Woods v. Hubley, (1995) 146 N.S.R.(2d) 97 (CA)

• Judge: Chipman, Jones and Flinn, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: November 07, 1995
• Jurisdiction: Nova Scotia
• Citations: (1995), 146 N.S.R.(2d) 97 (CA)

Woods v. Hubley (1995), 146 N.S.R.(2d) 97 (CA);

  422 A.P.R. 97

MLB headnote and full text

Brenda Hubley and Michael Hubley (appellants) v. Janice Woods (respondent)

(C.A. 115766)

Indexed As: Woods v. Hubley

Nova Scotia Court of Appeal

Chipman, Jones and Flinn, JJ.A.

November 7, 1995.

Summary:

The plaintiff was seriously injured in a motor vehicle accident caused by the de­fendants' negligence. The plaintiff sued for damages. The defendants relied on a release executed by the plaintiff. The plaintiff claimed the release was void and unenforce­able as an unconscionable bargain. The defend­ants also claimed the action was barred by the two year limitation period in the Limita­tion of Actions Act.

The Nova Scotia Supreme Court, in a judgment reported 140 N.S.R.(2d) 180; 399 A.P.R. 180, allowed the plaintiff's action and assessed damages accordingly. The release was void and unen­forceable as being uncon­scionable. The defence based on the two year limitation period was disallowed, because most, if not all, of the delay was attributable to the defendants and there was little prejudice to the defendants. The de­fendants appealed.

The Nova Scotia Court of Appeal, Chip­man, J.A., dissenting in part, allowed the appeal in part. The court affirmed the setting aside of the settlement as unconscionable and that the action was not precluded by the Limitation of Actions Act. However, the trial judge erred in award­ing punitive damages. The court reduced the damage awards for lost past earnings, loss of future earnings, domestic assistance and future medical care.

Contracts - Topic 9329

Unconscionable transactions relief - Con­ditions for relief - General - The trial judge stated that a trans­action may be set aside if the evidence estab­lishes "(1) That there is an inequality of bargaining posi­tion arising out of ignor­ance, need or distress of the weaker party; (2) The stronger party has unconscien­tiously used a position of power to achieve an advan­tage; and (3) The agreement reached is substantially unfair to the weaker party or, as expressed in the Harry v. Kreutziger case, it is sufficiently diver­gent from com­munity standards of com­mercial morality that it should be set aside." - The Nova Scotia Court of Appeal stated that the test used by the trial judge was "a fair sum­mary of the law" - See para­graphs 25 to 26.

Contracts - Topic 9350

Unconscionable transactions relief - Con­ditions for relief - Harsh and unconscion­able - What constitutes - The plaintiff signed a release four months after suffer­ing serious injuries in a motor vehicle accident - The adjuster phoned her days before scheduled back surgery for a pro­truded disc and advised that the insurer would pay only $3,500 - The plaintiff did not have legal advice and the adjuster effectively dissuaded her from seeking advice - The plaintiff was in continual, severe, debilitating pain at the time - The trial judge set aside the release as being unconscionable - There was inequality of bargaining position - The adjuster "de-ceived and misled the plaintiff and pre­vented her from having a fair oppor­tunity to consult a lawyer" - The $3,500 offer was made without any refer­ence to what was appropriate compensation - No effort was made to adjust the claim in good faith - The $3,500 was woefully inadequate given the severity of her injuries and was substantially unfair and sufficiently diver­gent from community standards of com­mercial morality to justify setting it aside - The Nova Scotia Court of Appeal affirmed the settlement was un­conscion­able, but disagreed with the trial judge that the adjuster was guilty of deceit - See paragraphs 14 to 32.

Damage Awards - Topic 11

Injury and death - Continuing pain - A now 31 year old woman suffered severe lumbar strain, disc protrusion at the L4-5 level, mechanical back pain with right sciatica and chronic pain following a 1989 accident - Pre-existing psychological and physical problems, but they did not affect the severity of her current complaints - Totally disabled from employment to date of trial - Permanent partial disability - Psychological element to her pain - Still suffering continual pain, insomnia, low energy, poor appetite, poor concentration, mood irritability and depression - Surgery and other treatments ineffective in reduc­ing the pain - Unable to sit, stand or walk without pain for any length of time - The trial judge assessed $100,000 general damages for nonpecun­iary loss - The court reduced the award by 5% for the failure to mitigate, where the woman failed to obtain recommended treatment (physiotherapy, exercises and Pain Clinic) over a 5.5 month period - The Nova Scotia Court of Appeal affirmed the gross award of $95,000, but credited the defendants with $4,600 for settlement monies paid plus interest rather than the $7,000 credited by the trial judge - See paragraph 149.

