Townsend v. Kroppmanns et al., (2003) 316 N.R. 279 (SCC)

• Judge: McLachlin, C.J.C., Iacobucci, Major, Bastarache, LeBel, Deschamps and Fish, JJ.
• Court: Supreme Court (Canada)
• Case Date: December 02, 2003
• Jurisdiction: Canada (Federal)
• Citations: (2003), 316 N.R. 279 (SCC);2004 SCC 10;192 BCAC 144;[2004] 1 SCR 315;235 DLR (4th) 577;22 BCLR (4th) 199;[2004] 4 WWR 31;316 NR 279

Townsend v. Kroppmanns (2003), 316 N.R. 279 (SCC)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2004] N.R. TBEd. FE.054

Dale Kroppmanns and Allison Muriel Currie (appellants) v. Pamela Jean Townsend (respondent)

(29345; 2004 SCC 10; 2004 CSC 10)

Indexed As: Townsend v. Kroppmanns et al.

Supreme Court of Canada

McLachlin, C.J.C., Iacobucci, Major, Bastarache, LeBel, Deschamps and Fish, JJ.

December 2, 2003.

Summary:

The plaintiff's negligence action for dam­ages for injuries suffered when struck by the defendants' vehicle was dismissed by the British Columbia Supreme Court. The plain­tiff appealed.

The British Columbia Court of Appeal, in a judgment reported at (1998), 108 B.C.A.C. 23; 176 W.A.C. 23, allowed the appeal, apportioned liability 55 percent to the plain­tiff and 45 percent to the defendant driver, and remitted the matter for assessment of damages.

The British Columbia Supreme Court, in a decision reported at [1998] B.C.T.C. Uned. F19, assessed damages. In a subsequent decision, reported at [2000] B.C.T.C. 442, the court dealt with (1) post-judgment inter­est; (2) costs; (3) tax gross-up for the cost of future care award; and (4) manage­ment fees. The defend­ants appealed the assessment of dam­ages.

The British Columbia Court of Appeal, in a judgment reported (2002), 171 B.C.A.C. 11; 280 W.A.C. 11, allowed the appeal. The defendants appealed respecting the manage­ment fees and tax gross-up.

The Supreme Court of Canada dismissed the appeal.

Damages - Topic 1548

General damages - For personal injury - Management of fund fee (investment coun­selling) - Defendants argued that since statutory discount rates took into account some investment costs and since you could expect a higher rate of return to be achieved when an allowance for investment counselling was made, a reduction of management fees was appropriate - The Supreme Court of Canada rejected the sub­mission - Pursuant to s. 56 of the Law and Equity Act, the discount rate was fixed by the Chief Justice, precluding the need for expert evidence on discount rates - The legislature was presumed to know that courts award management fees according to a calculation distinct from the discount rate - Discount rates and management fees were complementary but distinct compo­nents of the calculation of the final damage award - Further, the court stated that "the ... [defendants'] argument, which seeks to compare the potential rate of return with the statutory rate, defeats the whole pur­pose of the deeming provision. The statu­tory discount rate is mandatory and renders irrelevant any evidence on actual or poten­tial rates of return or inflation. In order to entertain the [defendants'] approach, courts would have to enquire into the potential rates of return and inflation with the assist­ance of expert actuarial evidence, compare it with the statutory rate to determine whether the victim is likely to achieve a higher rate than the one provided for by the statute, and then apportion any per­ceived overpayment between the victim and the defendant. This kind of inquiry is exactly the one that the legislature allowed the parties to avoid by adopting a manda­tory deeming provision. With the deeming provision, parties no longer need to adduce evidence on rate of return. Assessment of management fees should not be an indirect and incidental means of reverting to costly complex evidence." - See paragraphs 8 to 16.

Damages - Topic 1548

General damages - For personal injury - Management of fund fee (investment counselling) - A plaintiff spent damages awarded for future care on a house and on legal fees - The defendants submitted that damages assessed for management fees and income tax gross-up should be based on the amount the plaintiff had left to invest (damages assessed less amount spent) - The Supreme Court of Canada affirmed the rejection of this submission - Damages are assessed, not calculated - Courts do not consider how plaintiffs spend their award -Damages are awarded in a lump sum for finality - The award was not subject to continual reassessment - Finally, a plaintiff was free to do whatever he or she wanted with the monies awarded - The court stated that "it is not relevant to inquire into how the plaintiff chooses to spend the amounts recovered for the assessment of damages for management fees and tax gross-up. Consequently, management fees and tax gross-up are to be assessed based on the first assessment of damages and not ac­cording to the amount available for invest­ment as eventually found at some indeter­minate date. In other words, the appropri­ate basis for calculation is the one deter­mined at trial, without considering what happens thereafter. It is improper for a trial judge to consider that the plaintiff does with awarded damages. ... No reduction of the management fees is allowed and the amounts spent by the [plaintiff] on her legal fees and for the purchase of a house should not be deducted from the amount upon which management fees and tax gross-up are calculated." - See paragraphs 17 to 25.

Damages - Topic 1628

General damages - Considerations in as­sessing general damages - Potential income tax liability - [See second Damages - Topic 1548 ].

Cases Noticed:

Mandzuk v. Vieira and Insurance Corp. of British Columbia, [1988] 2 S.C.R. 650; 89 N.R. 394, refd to. [para. 6].

Teno et al. v. Arnold et al., [1978] 2 S.C.R. 287; 19 N.R. 1, refd to. [para. 9].

Walker v. R., [1939] S.C.R. 214, refd to. [para. 9].

Andrews et al. v. Grand & Toy (Alberta) Ltd. et al., [1978] 2 S.C.R. 229; 19 N.R. 50; 8 A.R. 182, refd to. [para. 19].

Authors and Works Noticed:

British Columbia, Law Reform Commis­sion, Report on Standardized Assump­tions for Calculating Income Tax Gross-up and Management Fees in Assessing Damages (1994), pp. 51 [para. 13]; 52 [para. 10].

Counsel:

Patrick G. Foy, Q.C., and Robert J.C. Deane, for the appellants;

Joseph J. Arvay, Q.C., and Aaron A.G. Gordon, for the respondent.

Solicitors of Record:

Borden Ladner Gervais, Vancouver, B.C., for the appellants;

Gordon & Velletta, Victoria, B.C., for the respondent.

This appeal was heard on December 2, 2003, before McLachlin, C.J.C., Iacobucci, Major, Bastarache, LeBel, Deschamps and Fish, JJ., of the Supreme Court of Canada.

The judgment of the Supreme Court of Can­ada, which was rendered orally on De­cem­ber 2, 2003, was delivered in writing in both official languages by Deschamps, J., on February 19, 2004.