Watkins v. Olafson, Aitkenhead, Manitoba and Manitoba Public Insurance Corp., (1989) 100 N.R. 161 (SCC)

• Judge: Dickson, C.J.C., Lamer, Wilson, La Forest, L'Heureux-Dubé, Sopinka, Gonthier, Cory and McLachlin, JJ.
• Court: Supreme Court (Canada)
• Case Date: May 24, 1989
• Jurisdiction: Canada (Federal)
• Citations: (1989), 100 N.R. 161 (SCC);61 DLR (4th) 577;1989 CanLII 36 (SCC);39 BCLR (2d) 294;100 NR 161;[1989] SCJ No 94 (QL);[1989] 6 WWR 481;[1989] ACS no 94;[1989] CarswellMan 1;61 Man R (2d) 81;[1989] 2 SCR 750;50 CCLT 101

Watkins v. Olafson (1989), 100 N.R. 161 (SCC)

MLB headnote and full text

[French language version follows English language version]

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

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Donald Edwin Watkins (applicant) v. Ian Frank Olafson, James Aitkenhead and the Government of Manitoba (respondents)

(No. 20598)

Indexed As: Watkins v. Olafson, Aitkenhead, Manitoba and Manitoba Public Insurance Corp.

Supreme Court of Canada

Dickson, C.J.C., Lamer, Wilson, La Forest, L'Heureux-Dubé, Sopinka, Gonthier, Cory and McLachlin, JJ.

September 28, 1989.

Summary:

Watkins was rendered a quadriplegic in a motor vehicle accident. He was a passenger in a van owned by Aitkenhead and driven by Olafson. The accident occurred on a stretch of highway which was under construction by the Province of Manitoba. Watkins sued Aitkenhead, Olafson, the Province of Manitoba and the Manitoba Public Insurance Corporation. The issue of liability was dealt with first.

The Manitoba Court of Queen's Bench, in a decision reported 28 Man.R.(2d) 71, allowed Watkin's action and apportioned liability. However, in a decision reported 31 Man.R.(2d) 152, the Manitoba Court of Appeal reapportioned liability 75% on Olafson (for which Aitkenhead was vicariously liable), and 25% on the provincial government.

Subsequently, the Manitoba Court of Queen's Bench, in a decision reported 40 Man.R.(2d) 286, calculated the quantum of damages, including, inter alia, a lump sum amount for the cost of future care plus a gross-up for income tax. Olafson, Aitkenhead and the province appealed.

The Manitoba Court of Appeal, in a decision reported 48 Man.R.(2d) 81, allowed the appeal and recalculated damages accordingly. The Court of Appeal, inter alia, set aside the lump sum award for future care and ordered instead that the Province of Manitoba pay Watkins $3,000.00 per month adjusted annually for inflation, subject to deductions for ongoing care which he might receive from the government. The court also reduced the damage award in several other areas. Watkins appealed.

The Supreme Court of Canada allowed the appeal, set aside the decision of the Court of Appeal with the exception of one adjustment to the damage award, and restored the trial judge's decision. The Supreme Court of Canada held that the Court of Appeal erred in ordering periodic payments in the absence of enabling legislation or an agreement by all parties. The court also affirmed that the lump sum damage award for the cost of future care assessed by the trial judge should be grossed-up for the impact of income tax. The court also held that the Court of Appeal erred in substituting its opinion for what was appropriate when reducing other portions of the damage award, where the trial judge made no error and there was evidence to support his decision. The only adjustment made to the damage award by the Court of Appeal which was affirmed by the Supreme Court of Canada was the setting aside of an allowance for inflation on the damage award for pretrial loss of earnings.

Courts - Topic 28

Stare decisis - Authority of judicial decisions - The common law - Modification or extension of common law rule - The Supreme Court of Canada stated that "generally speaking, the judiciary is bound to apply the rules found in the legislation and in the precedents. Over time, the law in any given area may change; but the process of change is a slow and incremental one, based largely on the mechanism of extending an existing principle to new circumstances. While it may be that some judges are more activist than others, the courts have generally declined to introduce major and far reaching changes in the rules hitherto accepted as governing the situation before them" - See paragraph 13.

