DATE: 20040317

DOCKET: C37879

COURT OF APPEAL FOR ONTARIO

RE: KIRK BARTOSEK, by his Litigation Guardian Janet Williams and JANET WILLIAMS (Plaintiffs/Defendant by Counterclaim/ Respondents) – and - TURRET REALTIES INC., ANNE BUSK, also known as Anne McFadden, PAUL BUSK and ANDREW BARTOSEK (Defendants/Plaintiff by Counterclaim/Appellants)

BEFORE: Weiler, Sharpe and Blair JJ.A.

COUNSEL: Barry A. Percival, Q.C. for Turret Realities Inc.

Geoffrey D.E. Adair, Q.C. and Michael Burgar for Anne and Paul Busk

J.M. Arthur Lefebvre and Lawrence Gan for Kirk Bartosek and Janet Williams

HEARD: February 24, 2004

On appeal from the judgment of Justice James C. Kent of the Superior Court of Justice dated November 13, 2001, February 1, 2002 and February 25, 2002.

E N D O R S E M E N T

[1] The respondent Kirk Bartosek (“Kirk”), sustained catastrophic injuries when he rode his bicycle down a ramp and into the path of an oncoming vehicle driven by the respondent Anne Busk. The vehicle was owned by Paul Busk. Kirk was 6 years old at the time of the accident. The ramp was part of an apartment building owned by the appellant, Turret Realties Inc. (“Turret”). The trial judge found:

1. liability on the part of Turret as the owner and occupier of the premises for failing to discharge its duty to take reasonable care with respect to the foreseeable risk of harm posed by the design of the ramp and obstructions to the view of oncoming motorists;

2. contributory negligence on the part of Kirk apportioned at 50%;

3. no liability on the part of the defendants Anne Busk and Paul Busk;

4. no liability on the part of Andrew Bartosek, the respondent’s father.

[2] Turret asks that the judgment be set aside and the claims against it be dismissed with costs, or in the alternative, that a new trial be ordered or, in the further alternative, that the judgment be varied on the following grounds: (a) the trial judge’s refusal to recuse himself gave rise to a reasonable apprehension of bias; (b) the trial judge erred in finding negligence on the part of Turret; (c) the trial judge erred in finding no negligence on the part of Busk; (d) the trial judge erred by finding the plaintiff only 50% contributorily negligent; (e) the trial judge erred in awarding a gross up for income tax; (f) the trial judge erred in failing to impose a structured award for future care costs; and (g) the trial judge erred in his assessment of damages pursuant to the Family Law Act, R.S.O. 1990, c. F.3 in favour of Kirk’s brother and sister. Kirk cross-appeals, submitting that the judgment be varied on the following grounds: (a) the trial judged erred in finding him contributorily negligent or that his percentage of negligence be reduced; (b) the trial judge erred in refusing to award damages for loss of interdependent relationship; and, (c) the trial judge erred in refusing to award a management fee.

[3] We found it necessary to call upon the respondents only with respect to grounds (e), (f) and (g) of the appeal. For the following reasons we dismiss the appeal and allow in part the cross appeal.

Analysis

(1) Appeal

(a) Did the trial judge’s refusal to recuse himself give rise to a reasonable apprehension of bias?

[4] As a result of a motion to increase the claim from $1 million to $9 million, and the required disclosure of a Mary Carter agreement between the respondents Anne Busk and Paul Busk and the plaintiffs, the trial judge became aware of the following facts:

1. The Busks’ policy limits were $1 million dollars or less and their liability was capped at an undisclosed amount by virtue of the Mary Carter agreement.

2. Turret’s policy limits were $5 million dollars.

3. Andrew Bartosek, who was acting on his own behalf, was uninsured.

[5] The trial judge refused Turret’s motion that he recuse himself: “I am not persuaded that that [disclosure of the policy limits and the Mary Carter Agreement] is a consideration that would ever consciously or subconsciously influence me in arriving at an appropriate assessment of damages in this case.”

[6] At the same time, the trial judge granted Turret’s request for an adjournment of the trial. Turret took no steps to appeal the trial judge’s refusal of the recusal motion in the ensuing seven months before the trial commenced.

