Monks v. ING Insurance Co. of Canada

90 O.R. (3d) 689

Court of Appeal for Ontario,

Cronk, Gillese and Watt JJ.A.

April 15, 2008

Civil procedure -- Costs -- Risk premium -- Trial judge erring in awarding risk premium in favour of successful plaintiff's counsel -- Risk premium may not be passed on to unsuccessful defendant as part of costs award under Rules of Civil Procedure -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

Damages -- Aggravated damages -- Award of aggravated damages in amount of $50,000 against statutory benefits insurer affirmed on appeal.

Insurance -- Automobile insurance -- Statutory accident benefits -- Plaintiff injured in three motor vehicle accidents and becoming incomplete quadriplegic after third accident -- Plaintiff's automobile insurer initially paying statutory accident benefits in respect of third accident but then terminating payments and seeking repayment of some payments already made -- Plaintiff suing defendant -- Trial judge not erring in finding that third accident materially contributed to plaintiff's condition -- "Material contribution" test applying to statutory accident benefits cases -- "Crumbling skull" theory not applying in accident benefit cases -- Trial judge not erring in granting declarations regarding plaintiff's ongoing entitlement to statutory accident benefits -- Declaration not inconsistent with statutory accident benefits scheme -- Trial judge properly rejecting defendant's argument that it ought not to be required to pay any benefits to plaintiff until funds from her settlement of action against another insurer arising from second accident ran out.

The plaintiff was injured in three motor vehicle accidents, one in 1993, one in 1995 and one in 1998. After the 1995 accident, she sued her then insurer, Zurich, for payment of denied accident benefits. That action was settled when Zurich agreed to pay her $1.275 million. After the third accident, the plaintiff became an incomplete quadriplegic. She was confined mostly to bed, was dependent upon medications and attendant care and was disabled from any form of gainful employment. The defendant insurer paid the plaintiff statutory accident benefits in respect of the third accident pursuant to the Statutory Accident Benefits Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96 (the "SABS") for about three and a half years, on a without prejudice basis, and then terminated further payments and sought repayment of some payments already made on the basis that the plaintiff was not "catastrophically impaired" within the meaning of the SABS. The plaintiff sued the defendant, claiming declaratory relief and an award of aggravated damages.

At trial, the defendant did not dispute that the plaintiff was catastrophically impaired, but claimed that her impairment was caused by a combination of the first and second accidents and pre-existing spinal disease. The plaintiff adduced medical evidence that, while the second accident played the most significant role in the development of her ultimate condition, the third accident was a significant factor in hastening and accelerating her symptoms and overall condition.

The trial judge found that the third accident materially contributed to the plaintiff's condition and to the deterioration or duration of her symptoms, despite [page690] the role of prior accidents and alleged pre-existing conditions. The trial judge granted declarations that the plaintiff was entitled to receive medical and rehabilitation benefits, attendant care benefits and housekeeping benefits, all on an ongoing basis. The trial judge awarded aggravated damages in the amount of $50,000 in favour of the plaintiff, and a risk premium of $75,000 in favour of her counsel. The defendant appealed.

Held, the appeal should be allowed in part.

The declarations granted by the trial judge with respect to the plaintiff's ongoing entitlement to statutory accident benefits were not inconsistent with the SABS scheme. The trial judge explicitly held that the types of ongoing benefits claimed by the plaintiff were reasonable and necessary having regard to her existing care requirements at the time of the trial. The result of that finding was that the plaintiff was entitled to the ongoing benefits subject to proof, in accordance with the SABS, of specific expenses falling within each category of benefits. By virtue of the declarations, while she would be obliged to substantiate specific expense claims, she would not be required to again establish that the expenses claimed were "reasonable and necessary". It would be for the defendant to prove that they were not. This did not override the requirements of the SABS.

The defendant failed to establish that there was any actual or apprehended bias on the part of the trial judge. The trial judge did not err in applying the "material contribution" test for causation rather than the "but for" test. The material contribution test applies to statutory accident benefits cases. In any event, the evidence relied on by the trial judge could have grounded the application of the "but for" causation test as well as the material contribution test, so that the outcome would have been the same had the "but for" test been applied. The trial judge did not err in finding that there is no room for the crumbling skull theory in accident benefits cases. Where, as here, a benefits claimant's impairment is shown on the "but for" or material contribution causation tests to have resulted from an accident in respect of which the claimant is insured, the insurer's liability for accident benefits is engaged in accordance with the provisions of the SABS. Even if the crumbling skull principle applied to accident benefits cases, its application was not triggered in this case.

The trial judge properly rejected the defendant's argument that it ought not to be required to pay any benefits to the plaintiff until the Zurich settlement moneys were exhausted. The plaintiff acknowledged that she was not entitled to double recovery, and proposed that she receive immediately the applicable accident benefits from the defendant, but that the monthly amounts to be paid to her from the proceeds of the Zurich settlement on account of medical, rehabilitation, attendant care and housekeeping expenses should be deducted from any monthly amounts to be paid to her by the defendant on account of the same category of benefits. The trial judge accepted that proposal. There was no basis for interfering with his treatment of the Zurich settlement funds. There is nothing in the language of s. 60(2) of the SABS that exempts an insurer from paying accident benefits where the insured is positioned to claim the same type of benefits from another insurer for injuries arising from a different accident.

Considering the defendant's behaviour towards the plaintiff and the impact of that behaviour on her health and well being, the award of aggravated damages was reasonable and arguably modest. [page691]

The trial judge erred in awarding the risk premium. A risk premium may not be passed on to an unsuccessful defendant as part of a costs award under the Rules of Civil Procedure.

APPEAL by the insurer from a judgment of Lalonde J., 2005 21689 (ON SC), [2005] O.J. No. 2526, [2005] O.T.C. 514 (S.C.J.); (2005), 2005 31991 (ON SC), 80 O.R. (3d) 609, [2005] O.J. No. 3749 (S.C.J.); [2005] O.J. No. 3753, [2005] O.T.C. 757 (S.C.J.); and 2005 33034 (ON SC), [2005] O.J. No. 3945, 30 C.C.L.I. (4th) 87 (S.C.J.), for the insured.

