Report from Montebello

Attachment pdf – Assessment of Damages and Costs This past weekend, the annual Civil Litigation Conference was held at Chateau Montebello, Quebec. The conference marked its twenty-fifth anniversary this year. It has become one of the premier continuing education programs for civil litigators in this province. Our own Heather Williams is one of the organizers and we are proud of her contribution. For the last several years, one of the features of the two-day conference has been a discussion of various fact situations by a panel of Superior Court judges. In the early years, the judges were simply asked to give their assessments of various heads of damages. At more recent conferences though, the judges have been encouraged to discuss what their philosophical approach would be to the fact situations. This year’s exchange yielded some interesting results in the areas of personal injury damages and costs. The judges who participated were: Associate Chief Justice Douglas Cunningham; Justice De Lotbiniere Panet; Justice Colin Campbell; Justice Lloyd Brennan; Justice Giovanna Toscano Roccamo; and Justice Charles Hackland. We are not going to report who said what but will discuss some of the broad trends in the discussion that we consider to be of interest.We have attached copies of the problems that were provided to the judges. (There were some fact situations in the field of employment law, which we have not included.)Problem #2: Multiple Accidents

Problem #2: Multiple AccidentsThis problem was aimed at getting the judges’ views on damages, where the same plaintiff suffers serious injuries in different accidents.

In answer to question 1, the assessments were between $225,000 and $275,000.

The assessments were not markedly lower for question 2 (general damages, taking into account the earlier accident). They ranged from $150,000 to $275,000. As you can see, this would result in the injured plaintiff recovering total general non-pecuniary damages (for the two accidents) well in excess of the present “cap” (about $300,000).

Interestingly, the judges would have been inclined to treat the case differently if they were compensating the plaintiff for both injuries in the same action (question 3). In that event, most would have awarded non-pecuniary damages of $300,000 but some felt that they would be free to exceed the $300,000 “cap” and award a higher figure. One judge remarked that when the Supreme Court of Canada had established the cap (which was originally $100,000), there had been no deductibles and therefore, considered it questionable whether the imposition of such a ceiling on general damages is still good law.

Question 4 addresses the FLA claim of the plaintiff’s husband. Several judges remarked that the assessment of FLA claims has been too low in the past, in their opinion, and that the new deductibles would impel them to increase their assessments of claims under s. 61 of the FLA. In this case, most of the judges were in the $75,000 to $100,000 range, although there was also an assessment of $45,000 and the lowest was $20,000.

Problem #3: Costs

In this problem, an insurance company lawyer had won a motion for summary judgment. Her client was entitled to costs. The lawyer was charging the insurer a low hourly rate in exchange for volume. The lawyer in the problem intended to seek costs on a substantial indemnity basis and the judges were asked to consider how they would calculate the appropriate substantial indemnity rate.

The problem arises from a change that has been made to the costs rules. “Substantial indemnity” has now been defined in Rule 1.03(1) as “1.5 times what would otherwise be awarded in accordance with Part I of Tariff A”. Unfortunately, Part I of Tariff A, which was formerly a grid of hourly rates for lawyers of various years of experience, no longer exists. Now, the same grid appears in the Rules in an informal way, headed “Information for the Profession”.

Using the grid, the lawyer in the problem would have been entitled to a maximum hourly rate, on a partial indemnity basis, of $350. Multiplying that by 1.5, as mandated by Rule 1.03(1) would yield a substantial indemnity hourly rate of up to $525. But the lawyer in the problem was only charging her client $240. All of the judges agreed that she could not recover more in costs than her actual rate to the client. This is what the earlier caselaw said, prior to the enactment of the changes to the Rules, in which a formula for the calculation of “substantial indemnity costs” has been laid down, without any reference to the actual rate to the client being an upper limit.

Rather than beginning with the hourly rate “grid” and multiplying by 1.5, as the Rule contemplates, all of the judges would have started with the actual hourly rate ($240) and massaged it somewhat, applying their discretion, to arrive at a substantial indemnity rate. Most of the judges would have come up with a figure of $240 or slightly less.

Because of this departure from the wording of the Rule, it is difficult to predict how substantial indemnity costs will now be quanitified.

The problem went on to invite the judges to consider what they would award in costs for the identical work, but to a lawyer whose hourly rate to her client was $600 instead of $240. Interestingly, most would have given significantly more in costs, even though the work being compensated was the same as in the previous scenario. In this second situation, where the actual rate was $600, most of the judges seemed to think that a substantial indemnity rate between $375 and $450 would be appropriate.

One point that most judges made was that lawyers from Toronto or Ottawa, who are charging high hourly rates, should not expect to recover those rates when they litigate in smaller centres, opposite local lawyers whose hourly rates are much lower.

Problem #5: Bill 198 Deductibles

This problem aimed at getting the judges’ comments about the new deductible regime under Bill 198, amending the Insurance Act. For accidents after October 31, 2003, the deductibles have been increased from $15,000 to $30,000 for injured plaintiffs and from $7,500 to $15,000 for FLA claimants. But the deductibles only apply where the non-pecuniary damages for the injured person are assessed at $100,000 or less. For claims that exceed the $100,000 figure, there is no deductible.

What became abundantly clear in the discussion of this fact situation was that the judges would try to avoid applying the deductibles. One justice commented that “this deductible regime is ridiculous”. It was apparent that a Bill 198 plaintiff whose damages would be anywhere between $75,000 and $100,000 is likely to receive an assessment of non-pecuniary general damages of at least $100,000.01 (with the result that no deductible would apply). So, in this fact situation, the assessments of non-pecuniary general damages were, for the most part, between $100,000 and $150,000. One judge who would have assessed the claim at less than $100,000 increased his assessment to more than $100,000 when the effect of Bill 198 was pointed out to him.

The FLA damages were $25,000 to $35,000 for the husband and $20,000 to $45,000 per child.

Based on the discussion at Montebello, the $100,000 cut-off figure will only be applied to relatively minor injuries. Given the new “enhanced” threshold under Bill 198, it is doubtful whether any of those claims will qualify for any non-pecuniary damages anyway. So, we may be about to see a system in which there are few cases below the $100,000 cut-off, with damages being either zero (as not meeting the enhanced threshold) or more than $100,000, to neutralize the deductible.



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