Hearsay Winter 2015

Moore v. Getahun
Ontario Court of Appeal rules on Communication with Experts

The Court of Appeal for Ontario has released its decision in Moore v Getahun. The much anticipated decision specifically addressed comments made by the trial judge regarding the extent to which communication between counsel and experts is permitted. In particular, the trial judge had held

that the 2010 changes to the Ontario Rules of Civil Procedure precluded meetings between experts and lawyers to review and shape expert reports and opinions. The trial judge further suggested that all communication with an expert after receipt of a final report should be in writing and disclosed to the opposing party.

The Court held that the trial judge erred in holding that it was unacceptable for counsel to review and discuss draft expert reports. The objectivity of expert witnesses is critical but mere communication with counsel does not taint such impartiality. Instead, lawyers play a significant role in explaining legal issues to experts and presenting complex expert evidence to the court. This role requires communication with experts while the report is being drafted.

The Court further explained that there is no routine obligation to produce draft reports or notes of interactions between counsel and an expert witness. However, relief can be sought to compel production when there is a reasonable suspicion that counsel improperly influenced the expert. The foundational information of the opinion must still be disclosed.

This decision confirms that lawyers can work with experts within the protections of litigation privilege to present their clients’ cases in the best possible way. However, caution must be taken to ensure that lawyers comply with their ethical and professional obligations and do not improperly influence an expert witness.

CDL was granted Intervenor Status in this case on behalf of its membership because communications with experts affect how defence lawyers practice. Our thanks to John Olah of Beard Winter and Stephen Libin of Dutton Brock for their many hours of work on this.

Arnold v. Debruge 2014 ONSC 7044

Teri Lui, Dutton Brock - Toronto ON,

In this case, Justice Edwards heard a threshold motion brought by the defence with respect to a motor vehicle accident which took place on November 13, 2011. The jury had awarded the Plaintiff $75,000 in general damages, which was beyond the range of $20,000 to $50,000 suggested by the trial judge, nothing for past for future loss of income, $8,300 for future housekeeping expenses and $5,000 for

future medical rehabilitation expenses. The defence was successful in its motion, resulting in a majority of the award being wiped out.

In deciding whether the Plaintiff’s injuries met the threshold, Justice Edwards was of the view that the trial judge should determine a threshold motion based on the evidence and independent of the jury’s verdict. He noted that a jury’s verdict did not change a case of a serious injury into a minor injury, and vice versa. Justice Edwards considered and rejected the opinion given by the advocate Dr. Fern, who had been hired to opine on the issues relating to the threshold. He concluded that Plaintiff had not met the evidentiary requirements specified in the Regulation. As a question of law, her injuries did not pass the threshold. Justice Edwards noted that this was a case where it was incumbent upon the trial judge to come to a conclusion different from the one reflected in the jury verdict, precisely because the jury does not have to engage in an analysis of the evidence as it relates to the threshold issue.rest of article

Coverage Issues for Employment Practices Liability Insurance
Erin Durant, Dooley Lucenti - Barrie ON
A growing number of insurers are offering employment practices liability policies as a stand-alone insurance product or as an added endorsement to their commercial general liability policies. Accordingly, there is a growing body of case law on coverage issues that are arising from these policies. The below two cases

illustrate the unique problems insurance lawyers and their clients face when determining coverage under these employment practices policies.

