COURT OF APPEAL FOR ONTARIO
O’CONNOR A.C.J.O., MOLDAVER and GILLESE JJ.A.
B E T W E E N:
NATALIA CHENDEROVITCH, SIMON CHENDEROVITCH, and ALINA CHENDEROVITCH and STANISLAV CHENDEROVITCH, minors by their Litigation Guardian, NATALIA CHENDEROVITCH
Plaintiffs (Respondents)
- and -
JOHN DOE, PILOT INSURANCE COMPANY and BUDGET CAR RENTALS TORONTO LIMITED
Defendants (Appellant)
John D. Strung and Kevin S. Adams for the appellant, Budget Car Rentals Toronto Limited
Edward Goldentuler for the respondents
HEARD: October 29, 2003
On appeal from the order of Justice Nancy L. Backhouse of the Superior Court of Justice dated November 29, 2002.
1On November 12, 1999, Natalia Chenderovitch and members of her family commenced an action against Budget Car Rentals Toronto Limited (“Budget”) and others for damages arising out of a motor vehicle accident. After delivering its statement of defence, Budget moved by way of summary judgment to have the action dismissed on the basis that it was statute-barred. On November 29, 2002, Backhouse J. dismissed Budget’s motion. Budget appeals from that order.
2The appeal is narrow in focus. It involves the limitation period specified in s. 206(1) of the Highway Traffic Act, R.S.O. 1990, c. H. 8, as amended, (“HTA”) and its application under the Bill 59 insurance regime when a person is injured in a motor vehicle accident and suffers both pecuniary damages and non-pecuniary damages. In particular, the issue to be determined is whether, under the Bill 59 regime, an action is statute-barred when it is commenced within two years of the plaintiff discovering that he or she has sustained the type of injuries required by statute to support an action for non-pecuniary damages but more than two years from the time the plaintiff could have brought an action for pecuniary damages.
3For reasons that follow, I am of the view that the plaintiff’s action for non-pecuniary damages was not statute-barred and the motions judge was correct in dismissing Budget’s application for summary judgment. Accordingly, I would dismiss the appeal.
THE FACTS
4The facts are straightforward. On April 29, 1997, Natalia Chenderovitch was involved in a motor vehicle accident. The car that struck her vehicle was owned by Budget. It was driven by someone whose whereabouts and identity are unknown.
5As a result of injuries sustained in the collision, Natalia was unable to return to work. On May 6, 1997, one week after the accident, Natalia became entitled to and began to receive income replacement benefits from her insurer. Those benefits, paid under the Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, O. Reg. 403/96, as amended, amounted to $185 per week. That amount was less than Natalia had been earning at work. Accordingly, under the Bill 59 regime (s. 267.5(1)) of the Insurance Act, R.S.O. 1990, c. I. 8, as amended) she was entitled, as of May 6, 1997, to commence an action against Budget for damages for loss of income. She did not do so, however, at least not immediately. Instead, Natalia waited until November 12, 1999, to commence her action. In it she claimed damages against Budget and others for loss of income (pecuniary damages) and damages for loss of enjoyment of life and pain and suffering (non-pecuniary damages).1
6Budget concedes, for all purposes, including the appeal and any trial that may follow, that Natalia’s claim for non-pecuniary damages was issued within the two-year limitation period specified in s. 206(1) of the HTA. Under ss. 267.5(5)(a) and (b) of the Insurance Act, such claims are foreclosed unless the injured party can establish that as a result of the accident, he or she has sustained permanent serious disfigurement or permanent serious impairment of an important physical, mental or psychological function. Budget accepts for all purposes that Natalia launched her claim for non-pecuniary damages within two years of discovering that her injuries were of a kind required by s. 267.5(5).2
7Budget nonetheless maintains that Natalia’s action is statute-barred because it was not commenced within two years of May 6, 1997, the date on which she knew that she had a pecuniary damage claim against Budget for loss of income. That is the basis upon which Budget moved for summary judgment to have Natalia’s action dismissed. Before the motion was heard, Natalia abandoned her claim for pecuniary damages. What impact that had on the matter, if any, remains to be seen.
