Court File and Parties

Court File No.: 4522/11 Date: 2018/10/09 Superior Court of Justice - Ontario

Re: LOUDIA ISMAIL, Plaintiff And: MEAGHEN FLEMING and LAURIE FLEMING, Defendants

Before: Justice I.F. Leach

Counsel: Karl Arvai and Louis Crowley, for the Plaintiff Brian Foster and Catherine A. McIntosh, for the Defendants

Heard: October 2-3, 2018

Endorsement

Plaintiff’s objection concerning relevance of collateral benefits to plaintiff’s work motivation

Introduction

[1] By way of overview and general context underlying this endorsement, the plaintiff in this personal injury action claims substantial damages under various headings, from the defendants, as the result of a 2009 motor vehicle accident in respect of which liability has been admitted.

[2] The matter currently is the subject of an ongoing civil jury trial, which commenced with jury selection on October 1, 2018.

[3] However, immediately following their selection, members of the jury were excused until October 3, 2018, and then to October 4, 2018, to allow for:

a. my hearing of an unrelated but pressing criminal matter, (scheduled for hearing on October 1, 2018, before I was asked on relatively short notice to preside over this civil jury trial); and b. the hearing, on October 2 and 3, 2018, of five preliminary motions and objections raised by the parties, at the outset of trial, requiring hearing and adjudication prior to counsel making their opening addresses to the jury and/or prior to the presentation of any evidence.

[4] Not wishing to delay return of the jury or progress of the trial any further, I communicated my substantive rulings in relation to each of the numerous preliminary motions and objections to counsel via email, in the early morning hours of October 4, 2018, “for reasons to follow”.

[5] In relation to the plaintiff’s objection to “any suggestion, submission, argument or other reference at trial to the effect that the receipt of collateral benefits is relevant to her motivation to work”, I made the following ruling, for reasons to follow:

• “The objection is sustained.”

[6] This endorsement provides my promised reasons for that ruling.

Further background

[7] By way of further background to this particular ruling:

• In her statement of claim, the plaintiff alleges that, because of the underlying motor vehicle accident, she sustained injuries resulting in serious and permanent impairments of important physical, mental and psychological functions. Amongst other things, it is said that those alleged injuries:
  • have caused the plaintiff to experience severe pain, discomfort, limitation in movement “and concurrent disability”;
  • have rendered the plaintiff incapable of vocational activities that she participated in prior to the accident; and
  • have caused the plaintiff to suffer a loss of past and future income, as well as a loss of competitive position in the marketplace, such that she will experience a diminution of income.
• It was not disputed that, following the underlying motor vehicle accident in July of 2009, the plaintiff has received collateral benefits in various forms and amounts, including: long term disability benefits from Great West Life; total disability benefits from the Canada Pension Plan; employment insurance (“EI”); and income replacement benefits from her own automobile insurer, Aviva Insurance. The evidence filed by plaintiff counsel, in relation to the preliminary motions and objections, indicates that the total of such collateral benefits received by the plaintiff, since February of 2010, comes to $266,874.00 prior to any deduction for income tax.
• The statement of defence filed by the defendants includes, in addition to broad denial of the plaintiff’s claims;
  • a specific denial that the plaintiff has suffered the income loss alleged by the plaintiff;
  • a specific assertion that the plaintiff has failed to return to work when reasonably fit to do so and otherwise failed to mitigate her damages in that regard;
  • a general assertion that the plaintiff has failed to mitigate her damages; and
  • an “entitlement to the benefits of all insurance monies, wage and salary continuation plans and government benefits to which the plaintiff may be entitled whether or not claim for such entitlement has been made”.
• The plaintiff does not dispute that her tort claims against the plaintiff are offset, to some extent, by her receipt of collateral benefits. For example, despite the allegations in the statement of claim, plaintiff counsel has indicated that the plaintiff is not pursuing a claim for past income loss at trial, as the appropriate offset for collateral benefits received in that regard by the plaintiff effectively eliminates such a claim, or at least reduces such a claim to the point it is not worth pursuing. However, the plaintiff is still pursuing a claim for future income loss, with the precise impact of certain continuing collateral benefits to be decided by the court.
• Anticipating that the defendants might seek to rely on the plaintiff’s receipt of such collateral benefits for a purpose beyond the calculation of possible offsets, (e.g., to support arguments that the plaintiff actually is not disabled from working, but chooses not to pursue active employment because she finds the receipt of collateral benefits without working a more attractive option), plaintiff counsel sought to address that possibility at the outset of trial.
• In particular, as noted above, plaintiff counsel formally objected to “any suggestion, submission, argument or other reference at trial to the effect that the receipt of collateral benefits is relevant to her motivation to work”.