Cases referred to Athey v. Leonati, 1996 183 (SCC), [1996] 3 S.C.R. 458, [1996] S.C.J. No. 102, 140 D.L.R. (4th) 235, 203 N.R. 36, [1997] 1 W.W.R. 97, 81 B.C.A.C. 243, 31 C.C.L.T. (2d) 113, 66 A.C.W.S. (3d) 578; Coombe v. Constitution Insurance Co. (1980), 1980 1715 (ON CA), 29 O.R. (2d) 729, [1980] O.J. No. 3714, 115 D.L.R. (3d) 499, [1980] I.L.R. 1060, [1980] I.L.R. Â1-1278, 5 A.C.W.S. (2d) 135 (C.A.) [Leave to appeal to S.C.C. refused (1981), 35 N.R. 355; Monachino v. Liberty Mutual Fire Insurance Co. (2000), 2000 5686 (ON CA), 47 O.R. (3d) 481, [2000] O.J. No. 865, 183 D.L.R. (4th) 577, 131 O.A.C. 235, 20 C.C.L.I. (3d) 127, 3 M.V.R. (4th) 246, 95 A.C.W.S. (3d) 553 (C.A.), consd Other cases referred to Argirovski v. Allstate Insurance Co. of Canada, [2000] O.F.S.C.I.D. No. 56; Belair Insurance Co. v. McMichael (2007), 2007 17630 (ON SCDC), 86 O.R. (3d) 68, [2007] O.J. No. 1972, 224 O.A.C. 304, 50 C.C.L.I. (4th) 52, 50 M.V.R. (5th) 191, 157 A.C.W.S. (3d) 634 (Div. Ct.); Canada v. Solosky, 1979 9 (SCC), [1980] 1 S.C.R. 821, [1979] S.C.J. No. 130, 105 D.L.R. (3d) 745, 30 N.R. 380, 50 C.C.C. (2d) 495, 16 C.R. (3d) 294, 4 W.C.B. 177; Daly v. ING Halifax Insurance Co. (2006), 2006 42548 (ON CA), 85 O.R. (3d) 70, [2006] O.J. No. 5083, 219 O.A.C. 230, 44 C.C.L.I. (4th) 3, [2007] I.L.R. ÂI-4568, 48 M.V.R. (5th) 20, 154 A.C.W.S. (3d) 468 (C.A.); Hungary v. Horvath, [2007] O.J. No. 4077, 2007 ONCA 734, 230 O.A.C. 66, 65 Imm. L.R. (3d) 169, 75 W.C.B. (2d) 372 [Leave to appeal to S.C.C. refused [2007] S.C.C.A. No. 604]; Kennelly v. Wawanesa Mutual Insurance Co., [2000] O.F.S.C.I.D. No. 17 (Fin. Serv. Comm.); Levey v. Traders General Insurance Co., [1999] O.F.S.C.I.D. No. 35, affg [1998] O.I.C.D. No. 113; MacDonald v. Travelers Indemnity Co. of Canada (1987), 1987 4062 (ON SC), 60 O.R. (2d) 385, [1987] O.J. No. 712, 42 D.L.R. (4th) 204, [1987] I.L.R. 8575 (H.C.J.); Manufacturers Life Insurance Co. v. Ward, [2007] O.J. No. 4882, 2007 ONCA 881, 162 A.C.W.S. (3d) 867, 37 B.L.R. (4th) 26, 37 E.T.R. (3d) 1, 288 D.L.R. (4th) 733; Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham (2000), 2000 16946 (ON CA), 51 O.R. (3d) 97, [2000] O.J. No. 4428, 138 O.A.C. 201, 43 C.P.C. (5th) 65, 101 A.C.W.S. (3d) 634 (C.A.) [Leave to appeal to S.C.C. refused [2001] S.C.C.A. No. 66]; Oleiro v. Commercial Union Assurance Co., [1996] O.I.C.D. No. 152; Pisani v. Simcoe & Erie General Insurance Co., [1995] O.I.C.D. No. 201, affg [1994] O.I.C.D. No. 129; R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, [1997] S.C.J. No. 84, 151 D.L.R. (4th) 193, 218 N.R. 1, J.E. 97-1839, 161 N.S.R. (2d) 241, 1 Admin. L.R. (3d) 74, 118 C.C.C. (3d) 353, 10 C.R. (5th) 1, 35 W.C.B. (2d) 520; Resurfice Corp. v. Hanke, [2007] 1 S.C.R. 333, [2007] S.C.J. No. 7, 2007 SCC 7, 278 D.L.R. (4th) 643, 357 N.R. 175, [2007] 4 W.W.R. 1, J.E. 2007-333, 69 Alta. L.R. (4th) 1, 404 A.R. 333, [2007] R.R.A. 1, 45 C.C.L.T. (3d) 1, 153 A.C.W.S. (3d) 1012; Saliba v. Allstate Insurance Co. of Canada, [1999] O.F.S.C.I.D. No. 170; Todd v. State Farm Mutual Automobile Insurance Co., [2003] O.F.S.C.D. No. 167; Walker v. Ritchie, [2006] 2 S.C.R. 428, [2006] S.C.J. No. 45, 2006 SCC 45, 273 D.L.R. (4th) 240, 353 N.R. 265, J.E. 2006-1997, 217 O.A.C. 374, 43 C.C.L.I. (4th) 161, 43 C.C.L.T. (3d) 1, 33 C.P.C. (6th) 1, 151 A.C.W.S. (3d) 23, EYB 2006-110276; Wawanesa Mutual Insurance Co. v. Smith (Committee of) (1988), 1998 18861 (ON SC), 42 O.R. (3d) 441, [1998] O.J. No. 5058, 168 D.L.R. (4th) 750, 116 O.A.C. 62, 10 C.C.L.I. (3d) 155, [1999] I.L.R. I- 3634, 43 M.V.R. (3d) 272, 84 A.C.W.S. (3d) 556 (Div. Ct.); Z v. Dominion of Canada General Insurance Co., [2000] O.F.S.C.I.D. No. 51 Statutes referred to Insurance Act, R.S.O. 1990, c. I.8, s. 268(1) [page692] Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194 Statutory Accident Benefits Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96, ss. 14(1), (2), (4) [as am.], (4.1) [as am.], 15(1), (2), (6) [as am.], (6.1) [as am.], (8), 16(1), (2), (4), (5) [as am.], 17 [as am.], 18, 60(1), (2)

Geoffrey D.E. Adair, Q.C., for appellant. Peter J.E. Cronyn, for respondent.

The judgment of the court was delivered by

CRONK J.A.: -- Introduction

[1] After being involved in three motor vehicle accidents in the span of six years, Suzanne Monks was rendered an incomplete quadriplegic. She suffers from a multitude of serious medical problems and is confined mostly to bed. She is mainly dependent upon medications and attendant care and is disabled from her former job in the insurance industry as a rehabilitation consultant and case manager, as well as from any other form of gainful employment.

[2] ING Insurance Company of Canada ("ING") was Ms. Monks' automobile insurer when the third and final accident took place in 1998. At that time, the Statutory Accidents Benefits Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96 (the "SABS") under the Insurance Act, R.S.O. 1990 c. I.8 (the "Act") governed entitlement to no-fault first party accident benefits arising out of accidents that occurred on or after November 1, 1996.

[3] ING paid Ms. Monks statutory accident benefits in respect of the third accident for about three and one-half years, on a without prejudice basis. Thereafter, it terminated any further payments and sought repayment of some payments already made on the basis that Ms. Monks allegedly was not "catastrophically impaired" within the meaning of the SABS. Ms. Monks sued ING, claiming declaratory relief and an award of aggravated damages. [page693]

[4] Following almost two months of trial, Lalonde J. of the Superior Court of Justice declared that Ms. Monks had suffered a catastrophic impairment as a result of the third accident and that she was entitled to receive from ING the statutory accident benefits to which a catastrophically impaired person is entitled under the SABS. He also granted specific declarations regarding her entitlement to income replacement benefits, past and ongoing medical, rehabilitation and attendant care benefits, and housekeeping and home modification expenses. In addition, he awarded Ms. Monks $50,000 in aggravated damages, plus interest and costs. He also awarded her counsel a $75,000 risk premium.

[5] ING appeals on several grounds. Its main submission is that the trial judge made numerous errors of fact and law, the cumulative effect of which ING claims gave rise to a result at trial that is "so tainted that the only just remedy is a new trial". In particular, ING challenges the grant of declaratory relief relating to ongoing accident benefits and the trial judge's awards of aggravated damages and a risk premium.

[6] For the reasons that follow, I would allow the appeal in part, by setting aside the risk premium awarded by the trial judge. In all other respects, I would dismiss the appeal. Facts

[7] I do not propose to review in detail the factual background giving rise to this appeal. It is set forth in the reasons of the trial judge, which are 409 pages and 1,243 paragraphs in length. As relevant to the issues on appeal, however, the following facts should be emphasized.

The Accidents and Ms. Monks' Injuries

[8] In February 1993, Ms. Monks was involved in a relatively minor car accident in which she sustained a whiplash-type injury that resolved within two to three months. The parties agree that the consequences of this accident have little relevance to the issues on this appeal. X-rays taken after the accident revealed the onset of a degenerative disc disease in Ms. Monks' spine. The progression of the disease was not significant at that time.

[9] The second accident, which occurred on July 2, 1995, was more serious. The parties are sharply divided on the extent and severity of Ms. Monks' injuries arising from this accident.

[10] ING maintains that the injuries were severe and progressive. It claims that during the two and one-half years following [page694] the accident, Ms. Monks "experienced symptom intensification and a marked decline in her overall condition" that had a "marked and debilitating effect on her work, her household duties and her social activities". It points out that MRI studies conducted in 1996 and 1997 disclosed a narrowing of Ms. Monks' spinal canal to six millimetres (normal limits are 12 to 13 millimetres). This meant that there was no reserve room in her spinal cord and that any sudden extension of her neck could further compromise her spinal canal, leading to irreversible spinal cord injury. As a result, after the 1995 accident, Ms. Monks was advised to avoid activities that would place her at risk of further neck injuries.

[11] In contrast, while Ms. Monks acknowledges a constellation of injuries after the 1995 accident, she denies that they had the debilitating effects alleged by ING and maintains that ING's depiction of the severity of the injuries is "grossly exaggerated". For example, at trial, she testified that she continued to work after the second accident, although she reduced her weekly work hours from about 80 to approximately 40 hours. She also continued to take on complex files and, as confirmed by her supervisor, there was no decline in the quality of her work.

[12] However, there is no debate that the 1995 accident did have some negative effect on Ms. Monks' spinal condition. As a result, Ms. Monks explored the possibility of surgery to relieve the pressure on her spinal cord with Dr. Howard Lesiuk, her treating neurosurgeon. He recommended a conservative -- i.e., non-surgical -- approach, feeling that her condition would not necessarily worsen without surgery, which carried its own risks.

[13] The third accident took place on December 23, 1998. Ms. Monks' immediate injuries did not appear to be extensive. No neurological "focal deficits" were revealed in examinations of her at the hospital shortly after the accident, and she was released with a neck collar.

[14] Unfortunately, as time passed, Ms. Monks' symptoms of injury intensified and she experienced increasing pain in her neck, discomfort in her arms, limited neck and head mobility, and constant headaches. The results of a June 1999 MRI examination were viewed by Dr. Lesiuk as signifying neural tissue damage and a clear indication for surgical intervention.

[15] As a result, Ms. Monks underwent spinal decompression surgery in 1999 and again in 2001 to arrest the deterioration in her spine. Although these operations prevented her from becoming a complete quadriplegic, her condition did not improve and she eventually became an incomplete quadriplegic. [page695]

[16] Ms. Monks, who is 52 years of age, now suffers from spastic quadriparesis (weakness of the limbs), chronic pain in her neck and shoulders, gait ataxia (decreased balance, trunk strength and stability), gastrointestinal dysfunction (persistent nausea and vomiting), lack of control over her bowel and bladder functions, depression, extreme fatigue, sleep apnea and problems with concentration and memory. She requires a host of ongoing medication, rehabilitative and assistive measures, vehicular and home modifications, therapies and attendant care.