Courts - Topic 28

Stare decisis - Authority of judicial decisions - The common law - Modification or extension of common law rule - The Supreme Court of Canada set out several reasons for the judicial reluctance to drastically recast established rules of law - See paragraph 14 - The court then stated that these reasons suggest "... that major revisions of the law are best left to the Legislature. Where the matter is one of a small extension of existing rules to meet the exigencies of a new case and the consequences of the change are readily assessable, judges can and should vary existing principles. But where the revision is major and its ramifications complex, the courts must proceed with great caution" - See paragraph 15.

Damage Awards - Topic 483

General damage awards - Structured settlement - Court ordered periodic payments - The plaintiff was rendered a quadriplegic in a motor vehicle accident - At trial he was awarded damages, including a lump sum amount for the cost of future care - On appeal the Manitoba Court of Appeal set aside the lump sum award and ordered that the provincial government (one of the defendants) pay the plaintiff $3,000.00 per month adjusted annually for inflation, subject to deductions for ongoing care which the plaintiff might receive from the government - The Supreme Court of Canada set aside the decision of the Court of Appeal and restored the lump sum award, holding that the Court of Appeal erred in awarding the periodic payments in absence of enabling legislation or the consent of all parties - See paragraphs 6 to 23.

Damage Awards - Topic 483

General damage awards - Structured settlement - Court ordered periodic payments - The Supreme Court of Canada stated that "the well-established limits on judicial law- making powers as well as the complexities associated with introduction of the concept of periodic payments into our law, preclude the court from ordering periodic reviewable payments for future cost of care in the stead of lump sum judgment to which the plaintiff is entitled under existing legal principles. For the same reasons, it would be inappropriate for the court to order the defendant to purchase an annuity for the plaintiff's care during his lifetime" - See paragraph 23.

Damage Awards - Topic 483

General damage awards - Structured settlement - Court ordered periodic payments - The Supreme Court of Canada held that in the absence of enabling legislation or the consent of all parties, a court should not order that an injured plaintiff forego his traditional right to a lump sum judgment for a series of periodic payments - See paragraphs 6 to 23.

Damages - Topic 65

General principles - Considerations in assessing damages - Inflation - The Supreme Court of Canada held that there was no legal foundation for allowing an amount for inflation on an award of damages for pretrial loss of earnings - See paragraph 47.

Damages - Topic 1542

General damages - Personal injury - Structured settlements - Court ordered periodic payments - [See first Damage Awards - Topic 483 above].

Damages - Topic 1542

General damages - Personal injury - Structured settlements - Court ordered periodic payments - [See second Damage Awards - Topic 483 above].

Damages - Topic 1542

General damages - Personal injury - Structured settlements - Court ordered periodic payments - [See third Damage Awards - Topic 483 above].

Damages - Topic 1548

General damages - Personal injury - Management of fund fee - The Supreme Court of Canada referred to an earlier decision of the court (Mandzuk v. Vieira and Insurance Corporation of British Columbia (1988), 89 N.R. 384), which established that a management of fund fee may be awarded where appropriate - The court affirmed a $75,000.00 fee on a $2,075,632.56 damage award for personal injuries - See paragraph 53.

Damages - Topic 1550

General damages - Personal injury - Prospective loss of wages or earnings - Income tax - The Supreme Court of Canada held that in calculating damages for loss of earning capacity, no deduction should be made for income tax a plaintiff would have had to pay on pre or post-trial earnings - See paragraph 49.

Damages - Topic 1550.1

General damages - Personal injury - Pretrial loss of wages or earnings - Income tax - [See Damages - Topic 1550 above].

