Campbell-MacIsaac et al. v. Deveaux et al., 2004 NSCA 87

• Judge: Chipman, Cromwell and Saunders, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: June 23, 2004
• Jurisdiction: Nova Scotia
• Citations: 2004 NSCA 87;(2004), 224 N.S.R.(2d) 315 (CA)

Campbell-MacIsaac v. Deveaux (2004), 224 N.S.R.(2d) 315 (CA);

 708 A.P.R. 315

MLB headnote and full text

Temp. Cite: [2004] N.S.R.(2d) TBEd. JL.016

Lombard Insurance Company (appellant/respondent by cross-appeal) v. Katherine Campbell-MacIsaac, Ronald MacIsaac, Chanelle Campbell-MacIsaac, Kielly Carlyn MacIsaac and Lisa Deveaux (respondents/appellants by cross-appeal)

(CA 202471; 2004 NSCA 87)

Indexed As: Campbell-MacIsaac et al. v. Deveaux et al.

Nova Scotia Court of Appeal

Chipman, Cromwell and Saunders, JJ.A.

June 23, 2004.

Summary:

The 51 year old plaintiff dentist severely injured her ankle in a motor vehicle accident caused by the defendant's negligence. The resulting permanent partial disability forced her to sell her dental practice and she lost her licence to practice dentistry. The plaintiff sued the defendant for damages for personal injuries. The plaintiff also sued her own insurer (Lombard) on a "Family Protection Endorsement", which insured her against an "inadequately insured motorist". At issue was the scope of that coverage, particularly whether the insurer could deduct the past and future long term disability benefits that the plaintiff had received or was entitled to receive from her disability insurer (Canada Life).

The Nova Scotia Supreme Court, in a judgment reported (2003), 214 N.S.R.(2d) 129; 671 A.P.R. 129, allowed the action and assessed damages accordingly. The insurer was liable under the "Family Protection Endorsement". Although the insurer was entitled to deduct Section B weekly indemnity benefits already paid, it was not entitled to deduct long term disability benefits already paid or the present value of future Section B and long term disability benefits. The insurer appealed. The plaintiff cross-appealed.

The Nova Scotia Court of Appeal allowed the appeal in part and dismissed the cross-appeal. The insurer was entitled to credit against its own liability both present and future long term disability benefits received or to be received and future Section B benefits to be received. The insurer had a right of subrogation and was entitled to an assignment of long term disability benefits up to the extent of its liability to the plaintiff. The court reduced several damage awards.

Damage Awards - Topic 492

Injury and death - General damage awards - Loss of earning capacity - A highly successful dentist (now aged 51) was forced to abandon her career and sell her practice after suffering a severely disabling ankle fracture - The plaintiff advanced personal funds to keep the practice going while she convalesced - When she finally sold the practice, she was forced to sell it at a distressed value - The trial judge awarded the dentist $115,000 for her loss on the sale of the practice, $1,412,000 for lost past income, $2,047,750 for loss of future earning capacity to age 65 and $24,000 for the severance paid to employees (which was reasonable) - The Nova Scotia Court of Appeal refused to disturb the damage award with the exception of reducing damages for severance to $22,000, the amount actually paid - The court rejected the submission that the trial judge should have applied, in assessing future lost income, negative contingencies for the possibility of, inter alia, early retirement - The trial judge made no error, on the basis of the plaintiff's unique circumstances, in failing to reduce damages for the possibility of retirement before age 65 - See paragraphs 96 to 131.

Damage Awards - Topic 492.1

Injury and death - General damage awards - Pretrial income loss - [See Damage Awards - Topic 492 ].

Damage Awards - Topic 580

Torts - Injury to third parties - General and special damages for personal care of injured person - In 1995, the now 51 year old plaintiff suffered a severe compound fracture of her ankle - Following a long convalescence and two fusion surgeries, the plaintiff was left with a permanent partial disability - She was forced to abandon her career as a dentist and sell her practice - Her physical capabilities were severely limited by pain and the loss of mobility in her fused ankle and foot - The trial judge awarded the plaintiff's husband $50,000 general damages for personal care of the plaintiff - The Nova Scotia Court of Appeal reduced the award to $20,000 - The trial judge improperly linked the husband's parallel claim for lost past income to a quite distinct award for quantum meruit and improperly considered the former to be a relevant factor or measure when calculating the latter - Further, an award of $50,000 was inordinately high - See paragraphs 132 to 135.

Damages - Topic 203

Entitlement - Loss by plaintiff's corporation - The plaintiff dentist, by way of a management company/family trust, transferred some of her professional income through the management company to the trust for her children's education and for tax avoidance purposes - The arrangement, regardless of share ownership, was subject to cancellation or asset starvation by the plaintiff - The defendant submitted that the plaintiff had no claim for any loss by the management company, as she did not have any legal or beneficial interest in the shares and was not entitled to any of its profits - The trial judge rejected the submission - The losses of revenue and income suffered by the plaintiff were real and tangible - Her claim was not defeated by the existence of the management company - The Nova Scotia Court of Appeal held that the trial judge did not err - See paragraphs 119 to 121.