RULING OF THE MOTIONS JUDGE
8The motions judge rejected Budget’s argument and refused to grant summary judgment. In a brief endorsement, she reasoned as follows:
Had this action claimed general damages only when it was commenced it would have presumably been open to the plaintiff under Cahoon v. Franks, [1967] S.C.R. 455 to add a claim for pecuniary loss after the expiration of the limitation period. It would appear to be an anomalous result to be statute-barred from bringing either a claim for pecuniary or non-pecuniary loss by having made both claims within 2 years from the discoverability of the non-pecuniary but not the pecuniary loss. Income loss may be very minor – would that then mean, regardless of whether an income loss claim is made, the limitation period would run from the date of the income loss and not from the discoverability of the serious threshold injuries?
In my view there is no merit in this motion and it should be dismissed.
RELEVANT STATUTORY PROVISIONS
9The relevant statutory provisions are:
Insurance Act, R.S.O. 1990, c. I. 8, as amended:
Bill 59
267.4 Sections 267.5 to 267.11 apply only to proceedings for loss or damage from bodily injury or death arising from the use or operation, after section 29 of the Automobile Insurance Rate Stability Act, 1996 comes into force, of an automobile in Canada, the United States of America or a jurisdiction designated in the Statutory Accident Benefits Schedule.
267.5(1) Despite any other Act and subject to subsection (6), the owner of any automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for the following damages for income loss and loss of earning capacity from bodily injury or death arising directly or indirectly from the use or operation of the automobile:
Damages for income loss suffered in the seven days after the incident.
Damages for income loss suffered more than seven days after the incident and before the trial of the action in excess of 80 per cent of the net income loss as determined in accordance with the regulations, suffered during that period.
Damages for loss of earning capacity suffered after the incident and before the trial of the action in excess of 80 per cent of the net loss of earning capacity, as determined in accordance with the regulations, suffered during that period.
267.5(5) Despite any other Act and subject to subsection (6), the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for damages for non-pecuniary loss, including damages for non-pecuniary loss under clause 61(2)(e) of the Family Law Act, from bodily injury or death arising directly or indirectly from the use or operation of the automobile, unless as a result of the use or operation of the automobile the injured person has died or has sustained,
(a) permanent serious disfigurement; or
(b) permanent serious impairment of an important physical, mental or psychological function.
Highway Traffic Act, R.S.O. 1990, c. H. 8, as amended.
206(1) Subject to subsections (2) and (3), no proceeding shall be brought against a person for the recovery of damages occasioned by a motor vehicle after the expiration of two years from the time when the damages were sustained.
BUDGET’S POSITION
10Budget’s argument is straightforward. It hinges on the following two common law propositions:
(1) there is only one cause of action for a single negligent act and damages resulting from that act must be assessed in one proceeding (Cahoon v. Franks, [1967] S.C.R. 455); and
(2) ignorance as to the type or extent of one’s damages does not delay time under a limitation period (Peixeiro v. Haberman, [1997] 3 S.C.R. 549).
11Applying those principles to the case at hand, Budget submits that Natalia knew, as of May 6, 1997, that she had a cause of action against Budget for loss of income. Hence, Budget maintains that for Natalia to comply with the two-year limitation period specified in s. 206(1) of the HTA, she had to commence her action by no later than May 6, 1999. Having failed to do so, her action is statute-barred.
