Roberts et al. v. Morana et al. [Indexed as: Roberts v. Morana]

49 O.R. (3d) 157

[2000] O.J. No. 2688

Docket Nos. C28568, C28619 and C28054

Ontario Court of Appeal

Labrosse, Weiler and Sharpe JJ.A.

July 20, 2000

Damages -- Personal injuries -- Automobile accident -- Catastrophic injuries including brain injury -- Loss of future income -- General damages -- Pain and suffering -- Cost of future care.

Torts -- Negligence -- Public authorities -- Non-repair of road -- Dangerous road conditions caused by ice storm -- Ministry of Transportation and Communications failing to order salting of road -- Failure to salt or sand may constitute failure to maintain highway -- Ministry of Transportation and Communications liable for negligence for failing to order road salting when it knew or ought to have known of highly dangerous situation -- Public Transportation and Highway Improvement Act, R.S.O. 1990, c. P.50.

NOTE: An appeal of the judgment of the Ontario Court (General Division) (O'Brien J.), reported at 1997 12257 (ON SC), 34 O.R. (3d) 647, to the Court of Appeal for Ontario was dismissed on July 20, 2000. The endorsement of the court is as follows:

Sheldon A. Gilbert, Q.C., for appellants, Salvatore Morana and Paul Morana. D. Bruce McCartney, for appellant, Her Majesty the Queen in Right of the Province of Ontario. Wayne McCormick, for appellant, Robert Anthony Dunn. Richard H. Shekter and Anna Casemore, for respondents.

[1] BY THE COURT: -- Following a 44-day trial plus additional days of evidence and argument, O'Brien J. awarded Penny Roberts ("the plaintiff") approximately $4.5 million, including $3.83 million for future care. This appeal raises issues of liability, damages and costs of the proceedings.

[2] With the exception of the issues raised with respect to s. 116 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and the costs, the issues raised in this appeal are fact-driven and the appellants essentially sought to re-try the case by challenging the weight given to the evidence by the trial judge. This aspect of the appeal must be dismissed. We adopt the trial judge's comprehensive and carefully considered reasons. More specifically, the findings of fact and the inferences drawn by the trial judge in relation to liability, community support services and accommodation and moving costs are all reasonable and amply supported by the evidence and based on sound and accepted legal principles.

[3] With respect to the s. 116 issue, the appellants assert that the trial judge erred in requiring them to purchase a structured annuity in the amount of the present value of the award for future care costs. The appellants submit that the trial judge ought to have accepted their proposal of a structured annuity that would provide periodic payments, indexed to the Consumer Price Index, corresponding to the various specific items of future care needs identified by the trial judge. The cost of the structured annuity proposed by the appellants was approximately $800,000 less than the present value of the future care award.

[4] Section 116 provides, in part, as follows:

116(1) In a proceeding where damages are claimed for personal injuries or under Part V of the Family Law Act for loss resulting from the injury to or death of a person, the court,

(a) if all affected parties consent, may order the defendant to pay all or part of the award for damages periodically on such terms as the court considers just; and

(b) if the plaintiff requests that an amount be included in the award to offset any liability for income tax on income from the investment of the award, shall order the defendant to pay all or part of the award periodically on such terms as the court considers just.

(5) If the court does not make an order for periodic payment under subsection (1), it shall make an award for damages that shall include an amount to offset liability for income tax on income from investment of the award.

[5] The starting point for the interpretation of s. 116 (read in conjunction with rule 53.09(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the discount rate)) is the determination of the present value of the future care award. Consideration of a periodic award was triggered, pursuant to s. 116(1)(b), by the respondent's request that an amount be included in the award to offset any liability of income tax. It is only after the calculation of the award is made that consideration is given to a periodic payment of the award or gross-up: Wilson v. Martinello (1995), 1995 303 (ON CA), 23 O.R. (3d) 417 at 427-28, 125 D.L.R. (4th) 240 (C.A.).

[6] The wording of s. 116 does not permit the court to order periodic payments in the manner suggested by the appellants. In our view, "the award" that is to be paid periodically can only be "the award" that triggers consideration of periodic payments. The wording of s. 116 may be contrasted with the Manitoba legislation, considered in Lusignan (Litigation Guardian of) v. Concordia Hospital (1998), 1998 27822 (MB KB), 44 C.C.L.T. (2d) 90, [1999] 1 W.W.R. 733 (Man. Q.B.) which specifically requires the court to order structured payments on an item by item basis. But for s. 116, the respondent would have been entitled to a lump sum award including the amount necessary to offset liability for tax on income derived from the award. We accept the respondent's submission that specific legislation, along the lines of the Manitoba scheme, would be required to take away her right to receive the full benefit of the present value of the award in her favour. We do not accept the submission of the appellants that it would be appro priate for this court to "read in" the words that would be needed to alter the effect of s. 116 to avoid what they perceive to be over-compensation to the respondent. The appellants have been relieved of the obligation to pay approximately $4 million by way of gross-up for income tax. That is the benefit intended by s. 116. Any further reduction in their liability would require legislative change.

[7] The trial judge heard a substantial amount of evidence and argument on the issue of the appropriate order pursuant to s. 116. The litigation guardian for the plaintiff, an experienced personal injury litigation lawyer, recommended that the major part of the future-care award be structured and that the balance, for which no gross-up was requested, be conservatively invested for her protection in the event of unanticipated development amongst the items covered by the award.

[8] The trial judge determined the present value of the future-care award. He then considered the benefits and disadvantages of a structured settlement and approved a periodic-payment schedule for a structured part of the award. He required a lump-sum payment of the balance of the award and approved a management plan for the amount paid to the credit of the plaintiff in order to provide for her financial flexibility.

[9] It is clear that the trial judge concluded that the plan proposed by the litigation guardian was in the plaintiff's best interests. The trial judge applied appropriate legal principles and we see no basis to interfere.

[10] Finally, with respect to costs, the trial judge fixed the costs of the action following a two-day hearing during which he examined extensive documentary evidence and heard submissions. Under the authority of rule 49.10, he awarded part of the costs on a solicitor-and-client basis. The appellants challenge three aspects of the cost award: first, two disbursements allowed as part of the costs; second, the premium awarded against them over the docketed time expended; and third, the allocation of the costs among the appellants. We see no merit in the attack on the disbursements. On the second ground, the trial judge concluded that the "meticulous, ingenious preparation and presentation of the case", "the financial risk incurred by the plaintiff's counsel and the extraordinary result" achieved, justified the premium awarded. In our view, the trial judge properly exercised his discretion when awarding the premium over the time docketed. We would not interfere with his disposition of the costs. As to the third ground, the trial judge considered all the relevant factors relative to the apportionment of the costs and we see no basis to interfere.

[11] Accordingly, the appeal is dismissed with costs.