The Zurich Settlement and litigation against ING

[17] At the time of the second accident, Ms. Monks was insured under a motor vehicle policy of insurance issued by Zurich Insurance in respect of which a predecessor version of the SABS applied. After the accident, Zurich claimed that Ms. Monks' impairments were the result of her pre-existing degenerative spinal condition and it declined to pay any accident benefits. Ms. Monks sued Zurich for payment of the denied benefits.

[18] The Zurich litigation was still in progress in 1998, when the third accident occurred. As a result, ING began paying accident benefits under the SABS but claimed contribution and indemnity from Zurich and, on this basis, obtained intervenor standing in the Zurich litigation. On April 1, 2002, ING acquired Zurich's personal insurance book of business, which included the Zurich policy issued to Ms. Monks. At the end of April 2002, the Zurich litigation settled when Zurich agreed to pay the sum of $1.275 million plus costs to Ms. Monks (the "Zurich Settlement"). It appears that ING participated in at least some of the meetings leading to the Zurich Settlement. In the end, the settlement cheque was provided to Ms. Monks by ING.

[19] Zurich and Ms. Monks agreed that the proceeds of the Zurich Settlement should be allocated as follows: (i) a total of $600,000 for past income loss; (ii) a total of $190,000 for past and future medical expenses; (iii) $75,000 for home renovations; (iv) $110,000 for housekeeping expenses; and (v) $300,000 for future attendant care benefits. Ms. Monks elected to place $800,000 of the Zurich Settlement funds in an indexed structured settlement.

[20] On May 31, 2002, approximately one month after the Zurich Settlement, ING terminated any further accident benefits payments to Ms. Monks concerning the third accident, claiming that she was not catastrophically impaired within the meaning of the SABS. It also sought repayment of certain housekeeping expenses and attendant care benefits it had previously paid. [page696]

[21] Ms. Monks sued ING, seeking declarations that she was catastrophically impaired as a result of the third accident and that she was entitled to receive from ING those past and ongoing accident benefits to which a catastrophically impaired person was entitled under the SABS, including income replacement, medical, rehabilitation and attendant care benefits, and housekeeping and home modification expenses. Ms. Monks also claimed aggravated damages in the amount of $500,000.

Expert evidence

[22] The central issue at trial was causation. Contrary to its earlier position, ING did not dispute at trial that Ms. Monks was catastrophically impaired. Instead, it claimed that her impairment was caused by a combination of the first and second accidents and her pre-existing spinal disease. Ms. Monks maintained that while the second accident played a role in causing her injuries, the third accident materially contributed to her condition and had a significant negative impact on her life, employment, health, lifestyle and prospects.

[23] Numerous medical and other experts testified and the reports of some of Ms. Monks' other care providers were filed as exhibits at trial.

[24] Dr. Lesiuk and Dr. Anik Vandewaetere (Ms. Monks' family doctor) testified on behalf of Ms. Monks. On the key issue of causation, Dr. Lesiuk offered the opinion that while the second accident had "the most significant role" in the development of Ms. Monks' ultimate condition, the third accident was a significant factor in hastening and accelerating her symptoms and overall condition. In this sense, Dr. Lesiuk said, the third accident "played a lesser but still very significant role" and "contributed materially" to Ms. Monks' condition. Dr. Lesiuk also testified that, before the third accident, there was a 60 per cent chance that Ms. Monks' symptoms could stabilize barring any further injury. For her part, Dr. Vandewaetere, who treated Ms. Monks before and after the third accident, stated in a report dated September 5, 2002: "I also believe that the [third] motor vehicle accident ... was the final blow to her spinal cord and was the proverbial 'straw that broke the camel's back'."

[25] Dr. Robert Hansebout, a neurosurgeon like Dr. Lesiuk, was ING's main witness on causation. He testified that the third accident had a "very minor role" in causing Ms. Monks' disability and that virtually all her medical difficulties were attributable to compression of her spinal cord due to a natural progression of [page697] her degenerative spinal disease. Dr. Bruce Stewart, a defence neurologist, also testified that the third accident contributed "only a minor element" to Ms. Monks' disability, although in his view it did aggravate her symptoms. He suggested that 10 per cent or less of Ms. Monks' impairment could be attributed to this accident.

[26] Dr. Markus Besemann was accepted by the trial judge as an expert in physiatry. In 2001, he performed a catastrophic impairment assessment of Ms. Monks at a designated assessment centre, as provided for under the SABS. He testified that Ms. Monks met the criteria for a catastrophic impairment designation, that the second accident was principally responsible for her neurological condition, and that the significant deterioration in her spine may have occurred regardless of the third accident.

[27] In addition, Sandra Guest-Poulin was qualified at trial as a certified rehabilitation and life care planning expert. At the request of Ms. Monks' counsel, she had prepared reports concerning Ms. Monks' actual care requirements for the years 2002 to 2004 and, based on Ms. Monks' care requirements at the time of trial, for 2005.

The trial judgment

[28] On the critical issue of causation, the trial judge accepted the evidence of Drs. Lesiuk and Vandewaetere and rejected the opinions of Drs. Hansebout, Stewart and Besemann. He held that causation was established because the third accident materially contributed to Ms. Monks' condition and to the deterioration or duration of her symptoms, "despite the role of prior accidents and alleged pre-existing conditions" (at paras. 846 and 863).

[29] By judgment dated June 15, September 7, September 8 and September 12, 2005, the trial judge granted the declaratory relief sought by Ms. Monks, including specific declarations that she was entitled to receive from ING:

(i) medical and rehabilitation benefits "as incurred" on an ongoing basis to meet her "medical and rehabilitation needs as set out in the spreadsheets of Sandra Guest-Poulin", subject to terms fixed by the trial judge regarding the Zurich Settlement;

(ii) attendant care benefits on an ongoing basis, also as set out in Ms. Guest-Poulin's spreadsheets and subject to terms fixed by the trial judge regarding the Zurich Settlement; and [page698]

(iii) housekeeping benefits on an ongoing basis in accordance with terms fixed by the trial judge regarding the Zurich Settlement. [See Note 1 below] As I have mentioned, the trial judge also awarded aggravated damages in the amount of $50,000 in favour of Ms. Monks, and a risk premium of $75,000 in favour of her counsel. Issues

[30] There are six issues on appeal:

(1) Did the trial judge err by granting declaratory relief con-cerning ongoing accident benefits, contrary to the SABS provisions?

(2) Do the trial judge's reasons raise actual or apprehended bias against ING?

(3) Did the trial judge err in his causation analysis by his treatment of the principles articulated in Athey v. Leonati, 1996 183 (SCC), [1996] 3 S.C.R. 458, [1996] S.C.J. No. 102?

(4) Did the trial judge err in his treatment of the Zurich Settlement funds?

(5) Did the trial judge err by awarding aggravated damages against ING?

(6) Did the trial judge err by awarding a risk premium of $75,000? [See Note 2 below] Analysis

The declaratory relief issue

[31] ING submits that the declarations concerning ongoing benefits are inconsistent with the SABS accident benefits regime and, therefore, that they are contrary to law because: (i) they ignore the SABS requirements for the payment of accident benefits, thereby undermining an insurer's ability to challenge a benefit claim under the SABS; (ii) they fail to recognize that an insurer's liability for SABS benefits arises only in respect of expenses "incurred" by an insured; and (iii) they were improperly [page699] based on Ms. Guest-Poulin's report and spreadsheets. [See Note 3 below] I would reject these submissions for several reasons.

[32] First, this challenge to the declarations is inconsistent with ING's final position at trial regarding the nature of the declaratory relief potentially available to Ms. Monks in respect of ongoing benefits.

[33] On the second day of trial, ING moved for an order that evidence concerning Ms. Monks' past and future care needs was inadmissible, in part on the basis that the trial judge allegedly had no jurisdiction to order the payment of expenses that had not been "incurred" or to make "an Order into the future relating to accident benefits". In a ruling dated February 1, 2005, the trial judge dismissed ING's motion. He held, "I need to know what current benefits were paid in the past, what benefits are currently being paid, and how such benefits will be projected into the future." Thereafter, extensive evidence was led at trial concerning Ms. Monks' past care expenditures, her care requirements at the time of trial and her projected future care requirements.

[34] At the end of trial, ING conceded the trial judge's jurisdiction to grant declarations regarding ongoing accident benefits, so long as the declarations did not fix the quantum of the benefits in question. In its final written argument, ING stated: "ING acknowledges that an order for declaratory relief for entitlement can be granted however the order cannot incorporate a quantification of the benefit into the future." Similar statements were made in other parts of ING's final argument.

[35] The trial judge accepted this argument. The declarations in issue do not include any quantification of the amount of ongoing benefits.

[36] Second, contrary to ING's submissions, the jurisprudence indicates that declaratory relief regarding ongoing benefits under [page700] a statutory no-fault accident benefits regime like the SABS is available in a proper case.

[37] ING relies on the decision of this court in Monachino v. Liberty Mutual Fire Insurance Co. (2000), 2000 5686 (ON CA), 47 O.R. (3d) 481, [2000] O.J. No. 865 (C.A.). There, a plaintiff with brain damage sought a declaration regarding his entitlement to receive ongoing weekly income and future care benefits under a predecessor schedule to the SABS in accordance with a proposed long-term care program under a future care plan prepared by a psychologist. Citing the seminal case of Canada v. Solosky, 1979 9 (SCC), [1980] 1 S.C.R. 821, [1979] S.C.J. No. 130, Finlayson J.A. noted in Monachino, at para. 20, the two criteria that must be satisfied in order to grant declaratory relief: "[T]he case before the court must be genuine, not moot or hypothetical; and the declaration must be capable of having some practical effect in resolving the issues the case raises."