Damage Awards - Topic 66

Injury and death - Body injuries - Back - [See Damage Awards - Topic 11 ].

Damage Awards - Topic 488

Injury and death - General damage awards - Cost of housekeeping services - The 31 year old female plaintiff was permanently partially disabled following a 1989 motor vehicle accident - She was unable to perform many common domestic chores and would require assistance all of her life - The trial judge awarded the plaintiff $60,225 general damages for the cost of future house­keeping services, based on an annual cost of $1,600, with services pro­vided to age 75 - The Nova Scotia Court of Appeal held that the amount awarded was unrealistic on the evidence - The court reduced the damage award to $10,000 - See paragraphs 114 to 119, 150.

Damage Awards - Topic 489

Injury and death - General damage awards - Cost of future care - The 31 year old female plaintiff was permanently partially disabled following a 1989 motor vehicle accident - She would require the services of a psychologist and chiropractor - The trial judge assessed $150,000 general damages for the cost of future medical care - The Nova Scotia Court of Appeal held that the amount awarded was unreal­istic - The court reduced the damage award to $26,000 - See paragraph 150.

Damage Awards - Topic 493

Injury and death - General damage awards - Loss of prospective earnings - A now 31 year old plaintiff was totally disabled from future employment in a 1989 motor vehicle accident - Between 1983 and 1987 she earned an average of $638 per year - She did not work from 1988 to 1991, being supported by her fiancé - They split up in 1992 - She left school in Grade 10 - The trial judge awarded the plaintiff $157,700 general damages for lost future income to age 65, based on an estimated annual income of $7,000 had she been able to work - The Nova Scotia Court of Appeal held that the evidence did not support an estimated annual income of $7,000 - The court reduced damages for lost future income to $15,000 - See para­graphs 107 to 113, 150.

Damage Awards - Topic 2027.1

Exemplary or punitive damages - Uncon­scionable conduct - The plaintiff was awarded almost $500,000 damages for injuries suffered in a 1989 motor vehicle accident - She was permanently partially disabled - The insurer's adjuster had con­vinced her to sign a release for $3,500, which was set aside in the present action - The trial judge awarded the plaintiff $10,000 punitive damages against the insurer, stating that "the adjuster for the defendants' insurer was indifferent or wilfully blind to the severity of the plain­tiff's injuries and potential permanent disability, and his actions in arranging a settlement shortly before sur­gery which held out the prospect of im­proving only some of her symptoms were not in good faith, contemptuous of her rights and de­liberately exposed her to a risk of suffering from increasingly severe symptoms with­out justification. I find that such actions offend the ordinary standards of morality or decent conduct in the com­munity at large." - The Nova Scotia Court of Appeal held that the trial judge erred in finding the adjuster's conduct de­serving of punitive damages - The court set aside the award - See paragraphs 126 to 128, 151.

Damages - Topic 1011

Mitigation - In tort - Personal injuries - Treatment for - [See Damage Awards - Topic 11 ].

Damages - Topic 1413

Special damages - Loss of income of self-employed, underemployed or unemployed person - A now 31 year old plaintiff was injured in a 1989 motor vehicle accident - She was permanently disabled from em­ployment - Between 1983 and 1987 she earned an average of $638 per year - She did not work from 1988 to 1991, being supported by her fiancé - They split up in 1992 - She left school in Grade 10 - The trial judge awarded $17,700 damages for lost income to trial, based on an estimated lost income of $6,000 per year had she been able to work - The Nova Scotia Court of Appeal held that $6,000 in lost yearly income was not supported by the evidence - The court reduced the damage award to $1,900 - See paragraphs 102 to 106, 150.

Limitation of Actions - Topic 9424

Bars - Disallowance of defence - Con­siderations - Delay - The plaintiff in a 1989 motor vehicle accident executed a release (without legal advice) four months after the accident - More than three years later, the insurer was given notice that the plaintiff intended to seek to set aside the release and sue - The defendants pleaded the two year limitation period (Limitation of Actions Act, s. 2(1)(f)) - The action was commenced 20 months after the limi­tation period expired - The trial judge allowed the plaintiff's application under s. 3(2) to disallow the defence and to allow the action to proceed - The court stated that "most if not all of the delay is attribu­table to the insurer" - The defendant would not be prejudiced by allowing the claim to pro­ceed, but the plaintiff would be if precluded from pro­ceeding - The Nova Scotia Court of Appeal held that the trial judge did not err in exercising his discretion to disallow the limitation period defence - See paragraphs 33 to 39.

Limitation of Actions - Topic 9426

Bars - Disallowance of defence - Con­siderations - Prejudice to parties - [See Limitation of Actions - Topic 9424 ].

