H. Remedies

Pages:118-138
Author:Philip H. Osborne
Profession:Faculty of Law. The University of Manitoba
 
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Page 118

The remedy for plaintiffs who suffer loss as a consequence of the defendant’s negligence is an award of damages. Damages may be compensatory, aggravated, or punitive. In negligence actions, the primary focus is on compensatory damages. They are essentially restitutionary in nature, being designed to place the plaintiff in the position she would have been in if the negligent conduct had not taken place. Aggravated and punitive damages play a very modest role in negligence law. Aggravated damages are also compensatory in nature. They are awarded for the humiliation, embarrassment, or distress caused by the nature and gravity of the defendant’s wrongdoing. Punitive or exemplary damages are awarded when a defendant’s conduct is so outrageous, vicious, malicious, or despicable that it warrants a severe reprimand and punishment. It is in the nature of a civil fine payable to the victim. The conduct of defendants in negligence cases rarely warrants either aggravated or punitive damages242. They are most commonly awarded in cases of intentional injury.

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The general restitutionary principle of compensatory damages is applicable to personal injury, fatality, and property claims but most judicial energy is expended on personal injury and fatality cases. Not only has tort law always given high priority to personal security, but personal injury and fatality claims present the most technically difficult assessment issues. The patterns of insurance also dictate that courts are primarily concerned with personal injury and fatality claims. Property, both real and personal, is normally insured on a first-party basis. Consequently, when property is damaged, destroyed, or stolen, its owner is more likely to turn to her first-party loss insurer than to commence a tort action. Insurers do have a right of subrogation which allows them to recoup payments they have made to the insured by exercising the insured’s tort rights against the wrongdoer who caused the loss, but that right is not always exercised. First-party insurance against death and disability is much less common and it may be inadequate to cover catastrophic losses. Much greater reliance must therefore be placed on the fault/ liability insurance system to secure adequate compensation. Emphasis will accordingly be given to the assessment of compensatory damages for personal injury and for losses arising out of fatal accidents.243

1) Personal Injury

The calculation of damages for personal injuries has undergone a dramatic change in the last thirty years. Prior to 1978, judges tended to make an impressionistic global award for all the plaintiff’s past and future losses. No explanation, justification, or itemization of the lump sum award was given. This assessment process was unscientific and unreliable and probably led to the undercompensation of many plaintiffs. In a trilogy of cases244in 1978, however, the Supreme Court reformulated the principles upon which damages for personal injuries are assessed. In these cases the Court called for, among other things, the full compensation of all probable future pecuniary losses, the math-

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ematical calculation of future economic losses based on the expertise of actuaries, economists, and other professionals (the actuarial method of assessment), and the itemization of the lump sum award to explain its manner of calculation and the use to which it is intended. The leading decision is Andrews v. Grand & Toy Alberta Ltd.245In that case, the plaintiff was a twenty-one-year-old man who suffered catastrophic physical injuries, including permanent quadriplegia. He did not, however, suffer mental or psychological damage. Occasional reference will be made to the Andrews case as the elements of the assessment process are described.

a) Lump Sum Award

At common law, damages must be awarded in a single lump sum award. The common law knows nothing of periodic payments or of any system for reviewing and varying the lump sum as future circumstances might warrant. The lump sum award has certain advantages, including finality, certainty, and administrative efficiency, but a high price is paid in terms of the accuracy of the award and the time it takes either to settle or to adjudicate the appropriate quantum. That delay may be detrimental to the rehabilitation process of the plaintiff and may create heavy pressure to settle her claim for less than is due. A judicial initiative to introduce a modest system of periodic payments was unsuccessful246and it is now clear that systemic reform of the judicial assessment process requires legislative intervention. A few provinces including Ontario,247

Manitoba,248and British Columbia249have legislation that permits or requires periodic payments to be ordered in limited circumstances.

Some flexibility has been introduced into the system through the settlement process by the use of structured settlements. Structured settlements are used to provide a stream of periodic payments to cover future losses. This requires the purchase of an annuity by the defendant to provide payments tailored to the particular circumstances and needs of the plaintiff. The significant advantage of a structured settlement is that the payments are not taxable in the hands of the plaintiff. This provides some efficiencies over the lump sum since the interest earned on the lump sum, although not the lump sum itself, is classified as taxable income. These potential tax savings can be shared between the parties, providing an incentive for both to use a structured settlement. Struc-

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tured settlements are particularly advantageous in cases of serious injuries to children. Payments may be delayed until the age of majority, which permits an accumulation of investment income to the ultimate advantage of the plaintiff. Structured settlements also guard against the risk of large sums being dissipated by seriously disabled plaintiffs who may then be forced to fall back on the social welfare system.

b) Special and General Damages

Special damages compensate the plaintiff for all pretrial losses. These include loss of income, nursing and personal attendant costs, medical expenses, any travel costs necessitated by the injury, and other out-of-pocket expenses. In many situations, these damages are susceptible of precise arithmetic calculation.250General damages compensate future losses. They are assessed under three broad heads of damage: future care costs and loss of earning capacity, which cover the plaintiff’s pecuniary losses, and non-pecuniary losses such as pain and suffering, permanent disability, and loss of expectation of life. The awards of damages in each category of pecuniary loss must be itemized and explained to the extent that it is feasible. This permits a meaningful review on appeal and informs the plaintiff of the way in which the lump sum was calculated and how it is intended that it be invested and spent.

c) Guidelines

The function of compensatory damages is to provide full compensation for the plaintiff’s pecuniary losses (future care and loss of earning capacity) and moderate compensation for non-pecuniary losses. Neither undue sympathy for the plaintiff nor a punitive approach to the defendant is appropriate. The defendant’s ability to pay the damages awarded and the existence and limit of any liability insurance are not relevant and should not be alluded to at trial. The plaintiff must not make excessive or unreasonable demands but mitigation principles play a more minor role than in cases of property damage. Damages may, however, be reduced on the ground of a failure to mitigate loss if the plaintiff has refused remedial medical treatment that has a substantial chance of success.251

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d) Future Care Costs

General damages for future care include the costs of all care necessitated by the injury, including nursing and personal attendant services, home or motor-vehicle modifications, medical, dental, and pharmaceutical expenses, transportation expenses, the purchase of prosthetic devices and other necessary equipment, and other expenses incurred because of the plaintiff’s disability. This head of damage is of central importance to claimants who are seriously and permanently incapacitated, and courts strive to achieve full compensation for these costs and expenses. This standard of full compensation was established in Andrews. In that case, the plaintiff required twenty-four-hour attendant care. A central issue in the case was the location of that care. His future care costs in a home setting were assessed at $4,135 per month. The only alternative presented to the Court was institutional care, which would cost $1,000 per month. Arguably the most important decision made by the Court in the Trilogy was to choose home care as the appropriate level of care for the plaintiff. The decision was clearly consistent with the general rule that the plaintiff is to be put in the position he would have been in if the accident had not occurred and, therapeutically, it was the best option for him. The Court was not influenced by the high cost of that care.252It noted that future care costs must be given the first priority and that the potential burden on defendants is almost always dissipated by liability insurance.

Once the basic monthly expense is established, a variety of other factors are considered in order to calculate the required lump sum to pay for this level of care. First, actuarial tables are used to determine how long such care will be required. Second, the controversial process of...

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