Damages - Topic 1531

General damages - Elements of general damages - Losses of plaintiff's corporation or business - [See Damage Awards - Topic 492 ].

Damages - Topic 1549

General damages - General damages for personal injury - Impairment of earning capacity - A now 51 year old dentist was forced to sell her practice and unable to return to dentistry because of a severe ankle injury - At issue in assessing damages for past lost income and future loss of earning capacity was when the dentist would have retired (age 65 or before) - The trial judge, in using age 65 as the most reasonable retirement age, agreed with the following statement: "While I accept the fact that some people do retire before the normal retirement age of 65, I see nothing in this case to make me find that the plaintiff would retire before the normal retirement age. A person's decision to retire is affected by many factors and is constantly changing depending on a person's personal situation. I believe it is reasonable to accept a normal retirement age unless there is some evidence which would indicate that a particular plaintiff would not work until that age." - The Nova Scotia Court of Appeal held that the trial judge did not err - See paragraphs 96 to 111.

Damages - Topic 1569

General damages - General damages for personal injury - Business loss - [See Damage Awards - Topic 492 ].

Damages - Topic 1746

Deductions for payments or assistance by third parties - Contractually - Insurance - Accident and sickness benefits (incl. disability) - The plaintiff's damages exceeded the limit of the defendant's insurance coverage - The plaintiff's own insurer (Lombard) provided a "Family Protection Endorsement" (SEF No. 44) which provided underinsured motorist coverage up to $2 Million - An umbrella policy increased that coverage by a further $4 Million - The plaintiff also received long term disability benefits from her disability insurer - Lombard sought to deduct from the SEF No. 44 benefits the present value of the future stream of disability benefits the plaintiff might receive - The trial judge held that disability benefits from a private insurer were not deductible - Lombard's claim was a claim against a collateral benefit and would contractually abrogate the common law rule of non-deductibility of private insurance - Clear and unequivocal language, which was not present, was needed to abrogate that rule - The Nova Scotia Court of Appeal held that the collateral benefits rule did not apply to a first party contract dispute between an insured and insurer - Lombard was entitled to the benefit of any present and future long term disability benefits received or to be received and any future Section B benefits to be received - Lombard had no right to the present value of future benefits the plaintiff might receive, but had a right of subrogation and was entitled to an assignment of long term disability benefits up to the extent of its liability to the plaintiff - See paragraphs 63 to 95.

Damages - Topic 1749

Deductions for payments or assistance by third parties - Contractually - Insurance - Future benefits - [See Damages - Topic 1746 ].

Insurance - Topic 4103

Automobile insurance - Uninsured or underinsured motorist coverage - Extent of coverage - The plaintiff's damages exceeded the limit of the defendant's insurance coverage - The plaintiff's own insurer (Lombard) provided a "Family Protection Endorsement" (S.E.F. No. 44) which provided underinsured motorist coverage up to $2 Million - An umbrella policy increased that coverage by a further $4 Million - The Nova Scotia Court of Appeal stated that "SEF protection is 'excess' coverage only and ought not to provide a 'windfall' or double recovery. ... the SEF 44 endorsement is an indemnity policy which is intended to cover [the plaintiff] up to the extent of her loss, such that she is to receive no more and no less than full indemnity. She can in no way profit from the insurance. ... the terms of the endorsement must be interpreted in light of its overall purpose, that it is 'last ditch', 'safety net' and 'excess insurance'" - See paragraphs 52 to 62.

Insurance - Topic 4103

Automobile insurance - Uninsured or underinsured motorist coverage - Extent of coverage - [See Damages - Topic 1746 ].

Insurance - Topic 4110.1

Automobile insurance - Uninsured or underinsured motorist coverage - Deductions - [See Damages - Topic 1746 ].

Cases Noticed:

Stein Estate v. Ship Kathy K (1975), 6 N.R. 359; 62 D.L.R.(3d) 1 (S.C.C.), refd to. [para. 32].

Toneguzzo-Norvell et al. v. Savein and Burnaby Hospital (1994), 162 N.R. 161; 38 B.C.A.C. 193; 62 W.A.C. 193; 110 D.L.R.(4th) 289 (S.C.C.), refd to. [para. 33].

Founders Square Ltd. v. Nova Scotia (Attorney General) (2001), 192 N.S.R.(2d) 127; 599 A.P.R. 127 (C.A.), refd to. [para. 33].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1, refd to. [para. 36].

Director of Investigation and Research, Competition Act v. Southam Inc. et al., [1997] 1 S.C.R. 748; 209 N.R. 20, refd to. [para. 40].

Nance v. British Columbia Electric Railway Co., [1951] A.C. 601, refd to. [para. 41].

Parker v. Parsons (1997), 160 N.S.R.(2d) 321; 473 A.P.R. 321 (C.A.), refd to. [para. 41].

