The Ontario Court of Appeal concurrently released two eagerly awaited decisions that speak to the interplay between tort damage awards and statutory accident benefits (SABs) under s. 267.8 of the Insurance Act in motor vehicle accident personal injury cases. Cadieux v. Cloutier addressed the deductibility of SABs paid before trial from tort damage awards, while Carroll v. McEwen dealt with the assignment of future SABs to the tort liability insurer.
In a nutshell, the five-judge panel hearing both of these cases held as follows:
The modern “silo” approach based on the three broad SABs categories (specified weekly benefits, health care benefits and other pecuniary benefits) is preferred over the strict “apples to apples” matching approach in relation to both the deduction and assignment of SABs from tort damage awards
SABs deductions are allocated between Defendants on the basis of each Defendant’s respective liability share (found to be a 50/50 split of the deduction in Cadieux)
There is no basis for making a temporal distinction between past and future SABs for the purpose of deductibility of SABs settlements from the tort damage award
Past SABs payments are deductible from the tort damage award even if those payments were made to third parties instead of the Plaintiff directly
SABs settlements are deductible from the tort award before factoring in the Plaintiff’s legal costs of SABs recovery, although those costs may be awarded to the Plaintiff in certain circumstances
The amendments to theInsurance Act concerning pre-judgment interest on general damages are procedural and apply retrospectively (as considered by MacFarland J.A. more thoroughly in the 2017 Court of Appeal Cobb and El-Khodr decisions)
1. Deductibility of Statutory Accident Benefits from Tort Damages
Cadieux v. Cloutier revolves around a 2006 motor vehicle accident involving a pedestrian (Cadieux) who got into an altercation with another pedestrian (Saywell). Saywell pushed the Plaintiff toward the road, causing him to stumble into the path of a truck being driven by the Defendant, Cloutier, causing a brain injury and multiple orthopaedic injuries. The Plaintiff claimed SABs from his no-fault insurer, Aviva, and also brought a tort action for damages against the Defendants. Before the trial, the Plaintiff settled his SABs claim with Aviva for $900,000 and also settled his tort claim against the Defendant truck driver, Cloutier, vis-à-vis a Pierringer agreement.
After a seven-week jury trial solely against the Defendant, Saywell, the jury awarded damages in excess of $2.3 million. The jury also apportioned liability equally amongst each of the parties involved: 1/3 against the Plaintiff and 1/3 against each of the Defendants, Cloutier and Saywell. Following the jury’s verdict, Saywell brought a motion dealing with several issues, including:
A. Should SABs deductibility be based on a strict “apples to apples” comparison of the items in the jury award against the SABs payments received, or is it sufficient that the tort award generally corresponds with the three SABs “silos”?
This issue arose because the jury did not make any specific award for the costs of future attendant care. Instead, the jury awarded over $700,000 for the future care costs of an ABI support worker, which related to medical/rehabilitation benefits – not attendant care benefits. Using an “apples to apples” approach, the Plaintiff argued that only the SABs settlement for medical/rehabilitation benefits ($250,000) should be deducted as opposed to the portion of SABs payments related to attendant care ($350,000). The Defendant, Saywell, argued that both medical/rehabilitation and attendant care benefits were captured within the silo of “health care” expenses and are properly deductible from the jury’s award for future care costs.
The trial judge favoured Saywell’s argument that SABs deductibility under s. 267.8(4) of the Insurance Act should be interpreted by applying the definition of “health care” under s. 224(1), which includes “all goods and services for which payment is provided by the medical, rehabilitation and attendant care benefits provided for in the SABs” (emphasis added).
The Court of Appeal five-judge panel unanimously upheld the trial judge’s preference for the “silo” approach to SABs deductibility, noting that he did not err in reducing the jury’s damage award by the SABs received by the Plaintiff for both medical/rehabilitation and attendant care benefits. According to the panel, the strict “apples to apples” matching approach complicates tort actions unnecessarily by focusing on irrelevant labels for heads of damages as opposed to simply matching the tort damage award to the corresponding SABs “silos” of (1) specified weekly benefits, (2) health care benefits and (3) other pecuniary benefits.
