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NL Court Confirms Role of Jurisdiction in Injury Damages Calculation

Published:

April 18, 2022

Author(s):

• Jennifer Reid

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On March 28, 2022, the Supreme Court of Newfoundland and Labrador (General Division) decided that in a personal injury case, quantification of damages is governed by the law of the place where the action is started and entitlement to damages is governed by the law of the place where the accident occurred. And while the practical impact in Harris v. Hillyer was relatively minor, it could be significant depending on the jurisdictions involved and whether the Family Protection Endorsement is in play. Here’s a look at the case and the potential impact of jurisdiction in a conflict of laws situation.

The Case. A number of passengers injured in a bus accident started actions in Newfoundland & Labrador against the bus driver and the bus company. The accident occurred in Nova Scotia, but all of the parties (both Plaintiffs and Defendants) were domiciled in Newfoundland & Labrador. Neither liability nor entitlement to damages were in issue. The parties asked the Court to rule on whether the law of Nova Scotia or of Newfoundland & Labrador applied in the calculation of the Plaintiffs’ damages. This was pertinent because Nova Scotia legislation limits the award for general, non-pecuniary damages in respect of minor injuries to $7,500 plus inflation for the year of the accident ($8,937.00 for accidents occurring in 2021). However, Newfoundland & Labrador has no legislated cap. The Court found the logic of decisions from other provinces, while not binding on it, was persuasive and concluded that in a personal injury case, quantification of general, non-pecuniary damages is governed by the law of the place where the action is commenced. In this case, that meant Newfoundland & Labrador – and therefore it wasn’t subject to a cap.

• Conflict of Laws. The Court referenced the leading Canadian case on conflicts of laws, the Supreme Court of Canada’s decision in Tolofson v. Jensen. There, the Supreme Court held that the law to be applied to “substantive rights” in a tort case is the law of the place where the tort occurred (the lex loci delicti) and the law applied to “procedural matters” is the law of the place where the action is heard (the lex fori).

• Substantive v. Procedural. But what is a substantive right and what is a procedural matter? To answer, the Court turned to the Ontario Court of Appeal’s decision in Somers v. Fournier. There, the Court described substantive law as law that “creates rights and obligations and is concerned with the ends which the administration of justice seeks to attain”, and a procedural matter as “the vehicle providing the means and instruments by which those ends are attained.” In Somers, the Court held that costs awarded at the end of litigation are a procedural matter governed by the law of the jurisdiction where the action was commenced; pre-judgment interest was substantive in nature thus governed by the law of the jurisdiction where the tort had occurred.

• Entitlement v. Quantum. The Court in Somers also stated, in terms of broad strokes, that entitlement to certain heads of damages are substantive rights while the quantification or calculation of damages is a procedural matter. There, one issue was whether a general damages cap, established at common law in Ontario, applied in an action started in Ontario relating to an accident that occurred in New York, where there was no such cap. The Court in Somers found that a cap related to the calculation of the damages and thus was a procedural matter governed by the law where the action had been commenced (in that case, Ontario).

The Practical Impact. The resolution of the conflict of laws issue in Harris v. Hillyer resulted in a relatively minor impact. However, the practical impact of jurisdiction could be much more significant in other situations.

• Jurisdiction Matters. The decision demonstrates that jurisdiction has a very real and potentially significant impact depending on the jurisdictions involved. To illustrate, take the example of an accident that occurred in Ontario, but where a plaintiff domiciled in Newfoundland & Labrador started the related personal injury action in Newfoundland & Labrador. To recover general, non-pecuniary damages in Ontario, a plaintiff must meet what is called the “threshold”: a judge must find their injuries are a “permanent, serious disfigurement or a permanent serious impairment of an important physical, mental or psychological function”. Newfoundland & Labrador, however, doesn’t have this threshold. Further, Ontario applies a deductible to awards of general, non-pecuniary damages ($41,503.50 for 2022); the Newfoundland & Labrador deductible is much lower ($5,000). The plaintiff who didn’t meet the Ontario threshold would likely be unable to recover any general, non-pecuniary damages, even though they started the action in Newfoundland & Labrador: the threshold is determinative of entitlement, a substantive right governed by the law of the place where the tort occurred. However, the plaintiff who did meet the Ontario threshold would be subject to the (much lower) Newfoundland & Labrador deductible: the quantification of the general, non-pecuniary damages is a procedural matter governed by the law of the place where the action was started.

• Family Protection Endorsement. When dealing with a conflict of laws situation, whether a Family Protection Endorsement is in play could further complicate the picture. Interestingly, section 5(b) of the S.E.F 44 Family Protection Endorsement potentially introduces a third jurisdiction into the mix in the possible (though not probable) situation in which an insured has a policy issued in one province, has an accident in a second, and starts their action in a third: it specifies the governing law in a conflict of laws situation, not by reference to where an action is started, but rather to where the policy was issued: “In determining the amount an eligible claimant is legally entitled to recover from the inadequately insured motorist, issues of quantum shall be decided in accordance with the province governing this policy and issues of liability shall be decided in accordance with the law of the place where the accident occurred.”
  

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  Please contact your McInnes Cooper lawyer or any member of our Insurance Defence Team @ McInnes Cooper to discuss how a conflict of laws impacts the calculation of damages.

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