[38] On the facts in Monachino, Finlayson J.A. held that it was premature to impose obligations arising from the future care plan in question because it met neither of these requirements. In addition, there was no evidence before the court that the benefits found to be appropriate for the injured plaintiff had not been paid without the intervention of the court (at para. 24). Thus, although the requested declaration was not available at the time sought in Monachino, this court implicitly recognized that declaratory relief in respect of ongoing statutory accident benefits may be granted on a sufficient evidentiary record where the criteria for declaratory relief identified in Solosky are met.

[39] In defence of the declarations granted by the trial judge, Ms. Monks relies on the decision of this court in Coombe v. Constitution Insurance Co. (1980), 1980 1715 (ON CA), 29 O.R. (2d) 729, [1980] O.J. No. 3714 (C.A.), leave to appeal to S.C.C. refused (1981), 35 N.R. 355. In Coombe, a declaratory order had been made that a fully disabled claimant was entitled to indefinite income replacement benefits under a predecessor schedule to the SABS. Justice Wilson, writing for a majority of this court, recognized the validity of the declaration for so long as the insured remained permanently and totally disabled (pp. 735-36 O.R.):

It follows from this analysis of the statute and of [the declaration made by the court] that the insurer cuts off weekly benefits to the insured at its own risk. It is not, in my view, for the plaintiff to establish that he continues week by week to be permanently and totally disabled. It is for the defendant to establish that he has ceased to be so and that [the declaratory order] is therefore no longer binding on it ... It is, in my view, unthinkable that an insured be put under an ongoing burden to establish [page701] his permanent and total disability and I cannot think that the Legislature could have intended it. These comments are apposite here.

[40] In my view, this case is more closely analogous to Coombe than it is to Monachino. In contrast to Monachino, the declarations in issue here are neither hypothetical nor moot. Nor are they remote to the issues in dispute. The nature of ING's defences to Ms. Monks' benefits claims made her entitlement to past and ongoing benefits one of the critical issues in dispute. Furthermore, there is no suggestion that the disputed ongoing benefits were or would be paid without the intervention of the court. From May 2002 onwards, ING's position that no further benefits would be paid was clear and unequivocal.

[41] Third, ING argues that a declaration of rights and obligations is appropriate only to the extent that it co-exists with and does not ignore applicable legislation. It submits that the impugned declarations in this case are unlawful because they allegedly "sweep aside" the SABS provisions for the determination of benefits claims. I would not accept this contention.

[42] In my opinion, the impugned declarations -- properly read -- co-exist with the scheme envisaged by the SABS for the determination of accident benefits and no inconsistency between the declarations and the SABS arises.

[43] The trial judge explicitly held that the types of ongoing benefits claimed by Ms. Monks were reasonable and necessary having regard to her existing care requirements at the time of trial. The result of this finding, which underpins the challenged declarations, is that Ms. Monks is entitled to the ongoing benefits in question subject to proof, in accordance with the SABS, of specific expenses falling within each category of benefits. By virtue of the declarations, while she will be obliged to substantiate specific expense claims, Ms. Monks will not be required to again establish that the expenses claimed are "reasonable and necessary". It will be for ING to prove, if so advised, that they are not. As the trial judge observed at para. 18 of his ruling at the outset of trial, mentioned above, "Once I make a declaration, it will mean that the benefits are ongoing only, and the plaintiff will enjoy such benefits until the defendant is able to prove she is not entitled to future benefits." This is entirely consistent with the approach approved by this court in Coombe.

[44] This does not override the requirements of the SABS. Nor do I understand Ms. Monks to argue to the contrary. Indeed, she acknowledged before this court that the ongoing benefits declarations do not relieve her from her obligations to submit the forms [page702] and other documents contemplated by the SABS in respect of a particular benefit claim. [See Note 4 below] I agree. See Daly v. ING Halifax Insurance Co. (2006), 2006 42548 (ON CA), 85 O.R. (3d) 70, [2006] O.J. No. 5083 (C.A.). At the same time, however, as Ms. Monks stated in her factum: "But in the same manner as in Coombe above, Ms. Monks should not be put to an 'ongoing burden' to prove to ING that [the identified ongoing benefits] continue to be 'reasonable and necessary'." Again, I agree.

[45] Similarly, there is no suggestion here that the effect of the challenged declarations is to bypass other mandatory provisions of the SABS. For example, on a plain reading, the declarations do not purport to supercede those sections of the SABS that establish the maximum rate or amount of medical, rehabilitation and attendant care expenses (see for example, ss. 14(4), 14(4.1), 15(6), 15(6.1), 15(8) and 16(5) of the SABS) or that fix the duration of benefits payable under the SABS (s. 18).

[46] Fourth, ING's submission that the ongoing benefits declarations ignore the SABS provisions that contemplate the payment of benefits only for "incurred" expenses must also fail.

[47] There is no dispute that one of the pre-conditions to the receipt of accident benefits under the SABS is that the cost or expense in question be "incurred". For example, ss. 14(2) and 16(2) of the SABS provide that medical and attendant care benefits must pay for "all reasonable and necessary expenses incurred by or on behalf of the injured person as a result of the accident" (emphasis added) and s. 15(2) states that a rehabilitation benefit must pay for "all reasonable and necessary measures undertaken" by the insured person (emphasis added.) See also Monachino, at para. 10. Rather, the issue in contention is the meaning to be accorded to the word "incurred" as used in the SABS.

[48] ING argues that the word "incurred" as employed in the SABS requires a legal liability for payment or a certainty that the claimed expense will arise. This is said to preclude, for example, the declaratory relief granted with respect to home modifications because Ms. Monks can choose whether or not to renovate her home.

[49] The courts, however, have rejected a narrow construction of the word "incurred" as used in accident benefits schedules. In Belair Insurance Co. v. McMichael (2007), 2007 17630 (ON SCDC), 86 O.R. (3d) 68, [2007] O.J. No. 1972 (Div. Ct.), at para. 24, [page703] when considering the meaning of "incurred" in the context of the attendant care provisions of the SABS, the Divisional Court cited with approval the following statement in Wawanesa Mutual Insurance Co. v. Smith (Committee of) (1998), 1998 18861 (ON SC), 42 O.R. (3d) 441, [1998] O.J. No. 5058 (Div. Ct.), at paras. 38-39:

A purposive and remedial interpretation requires that the legislation be read so as not to require an insured person to finance, or to pledge her credit, in order to secure the very benefits for which she is insured. . . . . .

I conclude that an insured . . . need not actually receive the items or services or spend the money or become legally obliged to do so. It is sufficient if the reasonable necessity of the service or item and the amount of the expenditure are determined with certainty before the end of [the specified time limit under the applicable benefits schedule]. (Emphasis added) See also MacDonald v. Travelers Indemnity Co. of Canada (1987), 1987 4062 (ON SC), 60 O.R. (2d) 385, [1987] O.J. No. 712 (H.C.J.), at paras. 244-45.

[50] A similar approach to the interpretation of "incurred" under predecessor schedules to the SABS has also been adopted by arbitrators involved in the resolution of disputes about the payment of accident benefits: see Kennelly v. Wawanesa Mutual Insurance Co., [2000] O.F.S.C.I.D. No. 17 (Fin. Serv. Comm.), at paras. 58-63, cited in Belair, supra, at para. 25.

[51] This interpretive approach is consistent with the principles applicable to the construction of insurance coverage provisions. It is well-established that insurance coverage provisions are to be interpreted broadly, while coverage exclusions or restrictions are to be construed narrowly, in favour of the insured. At the time of Ms. Monks' third accident, the SABS was deemed to be incorporated in every standard automobile insurance policy in Ontario by virtue of s. 268(1) of the Act. Consequently, to the extent that the word "incurred" as used in the SABS restricts the coverage available to Ms. Monks under her ING policy, it must be assigned a narrow meaning.

[52] Moreover, a broad interpretation of the word "incurred" under the SABS is consistent with the policy objective that accident victims promptly receive the statutory accident benefits to which they are entitled under the Act and their automobile insurance policies. It also prevents an insurer from benefitting from an insured's lack of financial resources. As Wilson J.A. observed in Coombe, at p. 736 O.R.: "The legislation was designed for the protection of the insured and should be construed in the way most favourable to him." [page704]

[53] Finally, I turn to the last prong of ING's attack on the declarations in issue. This concerns the trial judge's directions that ING pay certain ongoing benefits "as set out in the spreadsheets of Sandra Guest-Poulin". ING argues that these directions are improper because Ms. Guest-Poulin was not personally qualified to provide evidence of Ms. Monks' future needs and her report and spreadsheets were tendered at trial only on the issue of aggravated damages. I would not give effect to this argument.

[54] Ms. Guest-Poulin's expertise as a life care planning and rehabilitation expert was not challenged by ING at trial. Nor does it appear that there was any suggestion that her spreadsheets should be excluded from evidence on the ground that she was not qualified to provide evidence of Ms. Monks' current and future needs, notwithstanding that ING objected to their admission on other grounds.

