Court File and Parties

COURT FILE NO.: CV-14-4361-00 DATE: 2019 07 12

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

MARY FARRUGIA and SKYE FARRUGIA by her Litigation Guardian MARY FARRUGIA Plaintiff

Douglas Wright and Savannah Chorney, for the Plaintiff

• and -

FARISHTA AHMADI, MOHAMMAD ABRAHIM AHMADI, HONDA CANADA FINANCE INC. and MANDEEP CHANA Defendants

Aaron Murray and David Edwards, for the Defendants Farishta Ahmadi; Mohammad Abrahim Ahmadi and Honda Finance Canada Inc.

HEARD: May 14 and 16, 2019

MID-TRIAL RULING No. 1

(Re: Cross-examination on the Plaintiff’s AB Settlement)

Emery J.

[1] Mary Farrugia was involved in a car accident on December 18, 2013, at the intersection of Hurontario Street and Ray Lawson Blvd. in Brampton, Ontario.

[2] Ms. Farrugia made a claim to her own insurer for accident benefits payable under her motor vehicle insurance policy. The insurer ultimately determined that Ms. Farrugia had suffered catastrophic injuries. In March, 2016, Ms. Farrugia settled with her insurer for a total of $1.8 million. This amount represent all amounts paid or payable for accident benefits under the policy.

[3] Ms. Farrugia has brought this action in tort seeking damages from the driver and owner of another motor vehicle (the defendants) involved in the accident. In the course of the trial, counsel for the defendants made known their intention to cross-examine Sue Barnes as guardian of Ms. Farrugia’s property about the total amount she had received for various accident benefits under the settlement. Two days later, counsel for the defendants indicated their intention to cross-examine Ms. Farrugia herself on the same subject.

[4] On the objection made each time by Ms. Farrugia’s counsel, I heard submissions from counsel in the absence of the jury. After hearing those submissions, I made a ruling that the defendants could not ask either witness about the total amount Ms. Farrugia had received from her own insurer. However, I also ruled that the defendant could ask questions about some, but not all, components of the settlement for reasons to follow. These are those reasons.

The Issue

[5] Counsel for the defendants asked the court for a ruling on the following question in the context of cross-examining Sue Barnes:

What, if anything, can be disclosed as evidence to the jury with respect to the AB settlement for the subject accident?

[6] The settlement and its various components that form the subject matter of each ruling is set out in the Insurer’s Offer to Settle Benefits as part of the settlement disclosure notice to Ms. Farrugia dated March 24, 2016. The amounts paid to, or on behalf of Ms. Farrugia are allocated as follows:

(a) $100,000 for all past and future caregiver benefits; (b) $700,000 for all past and future medical benefits; (c) $750,000 for all past and future attendant care benefits; (d) $75,000 for all past and future housekeeping and home maintenance benefits; and (e) $175,000 for legal expenses, past incurred expenses and disbursements.

Position of the Parties

[7] Mr. Murray submits on behalf of the defendants that his questions in respect of accident benefits are based on the defence that Ms. Farrugia failed to take reasonable steps to mitigate her damages. Specifically, the defendants argue that Ms. Farrugia could have taken reasonable steps by using funds received as accident benefits to reduce her loss, and therefore the damages she now seeks in this action.

[8] Mr. Wright submits on behalf of Ms. Farrugia that the jury has all of the evidence from Ms. Barnes that they need to assess the mitigation issue. Specifically, he argues that the jury has heard that $750,000 the insurer paid for attendant care benefits has been invested in a structured settlement to provide Ms. Farrugia with a monthly allowance for the rest of her life. He also submits that Ms. Farrugia cannot make a double recovery of amounts the jury may award for particular damages in this action to the extent that she has already received accident benefits for the same purposes. As he explained in his submissions, those accident benefits will be deducted as collateral benefits from any damages awarded as a matter of law.

Analysis

[9] The starting point for ruling on the proper basis to ask any question at trial is relevance. All questions for a witness in cross-examination must be relevant, unless the prejudicial effect of those questions outweighs their prohibitive value, or the answer to the question is protected by some kind of privilege. The relevance of questions determines the boundaries for a cross-examination and ensures a fair hearing.

[10] Generally, relevance is determined by the pleadings or by the evidence a witness has already given on the matter before the court. Mr. Murray seeks to question Ms. Barnes and then Ms. Farrugia in turn on the defence theory that Ms. Farrugia wasted money on renovations to a home she purchased in London two years after the accident. As I understand this argument, the defendants take the position that Ms. Farrugia spent money on renovations to the London house instead of using those funds to lessen, reduce or otherwise mitigate damages she seeks in respect of the continuing injury or loss she now claims.