B. Is a tort Defendant entitled to deduct 100% of a SABs settlement, or is the deduction allocated amongst Defendants based on their respective share of liability?
Although the Insurance Act is silent on the apportionment of SABs deductions between two or more Defendants, the trial judge relied on the principles of equity and common sense to find that SABs deductions are allocated based on the liability proportion of each Defendant. If the non-settling tort Defendant were to enjoy a 100% reduction from his 1/3 share of damages, he would be unjustly enriched, which would deter pre-trial settlements. The Court of Appeal agreed, finding that the SABs deduction ought to be apportioned 50/50 as between the two Defendants.
2. Assignment of Future SABs to the Tort Liability Insurer
Carroll v. McEwen involved a pedestrian motor vehicle accident occurring in 2009. The Defendant driver/owner (the McEwens) carried $1 million in liability insurance with Aviva, so the Plaintiff also sued her own automobile insurer, Pilot, on the basis of the OPCF 44R endorsement under her policy and the underinsured motorist provisions of the Insurance Act.
Following a seven-week jury trial, the McEwens were found 62% liable, with the Plaintiff bearing 38% contributory negligence. The jury awarded damages in excess of $2.6 million net of the Plaintiff’s contributory negligence, including a lump sum award of over $2.2 million for the Plaintiff’s “future care costs”. The trial judge granted Aviva and Pilot a conditional order that if they paid the judgment in full, they would receive an assignment of the future medical/rehabilitation and attendant care SABs that the Plaintiff received from her no-fault insurer. This could potentially reduce Aviva and Pilot’s net liability in the event that the outstanding SABs payments were greater than the excess amount awarded after applying the combined $2 million liability coverage.
The Plaintiff appealed the conditional assignment order for the main reason that it violated the strict “apples to apples” matching principles identified in earlier case law.
For similar reasons outlined in Cadieux, the Court of Appeal ultimately dismissed the Plaintiff’s appeal. The Court disagreed with the approach of strict identification and matching between specific SABs benefits and damages for the identical head of damages awarded by the jury within the same silo. In their view, the “silo” approach adopted in Cadieuxshould equally apply to the assignment of future SABs. As the jury’s damages award for future care costs exclusively falls within the “health care” silo, the Court of Appeal found that the same was true of future SABs. As such, the trial judge did not err by ordering a conditional assignment of the future medical/rehabilitation and attendant care SABs available to the Plaintiff. The Court of Appeal also varied the conditional order by requiring the Plaintiff to disclose the amount of SABs received following the conclusion of the trial of the tort action.
These two important decisions deal with several complex issues in the motor vehicle litigation realm which make them worthy of paying attention to. Overall, the Court of Appeal has no doubt expressed strong support for the more modern “silo” approach as opposed to the strict “apples to apples” matching approach adopted under an earlier and very different legislative regime. At the end of the day, this means that the three broad categories or “silos” of SABs benefits are deductible from the corresponding tort damage award categories. The Court of Appeal has also adopted the same approach and reasoning in relation to the assignment of future SABs granted to tort liability insurers post-trial.
It is notable that the Court of Appeal found that the deductibility of SABs payments from tort awards does not warrant what has been described as the “complicated and cumbersome process” of matching heads of damages in tort to particular SABs benefits. So even if a jury neglects to make a specific tort damage award for “attendant care” expenses, SABs payments for attendant care benefits may still be deductible from the tort damage award for the reason that they are captured within the silo of “health care” as defined in s. 224(1) of the Insurance Act.
Thanks to Cadieux, we also now have another Court of Appeal decision which explicitly recognizes that the Insurance Act amendments regarding the calculation of pre-judgment interest on general damages are procedural in nature and that they apply retrospectively to accidents which took place before the amendments came into effect.
Krista has a diverse insurance law practice which focuses on bodily injury litigation, including general negligence/liability claims, motor vehicle accidents, commercial general liability, homeowners’ liability and occupiers’ liability, as well as priority/loss transfer disputes between insurers. Read more...