Coverage for Associated and Related Employers
In Precidio Design Inc v. Great American Insurance Company, 2013 ONSC 7148 the Great American Insurance Company denied coverage under a directors’ and officers’ employment practices liability insurance policy. The applicant sought a declaration that it was insured under the policy, that Great American was required to pay all of its defence costs on a full indemnity basis resulting from a claim by the Ontario Ministry of Labour and an order that Great American Pay $239,000 being its loss from the claim. The application was granted.
Great American initially had issued a policy of insurance to Precidio Inc and its holding company (collectively referred to in the reasons as Precidio). The policy was renewed. After the renewal, a new company was incorporated, Precidio Design Inc. with the same officers and directors. A few months later Precidio terminated all operations and dismissed all of its employees. Precidio Design then commenced its operations and hired new employees. Unaware that Precidio was no longer in business, Great American offered to renew its insurance policy. Procedio Design applied for coverage. Procedio Design submitted the application and Great American agreed to be bound by the policy.
The next year the principals of Precidio design received notice from the Ministry of Labour regarding claims from 36 former employees of Precidio. The claim was initiated against Precidio and its officers and directors. Coverage was denied on the basis that the Ministry was not asserting claims against Precidio Design, the named insured. This was so even though Precidio Design and its directors were jointly and severally liable with Precidio due to the common employer doctrine found in section 4 of the Employment Standards Act. That section reads:
4. (1) Subsection (2) applies if,
(a) associated or related activities or businesses are or were carried on by or through an employer and one or more other persons; and
(b) the intent or effect of their doing so is or has been to directly or indirectly defeat the intent and purpose of this Act.
(2) The employer and the other person or persons described in subsection (1) shall all be treated as one employer for the purposes of this Act.
(3) Subsection (2) applies even if the activities or businesses are not carried on at the same time.
(4) Subsection (2) does not apply with respect to a corporation and an individual who is a shareholder of the corporation unless the individual is a member of a partnership and the shares are held for the purposes of the partnership.
(5) Persons who are treated as one employer under this section are jointly and severally liable for any contravention of this Act and the regulations under it and for any wages owing to an employee of any of them.
Justice Perrell ruled that a claim was made against Precidio Design within the meaning of the insurance policy due to the above section. Justice Perrell also ruled that the claim was made against an “Insured Person” under the policy. The definition of insured person included officers and directors. The officers of directors were pursued by the Ministry of Labour.
The insurer also argued that there was no “wrongful act” within the definition of the policy. The policy read:
I. "Employment Practices Wrongful Act" shall mean any of the following acts related to employment:
(1) wrongful dismissal, discharge or termination of employment, whether actual or constructive or breach of an implied employment contract,
Justice Perrell accepted the argument that because of the common employer doctrine in section 4 of the Employment Standards Act Precidio’s wrongfully dismissed employees are also Precidio Design’s employees and, therefore, Procidio Design committed a wrongful act under the terms of the policy.
Justice Perrell also went on to find that Great American not only had to pay the defence costs, but also the amounts paid by Procidio Design to the Ministry of Labour. The policy contained an exclusion that read:
The Insurer shall not be liable to make any payment for Loss in connection with any Claim made against any Insured:
K: other than Costs of Defence, for the failure to afford an employee with reasonable notice of termination, except this exclusion shall not apply to that portion of Loss that is increased by reason of an Insured engaging in an Employment Practices Wrongful Act;
The Court reasoned that the exclusion does exclude indemnification “for the failure to afford an employee with reasonable notice of termination” but does not exclude indemnification for “that portion of Loss that is increased by reason of an Insured engaging in an Employment Practices Wrongful Act.” In his opinion, the payment made to the Ministry was a loss increased by reason of the insured engaging in an employment practices wrongful act and was not a failure to afford an employee with reasonable notice.
I presume that Great American was surprised by Justice Perrell’s ruling as I doubt it intended its policy to apply to associated or related businesses or for damages to be paid pursuant to a Ministry of Labour proceeding.

