass awarded damages of $11.3 million dollars.

What made these awards so high? It would be wrong to attribute these high awards to “runaway juries”. For one thing, although Sandhu and Marcoccia were jury decisions, Gordon was a judge-alone decision. For another, the Sandhu decision has been upheld by the Court of Appeal for Ontario.

True:  these plaintiffs sustained serious brain injuries, and so received the maximum award for non-pecuniary general damages. But general damages represented tiny fractions of these awards.  In Sandhu, the award for general damages was $311,000.  In Gordon, it was $310,000; and, in Marcoccia, $312,200.  (Today, the maximum is approximately $330,000.)

True: because of their injuries, the plaintiffs were left with no residual earning capacity, and received damages for lifetime loss of earnings.  But the loss of earnings awards – $1.8 million in Gordon, $1.38 million in Marcoccia, and $1.4 million in Sandhu – also represent small fractions of the totals.

Rather, it was cost of future care that accounted for the lion’s share of damages in each case – in Sandhu, $10.9 million; in Gordon, $8.6 million; and, in Marcoccia, $13.9 million.

Within those future care awards were allowances for therapies and services, such as:  speech language therapy, tutoring, occupational therapy, and psychotherapy.  However, by far the largest component of the future damage awards in each case related to the cost of round the clock supervision.

The first key factor which drives the large awards for supervision is the number of hours for which supervision is required.  The plaintiffs in Sandhu, Marcoccia and Greig required supervision 24/7.  They did not require physical care in the way that a person suffering from paraplegia or quadriplegia does.  For the most part, these plaintiffs exhibited no physical problems.  They looked normal.  They could do many things for themselves.  They slept through the night.  However, in each case doctors testified that there was a substantial risk that the plaintiff might not be safe if left alone.

Supervision was required overnight because in an emergency such as a fire, these plaintiffs might become confused or unable to react.  Or, left unsupervised, they might wander off in the middle of the night and get into trouble.

Supervision was required during the day to help cue and prompt the plaintiffs through daily activities.  For example, in Sandhu, because of the infant plaintiff’s frontal lobe brain injury, he would not be able to initiate tasks.  He would not have the judgment to conduct himself appropriately in social situations and, he might be easily led astray by unscrupulous individuals.

The second key factor that drives the large awards for supervision is the level of care.  Hourly rates vary depending on the level of expertise of the caregiver.

In Marcoccia, evidence was led that during the productive hours of the day the plaintiff would require supervision by a rehabilitation support worker (RSW) at $54 per hour.  An RSW has college-level training on how to manage a person with a brain injury.

The required level of care may vary depending on the time of day and the activities in which the plaintiff is involved.  In Sandhu, evidence was led that different levels of care would be required at different times of the injured boy’s day.  For example, while getting ready for school and at bed-time, supervision at the level of a Personal Support Worker (PSW) at $22 per hour would suffice.

During the school age years, the cost of supervision on a typical school day exceeded $700. Different scenarios were presented at trial for each phase of the plaintiff’s life, with similar daily cost estimates.

These daily costs add up — over a lifetime, they add up to millions of dollars.

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