The Estate of Glen Charles Sullivan, by its Executrix, Sullivan et al. v. Bond et al.
[Indexed as: Sullivan Estate v. Bond]
55 O.R. (3d) 97
[2001] O.J. No. 3205
Docket Nos. C35169 and C35170
Court of Appeal for Ontario
Weiler, Abella and Moldaver JJ.A.
August 2, 2001
Insurance--Automobile insurance--Section 267.7(1)(a) of Insurance Act restricts application of s. 1 of Negligence Act insofar as unprotected defendants are concerned--Unprotected defendants not liable on joint and several basis to pay any shortfall occasioned by application of limiting provisions of Negligence Act as they apply to protected defendants pursuant to s. 1 of Negligence Act--Insurance Act, R.S.O. 1990, c. I.8, s. 267.7(1)(a)--Negligence Act, R.S.O. 1990, c. I.8, s. 1.
Negligence--Joint tortfeasors--Effect of automobile insurance legislation--Section 267.7(1)(a) of Insurance Act restricts application of s. 1 of Negligence Act insofar as unprotected defendants are concerned--Unprotected defendants not liable on joint and several basis to pay any shortfall occasioned by application of limiting provisions of Negligence Act as they apply to protected defendants pursuant to s. 1 of Negligence Act--Insurance Act, R.S.O. 1990, c. I.8, s. 267.7(1)(a)-- Negligence Act, R.S.O. 1990, c. I.8, s. 1.
One person was killed and two persons were injured in a single-car accident. The two injured persons and the family of the deceased person brought actions claiming damages from the driver, owner and lessee of the vehicle and from two taverns in which the occupants of the vehicle had been drinking prior to the accident. One of the taverns brought a motion under rule 21.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for the court's opinion as to the proper interpretation of s. 267.7 of the Insurance Act. The tavern wanted to know whether, as an unprotected defendant, it was liable to the plaintiffs for the whole amount of the s. 267.5(7) deductibles by which an award for non-pecuniary loss against protected defendants are reduced or something less. The trial judge held that if the taverns were found liable to the plaintiffs then, in their capacity as unprotected joint and several tortfeasors, they were responsible to the plaintiffs for 100 per cent of the deductibles set out in s. 2 67.5(7). The taverns appealed.
Held, the appeal should be allowed.
Per Moldaver J.A. (Abella J.A. concurring): The trial judge erred in concluding that an unprotected defendant would be responsible to pay any shortfall occasioned by the application of the provisions of the Negligence Act as they apply to protected defendants pursuant to s. 1 of the Negligence Act. Section 267.7(1)(a) of the Insurance Act restricts the application of s. 1 of the Negligence Act insofar as unprotected defendants are concerned. Section 267.7(1)(a)(i) of the Act limits the joint and several liability of an unprotected defendant to a plaintiff to the same extent that a protected defendant's liability is limited by virtue of s. 267.5 of the Act and, as such, modifies the extent to which an unprotected defendant would otherwise be liable under s. 1 of the Negligence Act. Section 267.7(1)(a) of the Act should be interpreted to mean that if one or more protected defendants and one or more unprotected defendants are found liable for damages for non-pecuniary loss, the unprotected defendants' liability is to be determined as follows: (a) the unprotected defendants are jointly and severally liable with the protected defendants for the damages for non-pecuniary loss for which the protected defendants are liable under the Act; and (b) using the gross figure for non-pecuniary loss, the unprotected defendants are solely liable to the plaintiff for the amount, if any, by which the amount they would have been liable to make contribution and indemnify the protected defendants under the Negligence Act exceeds the figure calculated in (a).
Per Weiler J.A. (dissenting): The trial judge was correct in holding that unprotected defendants are liable for excluded damages.
APPEAL from a judgment of Dyson J. (2000), [2001] I.L.R. 1-3899 (S.C.J.) interpreting s. 267.7 of the Insurance Act, R.S.O. 1990, c. I.8.