[7] We do not accept the submission that the trial judge erred by refusing to recuse himself. The appellant conceded that the Mary Carter agreement had to be disclosed to the trial judge. It would have been obvious that Andrew Bartosek was uninsured as he was acting on his own behalf. It is not uncommon for a trial judge to become aware of the availability of policy limits. The trial judge explained in his ruling: “I am satisfied that on the basis of my own past experience in these matters that I am quite able to ignore and remove from my mind information such as that that Mr. Percival has indicated his client is concerned about.” In our view, there was no basis for a reasonable apprehension of bias in these circumstances.

[8] In any event, counsel for Turret made a tactical decision not to seek leave to appeal the ruling on the recusal motion because he was concerned that he would lose the motion and still find himself before the same trial judge. This tactical decision provides a further basis for rejecting this ground of appeal.

(b) Did the trial judge err in finding negligence on the part of Turret?

[9] There was ample evidence to support the trial judge’s finding that Turret failed to discharge its duty under the Occupiers’ Liability Act, R.S.O. 1990, c. O.2 to ensure that persons on its premises were reasonably safe given the existence of a relatively steep ramp immediately adjacent to a concrete wall and shrubbery that prevented oncoming traffic from seeing a cyclist descending the ramp until the cyclist had exited the ramp. Turret knew that children played in the area and failed do anything to alleviate this risk posed by the design of the ramp. We agree with the trial judge that the issue of Turret’s liability did not turn on compliance or non-compliance with the applicable building codes. Evidence of previous safe usage of premises is only one factor to be considered when determining whether the duty of care prescribed by the Occupiers’ Liability Act has been satisfied. An occupier has a continuing duty to take positive steps to make premises safe and is not absolved of liability because no accident has yet occurred.

(c) Did the trial judge err in finding no negligence on the part of Anne Busk?

[10] There was evidence to support the trial judge’s finding that in the circumstances, Busk had no chance to avoid the accident and there is no basis for us to interfere with that finding. We do not accept the submission that the trial judge failed to apply the reverse onus provision of the Highway Traffic Act, R.S.O. 1990, c. H.8, s. 193. In concluding that Busk was not negligent, the trial judge explicitly stated: “Anne Busk has therefore established that she was not negligent” [emphasis added].

(d) Did the trial judge err by finding the plaintiff only 50% contributorily negligent?

[11] Appellate courts should not interfere with the trial judge’s apportionment of liability unless there is demonstrable error in the trial judge’s appreciation of the facts or the applicable legal principles. We have not been persuaded of any such error here. The trial judge considered all of the factors he was required to consider and we cannot interfere with his assessment.

(e) Did the trial judge err in awarding a gross up for income tax?

[12] We do not accept the appellant’s submission that the trial judge erred by including a gross up for income tax on the damages for future care costs because that award was reduced by 50% on account of the plaintiff’s contributory negligence. The plaintiff will still receive a substantial capital sum and the trial judge was entitled to make the award for gross up on the assumption that the plaintiff would prudently invest that capital sum to ensure a steady stream of income which would attract income tax: see Townsend v. Kroppmanns, 2004 SCC 10.

(f) Did the trial judge err in failing to impose a structured award?

[13] The trial judge did not err by refusing the appellant’s request to impose a structured award. The appellant conceded that the cause of action arose prior to the effective date of the Courts of Justice Act, R.S.O. 1990, c. C.43, s. 116, therefore that section does not apply. There is a long line of authority that, absent legislation or the consent of both parties, the plaintiff cannot be forced to accept periodic payments in lieu of a lump sum award. Accordingly, the trial judge did not err by refusing to make such an order in the exercise of the court’s parens patriae jurisdiction.

(g) Did the trial judge err in his assessment of the Family Law Act damages?

There was ample evidence to support the trial judge’s finding that the plaintiff’s siblings made extraordinary efforts in meeting his special care needs and we see no basis upon which we could interfere with his admittedly substantial award of Family Law Act damages in their favour.