Coverage available despite allegations of intentional wrongdoing
In 1082652 Ontario v. Chartis, 2013 ONSC 7117 the applicant sought a declaration that Chartis Insurance Company was required to pay the legal costs of the applicant in a wrongful dismissal action. The policy provided coverage only for the payment of legal costs and not for damages for wrongful dismissal. The applicant was a tae kwon do school who terminated the employment of an instructor. A claim was commenced for wrongful dismissal damages as well as aggravated damages and punitive damages due to alleged high handed and malicious conduct. The claim also sought damages for defamation and various torts against the principal of the applicant.
Justice Gray reviewed the principles that apply in all duty to defend cases:
1.      The insurer has a duty to defend if the pleadings filed against the insured allege facts which, if true, would require the insurer to indemnify the insured;
2.      If there is any possibility that the claim falls within the liability coverage, the insurer must defend;
3.      The court must look beyond the labels used by the plaintiff to ascertain the “substance” and “true nature” of the claims;
4.      The court should determine if any claims plead are entirely “derivative” in nature, within the meaning of that term as set out in Scalera;
5.      If the pleadings are not sufficiently precise to determine whether the claims would be covered by the policy, “the insurer’s obligation to defend will be triggered where, on a reasonable reading of the pleadings, a claim within coverage can be inferred”;
6.      In determining whether the policy would cover the claim, the usual principles governing the construction of insurance contracts apply, namely: the contra proferentum rule and the principle that coverage clauses should be construed broadly and exclusion clauses narrowly;
7. The desirability, where the policy is ambiguous, of giving effect to the reasonable expectations of the parties; and
7.      Extrinsic evidence that has been explicitly referred to in the pleadings may be considered to determine the substance and true nature of the allegations.
The respondent relied on the allegations of intentional conduct in the Statement of Claim to deny coverage. Justice Gray did not accept that because the plaintiff claimed moral damages resulting from bad faith, high handed and malicious conduct that these allegations took the claim outside the coverage under the policy. Chartis was required to pay the defence costs of the claim.
This is an important ruling because many wrongful dismissal claims are accompanied by allegations of bad faith and intentional conduct for strategic reasons and to provide tax-related advantages and options for settlement purposes.

Bhasin v. Hrynew, 2014 SCC 71
SCC Speaks on Duties of Good Faith and Honesty in Contractual Performance
Jamieson Halfnight & Anne Juntunen, Halfnight & McKinlay - Toronto ON
In November 2014, the Supreme Court of Canada issued its reasons for judgment in the contract case of Bhasin v. Hrynew, 2014 SCC 71. In that case, the Court addressed the scope of contracting parties’ obligation to act honestly and in good faith in the performance of their contractual obligations. The Court held that:

(1) an “organizing principle of good faith” underlies all contracts, and (2) all parties to contracts have a duty of honest performance.

The Facts
The facts of Bhasin provided a compelling background against which to address the duty of honesty. Mr. Bhasin was an “enrollment director” for Can-Am, a company that marketed education savings plans to investors. Mr. Bhasin owned his own business in which he sold Can-Am’s financial products. Per his contract with Can-Am, Mr. Bhasin sold Can-Am’s products to the exclusion of all others.
Mr. Bhasin had spent years building a successful sales force and was a top performer for Can-Am. His business was so prosperous that a rival enrollment director, Mr. Hrynew, had made multiple (unsuccessful) attempts to acquire it.
At some point, Can-Am came under regulatory scrutiny and committed to reviewing all of its enrollment directors’ business records as part of its securities compliance efforts. The company appointed Mr. Hrynew to conduct the review. Mr. Bhasin objected to allowing his business rival to access his confidential records, but Can-Am misled him into believing that it could not appoint an outside party. Can-Am also stated inaccurately that Mr. Hrynew would be obligated to treat the information he reviewed confidentially. All the while, Can-Am was making plans to have Mr. Bhasin work underneath Mr. Hrynew. When Mr. Bhasin’s contract with Can-Am expired, Can-Am refused to renew it.
Without the ability to sell Can-Am products, Mr. Bhasin lost most of his sales agents and much of the value of his business. Mr. Bhasin commenced an action against both Mr. Hrynew and Can-Am. As against Can-Am, he claimed that the company had acted dishonestly and in bad faith during the course of their contractual relationship by misleading him as to its intentions for his business and by requiring him to disclose information to his competitor.