[8] Before making my ruling noted above, sustaining the plaintiff’s objection in that regard, I considered the parties’ respective arguments in their entirety, and my attempt to summarize their positions should not suggest otherwise.

[9] In broad terms, however, the position of the plaintiff was as follows:

• Plaintiff counsel relied primarily on first instance and appellate decisions rendered in the case of Kitchenham v. AXA Insurance [1], which were said to have confirmed that a claimant’s receipt of collateral benefits should be regarded as irrelevant to assessment of the claimant’s motivation to work and corresponding determination of whether the claimant is actually disabled.
• In that regard, it was emphasized by plaintiff counsel that all levels of court dealing with the Kitchenham v. AXA Insurance case had regarded such considerations as lacking even a “semblance of relevance” to such matters. In other words, such considerations had no relevance to such matters even when relevance was assessed on the “generous” and “wide latitude” standard described in authorities such as Kay v. Posluns [2], and accepted by our Court of Appeal. [3]
• In the submission of plaintiff counsel, it accordingly should be impermissible for the defendants to make any such irrelevant suggestions or arguments, directly or indirectly, during the course of this trial.

[10] In similarly broad terms, the position of the defendants was as follows:

• Defence counsel did not disclaim any intention to pursue such suggestions or arguments; e.g., through cross-examination, or submissions to the jury. Instead, it was argued that such considerations and arguments were relevant and proper.
• It was emphasized that evidence of personal injury claimants receiving collateral benefits is routinely and properly led before juries, (e.g., with witnesses being questioned about such matters), and that juries routinely are provided with instructions in that regard.
• It was emphasized that our Court of Appeal, in cases such as McLean v. Knox [4], has recognized that there may be important issues of credibility and motivation to work in relation to plaintiffs alleging serious injuries and future income loss as the result of a motor vehicle accident.
• It was argued that the various decisions in Kitchenham v. AXA Insurance were distinguishable, and of no application to the present case. In that regard, defence counsel emphasized in particular that those decisions were rendered in relation to a litigated claim against an insurer for payment of disability benefits, and not in the context of a personal injury claim against tortfeasors such as the one being advanced in this case. It was suggested that the Kitchenham decisions should not be applied from one context to the other, having regard to considerations such as distinctions between the duties respectively owed by insurers and tortfeasors, differences between what claimants may be required to prove in each context, and the corresponding differences in the evidence normally led in such cases.
• It was noted that, in at least two previous decisions rendered by Canadian trial judges, (one in British Columbia and the other in Ontario), [5] a plaintiff’s receipt of collateral benefits had been considered relevant to a plaintiff’s motivation to work, and corresponding determinations of whether a plaintiff is incapable of working so as to justify a claim for income loss.

[11] With the above background and positions in mind, I turned to my assessment of the plaintiff’s particular objection.

Analysis

[12] At the outset of my analysis, I note that I was struck by the apparent paucity of authority dealing with this particular issue one way or the other, given the frequency with which the circumstances triggering such concerns seem likely to arise. In particular:

• Given the nature of the litigation “threshold” established by s.267.5 of the Insurance Act, R.S.O. 1990, c.I.8, any plaintiff advancing a personal injury claim stemming from a motor vehicle accident invariably will assert that the accident resulted in the plaintiff sustaining injuries constituting a serious and permanent impairment of an important physical, mental or psychological function. Allegations of disability are therefore inherent in all such claims.
• In such cases, there frequently will be a claim that such disabilities have resulted in a past or future loss of income.
• In such cases, claimants also frequently will have received a measure of collateral benefits, (including income replacement benefits), if only pursuant to the Statutory Accident Benefits Schedule.
• Tortfeasors therefore frequently may be inclined to argue that a plaintiff actually is not disabled from returning to work and earning income, but chooses not to do so because his or her receipt of collateral benefits undermines his or her motivation to work.