[55] In addition, Ms. Guest-Poulin testified that the information contained in her report and spreadsheets concerning Ms. Monks' care requirements was provided by Ms. Monks, who is an experienced registered nurse and rehabilitation consultant in her own right, and by Ms. Monks' medical and other care providers, who testified at trial and were subject to cross- examination. According to Ms. Guest-Poulin, her report and spreadsheets were a compilation of information from these sources designed to serve as a "tool" to assist the court in understanding Ms. Monks' care requirements.

[56] In this context, Ms. Guest-Poulin's report and accompanying spreadsheets identified the categories or types of services that Ms. Monks required during the period 2002-04 and at the time of trial in 2005, given her condition and care requirements as determined by her professional caregivers. The spreadsheets also estimated the cost of such services, if undertaken in the future. In particular, Ms. Guest-Poulin's Life Care Plan 2005 detailed the types of projected services that Ms. Monks would require (based on her existing needs), the purpose of each service, the health care professional or other service provider who recommended the service in question, and the estimated cost and source of funding for each service identified.

[57] During his exchanges with counsel regarding the admissibility of this evidence, the trial judge indicated, as he did in his ruling at the outset of trial concerning the admission of "needs" evidence, that he was concerned strictly with Ms. Monks' existing rather than potential needs. He said, "I want to look at current [needs], I don't want to go beyond current . . . I can make my order based on the current needs . . .". [page705]

[58] The transcript reveals that Ms. Guest-Poulin's spreadsheets were ultimately admitted for two purposes: to support Ms. Monks' aggravated damages claim and to meet ING's assertion -- discussed later in these reasons -- that ING should not be required to pay any further benefits until all the Zurich Settlement funds had first been exhausted. The spreadsheets were intended, therefore, at least in part, to establish that the services in question were reasonable and necessary notwithstanding ING's position to the contrary and the services already being provided by virtue of the Zurich Settlement.

[59] The trial judge's reasons indicate that he understood these purposes of Ms. Guest-Poulin's report and spreadsheets. As I have said, he explicitly stated that this evidence was relevant to Ms. Monks' "current" needs and elaborated: "because for the most part they are recurring and known, they fit within the definition of 'incurred'" (at para. 1125). He then referred to his earlier ruling regarding the admissibility of evidence about Ms. Monks' past and future needs, which I have mentioned above, and in a clear reference to Coombe, supra, stated (at paras. 1125-26):

I also decided that the material that is being supplied to Ms. Monks, to meet such needs, is reasonable and necessary. The plaintiff should definitely not be obliged to come to court every other month for a determination of what is reasonable and necessary. If Ms. Monks' needs do change and the material required to look after the needs also changes, then a court application must be made.

I declare that the defendant is obliged to meet Ms. Monks' needs on an ongoing basis as, presently, they are recurring needs. The defendant has only to consult the spreadsheets found in Ms. Guest-Poulin's report to know what is to be provided, on a monthly basis.

[60] As I read the trial judge's reasons, therefore, he had regard to Ms. Guest-Poulin's report and accompanying spreadsheets to determine the categories of services that Ms. Monks would require going forward, based on the evidence of her existing care requirements at the time of trial. He recognized that these requirements might change, in which event ING would be free to challenge Ms. Monks' entitlement to the services in question. Importantly, he did not rely on Ms. Guest-Poulin's costs estimates for the purpose of the declarations that he granted.

[61] Understandably, the parties' final written submissions at trial specifically addressed the categories of expenditures that were in dispute. ING was thus provided with a full opportunity to contest, and did contest, the asserted necessity and reasonableness of the services claimed by Ms. Monks. In addition, ING's [page706] trial counsel appears to have acknowledged at one point during the trial that Ms. Guest- Poulin's evidence could ground a declaration of Ms. Monks' entitlement to the services enumerated in Ms. Guest-Poulin's report and spreadsheets. She said:

There may be some which you will make your ruling on in terms of whether or not you feel that it's something that she is entitled to. And then, once you've made your ruling on that particular aspect of it, that's decided one way or another in terms of any future claim for that particular item.

[62] In all these circumstances, I do not agree that the trial judge erred in his treatment of Ms. Guest-Poulin's report and spreadsheets. The trial judge relied on this evidence, together with the evidence of Ms. Monks' caregivers and Ms. Monks herself, to determine her benefits requirements current to the time of trial and, based on them, her anticipated ongoing benefits requirements. He crafted the declarations in question to ensure that the quantum of any particular future benefits claim remained to be determined in accordance with the SABS and to preserve ING's right to seek to establish that a benefit claimed in the future was no longer reasonable and necessary. I see nothing objectionable in this approach.

[63] I end my consideration of this ground of appeal where I began. As I have indicated, ING argued at the end of trial that if a declaration was granted regarding Ms. Monks' entitlement to ongoing benefits, the relief allowed should be limited to a declaration of entitlement, without any determination of the amount of the benefits in question. That is precisely what the trial judge did.

The judicial bias issue

[64] ING's assertion of judicial bias is focused on the trial judge's reasons. There is no suggestion that the trial judge's conduct deprived ING of adjudicative fairness during the trial itself. ING's four complaints in support of its bias claim are succinctly described in para. 65 of its factum on appeal:

ING respectfully submits that a combination of errors and comments exhibiting bias when taken in totality ought to result in a new trial. The learned trial judge made a number of material errors in his understanding of the evidence; he failed to grasp the theory of the defence; His Honour made comments exhibiting a bias against ING, its witnesses and its counsel and his treatment of the evidence of Sandra Guest- Poulin resulted in a denial of natural justice. ING made similar oral submissions before this court.

[65] ING faces a significant hurdle to succeed on this ground of appeal. The threshold for a finding of actual or apprehended [page707] judicial bias is a high one, "requiring cogent and substantial evidence that the judge has done something giving rise to a reasonable apprehension of bias": Hungary v. Horvath, 2007 ONCA 738, [2007] O.J. No. 4077, 230 O.A.C. 66 (C.A.), at para. 10, leave to appeal to S.C.C. refused [2007] S.C.C.A. No. 604; Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham (2000), 2000 16946 (ON CA), 51 O.R. (3d) 97, [2000] O.J. No. 4428 (C.A.), at para. 131, leave to appeal to S.C.C. refused [2001] S.C.C.A. No. 66; and R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, [1997] S.C.J. No. 84, 118 C.C.C. (3d) 353. The courts presume that judges will carry out their oath of office: Marchand, at para. 131.

[66] ING's first complaint is that the trial judge "made a number of material errors in his understanding of the evidence". Having reviewed the findings said to reflect these legal errors and the evidence relevant to those findings, it is my view that they are either not errors at all or they are so minor when viewed in the context of the critical issues at this complex and lengthy trial as to be inconsequential.

[67] Two examples suffice to make this point. Of the factual errors alleged by ING, the most serious involve the trial judge's finding concerning Dr. Besemann's neutrality in the conduct of his assessment of Ms. Monks and his finding that Drs. Hansebout and Besemann testified at trial on the key issue of causation beyond the bounds of the opinions detailed in their reports.

[68] First, Dr. Besemann. The trial judge stated that Dr. Besemann acknowledged that his neutrality had been compromised due to his failure to adhere to impartiality guidelines applicable to designated assessment centre assessors. During a searching cross-examination at trial, Dr. Besemann acknowledged his awareness of and support for the neutrality provisions of the guidelines, including the requirement that communications with assessors -- like Dr. Besemann -- involve all parties to an assessment. But he also confirmed that he had met with ING's trial counsel to prepare for trial, without the knowledge or involvement of Ms. Monks' counsel. Further, he was confronted at trial with the fact that, unbeknownst to Ms. Monks' counsel, he had received documentation from ING's counsel after the date of his assessment that included "insurance" and "legal" files.

[69] Given this evidence, it was open to the trial judge to conclude that Dr. Besemann's testimony on cross-examination included an implicit acknowledgment that the neutrality provisions of the guidelines were breached. Even if the trial judge erred in his appreciation of whether Dr. Besemann actually acknowledged such a breach, this error is of little moment. The [page708] admissions made by Dr. Besemann, objectively viewed, supported the trial judge's finding that such a breach occurred.

[70] Second, the suggestion of "over-reaching" by Drs. Hansebout and Besemann. The trial judge held that Drs. Hansebout's and Besemann's opinions on causation as offered at trial went beyond those expressed by them in their written reports. I see no palpable, let alone overriding, error by the trial judge in respect of this factual finding.

[71] With respect to Dr. Hansebout, the trial judge stated that he gave no indication in his report that Ms. Monks required corrective spinal surgery before the third accident, although he offered the opinion at trial that surgery was necessary before the third accident due to the natural progression of Ms. Monks' spinal disease. ING submits that this reflects a critical misapprehension by the trial judge of Dr. Hansebout's evidence.

[72] I disagree. On more than one occasion during his trial testimony, Dr. Hansebout said that Ms. Monks required surgery before the third accident. In its final written argument at trial, ING expressly relied on this evidence. The trial judge was correct that this opinion was not clearly expressed in Dr. Hansebout's written report. Instead, Dr. Hansebout stated in his report that Ms. Monks "would have required surgery even had she not been involved in the 1998 motor vehicle accident". This language left open the important issue of when the surgery would have been necessary. To this extent, therefore, Dr. Hansebout "went beyond" the opinions expressed in his report when testifying at trial.