12According to Budget, that result follows despite the fact that as of May 6, 1999, Natalia could not have claimed non-pecuniary damages because she had not yet discovered that her injuries were sufficiently severe to satisfy the statutory requirements of s. 267.5(5) of the Insurance Act. While perhaps unfortunate for Natalia, as the court in Peixeiro observed, at common law, ignorance of the type or extent of one’s damages does not prevent the clock from ticking on a limitation period. Absent a suggestion (and there was none here) that Natalia’s damages may have arisen from something other than a single act of negligence, Natalia had but one cause of action against Budget. On Budget’s analysis, that cause of action arose on May 6, 1997, when, on the undisputed facts, she knew or should have known that she could commence an action against Budget for loss of income.
ANALYSIS
13In assessing the issue at hand, I think it is important to understand the historical roots of Natalia’s legal conundrum. That requires a brief review of the several insurance regimes that have existed in this province since 1990.
14In Peixeiro, the Supreme Court examined the Bill 68 regime, commonly referred to as the Ontario Motorist Protection Plan (OMPP). It came into force on June 22, 1990, with the proclamation of the Insurance Statute Law Amendment Act, S.O. 1990, c. 2.
15Under that regime, accident victims could not commence an action against the owner or occupants of an automobile or any person present at the scene of an accident, either for pecuniary or non-pecuniary damages, unless the victim’s injuries met the “permanent and serious” requirements specified in s. 266(1) of the Insurance Act. Consequently, as Major J. observed in Peixeiro at pp. 561-62, no cause of action in tort existed until the “severity of the injury” requirement was met, regardless of whether the victim was seeking compensation for pecuniary or non-pecuniary damages:
What insight can we gain into the meaning of s. 206(1) HTA, given the exclusion of liability under s. 266 of the Insurance Act? An action governed by s. 206(1) fails if it does not qualify under the exception provided for in s. 266(1). The cause of action referred to in s. 206(3)[sic 206(1)] does not accrue until the statutory requirement of s. 266(1) of the Insurance Act is met. Under the no-fault system in place at the time of the accident, the mere happening of an injury in a car accident does not found a cause of action. No cause of action exists until sufficient severity of injury exists. This view is strengthened by s. 266(3), which allows for a pre-trial motion on the issue of the existence of a cause of action. Under s. 266(3), a motion may be brought to determine whether there is a cause of action evident on the face of the record. The onus is on the plaintiff to prove that his injuries meet the requirements in s. 266(1)(b): Buffa v. Gauvin (1994), 18 O.R. (3d) 725 (Gen. Div.), and Meyer v. Bright [(1993), 15 O.R. (3d) 129] at p. 146.
In my view, the right of action contemplated in s. 206(1) HTA must refer to an action that is not excluded by s. 266 of the Insurance Act. It cannot be otherwise [emphasis added].
16In 1994, Bill 164 came into force with the passing of the Insurance Statute Law Amendment Act, S.O. 1993, c. 10. Under that regime, accident victims could no longer sue for pecuniary damages regardless of the severity of their injuries. Those whose injuries met the “permanent and serious” requirement could only sue for non-pecuniary damages.
17In 1996, the Bill 164 regime was replaced with the Bill 59 regime. Among other things, Bill 59 eliminated the restrictions, established in the two previous regimes, on a victim’s right to sue for pecuniary damages. In particular, s. 267.5(1) of the Insurance Act was added to the statutory scheme. It allowed victims to seek compensation for pecuniary losses (not allowed under the Bill 164 regime) without requiring such victims to first meet a severity of injury threshold (a requirement under the Bill 68 regime).
18It is instructive to understand the problem that Bill 59 sought to redress. For that, I turn to the remarks of Mr. Flaherty, speaking for the government of the day, on the second reading of Bill 59 (Ontario, Legislative Assembly, Debates (June 17, 1996) at 3609):
In the Liberal legislation in 1990, Bill 68, there was a verbal threshold that was established that prohibited persons from claiming compensation in tort, be it for pain and suffering or loss of income or any other compensation, if they did not meet the “serious and permanent” requirements of that verbal threshold law. The difficulty with that law in practice and in reality is that it took away the right to full income compensation, so that if someone was unfortunately injured through no fault of their own, or only partially through their fault, in a motor vehicle accident and they suffered loss of income, to the extent their loss of income exceeded the no-fault benefits paid and they did not cross the threshold, that meant that they were not made whole, that they did not receive their full loss of income, although this had happened to them, they were victims and it wasn’t their fault.