The Court's Reasons
Before addressing the merits, the Court canvassed the development of the law on good faith in contractual relations. It noted that, to date, Canadian law has restricted such a duty to certain types of contracts such as insurance contracts (at para. 36). The Court expressed a desire, however, to conform Anglo-Canadian law to the law of the United States and Quebec, where good faith is implied in all contracts. According to the Court, this would make the law more consistent with the “reasonable expectations of commercial parties” (para. 41). The Court stated, in an effort to bring “greater certainty and coherence to a complex and troublesome area of the common law”, that justice requires an organizing principle of good faith (at para. 63).
The Court then made what it characterized as two incremental steps, which it said would make the common law “more coherent and more just” (para. 33). First, the Court held that good faith is an organizing principle in all contracts. Second, it recognized a common law duty to act honestly in the performance of contractual obligations.
Notably, the Supreme Court did not go so far as to expressly create a cause of action for breach of the duty of good faith. The Court simply stated that a contracting party “should have appropriate regard to the legitimate contractual interests of the contracting partner” (para. 65). In what may have been a pre-emptive defence to criticisms of its “incremental” approach, the Court stated that it is “appropriate in the development of the doctrine of good faith” to “recogniz[e] an overarching organizing principle but accept[] the existing law as the primary guide to future development” (para. 69). Accordingly, the existing law remains the guide for applying the “general organizing principle of good faith” in any given case.
The Court went on to hold that, under the facts in Bhasin, Can-Am had violated the duty of honesty and, therefore, its contract with Mr. Bhasin, by misrepresenting key facts to Mr. Bhasin in the course of carrying out the parties’ contractual relationship.

What this means for litigators
In the past, Canada’s highest court has dealt with duties of good faith and fair dealing only in contractual disputes in the context of certain specific kinds of contracts and between parties of certain specific relationships. Insurance litigators are familiar with the duty of good faith that has been imposed on contracts of insurance by the common law, and employment lawyers are accustomed to addressing the question of good faith in employment contracts. The significance of Bhasin is that it applies to all contracts, regardless of the subject matter of the contract or the relationship between the contracting parties.
The Court’s decision in Bhasin is not only important for practitioners in areas of law that did not previously have a statutory duty of good faith on contractual performance. It is also of interest to insurance and employment lawyers, who regularly encounter arguments of bad faith in contractual performance. Two effects are foreseeable:
Bhasin left open the question of what the “organizing principle of good faith” requires in any specific case. Given the uncertainty of the outlines of the doctrine, the Court’s judgment is likely to engender more case law addressing the meaning of good faith and honesty in contracts, to the benefit of insurance and employment litigators frustrated by a lack of reported decisions on point. But counsel will need to take care in applying arguments based on Bhasin and its progeny to specialized areas of law where the parties’ obligations of good faith have been honed to fit the nature of certain relationships.
Courts that were formerly reluctant to question the behaviour of employees and insureds (on the ground that these parties were deemed to have less power than their contractual counterparties), may be more willing to recognize bad faith, simply because courts will become more accustomed to holding all parties to all kinds of contracts to standards of good faith and honesty.

Shawnoo v. Certas Direct 2014 ONSC 7014
AB Wins and Tort Loses on Attendant Care
Philippa Samworth, Dutton Brock - Toronto ON
Shawnoo v. Certas Direct Insurance Company is an important case for the Accident Benefit and Tort Bar in personal injury because of Justice Garson’s determination as to what constitutes an incurred expense for attendant care for an individual who claims they are doing it in the course of their employment, occupation or profession. In the Shawnoo case, the Applicant’s mother
had been trained and certified as a personal support worker a number of years prior to the accident. However, she was not working in a paid position as a PSW on the date of the accident or even within a year prior to the accident. She argued, however, that she was still a qualified PSW and that she provided non-ruminative services for people as a PSW within her community. As well, Ms. Shawnoo claimed that her roommate, who was a youth care worker, qualified as an incurred provider of attendant services, claiming that a youth care worker had sufficient connection with a personal support worker to justify payment of her attendant care services.

Justice Garson concluded that neither of these individuals provided their services to the insured in “the course of their employment, occupation or profession in which they would have ordinarily been engaged but for the accident.”