Releases - Topic 3391

Grounds of invalidity - General - [See Contracts - Topic 9350 ].

Cases Noticed:

Stephenson v. Hilti (Canada) Ltd. (1989), 93 N.S.R.(2d) 366; 242 A.P.R. 366 (T.D.), refd to. [para. 25].

Lloyd's Bank v. Bundy, [1974] 3 All E.R. 757 (C.A.), 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. 91].

Greek and Hillier v. Ernst (1980), 43 N.S.R.(2d) 191; 81 A.P.R. 191 (T.D.), refd to. [para. 92].

Benson v. Jamieson (1993), 117 N.S.R.(2d) 347; 324 A.P.R. 347 (C.A.), refd to. [para. 93].

Pryor v. Bains (1986), 69 B.C.L.R. 395 (C.A.), refd to. [para. 95].

Martin v. Jordan (1988), 31 B.C.L.R.(2d) 266 (C.A.), refd to. [para. 95].

Nygaard v. Gosling, [1988] B.C.W.L.D. 3702 (S.C.), refd to. [para. 95].

Graham et al. v. Rourke (1988), 43 C.C.L.T. 119 (Ont. H.C.), varied 40 O.A.C. 301; 75 O.R.(2d) 622; 74 D.L.R.(4th) 1 (C.A.), refd to. [para. 95].

Hooiveld v. Van Biert, [1992] B.C.W.L.D. 1448 (S.C.), varied [1994] 4 W.W.R. 143; 36 B.C.A.C. 19; 58 W.A.C. 19; 87 B.C.L.R.(2d) 160; 48 M.V.R.(2d) 315 (C.A.), refd to. [para. 95].

Shaw v. Clark (1986), 11 B.C.L.R. 46 (S.C.), refd to. [para. 95].

Nance v. British Columbia Electric Railway Co., [1951] A.C. 601 (P.C.), refd to. [para. 97].

Cameron v. Excelsior Life Insurance Co., [1981] 1 S.C.R. 138; 35 N.R. 213; 44 N.S.R.(2d) 91; 83 A.P.R. 91, refd to. [para. 97].

Smith v. Stubbert (1992), 117 N.S.R.(2d) 118; 324 A.P.R. 118 (C.A.), refd to. [para. 97].

Lewis v. Todd and McClure and Canadian Provincial Insurance Co. (1980), 34 N.R. 1; 115 D.L.R.(3d) 257 (S.C.C.), refd to. [para. 109].

Vorvis v. Insurance Corp. of British Columbia (1989), 94 N.R. 321; 58 D.L.R.(4th) 193 (S.C.C.), refd to. [para. 127].

Stevenson v. Vance (1988), 87 N.S.R.(2d) 96; 222 A.P.R. 96 (T.D.), refd to. [para. 127].

Patterson v. Municipal Contracting Ltd. (1989), 98 N.S.R.(2d) 259; 263 A.P.R. 259 (T.D.), refd to. [para. 127].

McIntyre v. Atlantic Hardchrome Ltd. and Ferguson (1991), 102 N.S.R.(2d) 1; 279 A.P.R. 1 (T.D.), refd to. [para. 127].

Hill v. Church of Scientology of Toronto and Manning (1992), 7 O.R.(3d) 489 (Gen. Div.), affd. (1994), 71 O.A.C. 161; 18 O.R.(3d) 385 (C.A.), refd to. [para. 127].

Kroeker v. Jansen et al. (1995), 58 B.C.A.C. 1; 96 W.A.C. 1; 4 B.C.L.R.(3d) 178 (C.A.), refd to. [para. 130].

Statutes Noticed:

Limitations of Actions Act, R.S.N.S. 1989, c. 258, sect. 3(2), sect. 3(4), sect. 3(6) [para. 33].

Authors and Works Noticed:

Crawford, B.E., Restitution, Unconcionable Transaction, Undue Advantage Taken of Inequality between Parties (1966), 44 Can. Bar Rev. 142, generally [para. 26].

Klar and Linden, Remedies in Tort, c. 27-82, § 45.1 [para. 94].

Munkman, Damages for Personal Injuries and Death (9th Ed. 1993), p. 39 [para. 96].

Counsel:

Murray J. Ritch, Q.C., and W. Augustus Richardson, for the appellants;

Colin D. Bryson and Phillip S. Gruchy, for the respondent.

This appeal was heard on September 28, 1995, before Chipman, Jones and Flinn, JJ.A., of the Nova Scotia Court of Appeal.

On November 7, 1995, the judgment of the Court of Appeal was delivered and the following opinions were filed:

Chipman, J.A., dissenting in part - see paragraphs 1 to 133;

Jones, J.A. (Flinn, J.A., concurring) - see paragraphs 134 to 153.