A.T.-B. v. Mah, 2013 ABQB 241

Court of Queen’s Bench of Alberta Citation: A.T.-B. v. Mah, 2013 ABQB 241 Date: 20130423 Docket: 0303 10430 Registry: Edmonton Between: A. T.-B., an Infant by Her Next Friend, A.-L. T.-B., A.-L. T.-B., A.B., and Her Majesty theQueen In Right of Alberta Plaintiffs - and - Dr. May Sue Mah Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Robert A. Graesser _______________________________________________________ I. Introduction [1] This decision is supplemental to my reasons for decision in A.T.-B. v. Mah, 2012 ABQB 777.

The parties requiredclarification on two issues: 1. Should the Supreme Court of Canada imposed cap on general non-pecuniary damages mandated in Andrews v. Grand & ToyAlberta Ltd., (SCC), [1978] 2 S.C.R. 229, [1978] 2 R.C.S. 229; 83 D.L.R. (3d) 452 be indexed using the inflationaryrates for Canada or for Alberta?

2. Should the general non-pecuniary damages bear interest from A.T.-B.’s date of birth to the date of judgment at the JudgmentInterest Act, R.S.A. 2000 c. J-1, rate of 4% per annum, or at some other rate? II. Background [2] In my reasons for decision, I awarded A.T.-B. the maximum allowable amount for general non-pecuniary damages. Mr.Miller Q.C. for the plaintiffs argues that the indexing to be applied should be indexing specific to Alberta. Mr. Hembroff for thedefendant argues that the indexing should be Canada-wide.

Not surprisingly having regard to the parties’ positions, the Alberta rate ofinflation since 1978 has been higher than that for Canada as a whole. The evidence before me at trial was that the Alberta rate attracts amultiplier of 3.747. The Canada rate attracts a multiplier of 3.486. [3] With respect to interest, Mr. Hembroff argues that pre-judgment interest constitutes overcompensation to A.T.-B. becausethe general damages have already been adjusted for inflation. III. Arguments A. Canada or Alberta inflation rates? [4] Mr.

Miller for the plaintiffs argues that the Alberta inflation rate should be used so that the general damage award reflectsthe present purchasing power of $100,000.00. Otherwise, A.T.-B. would essentially receive something less than a similarly-injuredplaintiff in a province where inflation has been less than in Alberta. [5] Mr. Hembroff argues that Andrews v. Grand & Toy essentially dealt with this issue when Dickson C.J.C. stated at pages263-264: The amounts of such awards should not vary greatly from one part of the country to another.

Everyone in Canada, wherever he mayreside, is entitled to a more or less equal measure of compensation for similar non-pecuniary loss. Variation should be made for what aparticular individual has lost in the way of amenities and enjoyment of life, and for what will function to make up for this loss, butvariation should not be made merely for the province in which he happens to live. B. Inflation plus interest? [6] The defendant acknowledges that since Lindal v.

Lindal, (SCC), [1981] 2 S.C.R. 629, 129 D.L.R. (3d) 263,non-pecuniary damages are to be assessed as at the date of trial in trial-date dollars. [7] The defendant notes that

section 2 of the Judgment Interest Act provides for pre-judgment interest from the date the cause ofaction arose until the date of judgment. This, according to the defendant, constitutes a double recovery. The defendant points out thatsection 2(3)(

b) of the Act allows the court to award a lower (or higher) rate than prescribed in circumstances where it is just to do so: 2(3) If it considers it just to do so having regard to changes in market interest rates, the circumstances of the case or the conduct of theaction, the court may (

a) refuse to award interest under this Part,

(

b) award interest under this Part at a rate higher or lower than the rate set out in this Part, or (

c) award interest under this Part for a period other than the period provided for in this Part. [Emphasis added.] [8] The defendant fairly points out that in Cleary v. Courtney, 2010 NLCA 46, 322 D.L.R. (4th) 10 the Newfoundland Court ofAppeal held that the fact that general non-pecuniary damages incorporate inflation into the award was not sufficient to modify the pre-judgment interest rate provided by statute.