With respect to the Applicant’s mother, while she was trained as a healthcare aide and had been some employed in the past and continued to be certified as a healthcare aide, she had not been employed for remuneration in that capacity since 2006. Justice Garson stated

“Applying a broad interpretation to the legislative provisions in question and accepting that the goal of the legislation is to reduce hardship on accident victims I am still unable to conclude that the Applicant’s mother provided her services “in the course of the employment, occupation or profession she would ordinarily have been engaged in, but for the accident”.

Similarly, he observed that the roommate was not trained in the field of healthcare, had no prior work history or experience in the same and although her services were valuable, that they did not meet the test under the definition of incurred.

Justice Garson agreed with the Arbitrator in the Josey and Primmum Insurance Company case (October 31, 2014 FSCO A13-005768) that Section 3(7)(e)(iii)(A) refers to an individual who was trained in and/or working in the healthcare industry for remuneration.

This is a significant decision with respect to who qualifies under this provision of the SABS. The decision will not be appealed, as it settled shortly after the decision was released.

Lau v ICBC 2014 BCCA 442
Tell ICBC the truth about who is the principal operator of your car!
Reza Sadeghi-Yekta, Carfra Lawton - Vancouver BC
In Lau v Insurance Corporation of British Columbia 2014 BCCA 442 22 year old Victa Lau collided with another vehicle when driving his 2005 Subaru Impreza WRX STI worth $40,000. The WRX was a total loss and the driver was deemed 100% at fault. The plaintiff Yu Lau, who is Victa’s father,

represented to ICBC in his application for insurance when he bought the vehicle that he was to be the principal operator. Yu Lau provided statement to ICBC following the collision that he had been the principal operator.
ICBC denied the plaintiffs’ claim on the basis that both the application and statement contained misrepresentations as to the principal operator
Several facts led the court to this reluctant conclusion: Yu Lau was the principal operator of a 2005 Lexus he bought three months before the WRX, his wife owned and operated a Toyota, Yu Lau owned two other vehicles he could not afford to insure, he bought the WRX on credit at steep interest rates, the WRX was the kind of car a young man would like, Victa picked up the car from the dealership and Yu Lau could remember very few of the specifications of this high performance car.
ICBC argued that Yu Lau used his 43% claim-rated scale discount to insure the high performance car for the plaintiff at modestly lower premiums.
The trial judge relied on a 2008 Supreme Court of Canada case (F.H. v McDougall) in finding that there is only one civil standard of proof at common law: the balance of probabilities. The 1999 BC Court of Appeal case of Bevacqua, which found that something substantially more was required in cases such as this, where something like fraud is alleged, is no longer the law of BC.
The Court of Appeal upheld the trial judge’s finding and dismissed the appeal in favor of the defendant, ICBC.

The Use of Social Media in Bodily Injury Claims
Tobin Horton, Blaney McMurtry - Toronto ON
Social media has become ubiquitous in our day-to-day lives. It is the communication medium for the younger generation. Advertisements declare that social media is the only way to “stay connected.” For litigators, social media is a very useful tool for defending bodily injury claims - some plaintiffs literally put their lives online. Social media can obviate the need for surveillance and can be used

to force a plaintiff’s hand into equitable settlement of a claim or a dismissal without costs.
What follows is a brief synopsis of some initial considerations when a new claim arrives and some uses of social media in litigating bodily injury claims.

Initial Considerations
When a new claim is received, run a simple Google search using the Plaintiff’s name. Conducting this search in even a perfunctory fashion is a great initial starting point. A Google search can identify typical items, such as Facebook accounts, Twitter accounts or LinkedIn profiles. Although these can be quite useful, there is a plethora of other information which may come up through a simple search.
The items that can be found can be extensive and reveal surprising and unknown aspects of a plaintiff’s functionality. Some examples from my own litigation experience include:

a Kijiji advertisement where the plaintiff has been advertising maid services;
YouTube videos of a plaintiff who moonlighted as a reggae DJ;
Photographs from a cricket league which depicted the plaintiff playing cricket; and,
a martial arts blog, where the plaintiff posted photographs of himself doing karate.