It got worse in 1994. With Bill 164 the former government, the New Democratic government, did something that had not been done in any modern western society; that is, it took away totally from victims of motor vehicle accidents in the province of Ontario the right to sue for economic loss … This Bill 164 system that came into force January 1, 1994, truly created a dramatic inequity, taking away the right to sue for loss of income so that a victim could not recover their loss of income in tort, regardless of threshold.
The new law, Bill 59, which has been introduced and which we debate now at second reading, accomplishes the goal of balance between tort compensation and no-fault compensation. To the extent to which an innocent victim of a motor vehicle accident has a loss of income, that loss of income, to the extent it exceeds the no-fault coverage, will be recoverable in tort without the victim having to get over some sort of artificial threshold concerning the nature of the injury. This is of fundamental importance in terms of fairness to victims of motor vehicle accidents, and reasonable-minded persons looking at this system who understand it realize that this is a fundamental equitable reform that is necessary to put the system back in balance [emphasis added].
19As is apparent, in enacting Bill 59, the legislature was concerned with fairness to accident victims who had theretofore been unable to recover lost income because they were precluded from doing so under Bill 164 or prevented from doing so under Bill 68 due to the limited nature of their injuries. Now, under s. 267.5(1), such victims could commence an action for loss of income or loss of earning capacity without regard to the severity of their injuries, the only caveat being that they could not claim for the first seven days of loss. Non-pecuniary claims, on the other hand, remained tied to the severity of the injuries. Under s. 267.5(5), such claims were foreclosed to victims whose injuries did not reach the “permanent and serious” level of severity.
20The foregoing “historical overview” shows that Bill 59 was designed to enhance the rights of accident victims, not detract from them. No counter-balancing was intended. The purpose of the legislation was to enable accident victims to recover pecuniary damages without regard to the severity of their injuries; it was not to lay a limitation trap to prevent them from recovering legitimate non-pecuniary damages.
21And yet, that is precisely what would occur if Budget’s “single cause of action” paradigm were to be accepted. Accident victims with a substantial non-pecuniary damage claim for serious permanent injuries not discoverable within two years of a discoverable pecuniary loss would be statute-barred if, by choice or chance, they failed to pursue the pecuniary claim, regardless of its size or consequence, within the limitation period. Likewise, victims with a substantial non-pecuniary claim for permanent serious injuries not discoverable within two years of a discoverable pecuniary loss might well be precluded from asserting such a claim if, having brought the pecuniary loss claim within the applicable limitation period, they either settled that claim or obtained judgment on it before the non-pecuniary claim became discoverable (Cox v. Robert Simpson Co. Ltd. (1974), 1 O.R. (2d) 333 (Ont. C.A.) at 334-35.
22Measured against the purpose of Bill 59, these examples cause me to turn away from the “single cause of action” paradigm proposed by Budget. In short, I am satisfied that in enacting Bill 59, the legislature did not intend to lay a limitation trap to prevent accident victims, with pecuniary losses, from pursuing significant non-pecuniary damage claims.
23In arriving at that conclusion, I have not ignored Budget’s submission that the legislature, mindful of the concern just outlined, acted in the belief that most victims would know within two years of a discoverable pecuniary loss, whether their injuries were sufficiently severe to sustain a non-pecuniary damage claim. I reject that submission. To give effect to it would mean that the legislature was prepared to sacrifice, for the sake of certainty or repose, the rights of some of the most severely injured accident victims. I do not accept that. Instead, I prefer to believe that in enacting s. 267.5, the legislature intended to draw a distinction that the common law does not recognize. To be precise, it chose to create separate causes of action for separate heads of damages arising out of the same act of negligence.