Cases referred to Dalgliesh v. Green (1993), 1993 CanLII 3389 (ON CA), 15 O.R. (3d) 129, 48 M.V.R. (2d) 1 (C.A.), affg (1993), 1993 CanLII 8679 (ON SC), 12 O.R. (3d) 40, 100 D.L.R. (4th) 390 (Gen. Div.) (sub nom. Meyer v. Bright) [Leave to appeal to S.C.C. refused (1994), 17 O.R. (3d) xvi]; Derksen v. 539938 Ontario Ltd. (1999), 1999 CanLII 3749 (ON CA), 45 M.V.R. (3d) 6 (Ont. C.A.), affg (1998), 37 M.V.R. (3d) 59 (Ont. Gen. Div.) [Leave to appeal to S.C.C. allowed (2000), 256 N.R. 398n]; Henderson v. Parker (1998), 1998 CanLII 14717 (ON SC), 42 O.R. (3d) 462, 45 M.V.R. (3d) 60 (Gen. Div.)
Statutes referred to Family Law Act, R.S.O. 1990, c. F.3, s. 61(2)(e) Insurance Act, R.S.O. 1980, c. 218, s. 231a(5) (en. 1990, c. 2, s. 57 (Bill 68)) [now R.S.O. 1990, c. I.8, s. 266(5) (am. 1993, c. 10, s. 1 (Bill 164); 1996, c. 21, s. 26 (Bill 59))] Insurance Act, R.S.O. 1990, c. I.8, ss. 267.1 (am. 1993, c. 10, s. 1 (Bill 164); 1996, c. 21, s. 26 (Bill 59)), 267.3 "protected defendant", 267.5(1), (3), (5), (7), (8), (10), 267.7(1)-(3) (am. 1996, c. 21, s. 26 (Bill 59)) Negligence Act, R.S.O. 1990, c. N.1, s. 1
Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21.01, 21.01(1)(a)
Authorities referred to McKee, S. G., and L. Chiarotto, "Unprotected Defendants: Out of Sight, Out of Mind" (1998) Practical Strategies for Advocates (VII) Moore, S. R., "Unprotected Defendants: An Update on Practical Strategies in Suing or Defending Claims Against Unprotected Clients" (1999) Practical Strategies VII
Alan L. Rachlin, for appellant Papaevangelou Holdings Ltd. Vincent G. Burns, for appellant Aristocrat Restaurants Ltd. Juan F. Carranza, for respondents Hayward and Duffield. Terence J. Collier, for respondent the Estate of Sullivan. David R. Neill, for respondents Glen Sullivan et al.
The judgment of the court was delivered by
[1] MOLDAVER J.A. (ABELLA J.A. concurring):-- Papaevangelou Holdings Ltd. and Aristocrat Restaurants Limited, carrying on business respectively as The Birchmount Restaurant & Tavern ("Birchmount") and Tony's East ("Tony's"), are defendants in three related actions arising out of a motor vehicle accident that took place in March 1997. By order dated November 7, 2000, Dyson J. held that if Birchmount and Tony's are found liable to the plaintiffs in those actions, then, in their capacity as unprotected joint and several tortfeasors, they are responsible to the plaintiffs for 100 per cent of the deductibles set out in s. 267.5(7) of the Insurance Act, R.S.O. 1990, c. I.8, as amended (the "Act").
[2] Birchmount and Tony's appeal from that order on the ground that it is based on an erroneous interpretation of s. 267.7(1) of the Act. In particular, they submit that Dyson J. misconstrued subs. (1)(a) of that provision, which reads as follows:
267.7(1) If, in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, one or more protected defendants and one or more other persons are found to be liable for damages,
(a) the other persons,
(i) are jointly and severally liable with the protected defendants for the damages for which the protected defendants are liable, having regard to section 267.5, and
(ii) are solely liable for any amount by which the amount mentioned in subclause (i) is less than the amount that the other persons would have been liable to make contribution and indemnify the protected defendants in respect of damages in the absence of section 267.5;
According to the appellants, had Dyson J. construed that provision correctly, he would have held that in the event that Birchmount and Tony's are found liable to the plaintiffs, their liability would be no more than the greater of either the protected defendants' joint and several liability to the plaintiffs or the unprotected defendants' found liability without regard to the deductibles in s. 267.5(7).