These examples illustrate that, beyond the familiar avenues of investigation such as Facebook and Twitter, interesting discoveries can be made about a plaintiff who is not aware of the far-reaching capabilities of internet search engines.

Social Media
When searching social media, you should be mindful of the search parameters being used to track down a plaintiff. Using Facebook as an example, if the plaintiff’s name is John Smith, it is prudent to search not only “John Smith,” but also derivatives of his name: “Johnny Smith,” “John S.,” “Johnny S.,” etc.
Facebook also provides modifiers to limit a search, such as by geographical location (e.g., “Burlington, Ontario”) or by an institution (e.g., “York University”). This is where taking a detailed look at the records provided by counsel is important as they can provide insight into the search parameters to help track down a plaintiff. As an example again from my own experience, a doctor’s clinical note made reference to the fact that a plaintiff was an aspiring hip-hop singer. Some digging on the internet revealed his hip-hop alias and this alias was his handle on Facebook and YouTube. A search of both revealed photographic and video evidence crushingly inconsistent with the plaintiff’s alleged impairments.
When undertaking background research on a plaintiff through social media, be sure to use all resources available for maximum results. Be meticulous with the productions from counsel and the online searches are of crucial importance when attempting to track down a plaintiff’s profile.

Lesser Known Social Media Outlets
Although most people are familiar with more popular social media outlets - Facebook, Twitter and Instagram - there are other lesser known sites which may be helpful:

Wayback Machine: This web site is essentially an internet archive of over 4 billion websites dating back to the 1990s. It allows a user to input a web address and select the point in time you would like to view. It is useful to find content which may have been modified since its inception.
Vine: Especially popular with younger generations, Vine is a site which allows users to upload short, usually 7 seconds or less, video clips. This site is popular for videos that go “viral” - i.e., popular videos that become internet sensations - but also hosts more mundane videos, some of which may have been posted by a plaintiff.
Pinterest: A social media site where users post items they enjoy or have interest in on their own board. The posted items can range anywhere from recipes for desserts to physical fitness pursuits and can provide useful insight into a plaintiff’s hobbies or post-accident activity/functionality.
Tumblr: This site is similar to a blog, but it contains photographs which can be shared with other users. Users can follow like-minded users and post photographs about activities or hobbies.
Shots: This relatively new social media outlet is exclusively for “selfie-photographs” and users post pictures of themselves and friends doing various activities. Typically, the purpose of these photographs is to elicit other users to like or share the photographs, so they tend to be rather showy in nature.

Conclusions and Recommendations
Social media cannot be ignored. Courts have acknowledged that internet and social media are fair game for bodily injury actions. The information available to litigators who take the time to conduct thorough searches of that media can be quite significant and, in some circumstances, can significantly diminish the value of a claim.

Higgins Estate v. David A. Arseneau, 2014 NBCA 65
Post-Death Loss of Income Not Recoverable Under Survival of Actions Act

Patrick Dunn, Cox & Palmer - St. John NB

In a decision that will be of interest to anyone involved with fatality claims, the New Brunswick Court of Appeal has ruled that the loss of the income that a deceased person could have earned had he or she survived is not recoverable by the deceased person’s estate.

The recoverability of damages representing the income that a deceased person could have earned had he or she not perished in a fatal accident had been a matter of some doubt in New Brunswick until the Court of Appeal settled the law in the recent decision in the case of Higgins Estate v. David A. Arseneau, 2014 NBCA 65, released on November 6, 2014.

The case arose out of a motorcycle-pedestrian collision in which Caroline J. Higgins, a lawyer in Saint John, New Brunswick, was struck and killed by a motorcycle while she was jogging. Her estate claimed against the driver of the motorcycle for the loss of income that Ms. Higgins would have earned had she not died as a result of the collision.

