Flammia v. Royal Glen Eagle, 2015 ONSC 1465
COURT FILE NO.: CV-08-358931
DATE: 20150309
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MICHAEL FLAMMIA and SILVANA FLAMMIA, Plaintiffs
AND:
ARTHUR HAGERMAN and ROYAL GLEN EAGLE INVESTMENTS LTD., Defendants
BEFORE: Mr. Justice Graeme Mew
COUNSEL: Michael Smitiuch and Megan Self, for the Plaintiffs
Jack Fitch, for the Defendant Royal Glen Eagle Investments
HEARD: 20 February 2015
ENDORSEMENT
[1] This personal injury action was tried by me with a jury in November and December 2014.
[2] Michael Flammia was injured when he fell from a golf cart operated by one of the defendant’s employees. The jury found the defendant golf club to be 65% responsible for Mr. Flammia’s injuries (the remaining 35% being Mr. Flammia’s contributory negligence).
[3] The jury made the following awards of damages (adjusted to reflect Mr. Flammia’s 35% contributory negligence):
Non-pecuniary general damages $154,050
Silvana Flammia’s loss of Mr. Flammia’s care,
guidance and companionship $ 29,250
Michael Flammia past loss of income $292,256
Silvana Flammia past loss of income $ 20,150
Silvana Flammia nursing services $ 13,000
[4] In addition to these amounts, the parties agreed that the value of OHIP’s subrogated claim is $51,197.
[5] The parties agree that the applicable rate of interest for the non-pecuniary damages (including Silvana Flammia’s loss of care, guidance and companionship) is 5% for 7.25 years.
[6] The parties have different positions with respect to the interest rate applicable to the past pecuniary losses.
[7] The defendant invites me to exercise the discretion given to me under s. 130(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 by allowing pre-judgment interest on the plaintiffs’ pecuniary losses at a lower rate than that provided for under ss. 127 and 128 of the Courts of Justice Act.
[8] The statement of claim in this action was issued in July 2008. The pre-judgment interest rate provided for by s. 127 of the Courts of Justice Act for pecuniary losses is 3.3% per annum.
[9] In support of its position, the defendant argues:
(a) That since July 2008, pre-judgment rates have been lower (in the four quarters of 2009 the rates were respectively 2.5%, 1.3%, 0.5% and 0.5% per annum; in 2010 the rates were 0.5%, 0.5%, 0.8% and 1.0%; from the first quarter of 2011 until the fourth quarter of 2014, when the trial commenced, the pre-judgment interest rate remained unchanged at 1.3% per annum);
(b) Michael Flammia’s past loss of income claim did not start until 2012, when he was demoted to a lower paid job, at which time the table rate was 1.3%;
(c) Although the jury awarded Mr. Flammia $449,625 for past loss of income (before taking into account contributory negligence) the award was made after the jury was instructed by me to calculate the plaintiff’s past loss of income without making any deduction or adjustment for income continuation received as part of Mr. Flammia’s severance package (see 2014 ONSC 7522), with the result that Mr. Flammia’s actual out of pocket income loss was significantly less than the jury’s award for past income loss;
(d) That delays attributable to the plaintiffs and, in particular the fulfillment of disclosure obligations, unnecessarily lengthened the proceedings.
[10] The defendant submits that instead of applying a pre-judgment interest of 3.3%, I should use the rate of 1.3%, which reflects not only the average table interest rate during the lifetime of the lawsuit but, also, the predominant rate from 2011 until the date of trial.
[11] The Court of Appeal has cautioned against “replacing the statutory regime premised on a specified rate subject to variation by the exercise of judicial discretion with a judge-made presumption in favour of the average rate”: Graham v. Rourke (1990), ONCA 7005 at p. 10.
[12] In Livent Inc. v. Deloitte and Touche LLP, 2014 ONSC 4085, Gans J. observed that “Averaging is still an exception and not the rule and should be applied in instances of marked swings in interest rates driven by the fiscal and monetary policies of the day”.
[13] During the life of this lawsuit pre-judgment interest rates have gone from 3.3% - the applicable rate in the quarter in which the action was commenced – as low as 0.5% and then, for a sustained period of time, back to 1.3%.
[14] In recent years, pre-judgment interest rates have been relatively low. We are a long way from the heady days of 1990 when the pre-judgment interest rate peaked at 13.9%. So while there have been rate variations, the spread between the highest rate and the lowest rate during the lifetime of this lawsuit is 2.8%.
[15] In Monarch Construction Ltd. v. Axidata Inc., 2008 13608 (ON SC), Frank J. concluded that a fluctuation in rates of approximately 5% and a difference between the statutory rate and the average rate of .3% was not a sufficient difference, in the circumstances of that case, to justify deviating from the prescribed rate.
[16] I do not regard the difference between the prescribed rate of 3.3% and the average rate of 1.3% to be sufficiently great to represent an unfair windfall to the plaintiffs.
[17] There are also some practical difficulties that arise from the defendant’s arguments that interest should be adjusted to reflect the fact that Mr. Flammia did not suffer any loss of income until 2012 and that thereafter he received a severance package.
[18] The largest element of the plaintiffs’ pecuniary damages is for Mr. Flammia’s past loss of income. At trial, the plaintiff submitted that Mr. Flammia’s loss of income claim should be calculated from 1 January 2012 (2012 being the year in which he was demoted, allegedly because of the effect of his injuries on his ability to fulfill the functions of his employment). The defendant argues that the value of Mr. Flammia’s loss of the use of the money that he would otherwise have earned should attract interest at a rate reflective the prevailing rate at the time when that loss started, namely 2012, rather than the time when the action was started. That argument is bolstered by the fact that Mr. Flammia received a severance package which included an element of income continuation after his employment was terminated.
[19] In the present case, it could be said with some confidence that the jury’s award of past loss of income started went back no earlier than 2012, which is when the plaintiffs submitted Mr. Flammia’s income loss began. One cannot, however, know for sure. It would be an exceptional case in which it became appropriate to speculate about how the jury calculated past pecuniary damages and there are obvious concerns which such a process would engage.
[20] I do not find persuasive the argument that the plaintiffs have not really suffered from the loss of the use of their money since they have, effectively, enjoyed a measure of double recovery. As I indicated in my reasons on the issue of whether a new award of damages should be adjusted to reflect the value of the severance package received by Mr. Flammia, that package contained more than just income continuation. And no evidence was adduced as to the extent to which the severance package was income continuation on the one hand and loss of the value of accrued employment rights on the other.
[21] Finally, although it does appear that a trial date of 2 December 2013 was vacated by order of Archibald J. at a pre-trial conference on 8 October 2013 because, inter alia, the pre-trial judge determined that the action could not proceed to trial until all issues relating to the plaintiff’s termination from his employment were resolved and disclosed to the defendant and a will say statement from a witness, Walter Miller, was provided, the pre-trial judge’s report also indicates that the defendant needed to file two further expert reports within 90 days of the pre-trial.
[22] It is not my impression that there were egregious delays or conduct on the part of either side in this case. Delay should therefore not be a factor in determining whether any adjustment of the presumptive pre-judgment interest rate is appropriate.
[23] Having regard to all of the circumstances discussed above, I am not persuaded that I should exercise my discretion to depart from the statutorily prescribed rate of 3.3%.
[24] If my further assistance is required with respect to any issues arising out of the calculation of interest, having regard to my decision on the applicable rate, I can be spoken to. The same applies in the event that there remain outstanding issues of costs to be addressed.
Mew J.
Date: 9 March 2015