24In so concluding, I note that Peixeiro had been decided before Bill 59 was enacted. Accordingly, the legislature can be taken to have known that the discoverability principle applied to the two-year limitation period specified in s. 206(1) of the HTA. That principle, designed to soften the rigours of limitation periods in order to ensure fair treatment to injured plaintiffs, was explained in Peixeiro at 563 as follows:
Since this Court’s decisions in Kamloops (City of) v. Nielson, [1984] 2 S.C.R. 2, and Central Trust Co. v. Rafuse, [1986] 2 S.C.R. 147, at p. 224, discoverability is a general rule applied to avoid the injustice of precluding an action before the person is able to raise it [emphasis added].
25In enacting s. 267.5, I do not believe that the legislature intended to create a regime that would result in the very kind of injustice identified in Peixeiro – precluding an action before the person is able to raise it.
26The construction that I propose withstands scrutiny when tested against the policy considerations applicable to statutes of limitations in general and other relevant considerations that in my view apply to situations like the present one.
27In M. (K.) v. M. (H.), [1992] 3 S.C.R. 6, at paras. 21-24, the Supreme Court identified the three traditional rationales for limitation periods. A summary of each follows:
CERTAINTY OR REPOSE: the right of a potential defendant to be secure against stale claims and to be able to plan for the future without the uncertainty inherent in potential liability.
EVIDENTIARY: the search for truth may be seriously impaired by the loss of evidence, whether by death or disappearance of witnesses, failing memories, loss of documents or otherwise.
DILIGENCE: plaintiffs are expected to act diligently and not “sleep on their rights”; statutes of limitation provide an incentive for plaintiffs to bring suit in a timely fashion.
28In cases like the one at hand, those rationales pull in opposite directions when applied to non-pecuniary damage claims. While the repose rationale supports Budget’s “single cause of action” paradigm, the evidentiary and diligence rationales do not, at least not entirely. In terms of the evidentiary rationale, key issues to be determined in a non-pecuniary damage claim will often include the existence of “permanent serious” injuries, the cause of those injuries, and the damages resulting from them. Evidence relating to those issues tends to ripen, not disappear, as time passes. As for the diligence rationale, under s. 267.5(5), non-pecuniary damage claims cannot be brought unless the plaintiff is able to establish serious permanent injuries. Until such evidence is discoverable, plaintiffs can hardly be faulted for “sleeping on their rights”.
29In Wilson v. Johns-Manville Sales Corp., 684 F.2d 111 (D.C. Cir. 1982), the tension existing between the repose and evidentiary rationales figured prominently in the court’s decision to allow the plaintiff to continue an action for damages resulting from a latent asbestos-related cancer. The problem facing the plaintiff in that case arose from the fact that the cancer-related action was not commenced until long after the three-year limitation period within which an action could have been brought for damages resulting from a separate asbestos-related disease known as asbestosis.
30Writing for the court, Ruth Bader Ginsburg J. (then Circuit Judge) first exposed the tension that existed between the repose and evidentiary rationales. She then moved to consider the interests of plaintiffs and defendants generally in personal injury and death cases. At p. 119 of the decision, she stated:
Looking beyond repose and evidentiary considerations, we take into account the interests generally involved in personal injury and death cases: plaintiff’s in obtaining at least adequate compensation, defendant’s in paying no more than that. Integrating these two, the community seeks to advance, through the system of adjudication, relief that will sufficiently, but not excessively, compensate persons for injuries occasioned by the tortious acts of others. In latent disease cases, this community interest would be significantly
undermined by a judge-made rule that upon manifestation of any harm, the injured party must then, if ever, sue for all harms the same exposure may (or may not) occasion some time in the future3 [emphasis added].