On a motion by the defendant to determine a question of law before trial, a judge of the Court of Queen’s Bench ruled that the deceased’s post-death loss of income was not recoverable by the estate, a decision which the Court of Appeal has now upheld.

Some background regarding damages recoverable in fatal injury cases may assist in appreciating the interpretive question that the Court of Appeal has resolved. At common law, an action for personal injuries did not survive the death of the injured party. However, that rule has been modified in New Brunswick by the Survival of Actions Act (which is similar to legislation in force in the other provinces and territories). The Survival of Actions Act permits the estate of a deceased person to sue a wrongdoer for a cause of action that vested in a deceased person before death. It is uncontroversial that a fatal injury caused by the negligence of another would vest a cause of action in the fatally injured person in the moment before death. The estate of the deceased person would therefore be entitled to sue the wrongdoer.

Thus, the survival of actions legislation has reformed the common law rule that formerly prevented survival of actions after death. However, the reform only goes so far: the legislation places explicit limits on the damages that the estate of a deceased person is entitled to recover. The Survival of Actions Act only permits the estate to recover damages that have resulted in “actual pecuniary loss” to the deceased person or the estate, together with punitive or exemplary damages in appropriate cases. The Court’s recent decision turned on the correct interpretation of the words “actual pecuniary loss”, and whether they should be interpreted to include the category of damages claimed by the Higgins Estate for loss of the income that Ms. Higgins was expected to earn but for her untimely death. The Court concluded that such damages were not an “actual pecuniary loss” and therefore not recoverable by the estate.

Critical to the Court’s determination was the evidence of the New Brunswick Legislature’s intention when it enacted the current wording respecting damages recoverable under the Survival of Actions Act in 1969. The legislative debates reveal that the Legislature intended to adopt the uniform Survival of Actions Act as proposed by the Conference of Commissioners on Uniformity of Legislation in Canada. In the reports of the Conference in which the uniform survival of actions legislation was discussed, the Commissioners chose not to recommend wording expressly excluding damages for loss of expectancy of earnings after death because they thought that it was obvious that such damages were not an actual pecuniary loss recoverable in a survival action. The Court placed great weight on this uncontradicted evidence that the New Brunswick Legislature passed the uniform Survival of Actions Act into law with that understanding of its effect.

The Court held that the words “actual pecuniary loss” effectively expressed the Legislature’s intention to exclude damages for loss of expectancy of earnings after death. “Actual”, as used in the legislation, means “existing in fact”, and is the opposite of “possible” or “contingent”.

The Higgins Estate had argued that the reasoning of the Alberta Court of Appeal in the 1997 case of Duncan Estate v. Baddeley should be adopted in New Brunswick. In that Alberta case, the Court had interpreted that province’s similarly-worded survival of actions legislation as permitting a claim by the estate for post-death loss of income. However, the New Brunswick Court of Appeal rejected the reasoning of the Alberta Court and noted that the Alberta legislature had quickly intervened] to explicitly bar recovery of such damages. The Court also noted that the Alberta Court was clearly influenced by its dislike of the policy choice that would result in compensation for the loss of physical property of a deceased person (for example, an expensive watch, which would clearly be an actual pecuniary loss to the estate) but not the loss of a working person’s earning capacity. However, the New Brunswick Court held that any discomfort with that policy choice could not be allowed to influence the Court’s interpretation of validly enacted legislation.

Adopting the reasoning of appeal courts in Nova Scotia and Prince Edward Island that likewise rejected the Alberta Court’s interpretation, the New Brunswick Court of Appeal held that to interpret the phrase “actual pecuniary loss” in a manner that would allow recovery of the deceased’s expected earnings after death would render the word “actual” redundant. It is a fundamental rule in the interpretation of legislation that the Legislature is presumed not to speak in vain. If the word “actual” did not exclude the “possible” or “contingent” loss of earnings of the deceased after death, then its use served no purpose, as the other heads of damages to which the word “actual” may arguably refer are expressly dealt with in the legislation: non-pecuniary damages for pain and suffering are expressly excluded, and punitive or exemplary damages are expressly allowed.