[13] Notwithstanding such realities, counsel were unable to provide me with any decisions speaking to whether or not the relevant aspects of the Court of Appeal’s decision in Kitchenham v. AXA Insurance had been applied in the tort context. [6]

[14] Nor were counsel able to provide me with any decisions rendered by trial judges, since release of the Court of Appeal’s decision in Kitchenham v. AXA Insurance, speaking to whether or not receipt of collateral benefits should still be regarded, in the context of tort actions for personal injury resulting from motor vehicle accidents, as a relevant consideration vis-à-vis a plaintiff’s motivation to work and corresponding determinations of disability underlying claims of income loss. [7]

[15] In the result, I was left with little to guide me but the limited number of authorities noted above.

[16] In effect, I was asked to determine the plaintiff’s objection on this point, (i.e., relying on the suggested impact of Kitchenham v. AXA Insurance in the tort context), as a matter of first impression.

[17] In that regard, it seemed to me, at first blush, that there was an intuitive logic to the defendants’ contemplated line of questioning and argument, and their corresponding assertions of relevance.

[18] In particular, my thoughts in that regard were similar to those voiced by in Murdoch v. Boudot, supra, at paragraph 19. Speaking of collateral benefits, Justice Taylor said this:

There can be no doubt that a person in receipt of such benefits is to that extent freed of the financial incentive to seek employment, which would be felt by a person reliant on earned income for his or her support. The right to keep such benefits and still sue for full wages may, indeed, be a disincentive to return to work, where the recipient is better off financially when not at work than when working. In this sense, the fact that a plaintiff receives disability benefits may not be wholly irrelevant where, as here, failure to mitigate is alleged.

[19] A like sentiment was expressed in Halbot v. Little, supra, at paragraph 20. In particular, speaking of the claimant in that case, and the merits of her claim for income loss because of alleged disability, Justice Coo said this:

It must be remembered that, with regard to motivation to return to work, she is receiving from the disability insurer a significant sum, which would take her some time to earn through her employment.

[20] Having regard to such reasoning, its perceived relevance to the defendants’ assertion that the plaintiff actually is not disabled but really choosing not to work and failing to mitigate her damages, and the normal ability of defendants to rely on relevant evidence and arguments when defending claims, I therefore initially was inclined to dismiss the plaintiff’s objection.

[21] However, closer examination and consideration of the various decisions rendered in the Kitchenham v. AXA Insurance case indicated why such reasoning and assertions of relevance, despite their intuitive appeal, should be viewed as fallacious and based on improper speculation.

[22] In the Kitchenham v. AXA Insurance litigation, the plaintiff had been involved in a motor vehicle accident. She pursued a claim for disability benefits from her own insurer, as well as a tort claim against the other driver. There was a settlement of the plaintiff’s tort claim. However, litigation of the plaintiff’s separate claim for disability benefits from her own insurer continued, and proceeded to oral discovery examinations. During those examinations, the defendant insurer sought disclosure of the amounts which the plaintiff had recovered in the tort action, and the plaintiff refused.

[23] The plaintiff’s refusal to produce such information on the grounds of relevance formed one of many issues that then came before Justice Heeney, as the result of a motion brought by the defendant insurer. In disposing of that aspect of the motion, Justice Heeney said this:

The third item of disclosure relates to documentation surrounding the settlement arrived at by the plaintiff with the tort defendant. The primary issue is relevance. …

The best that [the defendant insurer] could do was to suggest that the quantum of the settlement might affect the plaintiff’s motivation to return to work. However, the issue to be determined at trial is whether or not the plaintiff is disabled from working, not whether the plaintiff has a financial incentive to work. A wealthy person might have no incentive to work at all, yet would still be entitled to loss of income benefits if he were disabled from doing so.