This action was brought against the Village of Kaslo (B.C.) by a plaintiff who sustained damages after falling down an embankment off Water Street (an unpaved alleyway). The Village had erected concrete barriers at the mouth of the street/alley in order to bar vehicles from entry and to demarcate the embankment. However, there were gaps between the barriers. Although the plaintiff was familiar with the area, she had her back to the barriers while helping her husband park their motor home. As a result, she stepped between one of the gaps before falling down and injuring herself.
In determining liability, the Court relied on the Supreme Court’s decision of Ryan v. Victoria (City), 1999 CanLII 706 (SCC) in which conduct was defined as negligent where it created “an objectively unreasonable risk of harm”. In this case, the Court noted the following factors: the embankment was patently obvious, the area was rarely used, the plaintiff knew of the embankment and there had been no other incidents of falls down the embankment.
Court dismissed the action and found that the infrastructure placed in the area of the fall by the Village was adequate. It was not necessary to put up fencing or fall protection as it was obvious that the area was hazardous. The Court also found that the plaintiff would not have fallen if she watched where she was stepping. Namely the “proximate cause” of her fall was determined to be her inattention in walking backwards toward the embankment despite being aware of the hazard.
While this decision is not binding on an Ontario Court, the duty of care owed by an occupier is defined almost identically in the Occupiers Liability Act of B.C. and Ontario. As such, the decision would likely be persuasive in Ontario in suggesting that common sense and the principles of reasonableness should prevail in disputes over whether an occupier has discharged its duty of care to ensure that people (and/or their property) will be reasonably safe while on their premises.
Shalini defends insurance claims covering all aspects of general insurance liability including motor vehicle accidents, occupiers’ liability, slip and falls, as well as accident benefits litigation and arbitration and priority and loss transfer disputes.
Risk of personal injury after vehicle stolen by two minors from commercial garage found not to be reasonably foreseeable.
The Supreme Court of Canada has weighed in on the duty of care owed by a business that stores vehicles to someone who is injured following the theft of a vehicle. This case arose after two teenagers drank alcohol, smoked marijuana, stole a vehicle from an unsecured car garage in town and subsequently crashed the vehicle. The passenger in the vehicle suffered a catastrophic brain injury and commenced a lawsuit against the driver, the driver’s mother (who supplied some of the alcohol) and the commercial car garage.
The issues the Court weighed in on were as follows:
Was the risk of personal injury reasonably foreseeable in this case?
Did the garage have a positive duty to guard against the risk of theft by minors?
Could illegal conduct sever any proximity or negate a prima facieduty of care?
Was the Risk Reasonably Foreseeable?
The Court commented that the foreseeability question must be framed in a way that links the impugned act (leaving the vehicle unsecured) to the harm suffered by the plaintiff (physical injury). It was not enough simply to determine whether the theft of the vehicle was reasonably foreseeable. The proper question to be asked was whether the personal injury suffered was reasonably foreseeable to someone in the position of the defendant when considering the security of the vehicles stored at the garage.
The Court noted that the evidence did not suggest that a vehicle, if stolen, would be operated in an unsafe manner, failed to address the risk of theft by a minor, and failed to address the risk of theft leading to an accident causing injury. To find a duty, there must be some circumstance or evidence to suggest that a person in the position of the defendant ought to have reasonably foreseen the risk of injury — that the stolen vehicle could be operated unsafely.
While in this case, it was argued that it was the risk of theft by minors that could make the risk of the unsafe operation of the stolen vehicle foreseeable, had there been other evidence or circumstances making the risk of personal injury reasonably foreseeable, a duty of care would exist.
Duty to Guard Against Risk of Theft by Minors
Although there was no need to address this given the conclusion that the injury was not reasonably foreseeable, the Court provided commentary on this issue. It was argued that the commercial garage was analogous to a commercial vendor of alcohol who has a duty to those who may be harmed by the damage caused by an intoxicated patron. The Court remarked that this analogy was misguided. While a garage benefits financially from servicing cars, they do not profit from or encourage the persons who steal cars. Having many vehicles does not necessarily create a risk of personal injury.
Additionally, the mere fact that the plaintiff was a minor was insufficient to establish a positive duty to act. Tort law does not make everyone responsible for the safety of children at all times.