Background Facts
[3] The background facts are straightforward. Three actions have been commenced as a result of a single car accident on March 29, 1997 in which Glen Sullivan, a passenger, was killed and two other passengers, David Hayward and Ryan Duffield, sustained injuries. The family of the late Mr. Sullivan, Mr. Hayward and his family and Mr. Duffield claim damages from the defendants Douglas Bond (the driver), AT&T Capital Canada Inc. (the owner of the vehicle), Carol Bond (the lessee of the vehicle) and Birchmount and Tony's, two taverns in which Sullivan, Hayward, Duffield and Douglas Bond had been drinking prior to the accident. All three actions have been ordered to be tried together. [See Note 1 at end of document]
[4] In the context of these actions, Birchmount brought a motion under rule 21.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 seeking the court's opinion as to the proper interpretation and application of s. 267.7 of the Act. To appreciate the issue which Birchmount sought to have determined, it is necessary to elaborate briefly on two other provisions in the Act, namely, s. 267.5(5) and s. 267.5(7).
[5] Under s. 267.5(5) of the Act, owners and occupants of automobiles and persons present at an incident involving a motor vehicle are provided with limited protection from liability for damages for non-pecuniary loss from bodily injury or death arising directly or indirectly from the use or operation of an automobile. Such persons, defined in s. 267.3 of the Act as "protected defendants", lose their protection when, as a result of the use or operation of an automobile, the injured person has died or sustained certain permanent serious injuries.
[6] Section 267.5(7) of the Act prescribes certain rules that a court must follow in determining an award for non-pecuniary loss against protected defendants in an action for loss or damage from bodily injury or death where such defendants have lost their protection from suit. Rule 3 of those rules [267.5(7)3] creates statutory deductibles that apply in such cases. In essence, it provides that an award for non-pecuniary loss against a protected defendant shall be reduced by at least $7,500 in the case of claims brought under clause 61(2)(e) of the Family Law Act and at least $15,000 in the case of other claims.
[7] As indicated, the rules prescribed in s. 267.5(7) apply only to awards for non-pecuniary loss against protected defendants. They do not apply to awards for non-pecuniary loss against other tortfeasors, commonly referred to as "unprotected defendants".
[8] It is against this backdrop that Birchmount, in its capacity as an unprotected defendant, brought the motion under rule 21.01 seeking the court's opinion as to the proper interpretation and application of s. 267.7 of the Act. In particular, Birchmount wanted to know whether, as an unprotected defendant, it was liable to the plaintiffs for the whole amount of the s. 267.5(7) deductibles by which an award for non-pecuniary loss against protected defendants are reduced or something less.
[9] The resolution of that issue, it is agreed, hinges on the construction of s. 267.7(1)(a) of the Act. That provision, reproduced above, addresses the extent to which plaintiffs can recover damages from unprotected defendants when one or more protected defendants and one or more unprotected defendants are found liable for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile. For convenience, it is repeated:
267.7 (1) If, in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, one or more protected defendants and one or more other persons are found to be liable for damages,
(a) the other persons,
(i) are jointly and severally liable with the protected defendants for the damages for which the protected defendants are liable, having regard to section 267.5, and
(ii) are solely liable for any amount by which the amount mentioned in subclause (i) is less than the amount that the other persons would have been liable to make contribution and indemnify the protected defendants in respect of damages in the absence of section 267.5;
Dyson J.'s Ruling
[10] The motion was heard by Dyson J. on September 15, 2000. In his reasons, delivered orally that day, he correctly framed the issue as follows:
The tavern [Birchmount] is an unprotected defendant and, in particular, seeks the Court's determination as to whether s. 267.7 entitles the plaintiff to recover the whole of the statutory deductible or only the portion of the deductible in proportion to the unprotected defendants' found accountability.
[11] Dyson J. then provided what he described as a short answer to the issue:
The short answer is that there is nothing in the Automobile Insurance Rate Stability Act, S.O. 1996, C. 21 (Bill 59), which in any way restricts or limits the liability of unprotected tortfeasors to victims of motor vehicle accidents, and therefore an unprotected tortfeasor would be responsible to a motor vehicle accident victim on a joint and several basis, pursuant to s. 1 of the Negligence Act, to pay any shortfall occasioned by the application of the limiting provisions of the Act as they apply to protected defendants.
Bill 59 sets out the limits and restrictions on the liability and responsibility of protected defendants, and hence their insurers, to compensate motor vehicle accident victims after November 1, 1996.
It follows that if the tavern in this case is fixed with any finding of negligence, it would be responsible to the plaintiffs for 100 percent of the deductibles as an unprotected joint and several tortfeasor.