I conclude that documents relating to the settlement of the tort claim have no relevance to the present proceedings, and the motion for disclosure of that evidence is dismissed. [8]

[24] Justice Heeney’s decision in that regard was upheld by the Divisional Court. In particular, among its comments on numerous issues pursued on appeal, the Divisional Court said this:

The motion judge was also asked to order production of the documentation surrounding the settlement arrived at by the plaintiff with the defendant in the tort action. He refused to do so on the basis of a lack of relevance. We agree with the motion judge and would dismiss the respondent’s cross-appeal on this point. [9]

[25] When it addressed the issue, our Court of Appeal agreed with Justice Heeney and the Divisional Court. In particular, speaking on behalf of the panel, Justice Doherty said this:

AXA argues that it is entitled to production of the settlement documents in the tort action because the amount and terms of the settlement could provide a disincentive to the plaintiff to work, thereby colouring her claim in the benefits action that she is actually disabled and unable to work. …

I agree with the motion judge (paras. 51-53) and the Divisional Court (para.22) that this ground of appeal cannot succeed. The issue in the benefits action is whether the plaintiff is disabled and unable to work. The impact, if any, of the settlement in the tort action on the plaintiff’s motivation to work and the extent to which the plaintiff is actually disabled are both so speculative as to be beyond even the generous notion of relevance applied at this stage of a proceeding: Kay v. Posluns (1989), 71 O.R.(2d) 238, … at p.246. [10]

[26] The specified comments of Justice Steele, found at page 246 of Kay v. Posluns, supra, confirmed that “semblance of relevancy” was the proper test to be applied at the discovery stage of litigation, and that the phrase contemplated a “wide latitude” of relevance, short of opening the door to possible harassment.

[27] In my view, the decisions in the Kitchenham v. AXA Insurance case reflect reasoning on such matters that cannot sensibly be confined to the context of plaintiff claims against disability insurers in the wake of an automobile accident, with no possible application in the tort context.

[28] To the contrary, it seems to me that the same reasoning extends to the defendants’ arguments of relevance in this case.

[29] In particular, despite ostensible differences, both contexts fundamentally deal with a situation wherein:

• a plaintiff asserts disability as the result of a motor vehicle accident, and a corresponding inability to continue his or her employment, giving rise to monetary claims against a defendant because of the alleged disability and loss of employment;
• the defendant denies the plaintiff’s alleged disability and inability to return to work; and
• the defendant wishes to argue that the plaintiff actually chooses not to work, owing to a financial disincentive effectively created by the plaintiff’s receipt of wealth from another source as a result of the same motor vehicle accident.

[30] If the receipt of alternative wealth has no semblance of relevance to a plaintiff’s motivation to work and corresponding determinations of disability in one context, (because alternative wealth does not negate disability and corresponding loss, and/or because any suggested connections between alternative wealth, motivation to work and/or actual disability are inherently too speculative), I frankly do not see why the same conclusion should not follow in the other context.

[31] In my view, the suggested reasoning and relevance, rejected by the court decisions in Kitchenham v. AXA Insurance, are essentially the same in both contexts.

[32] In that regard, I did not accept suggestions by defence counsel that the context in Kitchenham v. AXA Insurance must be distinguished from the present context because credibility is a fundamental concern in the present tort litigation, because insurers owe duties to their insureds that are different than those owed to injured parties by tortfeasors, and/or because different standards of permissible evidence accordingly might apply in addressing the two different types of claim. Without limiting the generality of the foregoing:

• It seems to me that, as far as the specific issue raised by the plaintiff’s objection is concerned, credibility was just as much a concern in Kitchenham v. AXA Insurance as it is in this case. The plaintiff in that case claimed that she was disabled and incapable of working because of the accident, and the defendant insurer wanted to challenge the credibility of the plaintiff’s assertions in that regard; e.g., by suggesting that the plaintiff’s receipt of other wealth, as a result of the accident, was the real reason she had not returned to work. To be sure, credibility has an impact on a broader range of issues in tort litigation than litigation advancing a claim against an insurer for disability benefits, because the issues are more wide-ranging. However, the specific and restricted focus of the plaintiff’s objection, and my corresponding immediate focus, is on whether the defendants can use the plaintiff’s receipt of collateral benefits to challenge the plaintiff’s credibility when it comes to the plaintiff’s assertion of disability underlying her claim for future income loss.
• Defence counsel did not clarify or explain why differences in the duties owed by insurers and tortfeasors, or the nature of what must be proved in the two contexts, might result in any distinctions in applicable standards of relevance that might affect the determination I had to make in relation to the plaintiff’s objection. As noted above, the Court of Appeal emphasized in Kitchenham v. AXA Insurance that a plaintiff’s receipt of alternative wealth as the result of the same underlying accident had no relevance, even on the very wide and generous “semblance of relevance” standard applicable to the discovery stage of civil claims, to the plaintiff’s motivation to work and determinations of underlying disability. It is hard to imagine that the applicable standard of relevance could or would be lower during trial of a civil claim.