[73] Similarly, the trial judge noted that Dr. Besemann expressed uncertainty in his report about whether Ms. Monks had sustained a spinal cord injury in the third accident. However, until objection by Ms. Monks' counsel, Dr. Besemann attempted to testify at trial that he was certain that there had been no spinal cord injury occasioned by that accident. Again, the trial judge's finding was grounded in the evidence and events at trial.

[74] Moreover, the trial judge's findings concerning the evidence of Drs. Hansebout and Besemann must be placed in context. The record before this court supports the trial judge's observation that ING's trial counsel led "many new points at trial" and that Drs. Hansebout's and Besemann's trial testimony, at least in some respects, went beyond the matters outlined in their reports. More importantly, apart from this factor, the trial judge outlined many other considerations concerning these witnesses' evidence that amply justified his rejection of their opinions on causation. [page709]

[75] ING's second complaint concerning judicial bias involves the contention that the trial judge misapprehended the defence theory on causation. ING submits that the trial judge erred by concluding that the defence theory turned on the premise that Ms. Monks required corrective spinal surgery prior to the third accident when, in fact, it was ING's position that Ms. Monks would have required surgery at some point, regardless of the occurrence of the third accident.

[76] Again, I disagree. In his reasons, the trial judge quoted extensively, and verbatim, from ING's final written argument at trial on causation. That argument clearly states that ING's primary position on causation was that Ms. Monks needed surgery prior to the third accident. Only in the alternative did ING argue that Ms. Monks' condition would have progressed to the point of necessitating corrective surgery regardless of the third accident. The trial judge's reasons reveal that he was mindful of both planks of the defence theory on causation. His rejection of ING's position on the timing of the need for surgery cannot ground a claim of judicial bias.

[77] The trial judge's reasons also include a detailed review of the evidence concerning the timing of Ms. Monks' need for surgery. Dr. Hansebout's and Dr. Stewart's opinions on this issue directly conflicted with that of Dr. Lesiuk. The timing of the need for surgery was one of the key causation-related issues at trial. In the end, as he was entitled to do, the trial judge simply preferred Dr. Lesiuk's opinion that, before the third accident, Ms. Monks was in the 60 per cent category of patients who could remain stable if nothing further untoward occurred and that the clear need for surgery did not arise until after the third accident.

[78] ING's third complaint is that certain of the trial judge's comments and findings about ING's conduct in responding to Ms. Monks' benefits claims and its conduct of the trial reflect judicial bias. I am unable to accept this submission.

[79] The challenged remarks and findings by the trial judge fall into three categories: (i) comments that quote directly from ING's final trial argument; (ii) observations and findings concerning the evidence of the defence experts and Dr. Besemann; and (iii) comments and findings that form part of the trial judge's analysis of Ms. Monks' aggravated damages claim. I see nothing inappropriate in the challenged references in any of these categories.

[80] There can be no serious objection to the trial judge's references to ING's final written argument at trial. The fact that the trial judge concluded that parts of that argument were not [page710] supported by the evidence, or were otherwise to be rejected, does not render his mention of them improper. As I have already said, his disagreement with the submissions advanced by ING does not give rise to a reasonable apprehension of bias.

[81] I recognize that the trial judge used blunt and sometimes harsh language to express some of his findings about the evidence of the defence experts and Dr. Besemann and ING's conduct both prior to and at trial. But this was a lengthy, complex and hard-fought trial that involved conflicting expert evidence on the core issue of causation. In this context, the trial judge is to be afforded some latitude on the manner in which his findings were expressed. This is particularly so, in my view, where -- as here -- many of the challenged comments and findings concern the trial judge's evaluation of the credibility and impartiality of the expert witnesses, the usefulness of their evidence to his decision-making process, and his appreciation of the evidence as a whole. These are matters squarely within the trial judge's domain.

[82] Moreover, some of the impugned comments and findings relate to the adequacy, timeliness and reasonableness of ING's response to Ms. Monks' benefits claims and its decisions to terminate benefits payments and to seek partial reimbursement of benefits already paid. These were the issues underlying Ms. Monks' allegations that ING's conduct constituted a wanton disregard of her rights and a breach by ING of its duty of good faith, thereby justifying an award of aggravated damages. To the extent that the trial judge's comments and findings on these issues reveal a negative view of ING's conduct, his criticisms were reasonably supported by the record. They do not constitute judicial bias but, rather, his assessment of the facts supporting an aggravated damages award.

[83] Finally, ING complains that the trial judge's treatment of Ms. Guest-Poulin's report and spreadsheets supports a claim of judicial bias. As I have said, it is my view that the trial judge's use of this evidence was permissible in the circumstances of this case.

[84] Overall, I am satisfied that the passages from the trial judge's reasons relied on by ING, viewed individually or in combination, do not amount to judicial bias. Given the issues in play and the positions of the parties on those issues at trial, I am of the view that a reasonably informed person, reading the trial judge's reasons as a whole in light of the trial record, would conclude that the trial judge demonstrated no actual or apprehended bias. I would therefore reject this ground of appeal. [page711]

The Athey v. Leonati issue

[85] Athey v. Leonati, supra, is the leading Canadian case on causation in tort law. In Athey, Major J. reiterated the following well-established principles:

(1) The general, but not conclusive, test for proof of causation is the "but for" test, which requires a plaintiff to show that his or her injury would not have occurred but for the negligence of the defendant (para. 14).

(2) In certain circumstances, where the "but for" test is un-workable, causation may also be established where it is demonstrated that the defendant's negligence "materially contributed" to the occurrence of the tort victim's injury. It is not necessary for the plaintiff to establish that the defendant's negligence was the sole cause of the injury (paras. 15 and 17).

(3) Liability will be imposed on a defendant for injuries caused or materially contributed to by his or her negligence. That liability is not reduced by the existence of other non-tortious contributing causes (paras. 22 and 23). (Citations omitted)

[86] More recently, in Resurfice Corp. v. Hanke, 2007 SCC 7, [2007] 1 S.C.R. 333, [2007] S.C.J. No. 7, the Supreme Court of Canada clarified the exceptions to the "but for" causation test and the circum-stances in which the material contribution test may be applied. I do not understand Resurfice to alter the basic causation principles that I have described.

[87] Counsel for Ms. Monks argued at trial that causation would be established in respect of the third accident if Ms. Monks demonstrated, on a balance of probabilities, that this accident contributed to her injuries in a manner that was outside the de minimis range. The trial judge agreed and found that the material contribution test for causation was satisfied despite Ms. Monks' two prior accidents and her pre-existing spinal condition. ING acknowledged in its factum on appeal that "the record discloses a reasonable body of evidence that would permit a properly instructed trier of fact to so conclude". However, it submits that the trial judge erred in his causation analysis by applying the material contribution test to determine causation.

[88] I disagree. ING's effort to now disclaim the application of the material contribution test in accident benefits cases is [page712] completely inconsistent with its position at trial on causation. In ING's final written argument at trial, it submitted:

The case law relating to accident benefit claims is clear -- that the principles enunciated in the Supreme Court of Canada decision of Athey are equally applicable in the context of an accident benefit claim.

[89] Later in its written argument, ING stated even more bluntly: "[T]he Plaintiff must meet the burden of establishing that the [third] accident significantly contributed to the severity or duration of the Plaintiff's symptoms" (emphasis in original) and, further: "The test incorporates a requirement that the Plaintiff prove that the contribution of the [third] accident is significant or material to the development or continuation of the disability claimed" (emphasis in original; citations omitted).

[90] Having thus invoked and urged the adoption of the material contribution test, ING can hardly be heard to complain because the trial judge accepted its submission on this issue.

[91] Moreover, the trial judge's application of the material contribution test conforms with a long line of arbitral decisions in which this test has been utilized to resolve causation issues in accident benefits disputes, including in cases where the benefits claimant suffered from a pre-existing condition prior to the accident in question. [See Note 5 below] Before this court, ING offers no authority to support its assertion that the material contribution test does not apply to statutory accident benefits cases.

[92] In any event, I agree with Ms. Monks' submission that the evidence of Dr. Lesiuk could have grounded the application of the "but for" causation test as well as the material contribution test and that, if the former test had been applied, the outcome would have been the same. Dr. Lesiuk, for example, testified that: "[T]he ultimate outcome of the things that happened to her had the potential to be different had this accident not occurred. And the outcome of everything that happened if the accident had not occurred could not be reliably predicted to be the same." I am satisfied that the evidence and the trial [page713] judge's reasoning and findings support his conclusions on the basis of a "but for" analysis.

[93] ING also submits that the trial judge erred in his causation analysis by concluding that the "crumbling skull" principle discussed in Athey has no application to accident benefits cases. This principle recognizes that a defendant tortfeasor need not put a tort victim in a position better than his or her original position. As Major J. put it in Athey, at para. 35:

The defendant is liable for the injuries caused, even if they are extreme, but need not compensate the plaintiff for any debilitating effects of [a] pre-existing condition which the plaintiff would have experienced anyway. The defendant is liable for the additional damage but not the pre-existing damage.