[12] Having stated his conclusion and the primary reason for it, Dyson J. went on to consider three additional factors that lent support to his conclusion.
[13] First, he found that s. 267.5(10) of the Act provided an important clue to the meaning of s. 267.7(1)(a). That provision reads as follows:
267.5(10) Subsections (1), (3) and (5) do not relieve any person from liability other than a protected defendant.
In Dyson J.'s view, s. 267.5(10) represents a clear and unambiguous statement by the legislature that the limited protection from liability afforded by subsections (1), (3) and (5) of s. 267.5 applies only to protected defendants and that these provisions do not relieve unprotected defendants from liability.
[14] Second, Dyson J. considered the wording in s. 267.7(1) (a)(ii) and found it to be ambiguous and lacking in clarity. Accordingly, as a matter of statutory interpretation, he held that it should not be construed in a manner that would extinguish "the common law right [of plaintiffs] to be compensated for the full amount of their loss". This could only be done by clear and unambiguous language.
[15] Third, Dyson J. found support for his conclusion in what he described as the "clear and obvious purpose of Bill 59". [See Note 2 at end of document] That purpose, he found, was the stabilization of automobile insurance rates, not the reduction of "the statutory or common law rights of an injured motor vehicle accident victim in respect of unprotected defendants or to stabilize the rates of insurance for the insurers of such parties".
[16] Taking these factors together, Dyson J. concluded that s. 267.7(1) "cannot be interpreted or applied in any manner that would reduce the common law rights or rights pursuant to the Negligence Act of an injured motor vehicle accident victim vis-à-vis an unprotected defendant".
Relevant Statutory Provisions
[17] The relevant provisions of the Insurance Act are as follows:
267.3 In sections 267.4 to 267.11,
"protected defendant" means a person who is protected from liability by subsections 267.5(1), (3) and (5).
267.5(1) 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 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.
(3) Despite any other Act and subject to subsections (4) and (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 expenses that have been incurred or will be incurred for health care resulting from bodily injury arising directly or indirectly from the use or operation of the automobile.
(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.
(7) Subject to subsections (5), (12), (13) and (15), in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the court shall determine the amount of damages for non-pecuniary loss to be awarded against a protected defendant in accordance with the following rules:
The court shall first determine the amount of damages for non-pecuniary loss for which the protected defendant would be liable without regard to this Part.
The determination under paragraph 1 shall be made in the same manner as a determination of the amount of damages for non-pecuniary loss in an action to which this section does not apply and, in particular, without regard to,
i. the statutory accident benefits provided for under subsection 268(1),
ii. the provisions of this section that protect protected defendants from liability for damages for pecuniary loss, and
iii. the provisions of paragraph 3.
- The amount of damages for non-pecuniary loss to be awarded against the protected defendant shall be determined by reducing the amount determined under paragraph 1 by,
i. in the case of damages for non-pecuniary loss other than damages for non-pecuniary loss under clause 61(2)(e) of the Family Law Act, the greater of,
A. $15,000, and
B. the amount prescribed by the regulations, and
ii. in the case of damages for non-pecuniary loss under clause 61(2)(e) of the Family Law Act, the greater of,
A. $7,500, and
B. the amount prescribed by the regulations.
- If fault or negligence on the part of the person entitled to damages for non-pecuniary loss contributed to those damages, the award for damages shall be reduced under paragraph 3 before the damages are apportioned under section 3 of the Negligence Act.
(8) Subsection (7) applies in respect of each person who is entitled to damages for non-pecuniary loss.
(10) Subsections (1), (3) and (5) do not relieve any person from liability other than a protected defendant.
267.7(1) If, in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, one or more protected defendants and one or more other persons are found to be liable for damages,
(a) the other persons,
i. are jointly and severally liable with the protected defendants for the damages for which the protected defendants are liable, having regard to section 267.5, and
ii. are solely liable for any amount by which the amount mentioned in subclause (i) is less than the amount that the other persons would have been liable to make contribution and indemnify the protected defendants in respect of damages in the absence of section 267.5;
(b) the other persons are liable to make contribution and indemnify the protected defendants in respect of damages to the same extent as if section 267.5 did not apply, up to the amount for which the protected defendants are liable having regard to section 267.5; and
(c) the protected defendants are liable to make contribution and indemnify the other persons for the amount that the protected defendants are liable, having regard to section 267.5, reduced by the amount that the other persons are liable to make contribution and indemnify the protected defendants under clause (b).