[33] In reaching my decision to sustain the plaintiff’s objection, I also was not persuaded by other points and arguments suggested by defence counsel. Without limiting the generality of the foregoing:

• It is quite true, as emphasized by the defendants, that parties in a trial such as this may lead and make reference to evidence that a plaintiff has received collateral benefits, and question witnesses about such matters, in the presence of the jury. [11] It is also true that the final charge to jurors in a civil jury trial routinely contains instructions relating to evidence about a plaintiff’s receipt of collateral benefits, and what clarification as to what the jury should and should not do in that regard. [12] However, the primary and accepted purpose of such evidence, questioning and instructions is to ensure that considerations of double recovery, (addressed by insurance legislation and caselaw) [13], are addressed properly. The issue raised by the plaintiff’s objection focuses on whether the defendants may use evidence and questioning relating to collateral benefits for a quite different purpose; i.e., as a basis for suggesting that the plaintiff is not really disabled, but effectively choosing not to work because her receipt of collateral benefits undermines her motivation to work.
• While defendants in civil litigation certainly have a right to make “full answer and defence” in relation to claims brought against them, in my view that right does not extend to contemplated reliance on evidence for a specific purpose, and/or the advancement of particular arguments, which our Court of Appeal effectively has characterized as fallacious and excessively speculative.
• In saying that, I recognize that our Court of Appeal, in McLean v. Knox, supra, has recognized that credibility issues in respect of income and motivation to work, (buttressed by evidence that a plaintiff had alternative job opportunities, and actually may have earned as much or more income after an accident as before), may be relevant to a trier’s assessment of claims for future income loss based on alleged disability resulting from a motor vehicle accident. However, those wider propositions do not address the more specific issue, (addressed in Kitchenham v. AXA Insurance), of whether the plaintiff’s unearned wealth from other sources, as a result of the same underlying motor vehicle accident, should be considered relevant to a plaintiff’s motivation to work and corresponding determinations of disability.

[34] In addition to the other considerations mentioned above, it seems to me that the contemplated questioning and argument of the defendants, (i.e., to suggest that the plaintiff is not really disabled but simply lacks motivation to work because she is receiving collateral benefits as a result of the accident), engages additional considerations of public policy and basic fairness. In that regard:

• The insurance scheme put in place by the Legislature, to deal with those injured in motor vehicle accidents, specifically contemplates that such individuals will receive a measure of compensation by way of certain “no fault” entitlements to be offset against their possible tort claims.
• In the result, many if not most personal injury claimants in this province will receive collateral benefits, because that is what the Legislature has deemed to be proper and appropriate in such cases.
• In my view, use of collateral entitlements premised on disability to support arguments of ability, in order to undermine residual claims for recovery not addressed by such collateral benefits, seems not only ironic but unfair. Such arguments could be advanced in every case where a plaintiff has received collateral benefits, regardless of idiosyncratic concerns about credibility. Moreover, such arguments may cause those legitimately disabled by motor vehicle accidents, and unable to work, to refrain from aggressively pursuing all collateral benefits otherwise properly available to them; i.e., to avoid having their legitimate and possibly greater claims for future income loss being compromised by such arguments.

[35] My decision to sustain the plaintiff’s objection did not depend on such public policy and fairness considerations, but it was buttressed by them.

Conclusion

[36] For such reasons, I decided to make the substantive ruling set forth above, sustaining the plaintiff’s objection.

[37] In doing so, I effectively made a direction that the defendants, during the trial, should not make any suggestion, submission, argument or other reference to the effect that the receipt of collateral benefits by the plaintiff is relevant to her motivation to work.

”Justice I.F. Leach” Justice I.F. Leach Date: October 9, 2018