[11] In order to determine relevance, I look first to the amended amended statement of claim and the damages that Ms. Farrugia claims in this action. In paragraph 1, she claims general and special damages in the amount of $400,000, and special damages in the amount of $11,289,234, as well as aggravated and/or exemplary damages in the amount of $250,000. Ms. Farrugia then sets out the nature of the loss, damage or expense for which she seeks those damages.

[12] In paragraph 14, Ms. Farrugia alleges that she is severely compromised in her employability given the nature of her injuries, as well as her education, training and experience. She claims damages for sustaining a significant loss of competitive advantage in the workplace, a significant reduction of past and future earnings, and a significantly higher risk of being unemployed or underemployed in the future.

[13] In paragraph 16, Ms. Farrugia alleges that she has undergone and will continue to undergo future hospitalization, therapy, rehabilitation, attendant care, the use of specialized equipment, specialized housing, and other forms of medical treatment or healthcare. In addition, she has received and will continue to require receiving medication at her expense.

[14] In paragraph 17, Ms. Farrugia alleges that, as a further result of injuries she sustained as a direct result of the accident, she has and will continue to receive therapy, rehabilitation, psychological counselling, ingestion of medication and other forms of medical treatment and healthcare.

[15] In paragraph 18, Ms. Farrugia alleges that she has incurred and will continue to incur expenses for household chores, as she is not able to perform household activities to the extent that she was able to do so before the accident.

[16] In paragraph 19, Ms. Farrugia claims that she has incurred and will continue to incur expenses for attendant care, as she is not able to perform her personal care activities to the extent she was able before the accident.

[17] Finally, in paragraph 20, Ms. Farrugia states that she has incurred and will continue to incur expenses for caregiver activities, as she is not able to perform caregiver activities to the extent that she was able before the accident.

[18] In the statement of defence, the defendants take the position that Ms. Farrugia has failed to mitigate the damages she claims in this action because she has misused funds paid to her as accident benefits by her own insurer. In paragraph 7 of the statement of defence, the defendants plead as follows:

7. The Pleading Defendants deny the injuries and damages as alleged by the Plaintiff and put her to the strictest proof thereof. In the alternative, the Pleading Defendants state that the Plaintiff has not taken any reasonable or proper steps to mitigate or reduce her damages and that the damages claimed are exaggerated, excessive and remote in law.

[19] In support of this position, there are two decisions that Mr. Murray made reference where the court dealt with the intention of defendants to ask questions in front of the jury about the collateral benefits received by the plaintiff. I propose to review those decisions to extract guiding principles to decide the question before me.

[20] In Ismail v. Flemming, 2018 ONSC 5979, Justice I.F. Leach sustained an objection made by the plaintiff to any question counsel for the defence may ask as to “any suggestion, submission, argument or other reference at trial to the effect that the receipt of collateral benefits is relevant to her (the plaintiff’s) motivation to work.” At paragraph 33 of Ismail, however, Leach J. recognized that parties in a trial may lead and make reference to evidence that a plaintiff has received collateral benefits. Leach J. also recognized that the charge to the jury in a civil trial routinely contains instructions relating to evidence about a plaintiff’s receipt of collateral benefits, and clarifies what the jury should and should not take into consideration when assessing damages. He expressly recognized that the primary purpose of such evidence and consequent instructions is to ensure that the prospect of double recovery is properly addressed.

[21] In the case before him, Leach J. found that the issue raised by the plaintiff’s objection focused on the defendant’s intended use of the answers relating to collateral benefits for a quite different purpose. He found that they were asked to suggest that the plaintiff was not really disabled, or that the receipt of collateral benefits undermined her motivation to return to work. It appears that Leach J. found this to be an improper purpose for asking these questions.

[22] The decision of Aitken J. in Peloso v. 778561 Ontario Inc. released on June 15, 2015, (unreported - Ottawa Court File No.: 00-CV-014286), dealt with the plaintiff’s decision on how she used the collateral benefits she had received. At issue was the ability of counsel to cross-examine the plaintiff on whether she had taken reasonable steps to mitigate. Justice Aitken put the issue this way at paragraph 360 of Peloso:

360. The Defendants argue that Linda Peloso’s current condition and her future prospects could have been better, had she followed consistently the treatment recommendations of various physicians. Ms. Peloso cannot recover from the Defendants damages which she, herself, could have avoided by the taking of reasonable steps, such as following reasonable treatment recommendations of various physicians. The onus is on the Defendants to prove, on a balance of probabilities, that Ms. Peloso did not fully mitigate her loss. They have met that onus.