(2) Liability shall be determined under subsection (1) separately for each of the following categories of damages:
Damages for income loss and loss of earning capacity.
Damages for expenses that have been incurred or will be incurred for health care.
Damages for pecuniary loss, other than damages referred to in paragraphs 1 and 2.
Damages for non-pecuniary loss, including damages for non-pecuniary loss under clause 61(2)(e) of the Family Law Act.
(3) For the purposes of subsection (1), the liability of all persons involved in the incident from which the action arose shall be determined as though all persons wholly or partly responsible for the damages were parties to the action even though any of those persons is not actually a party.
[18] The relevant provision of the Negligence Act, R.S.O. 1990, c. N.1 is s. 1, which reads as follows:
- Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.
Analysis
[19] With respect, I am unable to accept Dyson J.'s interpretation of s. 267.7(1) of the Act. In particular, I disagree with his conclusion that under that provision, unprotected defendants are required to pay 100 per cent of the amount deducted from awards against protected defendants for non-pecuniary loss pursuant to s. 267.5(7). To the contrary, I agree with the appellants that, insofar as the s. 267.5(7) deductibles are concerned, unprotected defendants are solely liable for the amount, if any, by which the amount they would have had to pay to the protected defendants by way of contribution and indemnity under s. 1 of the Negligence Act (i.e., the total amount awarded for non-pecuniary loss multiplied by the unprotected defendants' found degree of fault) exceeds the damages for non-pecuniary loss for which they and the protected defendants are made jointly and severally liable by s. 267.7(1)(a)(i) of the Act (i.e., the total amount awarded for non-pecuniary loss less the s. 267.5(7) deductibles). I have arrived at this conclusion for several reasons.
[20] First, unlike Dyson J., I am of the view that s. 267.7(1)(a) does restrict the application of s. 1 of the Negligence Act insofar as unprotected defendants are concerned. In particular, I am satisfied that in enacting s. 267.7(1)(a), the legislature had s. 1 of the Negligence Act in mind and when it wanted that provision to apply, it did so by using the words "in the absence of s. 267.5" or "as if s. 267.5 did not apply". To the extent however, that it did not want s. 1 to apply, it did so by using the words "having regard to s. 267.5". Thus, in subs. (a)(i) of s. 267.7(1), the use of the words "having regard to s. 267.5" is a clear indication that s. 1 of the Negligence Act is not to be applied in determining the amount for which protected and unprotected defendants are to be held jointly and severally liable to plaintiffs. By contrast, the use of the words "in the absence of s. 267.5" in subsection (a)(ii) of s. 267.7(1) is a clear indication that s. 1 of the Negligence Act is to be applied in calculating the amount that the unprotected defendants "would have been liable to make contribution and indemnify the protected defendants in respect of damages . . .".
[21] In this regard, I agree with the observations of S.G. McKee and L. Chiarotto at p. 5 of their paper entitled "Unprotected Defendants: Out of Sight, Out of Mind", Practical Strategies for Advocates (VII) (Advocates' Society, Toronto, January 1998):
[S]ection 267.7 does, by necessary implication, make reference to the Negligence Act, and indicates the relation between the section and the Negligence Act. As previously explained, "the amount that the other persons (i.e. unprotected defendants) would have been liable to make contribution and indemnify the protected defendants in respect of damages in the absence of section 267.5" would be determined in accordance with section 1 of the Negligence Act. If section 267.5 did not exist, protected defendants would be liable for the plaintiff's entire losses, and the Negligence Act would govern the joint and several liability of all defendants and the liability of the defendants to make contribution and indemnification as amongst themselves. Thus, in the absence of section 267.5, "unprotected" defendants would be liable to make contribution and indemnify "protected" defendants "in the degree in which the unprotected defendants are found to be at fault", as per section 1 of the Negligence Act.
