Actuarial Notes

The Cap on Non-Pecuniary General Damages: Where is it Going and How Does it Affect Litigation?

By Jim Davidson · The Canadian Institute · 2007 · 240L07-TOR

Study guide: Exam 6C

A paper reviewing the cap on non-pecuniary general damages in Canada and the key cases that have dealt with it over the past 30 years. Its author, Jim Davidson of MacMillan Rooke Boeckle LLP, prepared it for The Canadian Institute (paper 240L07-TOR). It starts from the Supreme Court of Canada's dismissal, on October 19, 2006, of the application for leave to appeal in Lee v. Dawson — which, the paper says, ended speculation that the time had come to revisit the cap.

On the syllabus

  • Exam 6C — objective A2; the whole paper.

Introduction

  • On October 19, 2006 the Supreme Court of Canada dismissed the leave to appeal application in Lee v. Dawson without reasons, ending speculation that the time had come to revisit the cap on general damages.

The Trilogy

  • The cap on non-pecuniary damages became law in Canada through the 1978 trilogy of Supreme Court of Canada decisions: Andrews v. Grand & Toy Alberta Ltd., Teno v. Arnold and Thornton v. Prince George School District No. 57.
  • In Andrews, Justice Dickson gave four reasons to bring consistency to these awards: the claim is virtually limitless, with no objective yardstick; such damages are not really "compensatory", since no money can provide true restitution; the plaintiff is fully compensated for future loss of income and future care costs; and exorbitant awards lead to an excessive social burden — unaffordable increases in insurance and social costs.
  • He adopted $100,000 as the award for a young adult quadriplegic and, save in exceptional circumstances, as the upper limit of non-pecuniary loss in cases of that nature.
  • The paper draws two observations: the limit rests on the assumption that pecuniary losses will be fully compensated ("a co-ordinated and interlocking basis for compensation"), and on the view that unregulated claims would lead to "extravagant" awards and a burden on society — which Justice Spence developed in Teno v. Arnold in terms of insurance premiums only the wealthy could afford.

Subsequent Cases

  • Fenn v. City of Peterborough
    • The Ontario Court of Appeal (1979) awarded $125,000, relying on the erosion in the value of money since the trilogy trials and on the plaintiff's more substantial pain; never appealed, it remains the only appellate decision that exceeds the cap.
  • Lindal v. Lindal
    • In 1981 the Supreme Court of Canada held that injuries are not to be compared between plaintiffs: $100,000 is the upper limit for all such cases, and it is the $100,000 figure, not the award, that is increased for inflation.
    • From this decision the courts treat the cap as $100,000 indexed for inflation to a point in time — $311,483 as of December 2006.
  • ter Neuzen v. Korn
    • In 1995 the Supreme Court said the trilogy imposed, as a "rule of law", a legal limit on non-pecuniary damages in personal injury cases, and that where a jury verdict exceeds it the court substitutes an award at the cap.
    • With this decision the rough upper limit evolved from a judicial policy directive to a "rule of law".
  • The Decisions in Lee v. Dawson
    • Trial Level
      • The jury awarded $2,000,000 in general damages for a young plaintiff's extremely serious brain and facial injuries; the trial judge, bound by the trilogy, reduced it to $294,600, the indexed cap at the time.
    • Court of Appeal
      • The plaintiff argued that the cap offended the "charter values" of section 15 by denying full compensation to the most seriously injured victims of negligence; the British Columbia Court of Appeal rejected this, since general damages were never meant to provide "full" compensation.
      • It set out, without answering, further arguments against the cap, and said that however compelling some of them seemed, it could not overturn the trilogy.
    • Supreme Court of Canada
      • Leave to appeal was dismissed without reasons on October 19, 2006, so the rough upper limit remains the law in Canada; the paper cites Roger Oatley's 2005 thesis that the cap works because it keeps insurers underwriting property and casualty insurance.

Cases To Which The Cap Does Not Apply

  • In S.Y. v. F.G.C. the British Columbia Court of Appeal rejected the notion that the cap applied to damages for sexual assault.
  • In Hill v. Church of Scientology the Supreme Court decided there was no cap for defamation; the plaintiff was awarded $300,000 in general damages.
  • In Young v. Bella the Supreme Court refused to cap a jury's $430,000 non-pecuniary award for negligence causing economic loss, finding the policy considerations behind the cap not made out.
  • From these passages the paper concludes that "social costs", as a reason for the cap, remain a paramount concern of the Supreme Court of Canada.

Conclusion

  • The cap imposed by the trilogy remains a "rule of law" in Canadian jurisprudence, and the refusal to revisit it in Lee v. Dawson indicates it will remain well into the future.
  • The original rationale, particularly the concern about consequential social costs, remains valid and relevant to the Supreme Court of Canada 30 years later.

Sources