Damages - Topic 1550.1

General damages - Personal injury - Pretrial loss of wages or earnings - The plaintiff was rendered a quadriplegic in a motor vehicle accident - The trial judge awarded damages for pretrial loss of wages - The Manitoba Court of Appeal reduced the award because, inter alia, the plaintiff's food and shelter were totally provided for by the government between the date of the accident and the date of trial - The Supreme Court of Canada held that the Court of Appeal erred in deducting the living expenses from the pretrial wages - See paragraph 48.

Damages - Topic 1550.1

General damages - Personal injury - Pretrial loss of wages or earnings - Inflation - [See Damages - Topic 65 above].

Damages - Topic 1565

General damages - Personal injuries - Considerations - Future income tax - The Supreme Court of Canada held that where the evidence supports it, an allowance should be made for the impact of income tax on a damage award for the cost of future care - See paragraphs 24 to 33.

Damages - Topic 1567

General damages - Personal injury - Future care and treatment - Structured settlements - Court ordered periodic payments - [See first Damage Awards - Topic 483 above].

Damages - Topic 1567

General damages - Personal injury - Future care and treatment - Structured settlements - Court ordered periodic payments - [See second Damage Awards - Topic 483 above].

Damages - Topic 1567

General damages - Personal injury - Future care and treatment - Structured settlements - Court ordered periodic payments - [See third Damage Awards - Topic 483 above].

Damages - Topic 1567

General damages - Personal injury - Future care and treatment - Income tax liability - [See Damages - Topic 1565 above].

Damages - Topic 1567

General damages - Personal injury - Future care and treatment - The plaintiff was rendered a quadriplegic in a motor vehicle accident - The trial judge calculated the damage award for future care on the basis that the plaintiff was entitled to be cared for in his own home, despite the availability of less costly government care programs - The Manitoba Court of Appeal disagreed, holding that government subsidized accommodation would be reasonable for the plaintiff - This assumption greatly reduced the sum required for future care - The Supreme Court of Canada held that the Court of Appeal should not have substituted its views of what would be appropriate care for the plaintiff where there was no error by the trial judge and there was evidence to support his conclusion - See paragraphs 36 to 40.

Damages - Topic 1628

General damages - Considerations in assessing - Potential income tax liability - [See Damages - Topic 1565 above].

Damages - Topic 1628

General damages - Considerations in assessing - Potential income tax liability - [See Damages - Topic 1550 above].

Practice - Topic 8802

Appeals - General principles - Duty of appellate court regarding damage awards by trial judge - The plaintiff was rendered a quadriplegic in a motor vehicle accident and damages were assessed by a trial judge - On appeal the Manitoba Court of Appeal reduced the award in several areas, substituting its own opinion of what was appropriate for the plaintiff or what his circumstances were - The Supreme Court of Canada substantially restored the trial judge's award, holding that the Court of Appeal erred in substituting its own opinions for those of the trial judge where the trial judge made no errors and there was evidence to support his findings - See paragraphs 35 to 54.

Cases Noticed:

Fournier v. Canadian National Railway Co., [1927] A.C. 167, refd to. [para. 11].

Andrews v. Grand & Toy (Alberta) Ltd., [1978] 2 S.C.R. 229; 19 N.R. 50; 8 A.R. 182; [1978] 1 W.W.R. 557; 83 D.L.R.(3d) 452; 3 C.C.L.T. 225, refd to. [paras. 11, 26, 27, 39, 41].

Lewis v. Todd, [1980] 2 S.C.R. 694; 34 N.R. 1; 115 D.L.R.(3d) 257; 14 C.C.L.T. 294, refd to. [para. 11].

McErlean v. Brampton (City) et al. (1987), 22 O.A.C. 186; 61 O.R.(2d) 396, leave to appeal refused [1988] 1 S.C.R. xi; 88 N.R. 204, refd to. [paras. 11, 27, 29].

McErlean v. Sarel - see McErlean v. Brampton (City) et al.

Thornton v. Board of School Trustees of School District No. 57, [1978] 2 S.C.R. 267; 19 N.R. 552; [1978] 1 W.W.R. 607; 83 D.L.R.(3d) 480; 3 C.C.L.T. 257, refd to. [para. 26].