(Emphasis added)
[22] In other words, s. 267.7(1)(a)(i) of the Act limits the joint and several liability of an unprotected defendant to a plaintiff to the same extent that a protected defendant's liability is limited by virtue of s. 267.5 of the Act and as such, it modifies the extent to which an unprotected defendant would otherwise be liable under s. 1 of the Negligence Act. Accordingly, I do not share Dyson J.'s view that the extent of an unprotected defendant's liability is governed, without exception, by s. 1 of the Negligence Act, such that unprotected defendants remain liable on a joint and several basis "to pay any shortfall occasioned by the application of the limiting provisions of the Act as they apply to protected defendants".
[23] Second, I am of the view that Dyson J. erred in characterizing s. 267.7(1)(a)(ii) as ambiguous and lacking in clarity and that he further erred in relying upon this characterization as a basis for refusing to interpret the provision in a way that would extinguish the "common law right [of plaintiffs] to be compensated for the full amount of their loss".
[24] The parties agree that apart from subs. (1)(a)(ii) of s. 267.7, the other sections in that provision, including (1)(a) (i) and (1)(b) and (c), are clear and unambiguous. With respect to subs. (1)(a)(ii), the appellants submit that although it is "densely" drafted, it is nonetheless clear and unambiguous. The respondents do not share that view. For convenience, s. 267.7(1)(a) is again reproduced:
267.7(1) If, in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, one or more protected defendants and one or more other persons are found to be liable for damages,
(a) the other persons,
(i) are jointly and severally liable with the protected defendants for the damages for which the protected defendants are liable, having regard to section 267.5, and
(ii) are solely liable for any amount by which the amount mentioned in subclause (i) is less than the amount that the other persons would have been liable to make contribution and indemnify the protected defendants in respect of damages in the absence of section 267.5;
[25] I agree with the appellants that subs. (1)(a)(ii) is "densely" drafted. That said, I accept their further submission that the wording is neither ambiguous nor unclear. To the contrary, when the provision is read carefully as a whole, its meaning is clear and the intent of the legislature obvious.
[26] Manifestly, subs. (1)(a)(ii) is a legislated formula designed to calculate the amount of damages, if any, for which unprotected defendants are to be held solely responsible to plaintiffs over and above that for which they and the protected defendants are held jointly and severally responsible under subs. (1)(a)(i). To arrive at that figure, one must determine under (1)(a)(ii) the amount that the unprotected defendants "would have been liable to make contribution and indemnify the protected defendants in respect of damages in the absence of s. 267.5". (Emphasis added)
[27] In other words, in the case of damages for non-pecuniary loss, the question is: what would the unprotected defendants have had to pay to the protected defendants by way of contribution and indemnity in the absence of s. 267.5(7) deductibles? The answer, of course, is found in s. 1 of the Negligence Act, namely, "in the absence of any contract express or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligence". Carrying on with the calculation, to the extent, if any, that this figure is greater than the amount for which the protected and unprotected defendants are jointly and severally liable to the plaintiff under subs. (1)(a)(i), then that is the amount for which the unprotected defendant will be solely responsible to the plaintiff under subs. (1)(a)(ii). If, on the other hand, that figure is equal to or less than the amount for which the protected and unprotected defendants are jointly and severally liable to the plaintiff under subs. (1)(a)(i), then the unprotected defendants are not liable to pay anything above and beyond the subs. (1)(a)(i) amount.
[28] With respect, I fail to see how subs. (1)(a)(ii) can be construed differently, especially when one gives effect to the words "protected defendants". Surely, if it were the intention of the legislature that in the case of damages for non- pecuniary loss, the unprotected defendants should bear 100 per cent of the s. 267.5(7) deductibles, then the word "plaintiffs" as opposed to "protected defendants" would have been used in subs. (1)(a)(ii). More to the point, if the interpretation suggested by the respondents and endorsed by Dyson J. is correct, there would have been no need to create the formula in subs. (1)(a)(ii) in the first place. Rather, a simple statement to the effect that the nature and extent of an unprotected defendant's liability shall be governed by s. 1 of the Negligence Act would have sufficed.
[29] As indicated, that is precisely how Dyson J. construed s. 267.7(1)(a). In doing so, he relied on s. 267.5(10) which, it will be recalled, reads as follows:
(10) Subsections (1), (3) and (5) do not relieve any person from liability other than a protected defendant.
