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SCC Trilogy and General Damages

Canadian courts compensate personal injury victims for their losses through damages. These damages are either classified as pecuniary or non-pecuniary damages. Pecuniary losses are those tangible losses that are more easily measured in terms of money, like loss of income and out of pocket expenses. Non-Pecuniary losses are those intangible losses which are not readily quantifiable in terms of money, like pain and suffering, loss of amenities, and loss of enjoyment and expectation of life.

Courts in quantifying damage awards are guided by two distinct but similar compensatory principles. For pecuniary losses, the principle is that the plaintiff should receive full compensation for pecuniary loss past and future. For non-pecuniary losses, the principle is that damages should be fair and reasonable. As with all tort claims, the end goal is for the Courts to restore the plaintiff, as well as money can provide, to its pre-accident position.

This clear expression of Canadian damages principles was articulated in Andrews v Grand & Toy Alberta Ltd, [1978] 2 SCR 229. This case was one of the three prominent 1978 Supreme Court of Canada cases on damages, often described as the trilogy on damages. All three of the trilogy cases involved catastrophically injured youths and the Court was grappling with the proper quantification of their non-pecuniary or pain and suffering damages.

The Court’s departure from the full compensation principle insofar as pain and suffering damages were concerned was based on several competing policies and principles of restitution, including that there is no medium of exchange for happiness or market for expectation of life but that restitution must be monetarily based and quantified in such a way that monetary awards from court to court are reasonably analogous, guided by early jurisprudence, and non-arbitrary. The Court also recognized the fact that no money can provide true restitution and, in that sense, pain and suffering damages are not truly functionally compensatory.

Another important factor in recognizing the “fair and reasonable” principle for non-pecuniary damages, as distinct from the full compensation principle for pecuniary loss, was the fact that "million dollar" awards had recently arisen in Canada at the time of the Trilogy cases. Large awards had also started to become the norm in the United States. It is clearly apparent that the Court was cognizant of this fact in rendering their decision and that they were looking for a new approach or “cap” that could bridle the accelerating general damage awards of the time.

The Court settled on a ‘cap’ for non-pecuniary damages in the amount of $100,000 in 1978 dollars, save for “exceptional circumstances”. Adjusting for inflation, and depending upon which province you live, the current non-pecuniary damages limit is at roughly $382,000 in 2019 dollars.

Mr. Justice Dickson in Andrews, explained that such a cap is not unfair given that non-pecuniary damages are not truly compensatory of a realised financial loss. In Arnold v Teno, [1978] 2 SCR 287, another of the trilogy cases, the Court explained that one of their primary policy considerations for the imposition of the ‘cap’ was to prevent runaway insurance premiums.

Following the trilogy cases, and because of the Courts use of a vague reference “exceptional circumstances” wherein the cap would not apply, there were periods of uncertainty as to whether the upper limit set by the Court was in fact a strict limit to be exercised in every case or whether it was to be treated as a guide for non-pecuniary damages quantification. Several legal challenges were launched against the cap over the years, with mixed success. For example, the cap does not appear to be applicable in defamation or loss of reputation cases.

Following several challenges, the Supreme Court in ter Neuzen v Korn, [1995] 3 SCR 674, reaffirmed that the trilogy cap applies to all personal injury cases claims and that is to be applied as a rule of law. In this case, a jury had awarded the catastrophically injured plaintiff $460,000 in non-pecuniary damages and on appeal the Supreme Court ended up reducing the jury award to the level of the cap.

As it currently stands, catastrophic claims are still subject to the non-pecuniary cap laid out in the trilogy cases. However, due to the significant impact these rulings have had on catastrophically injured plaintiffs, legal challenges continue to be made and it remains to be seen whether the Supreme Court of Canada will continue its steadfast approach in the years to come.

By Michael Shepherd