31In determining that the plaintiff’s claim could continue, Ginsburg J. also considered another factor which she identified as “concern for judicial economy”. On that subject, she observed at p. 120:
Concern for judicial economy also influences our decision. Upon diagnosis of an initial illness, such as asbestosis, the injured party may not need or desire judicial relief. Other sources, such as workers’ compensation or private insurance, may provide adequate recompense for the initial ailment. If no further disease ensues, the injured party would have no cause to litigate. However, if such a person is told that another, more serious disease may manifest itself later on, and that a remedy in court will be barred unless an anticipatory action is filed currently, there will be a powerful incentive to go to court, for the consequence of a wait-and-see approach to the commencement of litigation may be too severe to risk. Moreover, a plaintiff’s representative in such a case may be motivated to protract and delay once in court so that the full story of his client’s condition will be known before the case is set for trial [emphasis added].
32In the end, having considered the relevant factors, Ginsburg J. held at p. 120 as follows:
With respect to the statute of limitations issue before us, we conclude that a potential defendant’s interest in repose is counterbalanced and outweighed by other factors, including evidentiary considerations, securing fair compensation for serious harm, and deterring uneconomical anticipatory lawsuits. We therefore hold that the diagnosis of “mild asbestosis” received by Henry Wilson in February 1973 did not start the clock on his right to sue for the separate and distinct disease, mesothelioma, attributable to the same asbestos exposure, but not manifest until February 1978 [emphasis added].
33Manifestly, the situation in Johns-Manville differs from the situation here. In Johns-Manville, Ginsburg J. was applying common law principles to a common law defence. Our task does not require a reconsideration of common law principles. On the contrary, we are concerned with the interpretation of a particular statutory regime. Nonetheless, I find her reasoning helpful. It supports my view that in enacting s. 267.5, the legislature saw fit to draw a distinction that the common law does not recognize − the creation of two separate causes of action for different heads of damages arising out of the same negligent act. It did so to avoid the injustice of precluding an action before the person affected is able to raise it.
34For these reasons, I am satisfied that Natalia can pursue her non-pecuniary damage claim. Because she abandoned her pecuniary damage claim prior to the summary judgment motion before Backhouse J., it is unnecessary to finally decide whether that claim would have been statute-barred had she chosen to pursue it.
CONCLUSION
35Natalia’s non-pecuniary damage claim and the derivative claims associated with it can continue. Accordingly, I would dismiss Budget’s appeal with costs fixed on a partial indemnity basis at $5,000.
Signed: “M.J. Moldaver J.A.”
“I agree Dennis O’Connor A.C.J.O.”
“I agree E.E. Gillese J.A.”
RELEASED: “DOC” FEBRUARY 25, 2004
Footnotes
- In the same action, members of her family claimed for loss of guidance, care, and companionship under the Family Law Act, R.S.O. 1990, c. F. 3, and for out-of-pocket expenses relating to Natalia’s medical care.
- In light of Budget’s concession that it will raise no limitation defence at trial in respect of the non-pecuniary damage claim if the order of Backhouse J. stands, we are satisfied that the order under appeal is a final order. Accordingly, the appeal is properly within our jurisdiction.
- Unlike the situation in Johns-Manville, where the plaintiff, at least in theory, could have claimed damages for future consequences (the likelihood of contracting cancer) within a claim for damages resulting from asbestosis, the plaintiff in the present case could not have done so with respect to “future non-pecuniary damages”. Had Natalia issued her pecuniary loss claim within the applicable two-year limitation period and incorporated, in it, a claim for “future non-pecuniary damages”, given Budget’s concession that her injuries were not discoverable within the two-year limitation period applicable to her pecuniary loss claim, Budget would have moved to strike out the non-pecuniary aspect of her claim – and it would have succeeded. Natalia’s cause of action for non-pecuniary damages under s. 267.5(5) had not ripened. The severity of her injuries were then not known and not discoverable. Hence, she could not have pleaded the facts needed to support a non-pecuniary damage claim.