[30] With respect, I believe that Dyson J.'s construction of s. 267.5(10) constituted a further error in his analysis. That provision makes it clear that the legislated bars to suit referred to in subss. (1), (3) and (5) of s. 267.5 apply only to protected defendants, not unprotected defendants. That, in my view, is its sole purpose. It has nothing to do with the extent of an unprotected defendant's liability. That issue is addressed in s. 267.7(1). It follows, in my view, that s. 267.5(10) is irrelevant to the issue at hand and it should have formed no part of Dyson J.'s analysis.
[31] Finally, I believe that Dyson J. erred in construing s. 267.7(1) from the perspective that the legislature did not intend to benefit unprotected defendants or their insurer's at the expense of plaintiffs. In this regard, I note that Bill 59 is the third in a series of tort restrictive regimes enacted by various governments with a view to stabilizing automobile insurance rates. An excellent discussion of the predecessor regimes and the degree of liability ascribed in each to unprotected defendants can be found at pp. 2 and 3 of the McKee and Chiarotto article referred to above. As the learned authors point out, in each of the former regimes, the legislature enacted provisions to ensure that unprotected defendants and their insurers would not be saddled with the entire burden of the benefits afforded to protected defendants and their insurers: see s. 266(5) of the Ontario Motorists Protection Plan or Bill 68 (applicable to accidents occurring between June 22, 1990 and December 31, 1993) and ss. 267.1(7) and (10) of Bill 164 (applicable to accidents occurring between January 1, 1994 and October 31, 1996). From this, it is apparent that the purpose of the legislation was not to benefit protected defendants or their insurers at the expense of unprotected defendants and their insurers. Rather, in an effort to stabilize automobile insurance rates, the former regimes provided for an exchange of rights wherein accident victims would, in certain instances, lose the right to sue but receive, in return, more generous first-party benefits, regardless of fault, from their insurers: see Meyer v. Bright (1993), 1993 CanLII 3389 (ON CA), 15 O.R. (3d) 129 at p. 134, 48 M.V.R. (2d) 1 (C.A.).
[32] As I read Bill 59, there is nothing in it which causes me to believe that the legislature intended to alter its pre- existing policy towards unprotected defendants, such that they should now be required to bear the full burden of the benefits afforded to protected defendants and their insurers. The legislative intent is still that persons injured in motor vehicle accidents give up certain rights in tort in exchange for enhanced first party benefits from their insurer: see Henderson v. Parker (1998), 1998 CanLII 14717 (ON SC), 42 O.R. (3d) 462 at pp. 470-73, 45 M.V.R. (3d) 60 (Gen. Div.). Indeed, as the appellants point out, s. 267.7(1) of the Act is virtually identical to s. 267.1(10) of the predecessor legislation. In Derksen v. 539938 Ontario Ltd. (1998), 37 M.V.R. (3d) 59 (Ont. Gen. Div.), affd (1999), 1999 CanLII 3749 (ON CA), 123 O.A.C. 232, 45 M.V.R. (3d) 6 (C.A.), affd 2001 SCC 72, [2001] S.C.J. No. 27, Stach J. observed that:
Subsection 267.1(10) deals with the liability of unprotected defendants for non-pecuniary losses. Its effect is to limit the liability of the contractor as an unprotected defendant only to the extent that the contractor or its employee is at fault or negligent.
I agree with Stach J.'s interpretation of s. 267.1(10) and I am satisfied that it continues to apply in respect of s. 267.7(1).
Conclusion
[33] Section 267.7(1)(a) of the Act should be interpreted to mean that if one or more protected defendants and one or more unprotected defendants are found to be liable for damages for non-pecuniary loss, the unprotected defendants' liability is to be determined as follows:
(a) the unprotected defendants are jointly and severally liable with the protected defendants for the damages for non- pecuniary loss for which the protected defendants are liable under the Act; and
(b) using the gross figure for non-pecuniary loss, the unprotected defendants are solely liable to the plaintiff for the amount, if any, by which the amount that they would have been liable to make contribution and indemnify the protected defendants under the Negligence Act, exceeds the figure calculated in (a) above.
[34] In the result, I would allow the appeal and vary the order of Dyson J. in accordance with these reasons. The appellants are entitled to their costs of the appeal and the motion.
[35] WEILER J.A. (dissenting):--I have had the benefit of reading the reasons of Moldaver J.A. and I respectfully disagree with his conclusion. Instead, I am of the opinion that the trial judge was correct in holding that unprotected defendants are liable for excluded damages.