Could Illegal Conduct Sever / Negate Duty of Care?
Although there was no need to address this given the conclusion that the injury was not reasonably foreseeable, the Court provided commentary on this issue. The notion that illegal or immoral conduct by the plaintiff precludes the existence of a duty of care has consistently been rejected by the Court. Whether the personal injury caused by unsafe driving of the stolen car is suffered by the thief or a third party makes no analytical difference to the duty of care analysis.
The Court concluded that, while the risk of theft was reasonably foreseeable, the evidence did not establish that it was foreseeable that someone could be injured by the stolen vehicle. There was no evidence to support the inference that the stolen vehicle might be operated in an unsafe manner causing injury. It concluded that a business will only owe a duty to someone who is injured following the theft of a vehicle when, in addition to theft, the unsafe operation of the stolen vehicle was reasonably foreseeable.
The Court made it clear that its decision was based on the evidentiary record in this case. This is not to say that a duty of care will never exist when a car is stolen from a commercial establishment and involved in an accident. Another set of facts and evidence may establish that the business ought to have foreseen the risk of personal injury. In this case, the plaintiff only established a risk of theft in general. However, there was nothing to connect the risk of theft of the car to the risk of someone being physically injured.
case has liability implications for both personal and commercial auto insurers. The Court did not accept that anyone that leaves a vehicle unlocked with the keys in it should always reasonably anticipate that someone could be injured if the vehicle were stolen, noting this would extend tort liability too far. Physical injury is only foreseeable when there is something in the facts to suggest that there is not only a risk of theft, but that the stolen vehicle might be operated in a dangerous manner. A commercial entity will not be held liable simply because it failed to properly secure vehicles on its premises. The Court has made it clear that plaintiffs must now jump an additional hurdle in order to establish a duty of care against an owner / entity with possession of a vehicle after the vehicle is stolen and personal injury ensues.
On March 18, 2018, a vehicle operating in a “self-driving mode” (owned by Uber) struck and killed a woman in Tempe, Arizona, as she was crossing the street. This was the first documented time that an individual was killed by a self-driving vehicle. The vehicle in question was manufactured by Volvo but was owned and retrofitted by Uber with a self-driving mechanism. The vehicle did not “see” the woman crossing the street, did not slow down, and struck her.
Recognizing that we need more information, this incident begs the question: whose fault is it?
1. Volvo (manufacturer)?
Perhaps you would argue that Volvo should hold some liability for this accident. The question that needs to be answered is whether Volvo could have foreseen that Uber was intending to retrofit its vehicle with a self-driving device and whether Volvo had any control over the implementation / design / programming of the device. This would require an investigation into the ongoing relationship between Volvo and Uber.
This argument may prove to be quite dangerous. It would be shocking to hold a car manufacturer responsible for a regular car accident where a driver was negligent (absent a faulty product). However, is there a heightened standard of care that an auto manufacturer should have when they are engaging in research or development of a new product? Holding an auto manufacturer liable for the actions of a third party may be outrageous, but shouldn’t we expect a manufacturer to ensure that their product is being used for its intended purpose and if not, to step in?
2. Uber (owner / modifier)?
In this case, Uber seems like the obvious target. Or is it? Uber purchased a vehicle that was designed to be driven by a driver (with some assistive electronics like lane assist and adaptive cruise control). Uber took an active step to alter the vehicle and fit it with autonomous driving capabilities. Uber created a product and is liable for its malfunction.
But then the question arises: what level of autonomy did Uber program the vehicle to have? The US Department of Transportations National Highway Traffic Safety Administration (NHTSA) created a five-tiered ranking system to determine a vehicle’s level of automation. Perhaps the vehicle was equipped with a Level 2 system which required the driver to not only be able to assume control and responsibility for the vehicle but also be fully cognisant of the surrounding circumstances or it was a Level 3 system which only required a driver to be ready to assume control of the vehicle in an emergency situation. Or perhaps it was a Level 4 system where the vehicle assumes complete control over the vehicle and doesn’t require a driver’s input in most conditions.
Clearly, the level of liability fluctuates with the level of control that a manufacturer (or third party producer) gives to the vehicle. These levels need to be clearly communicated to a user to ensure that someone, or something, is responsible for controlling the vehicle at all times.