[94] At trial, ING argued that this was "a classic, unequivocal case of a crumbling skull Plaintiff" and, therefore, that ING need only pay "for those expenses for those injuries caused by our accident, being a cervical strain", which expenses had already been paid. The trial judge rejected this argument, holding at para. 852: "[T]here is no room for the crumbling skull theory in accident benefit cases."

[95] I agree. There is no indication in the SABS of a legislative intent that an insurer's liability for the accident benefits in issue in this case should be subject to discount for apportionment of causation due to an insured's pre-existing injuries caused by an unrelated accident. The SABS simply states, in clear and unambiguous language, that an insurer "shall pay an insured person who sustains an impairment as a result of an accident" medical, rehabilitation and attendant care benefits (ss. 14(1), 15(1) and 16(1)).

[96] Accordingly, where -- as here -- a benefits claimant's impairment is shown on the "but for" or material contribution causation tests to have resulted from an accident in respect of which the claimant is insured, the insurer's liability for accident benefits is engaged in accordance with the provisions of the SABS.

[97] Even if the crumbling skull principle could be said to apply to accident benefits cases, its application would not be triggered here. As I have said, the trial judge accepted Dr. Lesiuk's evidence that, prior to the third accident, there was a 60 per cent chance that Ms. Monks' condition could have remained stable. There was no finding by the trial judge that the incomplete quadriplegia to which Ms. Monks eventually succumbed would have occurred at some point without the third accident, which would have engaged the crumbling skull principle. See Athey, at paras. 36 and 48. [page714]

The Zurich Settlement funds issue

[98] Section 60(2) of the SABS states:

Payment of a medical, rehabilitation or attendant care benefit or a benefit under Part VI is not required for that portion of an expense for which payment is reasonably available to the insured person under any insurance plan or law or under any other plan or law. (Emphasis added)

[99] In reliance on s. 60(2), ING argues, as it did at trial, that: (i) it ought not to be required to pay any benefits to Ms. Monks until the Zurich Settlement moneys are exhausted in full; (ii) the maximum funds available to Ms. Monks are equal to a single policy limit for the accident benefit in question; and (iii) it ought to receive "credit" for the whole amount of the Zurich Settlement funds because these proceeds were "reasonably available" to Ms. Monks within the meaning of s. 60(2) of the SABS.

[100] At trial, Ms. Monks responsibly acknowledged that she was not entitled to double recovery or a windfall in respect of the accident benefits that she claimed. At the same time, it was her position that she was entitled to receive immediately the applicable accident benefits under her ING policy, for which she had paid a separate premium, without being required to first exhaust the Zurich Settlement funds. She proposed, therefore, that the monthly amounts to be paid to her from the proceeds of the Zurich Settlement on account of medical, rehabilitation, attendant care and housekeeping expenses should be deducted from any monthly amounts to be paid to her by ING in connection with the third accident, on account of the same categories of benefits. She further proposed that the funds she received under the Zurich Settlement for home renovations ($75,000) be used to either renovate her home or purchase another and that the balance of the funds required be funded by ING.

[101] The trial judge accepted these proposals, stating (at para. 890):

In my opinion, there does not seem to be anything unreasonable or incorrect in the plaintiff's plan to account for the Zurich settlement funds received. The plan is reasonable in that it takes care to ensure that the plaintiff does not benefit from any windfall or double-recovery, while safeguarding Ms. Monks' right to adequate compensation under the statutory accident benefit scheme.

[102] The trial judge, therefore, sought to avoid any "double recovery" by Ms. Monks. He also held that: (i) Ms. Monks was not required to wait until the funds under the Zurich Settlement were exhausted before receiving benefits payments from ING [page715] (para. 1112); (ii) s. 60(2) of the SABS did not apply in this case (para. 1115); and (iii) Ms. Monks was entitled to the coverage afforded by both the Zurich and ING policies: "Both insurers have to look after medical, rehabilitation and attendant care needs, irrespective of the fact that Ms. Monks may or may not have money of her own" (para. 1106).

[103] In the result, the declarations granted by the trial judge concerning ongoing medical, rehabilitation and attendant care benefits require that ING's payments be "net of collateral benefits and what the Plaintiff receives from the Zurich settlement funds". Similarly, in respect of ongoing housekeeping expenses, the declaration granted requires payment by ING "to the extent such expenses exceed the weekly amount received from the Zurich settlement funds". The $75,000 paid to Ms. Monks under the Zurich Settlement for home renovations was also deducted from the amount that ING was ordered to pay in respect of this item.

[104] I see no basis for interference with the trial judge's treatment of the Zurich Settlement funds. In my view, his acceptance of Ms. Monks' proposals was reasonable and his interpretation of s. 60(2) of the SABS was correct.

[105] There is nothing in the language of s. 60(2) of the SABS that exempts an insurer from paying accident benefits where the insured is positioned to claim the same type of benefits from another insurer for injuries arising from a different accident. Section 60(2) contemplates that an insurer need not pay that portion of "an expense" for which payment is "reasonably available" under another insurance plan. This language is designed to prevent recovery from two insurers for the same expense.

[106] However, s. 60(2) makes no mention of an insured's pre- existing impairment arising from a prior accident. In contrast, s. 60(1) authorizes an insurer to deduct benefits being received by an insured "in respect of an impairment that occurred before the accident" from the amount payable to an insured as an income replacement benefit after the accident.

[107] Thus, in respect of income replacement benefits, funds payable from another insurer for injuries sustained in another accident are deductible. No such provision is contained in s. 60(2) of the SABS in respect of medical, rehabilitation or attendant care benefits. In accordance with well-established principles of statutory interpretation, the absence of such language in s. 60(2) signals a legislative intent that an insurer's liability for the accident benefits in issue in this case is not subject to reduction on account of benefits paid for an insured's injuries in another accident. [page716]

[108] In this case, the fact that ING acquired the Zurich line of business that included Ms. Monks' Zurich policy and that ING was also her insurer in respect of the third accident is irrelevant to Ms. Monks' right to recover accident benefits from both companies. That Zurich and ING became, in effect, the same payor for the purpose of Ms. Monks' benefits claims by virtue of the transaction between Zurich and ING does not change the fact that Ms. Monks purchased two separate insurance policies, paid premiums on each policy, was afforded coverage under both policies and each policy responded to a different accident. I agree with the trial judge that Ms. Monks is entitled to look to both insurers for payment of those accident benefits to which she is entitled in accordance with the statutory accident benefits regimes in place when each accident occurred.

[109] The Zurich Settlement pertained to the injuries sustained by Ms. Monks in the second, rather than the third, accident. To the extent that there is any overlap in ongoing benefits in respect of injuries suffered by Ms. Monks in these accidents, the declarations fashioned by the trial judge take such overlap into account and afford ING credit for benefits received under the Zurich Settlement, on Zurich's account, in each benefit category. I therefore agree with Ms. Monks' submission that the effect of the declarations in issue, as crafted, is to recognize that the limits under both policies are fully available to satisfy proper benefits claims by Ms. Monks, subject to the restriction that they cannot be drawn down in respect of the same expenditure.

[110] I also do not accept ING's contention that the fact that some of the proceeds of the Zurich Settlement were placed in a structured settlement operates to reduce ING's benefits liability.

[111] The Zurich Settlement was entered into on April 22, 2002. By that time, ING had acquired Zurich's personal line of insurance. It had also obtained intervenor status in the Zurich litigation and participated in some of the settlement conferences. In addition, the evidence at trial indicates that, by at least November 27, 2001, ING was aware of Ms. Monks' claims against Zurich, of the Zurich litigation and of Zurich's denial of Ms. Monks' claims in that litigation. There can be no suggestion, therefore, that ING was unaware of its exposure prior to the Zurich Settlement.

[112] The structured settlement ensured that Ms. Monks would receive funds in certain benefits categories until she dies. As the trial judge recognized, the effect of ING's argument that it should not be required to pay benefits until the Zurich Settlement funds have been expended in full is that it would never [page717] have to pay benefits, for which it is otherwise liable, in at least those benefits categories contemplated by the structured settlement. This result, in my view, would be unjust and would not accord with the scheme of the SABS or the terms of Ms. Monks' contract of insurance with ING.

[113] Nor, contrary to ING's contention, can the structured settlement be regarded as manipulation of the Zurich Settlement funds to the prejudice of ING. If the effect of a structured settlement was regarded this way, so as to reduce or indefinitely defer an insurer's benefits payment obligations, a significant chilling effect on the willingness of accident victims to enter into structured settlements would be occasioned, thus vitiating the salutary effects of such settlements.

[114] I would not give effect to this ground of appeal.

The aggravated damages issue

[115] ING challenges the trial judge's award of aggravated damages on the sole ground that there is no basis in the evidence for such an award. In support of this argument, it relies on all its submissions on appeal, especially those relating to the allegation of judicial bias.