Fraser v. Hunter Estate (2000), 184 N.S.R.(2d) 217; 573 A.P.R. 217 (C.A.), refd to. [para. 41].

Somersall v. Friedman et al., [2002] 3 S.C.R. 109; 292 N.R. 1; 163 O.A.C. 201, refd to. [para. 53].

Myers Estate et al. v. Zurich Insurance Co. (1992), 118 N.S.R.(2d) 379; 327 A.P.R. 379 (T.D.), refd to. [para. 55].

Kuzyk v. Commercial Union Assurance Co. of Canada (1991), 117 A.R. 391; 2 W.A.C. 391; 84 D.L.R.(4th) 745 (C.A.), refd to. [para. 56].

Spath v. Anglo Canada General Insurance (1994), 17 O.R.(3d) 507 (Gen. Div.), refd to. [para. 56].

Keelty v. Bernique et al. (2002), 155 O.A.C. 20; 57 O.R.(3d) 803 (C.A.), refd to. [para. 56].

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488, refd to. [para. 59].

Bradburn v. Great Western Railway Co. (1874), L.R. 10 Ex. 1, refd to. [para. 63].

Parry v. Cleaver, [1970] A.C. 1, refd to. [para. 63].

Boarelli v. Flannigan (1973), 36 D.L.R.(3d) 4 (Ont. C.A.), refd to. [para. 63].

Ratych v. Bloomer, [1990] 1 S.C.R. 940; 107 N.R. 335; 39 O.A.C. 103, refd to. [para. 63].

Cunningham v. Wheeler - see Cooper v. Miller (No. 1).

Cooper v. Miller (No. 1), [1994] 1 S.C.R. 359; 164 N.R. 81; 41 B.C.A.C. 1; 66 W.A.C. 1, refd to. [para. 63].

Doran v. Commercial Union Assurance Co. of Canada (2000), 182 N.S.R.(2d) 329; 563 A.P.R. 329 (S.C.), overruled [para. 78].

MacNeill v. Co-operators General Insurance Co. et al. (2003), 223 Nfld. & P.E.I.R. 199; 666 A.P.R. 199; 224 D.L.R.(4th) 385 (P.E.I.C.A.), refd to. [para. 79].

Kern v. Steele (2003), 220 N.S.R.(2d) 51; 694 A.P.R. 51; 2003 NSCA 147, refd to. [para. 101].

Schrump et al. v. Koot et al. (1977), 82 D.L.R.(3d) 553 (Ont. C.A.), refd to. [para. 101].

Graham et al. v. Rourke (1990), 40 O.A.C. 301; 75 O.R.(2d) 602 (C.A.), refd to. [para. 101].

Keizer v. Hanna and Buch, [1978] 2 S.C.R. 342; 19 N.R. 209, refd to. [para. 102].

Scarlett v. Scarlett (1993), 47 R.F.L.(3d) 130 (B.C.S.C.), refd to. [para. 119].

Kachur v. Kachur (2000), 274 A.R. 323; 2000 ABQB 709, refd to. [para. 119].

Rattenbury v. Rattenbury, [2000] B.C.T.C. 326 (S.C.), refd to. [para. 119].

Olson et al. v. General Accident Assurance Co. of Canada (1998), 218 A.R. 310 (Q.B.), varied (2001), 281 A.R. 327; 248 W.A.C. 327 (C.A.), refd to. [para. 121].

Zollinger v. Kong, [2003] B.C.T.C. 1932 (S.C.), refd to. [para. 121].

Rayner v. Knickle and Kingston (1991), 88 Nfld. & P.E.I.R. 214; 274 A.P.R. 214 (P.E.I.C.A.), refd to. [para. 133].

Binder v. Mardo Construction Ltd. et al. (1994), 129 N.S.R.(2d) 64; 362 A.P.R. 64 (S.C.), refd to. [para. 36].

Authors and Works Noticed:

Brown, Craig, Insurance Law in Canada (2002), vol. 1, pp. 8 to 15 [para. 61].

Cooper-Stephenson, K., Personal Injury Damages in Canada (1996), pp. 158, 159 [para. 121].

Hilliker, Gordon, Liability Insurance Law in Canada (3rd Ed. 2001), pp. 27, 28 [para. 60].

Klar, Lewis N., Linden, Allan M., Cherniak, Earl A., and Kryworuk, Peter W., Remedies in Tort (1987), vol. 1, c. 27, para. 51 [para. 130].

Counsel:

Michael E. Dunphy, Q.C., for the appellant;

Robert L. Barnes, Q.C., and Gavin Giles, for the respondents.

This appeal and cross-appeal were heard on April 14-15, 2004, at Halifax, N.S., before Chipman, Cromwell and Saunders, JJ.A., of the Nova Scotia Court of Appeal.

On June 23, 2004, Saunders, J.A., delivered the following judgment for the Court of Appeal.