SCC to hear Challenge of General Damages "cap" in Personal Injury Cases?

On March 13, 2006, the BC Court of Appeal released its judgment in Lee v. Dawson, a case watched closely by counsel who regularly handle bodily injury claims both for plaintiffs and defendants.

The facts of the case are straightforward. The Plaintiff was severely injured in a motor vehicle accident in March 1997, and sued for damages. The claim was tried by a jury, which awarded $2 Million in general non-pecuniary damages (pain and suffering and loss of amenities).

As most handlers of Canadian bodily injury claims will know, in a series of three cases decided in 1978 (usually just called "the trilogy"), the Supreme Court of Canada established an upper limit on general damages for bodily injury in the amount of $100,000. This figure has since been increased each year to account for inflation, and at the time of the Lee case, was up to $294,600. In keeping with the usual practice, the trial judge reduced the jury award to that amount.

Among other things, the Defendant appealed the non-pecuniary award (as already reduced by the judge), claiming that $195,000 was the appropriate figure. However the Plaintiff cross-appealed to try and restore the original jury award of $2 million, alleging that the upper limit was contrary to the Charter of Rights and Freedoms and was unconstitutional.

The Upper Limit Issue

The main issue on the appeal was the upper limit issue. The Plaintiff alleged that the cap on non-pecuniary damages discriminates against personal injury claimants whose lawsuit is founded on negligence, and that the trial judge should not have applied the upper limit as a strict rule of law.

Since the Charter of Rights and Freedoms came into force in 1982, it has been established that common law rules must be interpreted in accordance with Charter values. In Lee, the Plaintiff argued that the upper limit was inconsistent with the equality and non-discrimination guarantees of the Charter, in that seriously injured people are treated differently from less seriously injured people. The basis for this argument was that less seriously injured people have their damages assessed without regard for any cap, whereas the most seriously injured people are subject to a cap and hence are not fully compensated for their loss.

The Court rejected this argument, stating that non-pecuniary damages are not based solely on severity of a Plaintiffs injuries, but rather on "their ability to ameliorate the condition of the victim considering his or her particular situation". Because there was no discrimination on that account the Charter argument failed.

However, the Plaintiff made various other arguments challenging the cap, including the following:

• the Supreme Court of Canada used language in the trilogy suggesting that the rough upper limit was just that, as opposed to a strict rule of law; therefore, it should be open to the lower courts to award higher damages in appropriate cases;
  
• the reasons justifying the upper limit no longer exist;
  
• it would be more appropriate to deal with certain considerations used as rationale for the trilogy by way of proper jury instructions rather than a cap on general damages ie let the jury decide;
  
• other considerations contemplated by the Supreme Court in the trilogy, such as sky-rocketing awards and insurance premiums had proven to be false;
  
• the upper limit precluded juries from keeping up with the rapid pace of social, economic and technological change in society;
  
• the cap alters the standard of appellate review for findings of fact, which include the amount of damages in a negligence award;
  
• the establishment of the upper limit constituted a radical change in the common law, contrary to the accepted "incremental method" of achieving such changes;
  
• the cap produces unjust results for Plaintiffs whose situations differ from the Plaintiffs in the trilogy;
  
• the cap has eroded full compensation for injuries;
  
• the cap is inconsistent with modern community values, which are much more accepting of disabilities than previously; and
  
• finally, the cap is simply arbitrary and lacking a logical foundation.
  

The Court of Appeal ultimately decided that the trilogy was binding upon them and could only be set aside by the Supreme Court itself. They agreed with the Plaintiff that the time has perhaps come for a revisiting of the cap but nevertheless, the appeal was dismissed.

The plaintiff is applying for leave to appeal the issue to the Supreme Court of Canada and, in light of the Court of Appeal's comments (encouragement?), it seems likely it will decide to hear the case. If the appeal is ultimately successful, exposures to insurers may soon radically change in certain cases, not only involving catastrophic injuries, but perhaps in less serious ones as well.

The Lee case can be accessed at:
http://www.courts.gov.bc.ca/jdb-txt/ca/
06/01/2006bcca0159.htm

Anyone with questions respecting this or any other insurance related issues are invited to contact Jonathan Hodes (jlh@cwilson.com ; 604.643.3168), Samantha Ip (ssi@cwilson.com ; 604.643.3172) or any of the member of Clark Wilson’s Insurance Law Group.