Cross-Appeal

(a) Did the trial judge err in finding Kirk to be contributorily negligent to the extent of 50%?

[14] As we have already stated, the scope of appellate review is narrowly circumscribed in this area. We see no demonstrable error in the trial judge’s appreciation of the facts or the applicable legal principles that would justify the intervention of this court.

(b) Did the trial judge err in refusing to award for damages for loss of interdependent relationship?

[15] The trial judge found that, on the evidence before him, this aspect of the claim had not been made out and that it should be rejected as speculative in nature. We are not persuaded that the trial judge erred in coming to this conclusion, and accordingly, we would not interfere on this ground.

(c) Did the trial judge err in refusing to award a management fee?

[16] The respondent cross-appeals the trial judge’s refusal to award a management fee. The rationale for a management fee where the plaintiff has suffered a debilitating injury as a result of the defendant’s tortious conduct is explained in Townsend, supra at paras. 5 and 6:

The dollar amount received for future care costs is actually lower than projected costs because it is assumed that the amount paid will be invested and will earn income before being used for future needs…[The award is] discounted to reflect the present value of the expenses incurred or the income earned at a future date, taking inflation adjustments into consideration. The purpose of the discount rate is thus to ensure that victims will be fully compensated but that defendants will not be called on to overpay. …

The same underlying rationale guides the attribution of management fees and tax gross up. The law aims at ensuring that the value of the amounts awarded to victims is maintained over time. In tort law, victims of personal injuries are awarded management fees when their ability to manage the amount they receive is impaired as a result of the tortious conduct. The purpose of this segment of the award is to ensure that amounts related to future needs are not exhausted prematurely due to the inability of the victims to manage their affairs.

[17] The trial judge’s findings bring the present case within the principle described in Townsend. The trial judge found that in view of the serious impairment the plaintiff suffered as a result of the accident, he is incapable of managing his own finances and that he and his family will require professional assistance in that regard. The trial judge also found that the expert evidence called by the respondent as to the basis for calculating a professional fee for such assistance “was appropriate and consistent with the provisions of Rule 53.09 [establishing the discount rate for future pecuniary damages].”

[18] However, the trial judge refused to award a management fee for the following reason: “Surely, a professional manager of funds of that magnitude ought to be able to earn his or her fee without really encroaching on the award and the income earned by it.” In our view, this conclusion is speculative in nature and inconsistent with his acceptance of the respondent’s expert evidence as to the cost of professional management assistance. If a professional manager is required, it seems inevitable that the cost of a professional manager will be taken from the income earned by the award and that the amount available the meet the respondent’s needs will be reduced accordingly.

[19] We do not agree with the appellant’s submission that the absence of evidence as to specifically how the funds would be actually dealt with after they had been paid into court provided a basis for denying the award of a management fee. As the passage quoted from Townsend indicates, the entire regime of discounted awards assumes that the amount of the award will be invested to earn income. The defendant benefits from the discount to reflect present value. Fairness requires that where, because of the defendant’s tort, the plaintiff will incur a cost to achieve the level of assumed income, the defendant should bear that cost.

[20] Accordingly, we would allow the cross appeal to the extent of amending the judgment to include an award of $302, 989 for a management fee. We understand from paragraph 3 of the reasons of the trial judge dated 25 February 2002 and the submissions of counsel that a small adjustment to the gross up award is required as a consequence of the award for a management fee. Accordingly, the damages for cost of future care should be amended to include an award of a management fee of $302,989 and the award for gross-up should be adjusted from $610, 800 to $604, 399 with appropriate adjustments to these amounts to be made on account of the finding of contributory negligence.

Conclusion

[21] The appeal is dismissed, and the cross appeal is allowed, but only to the extent outlined in paragraph 20. The respondents are entitled to their costs of the appeal which we fix in the following amounts: $21,000 inclusive of GST and disbursements in favour of the Bartosek respondents and $12,000 inclusive of GST and disbursements in favour of the respondent Busk.

“K.M. Weiler J.A.”

“Robert J. Sharpe J.A.”

“R.A. Blair J.A.”