[116] There was ample evidentiary support for the award of aggravated damages in this case. In the course of his damages assessment, the trial judge made the following findings: (i) ING did not look after Ms. Monks' needs properly from August to December 2000, even when her cognitive powers were diminished and she was in a depressive state; (ii) some care recommendations made for Ms. Monks were not carried forward by ING; (iii) in other instances, ING's delay in implementing care measures, i.e., home improvements, caused Ms. Monks physical and emotional damage; (iv) ING's sudden termination of Ms. Monks' benefits after the Zurich Settlement and its demand for reimbursement of approximately $52,600 on account of benefits already paid caused stress and damage to Ms. Monks and exacted a high toll on her physical and mental health; (vi) at about the same time, ING reduced Ms. Monks' monthly income replacement benefits by 20 per cent to offset the alleged overpayments made to Ms. Monks; and (vii) the funds paid to Ms. Monks in respect of needed expenditures prior to May 2002, when benefits were cut-off, were "the bare minimum". These findings, which were open to the trial judge on the evidence, are sufficient to support his award of aggravated damages.

[117] I add one final point. The trial judge indicated that he would have awarded $100,000 on account of aggravated damages [page718] but for some delay on Ms. Monks' part in renovating her home or choosing to move to another home. The trial judge reduced the damages awarded by 50 per cent on account of this factor. In these circumstances, in my view, the award of aggravated damages was both reasonable and arguably modest.

The risk premium issue

[118] In his ruling on costs dated September 8, 2005, the trial judge allowed a $75,000 premium to Ms. Monks' counsel, in addition to the costs awarded to Ms. Monks, on account of the risk assumed by counsel in undertaking this case. At the time of this ruling, the decisions of the Supreme Court of Canada in Walker v. Ritchie, 2006 SCC 45, [2006] 2 S.C.R. 428, [2006] S.C.J. No. 45 and of this court in Manufacturers Life Insurance Co. v. Ward, [2007] O.J. No. 4882, 2007 ONCA 881 were not available. Those cases hold that a risk premium may not be passed on to an unsuccessful defendant as part of a costs award under Ontario's Rules of Civil Procedure, R.R.O. 1990, Reg. 194 as in force today (Manufacturers Life) and at the time costs were fixed in this case (Walker). Accordingly, the $75,000 risk premium awarded by the trial judge cannot stand. Disposition

Disposition

[119] For the reasons given, I would allow the appeal in part, by setting aside the $75,000 risk premium awarded by the trial judge. In all other respects, I would dismiss the appeal. As Ms. Monks has been almost entirely successful on appeal, she is entitled to some costs of the appeal on the partial indemnity scale. I would fix those costs in the amount of $35,000, inclusive of disbursements and GST.

Appeal allowed in part.

SCHEDULE A

Declarations Granted by the Trial Judge

1. THIS COURT DECLARES that the Plaintiff, Suzanne Monks, suffered a "catastrophic impairment" as defined in the Statutory Accident Benefits Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96, as amended, [hereinafter "SABS 1996"] as a result of the motor vehicle accident on December 23, 1998;

2. THIS COURT DECLARES THAT the Plaintiff, Suzanne Monks is entitled to receive from the Defendant, ING Insurance Company of Canada, the statutory accident benefits which a catastrophically impaired person is entitled to receive pursuant to the SABS 1996, as follows: [page719]

a. Income Replacement benefits b. Medical and Rehabilitation expenses c. Attendant Care benefits d. Housekeeping and home maintenance expenses e. Expenses of visitors f. Caregiver benefits g. Costs of examinations, and h. Care Manager services.

Income Replacement Benefits:

3. THE COURT FURTHER DECLARES that since June 6, 2002, ING has deducted 20% of the IRB, on the basis of an overpayment to the Plaintiff, arising out of the monies received as an IRB in the Zurich settlement. ING agrees to repay to the Plaintiff those monies, which have been deducted, together with interest calculated in accordance with SABS, up to January 12, 2005, in the amount of $12,887.82. ING acknowledges that it is not entitled to make a deduction in respect of its payment of an IRB, in respect of any monies received by the Plaintiff in respect of the Zurich settlement in the past or in the future. ING acknowledges that the Plaintiff's current entitlement is $340.96 and reserves its right to investigation, deduction and/or the right to stop payment in accordance with the provisions of the SABS.

Medical and Rehabilitation Expenses:

4. THIS COURT FURTHER DECLARES that the Plaintiff is entitled to the amount of $46,718.04 from the Defendant, for past medical and rehabilitation expenses, incurred from May 2002 until the present. As the Plaintiff used the sum of $56,786.88, received from the Defendant for medical and rehabilitation expenses, the difference of $4,068.84 will be applied towards medical and rehabilitation benefits the Defendant will owe to the Plaintiff commencing January 1, 2005;

5. THIS COURT FURTHER DECLARES that from January 1, 2005 onward, the Defendant shall pay medical and rehabilitation benefits to the Plaintiff as incurred on an ongoing basis, to meet the medical and rehabilitation needs as set out in the spreadsheets of Sandra Guest-Poulin, Exhibit 8 Tab 4-D attached hereto as Schedule "A" to this Judgment, net of collateral benefits and what the Plaintiff receives from the Zurich settlement funds being $769.25 as of July 1, 2002 and indexed at 1% per annum each year as of July 1st;

6. THIS COURT FURTHER ORDERS that the Defendant shall provide to the Plaintiff a van modified with a platform either by way of purchase or lease;

7. THIS COURT FURTHER ORDERS that the Defendant shall pay to the Plaintiff the amount of $225,000.00 for home modifications;

8. THIS COURT FURTHER ORDERS that the Defendant pay to the Plaintiff interest on the said amount for home modifications from June 30, 2002 to June 15, 2005 in the amount of $238,564.10. [page720]

Attendant Care Benefits:

9. THIS COURT FURTHER ORDERS that the Defendant shall pay to the Plaintiff, the amount of $140,901.02 for past benefits for attendant care for the period extending from May 31, 2002 to January 1, 2005;

10. THIS COURT FURTHER ORDERS that the Defendant shall pay to the Plaintiff interest on the said amount for past benefits for attendant care in the amount of $78,192.70 from the period of May 15, 2002 to June 15, 2005;

11. THIS COURT FURTHER DECLARES that the Defendant shall provide to the Plaintiff attendant care benefits on an ongoing basis from January 1, 2005 on the basis of 24 hour case, as set out in the spreadsheets of Sandra Guest-Poulin, Exhibit 8 Tab 4-D attached hereto as Schedule "A" to this Judgment, net of collateral benefits and what the Plaintiff receives from the Zurich settlement funds being $1,538.50 as of July 1, 2002, and indexed at 1% per annum each year as of July 1st, to a maximum of $6,000.00 per month.

12. THIS COURT FURTHER DECLARES that the time for services rendered by the Plaintiff's spouse, Mr. John Perrozzino, at the average rate of $10.00 per hour is a fair rate regardless of whether his services were rendered in regard to routine personal care, basic supervisory functions or complex health care and hygiene functions.

Housekeeping Expenses:

13. THIS COURT FURTHER DECLARES that the Defendant shall pay to the Plaintiff housekeeping benefits already incurred, if any, and on an on-going basis to the extent such expenses exceed the weekly amount received from the Zurich settlement funds, which is $130.18 per week as of July 1, 2002 and indexed at 1% per annum each year as of July 1st, to a maximum of $100.00 per week.

Case Manager:

14. THIS COURT FURTHER DECLARES that the Defendant will provide the services of a case manager to the Plaintiff, pursuant to section 17 of the SABS 1996.

Notes

Note 1: The text of the declarations is set out in Schedule "A" to these reasons.

Note 2: Although ING originally also appealed against the trial judge's awards of interest in respect of certain ecpenses and benefits, this ground of appeal was not pursued.

Note 3: ING does not appeal against the trial judge's declarations that Ms. Monks suffered a catastrophic impairment as a result of the third accident and that she is entitled to recieve from ING the statutory accident benefits that a catastrophically impaired person person is entitled to receive under the SABS. In its factum on appeal, ING challenged the declarations granted by the trial judge regarding both past and ongoing accident benefits. However, during oral argument, it clarigied that the declarations in issue are those that pertain to Ms. Monks' future, that is, ongoing accident benefits. In the result, as ultimately argued on appeal, ING does not dispute the relief granted by the trial judge concerning income replacement benefits and past medical, rehabilitation and attendant care benefits.

Note 4: For example, Ms. Monks' counsel acknowledged during oral argument of this appeal that she will be required to submit a "Form 1" in respect of future attendant care benefits, as she has done in the past. Form 1 is a worksheet mandated by s. 16(4) of the SABS for the calculation of attendant care benefits.

Note 5: See for example, Pisani v. Simcoe & Erie General Insurance Co., [1994] O.I.C.D. No. 129, affd [1995] O.I.C.D. No. 201; Oleiro v. Commercial Union Assurance Co., [1996] O.I.C.D. No. 152; Levey v. Traders General Insurance Co., [1998] O.I.C.D. No. 113, affd [1999] O.F.S.C.I.D. No. 35; Saliba v. Allstate Insurance Co. of Canada, [1999] O.F.S.C.I.D. No. 170; Argirovski v. Allstate Insurance Co. of Canada, [2000] O.F.S.C.I.D. No. 56; Z. v. Dominion of Canada General Insurance Co., [2000] O.F.S.C.I.D. No. 51; and Todd v. State Farm Mutual Automobile Insurance Co., [2003] O.F.S.C.I.D. No. 167.