In a unanimous decision written by Justice Kathryn Feldman with Justice Eleanor Cronk and Bradley Miller concurring, released on November 21, 2017, the Court of Appeal upheld a liability split from a Trial decision involving a tragic motor vehicle accident in 2009.  A decision to apply the discount rate for future pecuniary damages prescribed by the Rules, and a cost-award, were also upheld.

Trial Decision

The Plaintiff, Tyler House, was operating a 1992 Toyota Tercel, owned by his friend Donald Baird.  Three friends (all teenage males), were passengers in the backseats. The vehicle was travelling on Huron Road, a  municipal highway west of Kitchener.  It lost control as it approached a crest and veered into the oncoming lane – resulting in a collision with an oncoming vehicle. One passenger was killed and the Plaintiff was badly injured. 

Liability was apportioned 50/50  between the Plaintiff and Baird.  The Township of Wilmot (“Wilmot”) and the operator of the other vehicle, both defendants, were absolved of liability.

The Trial Judge, Justice James Kent, accepted that the Plaintiff was distracted because he was smoking marijuana while driving, and was upset after learning earlier that day that his girlfriend was pregnant.

Although the presence of ice near the accident scene was inconclusive, the Trial Judge accepted that the road condition were at least slippery. The tires on the vehicle were worn, defective over-inflated and mismatched – resulting in reduced traction and a risk of loss.  It was accepted that the Plaintiff vehicle was travelling at an excessive speed for the conditions.

The Appeal

The Plaintiff (“Appellant”) appealed on three issues: (1) the liability of the municipality; (2) the apportionment of fault between himself and Baird, as owner; and (3) the failure of the Trial Judge to apply a discount rate for future pecuniary damages that deviated from the Rules of Civil Procedure.  The Respondent Baird cross-appealed on the issue of costs.

(1) Negligence of the Municipality

The Minimum Maintenance Standards for Municipal Highways (“MMS”), a Regulation made under the Municipal Act (the “Act”), establishes minimum standards of road maintenance for 6 classes of road. The faster/busier the roadway, the more stringent the requirements.  

Huron Road is  a “Class 3 Road” with mid-level standards. Wilmot had a system whereby an operator worked after-hours from home. Wilmot’s policy was to send out a road patrol only if there was a “weather event” or a complaint. The operator did not deem a patrol necessary that night as he observed only “a little” snowfall and the surface was only “slightly wet.” 

The Court of Appeal reiterated the four-part test for establishing liability on a municipality under s. 44 of the Act.  A Plaintiff must establish the road was in an “unreasonable state of repair”, and that this “caused” the accident.  The onus then shifts to the municipality to prove one of three statutory defences.  If successful, it can then make out contributory negligence.

Despite arguments to the contrary by the Appellant, the Court held that the Trial Judge came to the conclusion that there was prima facie unreasonable repair of Huron Road.

The Court upheld the finding that Wilmot met all three defences. First, it could not have possibly known about the ice formation where it was not anticipated by the forecast, and the accident site was not an “area of concern” (an area that would have been patrolled anyways).  Second, its system was reasonable. Third, the system conformed with the MMS, which only required maintenance of a Class 3 Road within eight hours of becoming aware of disrepair.

The Court emphasized the primacy of reasonableness when evaluating whether a municipality has met a statutory defence.  The standard is whether the steps the municipality took were reasonable; not whether something more intrusive could have been done. 

(2) Apportionment of Fault between the Appellant and the Respondent Baird

The Court of Appeal found no reason to dispute that Baird, as owner, was negligent.  The vehicle tires created a risk of loss unless being operated on a “clear dry road.”  There was no reason to dispute that the Appellant was negligent for driving too fast given the road conditions. There was no error in finding that he was distracted due to smoking marijuana and being preoccupied with his girlfriend’s pregnancy while driving. 

The Trial Judge determined that it was impossible to determine the relative degree of fault, and therefore applied s. 4 of the Negligence Act, which apportions fault on an equal-basis in such circumstances.  The Appellant’s submission that 50% liability was “speculation” was rejected.

(3) Present Value Discount Rate

Rule 53.09 prescribes a formula for determining the discount rate for an award of future pecuniary damages.  The justification is that the law assumes these awards will be invested and that interest will accrue overtime.  The amounts are discounted to ensure that the defendant does not overpay.  Parties may adduce evidence in support of an adjusted rate, but only where the present-day value of the expense will likely outpace the estimated long-term interest rate.

At Trial, the prescribed rate was applied (despite expert evidence).  The Appellant argued that this was incorrect because the Trial Judge acknowledged the “logic” of the expert’s opinion.  The Court of Appeal rejected this argument as it was clear that the Trial Judge did not fully accept the expert’s evidence.  The Court indicated a reticence to adjust the discount rate in individual cases – as compared to adjustments for categories of future pecuniary expenses.

 (4) Cross-Appeal on Costs

Baird offered to settle with the Appellant and the other injured passengers for his $1 million policy limits – with the relative amounts to be determined by agreement or Judgment.  He was ordered to pay 100% of the Appellant’s costs, which was upheld for three reasons.  First, the $1.4 million Judgment (after the 50% reduction for liability) exceeded any amount that was theoretically offered to the Appellant.  Second, the precise amount offered to the Appellant was “uncertain.”  Third, Baird’s assertion that only the policy limits were collectible was disputed and had no bearing on the law on costs.    

The Court upheld a modified Sanderson order,  which required Baird and the Appellant each pay one half of Wilmot’s costs.  Although Baird did not actively pursue his crossclaim against Wilmot, the very fact that it was initiated and persisted meant he was 50% responsible for that defendant’s costs throughout the action including Trial.

This decision illustrates that a fungible offer to multiple parties (without clear division) is unlikely to create cost consequences, where it impedes a proper understanding of whether the offer is capable of beating Judgment.  It is also a cautionary tale for defendants who leave a crossclaim open despite having no actual intention of pointing the finger at Trial.

If you have a question about this blog or a similar file, please contact Eric Grossman at 416-777-5222