3. The Driver (operator)?
The classic target – humans. Manufacturers are typically not named in law suits stemming from a motor vehicle accident (save for a product liability claim), rather, the individual driver is typically held liable for an accident that they orchestrated. But what about the promise of complete safety on the road given by autonomous vehicle manufacturers? What is reasonably expected by an average driver of a vehicle that is claimed to be autonomous? Can a contract between a manufacturer and a driver predetermine liability? Why would consumers trust technology and voluntarily assume liability for an accident that a car was designed to prevent?
In order to determine the liability of a driver of an autonomous vehicle, courts will need to consider the above questions. Courts will have to determine what a “reasonable person” would expect from their autonomous vehicle, what agreement was entered into between the manufacturer and the driver, and of course, what were the circumstances of the loss.
4. The Victim?
Contributory negligence will remain a key component of most law suits where a victim contributed to their own injury. However, the court will be tasked with determining whether a potential victim was owed a higher duty, if one was owed at all, by a manufacturer of a self-driving vehicle – they did after all promise safer roads. This is an unprecedented consideration, but I supposed its fitting considering the topic.
Perhaps one of the biggest considerations is the effect that autonomous vehicles will have on the insurance industry. Underwriters will have to take a more active role in determining the capabilities of a vehicle that is being insured and more importantly, if those capabilities are in fact able to prevent potentially fatal accidents.
Adjusters will need to be cognisant of potential misrepresentations made by their clients in the course of obtaining an insurance policy as well as their ongoing duty to disclose material changes (i.e. the addition of a self-driving apparatus to their car).
Regardless of how you feel about Skynet, the tragedy in Arizona will soon shed light onto whether our society and legal system are prepared to accept and handle significant strides in technology. We will keep you updated as the story progresses.
Stas practices in insurance-related litigation. He has a broad range of experience including tort claims, accident benefits, subrogation, priority and loss transfer disputes, WSIB matters, and fraudulent claims. Read more...
The Court of Appeal has upheld a jury’s award of $225,000 in general damages for pain and suffering in a case involving a plaintiff who suffered fractures to the tibia and talus bone as a result of a motor vehicle accident. The plaintiff was 18 at the time of the accident. She underwent a surgery post-accident and it was anticipated that further surgery might be required due to her pain and restriction of movement, which was attributable to the development of arthritis in her upper ankle. Her accident-related injuries had caused her to change her post-secondary education and career plans and also interfered with her daily activities.
The trial judge restricted the scope of testimony of the defendants' expert as the defendant failed to serve the plaintifs with a signed Rule 53 report until part way through the trial. Specifically, the expert was not allowed to comment on any developments that had occurred since the preparation of his report, including the testimony of the respondent’s expert at trial.
The defendants appealed. The Court of Appeal found that the appellants were the creators of their own misfortune, having delayed in serving a proper Rule 53 report and having failed to have their expert provide a response despite having the supplementary reports well in advance of trial. The Court ruled that there was no error in the trial judge’s ruling.
The appellants also appealed the trial judge’s decision to not grant a mistrial in light of opposing counsel’s “inappropriate and inflammatory” closing to the jury. The trial judge decided that any damage could be dealt with by providing the jury with correcting instructions. The Court of Appeal set out that a mistrial is a remedy of last resort such that the trial judge’s decision attracted deference. The Court criticized counsel’s conduct, noting that it risked the integrity of the trial process and that a mistrial would have attracted cost consequences, which would have to be borne by counsel himself. However, the Court ultimately found there was no miscarriage of justice requiring the need to order a new trial.
This case stresses the importance of preparation and putting your best foot forward at trial in light of the deference granted by appellate courts. Also, the Court of Appeal will not have any sympathy for a ground of appeal that has its nascence in the mischief of the appellant.
See Dunk v. Kremer, 2018 ONCA 274 (CanLII)
Shalini defends insurance claims covering all aspects of general insurance liability including motor vehicle accidents, occupiers’ liability, slip and falls, as well as accident benefits litigation and arbitration and priority and loss transfer disputes.