The Court stated that it was open to the legislature to modify the legislation, and that therewere valid policy concerns including the promotion of early settlement supporting the award of the full rate of interest. This approach isconsistent with Borland v. Musttersbach (1985), (ON CA), 53 O.R. (2d) 129, 23 D.L.R. (4th) 664 (Ont. C.A.),adopted by the Supreme Court of Canada in Botiuk v. Toronto Free Press Publications Ltd., (SCC), [1995] 3 S.C.R. 3,126 D.L.R. (4th) 609. [9] There are several Alberta cases somewhat on point. Reid v.

Stein, 1999 ABQB 222, 253 A.R. 90 indicates that there isauthority for both inflation and pre-judgment interest for non-pecuniary awards” (at para. 8). Jacobs v. McLaughlin, ,46 Alta. L.R. (2d) 1 (Alta. Q.B.) is to the same effect and is notable because Moshansky J. relied on s. 8(3)(

b) of the Act to increase theamount of interest on the non-pecuniary general damages: 1. from 4% to 8.7% for 1984, and 2. from 4% to 6.9% for 1985 and 1986. [10] He stated at para. 148: The defendants argue that no award of interest be made to the plaintiff with respect to non-pecuniary damages, on the basis that interesthas already been awarded by virtue of the grossing up of the $100,000.00 upper limit in the trilogy cases to allow for inflation. Thedefendants argue that to allow interest on the non-pecuniary damages would be to allow for inflation twice. I do not agree.

Thedefendants appear to be confusing the inflation factor with the interest factor. The evidence of Dr. Bruce clearly shows that real rate ofreturn (i.e. the interest rate over and above the inflation rate) was 8.7% in 1984 and 6.9% in 1985. Having regard to all the circumstancesof the case, including the changes in interest rates, I consider it just to award interest on the plaintiff's non-pecuniary damages to becalculated from April 1, 1984, at the rate of 8.7% for 1984; at 6.9% for 1985 and to date of judgment in 1986. [11] In Fitch v. Willow Creek (Municipal District), [1983] A.J. No 1081 (QL) (Alta.

Q.B.), an inflationary rate was added togeneral damages and the statutory pre-judgment interest rate was also awarded, but the arguments here do not appear to have been raised.I note with interest that the inflationary rate applied to the trilogy cap appears to have been inflation for Calgary, although no objectionappears to have been taken with that. [12] Nova Scotia has taken a different approach to that in Newfoundland, as the Court of Appeal there has applied a discountedinterest rate in Bush v. Air Canada (1992), (NS CA), 87 D.L.R. (4th) 248, 109 N.S.R. (2d) 91 (N.S.C.A.) and Hilzand Seamone Co. Ltd. v.

Nova Scotia (Attorney General) et al (1999), 1999 NSCA 22 , 172 D.L.R. (4th) 488, 173 N.S.R. (2d)341 (N.S.C.A.). [13]

Section 41(

i) of the Judicature Act, R.S.N.S. 1989, c. 40 provides: 41(i) ... in any proceeding for the recovery of any debt or damages, the Court shall include in the sum for which judgment is to be giveninterest thereon at such rate as it thinks fit for the period between the date when the cause of action arose and the date of judgment after

trial or after any subsequent appeal [Emphasis added.] In this legislative scheme, there has been no policy decision to fix a rate of interest on non-pecuniary damages in that province. [14] The defendant also points out that when the Judgment Interest Act was enacted in 1984, commercial interest rates were indouble-digit figures, as were the rates set annually by order in council for pecuniary damages for the seven years following thelegislation coming into effect.

Thus the 4% rate for pre-judgment interest on general damages was significantly lower than commercialinterest rates and the rate set for pecuniary damages. For most of the last nine years, however, the non-pecuniary rate has been equal to orlower than the pecuniary rate (which has been as low as 0.825%). [15] It is certainly arguable from quotations in Hansard from 1984 and cases such as Koukounakis v. Reid (1995), (ON CA), 23 O.R. (3d) 299, 81 O.A.C. 36 (Ont.