[23] Aitken J. did not accept Ms. Peloso’s explanation that she did not have the funds to take some of the treatments to counter the pain for which she was claiming damages. Ms. Peloso had settled with her accident benefits provider in June 2002. Part of the settlement proceeds she received from that settlement were specified for medical treatment that she might require. Aitken J. found that Ms. Peloso, instead of using the settlement funds for the treatments that might have proved beneficial to her in the long run, had purchased a house instead.

[24] The Peloso case can be distinguished on its facts from the case at bar. Although there was evidence that Ms. Peloso had suffered psychological symptoms from her accident, there was no evidence that she suffered a closed head injury that took away her ability to choose between what she wanted to do and what she ought to do with accident benefit funds. In the case of Ms. Farrugia, there is clear and cogent evidence that she was suffering from a mild brain injury or a mental illness when she purchased and renovated the house in 2016. The reason she made those decisions, and any causal link between her ability to make choices and the accident was an issue for the jury to determine.

[25] In my view, the law permits counsel to ask a question or to make reference to the receipt of payment or settlement for accident benefits during the cross-examination of a witness when the question or reference is posed for a proper purpose. That evidence should be accompanied at that place in the trial or in the final charge, or both, with the appropriate instruction to the jury that collateral benefits will be deducted by the trial judge as a matter of law after the verdict is delivered.

[26] Collateral benefits are received as a matter of contract by the plaintiff from a different source than from the defendants. The fact that the plaintiff has received or settled the claim for her accident benefits should not be used as a basis to defeat the purpose behind receiving the collateral benefits, or the assessment of damages in a tort action. But neither should that fact be shielded from relevant questions that are asked in good faith, or at the expense of the defendant to properly cross-examine a witness to answer the case it must meet.

[27] I therefore denied permission to counsel for the defendants to ask about the totality of the settlement received by Ms. Farrugia for accident benefits. Questions of this nature would create a prejudicial effect in the minds of the jury that would exceed the probative value of those questions, as would any answer as to the receipt of those funds or the use to which they were put. This prejudicial effect would be all the more pronounced because of the lack of materiality for asking those questions in the first place for the following reasons:

a) Paragraph 7 of the Statement of Defence was overly broad and failed to provide any other basis to establish how such a question would be relevant; and b) There was no evidence given by affidavit or in testimony to date that the use to which Ms. Farrugia put the funds could lessen, reduce or otherwise mitigate her loss or claim for damages.

[28] In my view, permitting a question about the totality of the accident benefits settlement received and any related question would expose Ms. Farrugia to double jeopardy. She would be subject to the impact of both the prejudicial effect of that question, as well as the fact that the very same accident benefits will be deducted under the Insurance Act, where applicable, from any award the jury makes.

[29] On the second part of the question, I ruled that counsel for the defendants could ask questions on the following accident benefits received because they had been expressly pleaded by the plaintiff and denied by the defendants. This exchange of pleadings put those benefits in dispute, making questions on each of them relevant for the jury to hear:

a) Caregiver expenses; b) Attendant care expenses; and c) Housekeeping and home maintenance expenses.

[30] Justice Firestone explained in Malfara v. Vukojevic, 2014 ONSC 6602 that it is appropriate to instruct the jury during a charge that they are “to make their award, if any, on a gross basis with no deduction for any collateral benefits”. This instruction is appropriate for a jury given the deductibility of collateral benefits pursuant to s. 267.8(1) of the Insurance Act, RSO 1990 c. 43.

[31] An instruction of this nature is helpful to explain to the jury the function of the trial judge in contrast to their own role, as the deductibility of collateral benefits is a matter of law. See also Cadieux v. Cloutier, 2018 ONCA 903 (Ont. C.A.) at para. 89 and El-Khodr v. Lackie, 2017 ONCA 716 at paras. 33 and 60.

[32] The subject matter of Ms. Farrugia’s settlement of her claim for attendant care benefits was relevant for cross-examination because Ms. Barnes’ had testified in direct examination about the structured settlement of the attendant care claim funded by the first party insurer. The Amended Management Plan she had prepared as the court appointed guardian of Ms. Farrugia’s property under the Substitute Decisions Act had been introduced through her direct evidence and marked as Exhibit 1 at trial.

[33] The Amended Management Plan also made the settlement of Ms. Farrugia’s attendant care claim relevant for cross-examination because it provided the base cost for Ms. Farrugia’s current care at the Chartwell Retirement Home in London. Living at Chartwell was the least expensive of the three models the jury was asked to decide between for Ms. Farrugia’s cost of attendant care. Any risk that the jury could mistakenly believe that any damages they might award for her cost of attendant care in the future would be double recovery because Ms. Farrugia has settled with her own insurer would be avoided when the court gave the appropriate instruction for the jury to assess such damages on a gross basis.

Emery J. Released: July 12, 2019