[36] Moldaver J.A. is of the opinion that the trial judge erred in saying that an unprotected defendant would be responsible to pay any shortfall occasioned by the application of the provisions of the Negligence Act, R.S.O. 1990, c. N.1, as they apply to protected defendants pursuant to s. 1 of that Act. Even if this is so, I find the additional three factors the trial judge articulated in his reasons support the interpretation he gave to s. 267.7(1)(a) of the Insurance Act, R.S.O. 1990, c. I.8, as amended (the "Act").
[37] First, the trial judge found that s. 267.5(10) of the Act provided an important clue to the meaning of s. 267.7(1) (a). That provision reads as follows:
267.5(10) Subsections (1) [See Note 3 at end of document], (3) [See Note 4 at end of document] and (5) [See Note 5 at end of document] do not relieve any person from liability other than a protected defendant.
[38] Moldaver J.A. is of the opinion that the sole purpose of this provision is to make it clear that the legislated bars to suit referred to in subss. (1), (3) and (5) of s. 267.5 apply only to protected defendants, not unprotected defendants. In other words, the provision has nothing to do with the extent of an unprotected defendant's liability. The section contains no wording limiting its application in the manner suggested by Moldaver J.A. and I would not limit its application.
[39] Second, the trial judge found the wording in s. 267.7(1) (a)(ii) to be ambiguous and lacking in clarity and that any restriction on the common law right of plaintiffs to be compensated for the full amount of their loss required clear and unambiguous language. Certainly, it cannot be said that the section clearly restricts the right at common law of plaintiffs to compensation. In his article, "Unprotected Defendants: An Update on Practical Strategies in Suing or Defending Claims Against Unprotected Clients" and Addendum: "The Apportionment Question" (Advocate Society Practical Strategies VIII) delivered February 19, 1999, Stephen R. Moore interpreted s. 267.7 in the manner adopted by the trial judge. Inasmuch as reasonable people may differ as to the interpretation of the section, I find it difficult to see how the section can be said to be clear and unambiguous.
[40] Third, the trial judge observed that the purpose of the legislation was the stabilization of car insurance rates. This court in Meyer v. Bright [supra], at p. 134 O.R., stated that:
[T]he Ontario legislature enacted s. 266 and other related amendments to the Act for the purpose of significantly limiting the right of the victim of a motor vehicle accident to maintain a tort action against the tortfeasor. The scheme of compensation provides for an exchange of rights wherein the accident victim loses the right to sue unless coming within the statutory exemptions, but receives more generous first-party benefits, regardless of fault, from his or her own insurer. The legislation appears designed to control the cost of automobile insurance premiums to the consumer by eliminating some tort claims.
(Emphasis added)
[41] The exchange of rights referenced by the Court of Appeal relates solely to the rights vis-à-vis the victim and the protected defendants referenced in s. 266 of the Insurance Act. A tortfeasor who is an unprotected defendant will not impact on the cost of car insurance. An unprotected defendant has no rights to exchange with a plaintiff and is therefore unable to obtain the benefit of the legislative compromise.
[42] For these reasons, I would dismiss the appeal.
Appeal allowed.
Notes
Note 1: The actions have been dismissed as against the defendant 946827 Ontario Limited.
Note 2: Bill 59 (Automobile Insurance Rates Stability Act, 1996, S.O. 1996, c. 21) represents the third of three legislated tort-restrictive automobile insurance regimes to date. It received Royal Assent on June 27, 1996 and relates to automobile accidents occurring on or after November 1, 1996. Section 29 of that Act amended the Insurance Act by adding various provisions relating to court proceedings for accidents following its enactment, including s. 267.7(1), the provision under consideration.
Note 3: 267.5(1) Protection from liability; income loss and loss of earing capacity -- 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 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.
Note 4: 267.5(3) Protection from liability; health care expenses -- Despite any other Act and subject to subsections (4) and (6), the owner of an automobile, the occupants of an automobile any any person present at the incident are not liable in an action in Ontario for damages for expenses that have been incurred or will be incurred for health care resulting from bodily injury arising directly or indirectly from the use or operation of the automobile.
Note 5: 267.5(5) Protection from liability; non-pecuniary loss -- 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.