C.A.) that legislatures such as Ontario’s and Alberta’s which have fixed non-pecuniary damage interest rates intended that the non-pecuniary rate be lower than pre-judgment interest for other awards to avoidovercompensation because inflation is already built into the general damage award (see also Redlick-Lynn v. Halfe Estate, 1996 ABCA124). [16] On the question of a potential for over-compensation or double recovery, the defendant argues that A.T.-B’s general damagesbe calculated as at the date of loss (June 2001) with pre-judgment interest at 4% per annum from then.

Alternatively the defendant arguesthat a reduced rate of interest be awarded pursuant to s. 3(2)(

b) of the Act. The defendant suggests 2%. In the further alternative, thedefendant suggests using an average of the pecuniary damage interest rates from June, 2001 which are suggested to be approximately3.34% per annum. IV. Analysis A. Canada or Alberta inflation? [17] In my view, the issue is answered by the above quote from Andrews v. Grand &Toy. While that case was decided some 35years ago and does not deal directly with the point raised by counsel here, the Supreme Court set policy for Canada as a whole.

It did soholding that a cap for the non-pecuniary general damages was appropriate so long as the pecuniary losses were adequately provided for. [18] Pecuniary damages will take into account provincial differences in costs.

Wage losses, cost of care and other heads ofpecuniary damages will undoubtedly be calculated based on the wages and costs prevailing in the location where the injured plaintiffresides. [19] While I recognize that plaintiffs in high-inflation provinces will have less purchasing power with their general damage awardsthan do plaintiffs in low-inflation provinces, the same can be said for other Canada-wide awards such as the Canada Pension Plan andOld Age Security. [20] The Supreme Court set the cap on general damages in Canadian dollars, applicable across Canada.

It is appropriate that fordamage awards which have been limited by the Supreme Court of Canada that such awards be adjusted similarly across Canada. Itherefore direct that the inflationary adjustment be made using Canada inflation rates, not Alberta-only rates. B. Inflation plus interest? [21] I am in agreement with the Newfoundland Court of Appeal in its recent treatment of the issue. The setting of the rate for pre-judgment interest was a policy decision by the Alberta legislature. I am clearly bound by Lindal v. Lindal that general damages are to beassessed as at the date of trial.

[ 22 ] While s. 2(3)(

b) of the Act is arguably applicable to the specified rate of 4% for non-pecuniary damage awards, a reduction in that rate because of economic considerations making it generous rather than somewhat nominal is, in my view, a task better left to the legislature. There is great merit to certainty such that pre-judgment interest is predictable and readily calculable.

The policy interest in encouraging early settlement is a valid factor, although again is a matter best left to the legislature. [ 23 ] If I have a discretion to vary the interest rate on account of the narrowing (and in some years reversal) of the gap between rates for pecuniary and non-pecuniary pre-judgment interest, this is not the case to do so. None of the factors in s. 2(3) is clearly applicable. The change in market interest occurred in approximately 1994 and has essentially prevailed since then.

The legislature has had nearly 20 years to react, if it considered it appropriate or necessary to change their policy. It has not done so, and I decline to do it for them. [ 24 ] I recognize that there is a certain element of double-counting inherent in this, although I do not see that as innately unfair for injured plaintiffs whose awards have been capped by other policy considerations. [ 25 ] As a result, interest on A.T.-B’s general damages is to be calculated at 4%. Heard on the 8 th of April, 2013. Dated at the City of Edmonton, Alberta this 22 nd day of April, 2013. Robert A. Graesser J.C.Q.B.A.

Appearances: Joe Miller Q.C. & Paulette M. DeKelver Weir Bowen LLP for the Plaintiffs Rose Carter Q.C. & William Hembroff Bennett Jones LLP for the Defendant