Nova Scotia Car Accident Minor Injury Cap

Donalee Moulton for The Lawyers Weekly

January 15, 2010

The Nova Scotia Court of Appeal has ruled that a legislated cap on minor injuries incurred as a result of an automobile accident does not violate the Canadian Charter of Rights and Freedoms.

"Generally, legislative caps on non-monetary damages appear to be upheld by the courts as constitutional," said Christa Brothers, a partner with Stewart McKelvey in Halifax, who was co-counsel to one of the appellants.

The decision has relevance across the country, said Jeff Galway, a partner practising litigation in the Toronto office of Blake Cassels & Graydon LLP and lead counsel representing the Insurance Bureau of Canada. "In addition to Nova Scotia and Alberta, there are a number of provinces in Canada that have put in place similar legislation. It helps clarify the law."

"It's significant," he added, "that you have two appeal court decisions that agree on the legal issues."

In Hartling v. Nova Scotia (Attorney General), [2009] N.S.J. No. 599, which heard two appeals together, three automobile accident victims challenged the Nova Scotia government's 2003 legislation capping non-monetary damages for "minor injuries" at $2,500. Specifically, the appellants argued that this law, denying them their right to full compensation, is discriminatory according to the equality provisions of the Charter and as such ought to be declared invalid.

Alternatively, the appellants asserted that the government of the day undermined the true will of the legislature by enacting regulations that expanded the reach of this cap beyond what the legislation ever intended.

For its part, the province insisted that this legislation is not discriminatory and that the regulations are properly designed to further its objects. Instead, it contended that this initiative reflects sound public policy designed to contain skyrocketing automobile insurance premiums.

The appeal court agreed with the government - and noted that its agreement was not unique. "Across the country," Chief Justice Michael MacDonald wrote in his 55-page decision, "there have been other constitutional challenges launched against similar provincial legislation. They too have been unsuccessful."

One pivotal precedent was Morrow v. Zhang, [2008] A.J. No. 582 (leave to appeal dismissed by SCC). Chief Justice MacDonald pointed out that while the Alberta Court of Appeal held that the province's minor injury regulation did create a distinction in relation to the respondents on the basis of disability, this distinction was not discriminatory.

"This decision largely turned on the fact that, while the legislative reforms capped non-pecuniary damages, they provided added medical benefits in exchange for reduced damages," he stated.

Despite the ultimate disagreement with the appellants, Nova Scotia's appeal court found common ground on several fronts. First, it noted, the group is treated differently from other automobile accident victims who will avoid the cap, and therefore, meets the distinction required by s. 15. Second, this distinction is based on one of the enumerated grounds: physical disability. Third, minor injury victims are disadvantaged by this legislation.

"This is obvious because when it comes to non-monetary loss, their right to recover will be subject to an arbitrary limit," wrote Justice MacDonald. "This means that while there may be discretion for awards involving less than $2,500, most members of this group will be denied individualized independent judicial assessments and consequently the right to full recovery.

"This runs counter to the civil law principle that, as far as money will allow, a wrongdoer should return the victim to his or her pre-accident position," he added.

However, the court found that the evidence fell short of establishing that the legislation perpetuates prejudice or stereotyping sufficient to trigger s. 15. "[A]s a basic proposition, it is not enough for the appellants to simply establish that their distinct group is disadvantaged; an invitation that the appellants came very close to extending. Instead, to succeed they must go a step further and establish that their disadvantage reflects discrimination," said Chief Justice MacDonald.

"[W]hile the cap represents a new disadvantage, there is no evidence of an historic disadvantage and very sparse evidence of past stereotyping," he added. "Furthermore, this reform is sufficiently attentive to the appellants' needs, capacity and circumstances. Specifically, the appellants will continue to be fully compensated for all direct financial losses."

The court also noted that the interest affected is already arbitrary by nature. "In other words," said Chief Justice MacDonald, "while this legislation results in a disadvantage, it is not the product of prejudice or stereotyping as envisaged under section 15."

"In essence," said Brothers, "the court looked at whether there was a stereotype or prejudice suffered by the group and found there was not enough evidence to conclude this."

"The court also looked at the fact that non-pecuniary damage caps exist in other provinces," she noted. "There have been judge-made non-pecuniary damage caps since the Supreme Court of Canada trilogy."

More than 30 years ago, the Supreme Court of Canada created a ceiling of $100,000 on non-monetary awards for victims of catastrophic injury in what has become known as the trilogy: Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229; Arnold v. Teno, [1978] S.C.J. No. 8.; and Thornton v. School Dist. No. 57 (Prince George), [1978] 2 S.C.R. 267.

Justice MacDonald pointed out the impact of that trilogy on decisions that followed. "Since that time what was referred to by the Supreme Court in 1978 as a 'rough upper limit' has essentially been honoured as a judge-made cap, subject only to adjustments for inflation."
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