The Court’s reasoning also took into account New Brunswick’s wrongful death legislation, and the potential for double recovery that would exist if the survival of actions legislation were interpreted in the manner proposed by the estate. New Brunswick’s wrongful death legislation is called the Fatal Accidents Act, the modern version of which was introduced in the New Brunswick Legislature on the same day as the Survival of Actions Act in 1969. The Fatal Accidents Act reforms another common law rule: at common law, a third party had no cause of action for damages arising out of the wrongful death of another person. For example, a surviving wife could not sue for the wrongful death of her husband. Under the Fatal Accidents Act, however, the spouse, parent, child, brother and sister of the deceased may now sue a tortfeasor for wrongful death and recover damages for the “pecuniary loss resulting from the death”.

The Legislature has thus named a limited class of persons (narrower than all those persons that a deceased may have chosen to benefit from his or her estate), who will be entitled to recover for losses they have suffered as a result of the wrongful death of the deceased. Typically the most significant head of damages claimed under the Fatal Accidents Act is for “loss of dependency”, which consists of what the deceased would have spent during a natural lifespan on the dependants’ costs of homemaking and family.

The Court of Appeal noted that an award to the estate for post-death loss of income would in some cases duplicate the damages awarded to dependants under the Fatal Accidents Act. Both awards would be based on the income that the deceased would have earned had she lived. For example, a spouse named in the deceased’s Will would benefit from an award to the estate for loss of income of the deceased, while also benefiting from a loss of dependency award under the Fatal Accidents Act. The Court found it unlikely that the Legislature, in enacting the Survival of Actions Act and the Fatal Accidents Act, would have intended to create the possibility of such double recovery without also setting out a mechanism to harmonize awards under both pieces of legislation.
In the result, the Court of Appeal held that post-death loss of income or earning capacity of the injured party is not an “actual pecuniary loss” and is therefore not recoverable by the estate.

What this decision means for insurers
Until the Court of Appeal’s decision in Higgins Estate v. Arseneau, there had been uncertainty under New Brunswick law as to whether a deceased person’s estate could recover for post-death loss of income. This issue has now been conclusively resolved, subject to any appeal of the decision to the Supreme Court of Canada (for which the Higgins Estate would have to seek leave of the Supreme Court early in 2015). Court actions and settlement discussions with respect to fatal injury claims in New Brunswick can now proceed in the knowledge that such damages are not recoverable. Had the Court concluded that such damages were recoverable in fatal injury cases, the increase in financial exposure of defendants would have been significant, as claims arising out of the death of a young person without dependants would have increased from a relatively modest sum to an amount based upon the deceased person’s future earnings over their expected natural lifespan.

This decision has the greatest impact on those fatal injury cases in which the deceased has no dependants who would be entitled to claim under the Fatal Accidents Act: for instance, in the case of a young person or an adult with no spouse or children. In such cases, the estate of the deceased person will not be able to use a claim for post-death loss of income to circumvent the Legislature’s policy decision to limit the class of dependants who are entitled to recover for their pecuniary loss under the Fatal Accidents Act.

Perhaps echoing the old law school question as to whether it is less expensive for a wrongdoer to cause another’s death rather than merely injuring them, the Court remarked that it is well aware that its narrow interpretation of “actual pecuniary loss” will occasionally limit the wrongdoer’s liability to relatively insignificant pecuniary damages; however, the Court confirmed that is a policy decision of the Legislature, and courts must respect such choices even if they may consider them to be insufficiently claimant-friendly.

The successful respondent on the appeal in Higgins Estate v. David A. Arseneau was represented by David G. O’Brien, Q.C. and Patrick J.O. Dunn of Cox & Palmer’s Saint John, New Brunswick office.
This article originally appeared in the January, 2015 Risk Management Counsel monthly magazine Net News, as found at www.rmc-agr.com.