Teno et al. v. Arnold, [1978] 2 S.C. R. 287; 19 N.R. 1; 83 D.L.R.(3d) 609; 3 C.C.L.T. 372, refd to. [para. 26].

Fenn v. City of Peterborough (1979), 25 O.R.(2d) 399, refd to. [para. 27].

Nielsen v. Kaufmann (1986), 13 O.A.C. 32; 54 O.R.(2d) 188, refd to. [para. 27].

Ashby v. White (1703), 2 Ld. Raym. 938; 92 E.R. 126, refd to. [para. 30].

Ontario v. Jennings, [1966] S.C.R. 532, refd to. [paras. 32, 49].

Mandzuk v. Vieira and Insurance Corporation of British Columbia, [1988] 2 S.C.R. 650; 89 N.R. 384, refd to. [para. 53].

Statutes Noticed:

Alabama Code, 6-5-486 (1975) [para. 9].

Alaska Statutes, 09.55.548 (1983) [para. 9].

California Civil Procedure Code, 667.7 (West 1980) [para. 9].

Courts of Justice Act, S.O. 1984, c. 11, sect. 129 [para. 9].

Delaware Code Ann. tit., 18, 6864 (Supp. 1984) [para. 9].

Florida State Ann., 768.51 (West 1986) [para. 9].

Illinois Ann. Stat., ch. 110, paras. 2-1701 to 2-1719 (Smith-Hurd Supp. 1986) [para. 9].

Income Tax Act, S.C. 1970-71-72, c. 63 [para. 24].

Kansas Stat. Ann., 60-2609 (1983) [para. 9].

Louisiana Rev. Stat. Ann., 40:1299.39 and 40:1299.43 (West Supp. 1986) [para. 9].

Maryland Courts and Judicial Procedure Code Ann., 3-2A-08(b) (1974) [para. 9].

Motor Vehicle (Third Party) Insurance Act, 1943-1972, sect. 16 E(5)(a)(W. Aust.) [para. 9].

New Hampshire Rev. Stat. Ann., 507-C:7 (1983) [para. 9].

New Mexico Stat Ann., 41-5-7 (1978) [para. 9].

New York Civil Practice L & R 5031 to 5039 (McKinney Supp. 1986) [para. 9].

Oregon Rev. Stat., 752.070 (1985) [para. 9].

South Dakota Codified Laws Ann., 213A-5 to 21-3A-13 (Supp. 1986) [para. 9].

Utah Code Ann., 78-14-9.5 (Supp. 1986) [para. 9].

Washington Rev. Code Ann., 4.56.240 (Supp. 1983) [para. 9].

Wisconsin Stat. Ann., 655.015 (West. Supp. 1985) [para. 9].

Authors and Works Noticed:

Feldthausen, Bruce and Keith McNair, General Damages in Personal Injury Suits: The Supreme Court's Trilogy (1978), 28 U.T.L.J. 381 [para. 29].

Counsel:

Robert B. Doyle, Harvey I. Pollock, Q.C., and Martin J. Pollock, for the appellant;

J.D.F. Strange, for the respondent, Ian Frank Olafson;

W.G. McFetridge and S.J. Pierce, for the respondent, Government of Manitoba.

Solicitors of Record:

Pollock & Company, Winnipeg, Manitoba, for the appellant;

S.S. Kapoor, Winnipeg, Manitoba, for the respondents, Ian Frank Olafson and James Aitkenhead;

Tanner Elton, for the respondent, Government of Manitoba.

This appeal was heard on May 24, 1989, before Dickson, C.J.C., Lamer, Wilson, La Forest, L'Heureux-Dubé, Sopinka, Gonthier, Cory and McLachlin, JJ., of the Supreme Court of Canada. The unanimous decision of the Supreme Court of Canada was delivered in both official languages by McLachlin, J., on September 28, 1989.