MARCH 2014
INSURANCE AND TORT LIABILITY
BULLETIN
In this newsletter, we bring you updates on the law related to punitive
damages, sidewalk liability and the limitation period for false arrest cases.
ONTARIO COURT OF APPEAL
AWARDS $450,000 IN PUNITIVE
DAMAGES AGAINST TOWNSHIP
Pate Estate v. Galway-Cavendish and
Harvey (Township ) 2013 ONCA 669
Author: Stephanie Young
The Ontario Court of Appeal recently affirmed a finding of malicious prosecution against
Galway-Cavendish and Harvey Township (the “Township”) and ordered the Township to pay
punitive damages of $450,000. The plaintiff commenced litigation against the Township
when he was dismissed after almost a decade of employment. The parties’ history
together included a police investigation, a criminal trial, an initial trial of the lawsuit, an
appeal of that trial decision, a denied leave application to the Supreme Court of Canada,
two re-trials and another appeal.
FACTS
The plaintiff worked as the Township’s
Chief Building Official from 1989 until
December 1998, when he was terminated as
a result of alleged discrepancies in building
permit fees collected. Following the plaintiff’s
termination, the Township conducted an
investigation and turned some information over
to the Ontario Provincial Police (“OPP”). Despite
initial reluctance on the part of the OPP, criminal
charges were ultimately laid. The plaintiff was
acquitted after trial. Local media covered the
criminal proceedings extensively.
The plaintiff then sued, claiming damages for
wrongful dismissal, malicious prosecution and
reputational injuries. He also sought special
damages for his criminal trial defence costs,
punitive and aggravated damages. The plaintiff
died in 2011, and his estate continued with
the litigation.
PROCEDURAL HISTORY
By the time the plaintiff’s action proceeded to
the first trial, the Township had conceded that he
was entitled to wrongful dismissal damages in
an amount equal to 12 months’ wages. At trial,
INSURANCE AND TORT LIABILITY BULLETIN | MARCH 2013
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the malicious prosecution claim was rejected;
however, the plaintiff was awarded $23,413
for the manner of his dismissal, $7,500 in
special damages for the costs of his criminal
trial, $75,000 in general and aggravated
damages, $25,000 in punitive damages,
pre-judgment interest and costs on a substantial
indemnity basis.
the Township’s employee withheld exculpatory
evidence from the OPP that the OPP could not
have been expected to uncover. The Township’s
employee provided information to the OPP
that he knew to be false, undermining the
independence of the police investigation. This
conduct was sufficient to satisfy the “initiation”
element of the malicious prosecution test.
The plaintiff appealed the malicious prosecution
ruling and the $25,000 punitive damages award.
The Court of Appeal allowed the appeal, set
aside the punitive damages award, and ordered
two new, separate trials: one on the quantum
of punitive damages and one on the malicious
prosecution issue. The Township’s application for
leave to appeal the decision to allow a retrial on
the malicious prosecution issue was dismissed
by the Supreme Court of Canada.
With respect to the punitive damages award,
the Township argued that the trial judge’s award
of $550,000 was neither warranted by the
Township’s misconduct, nor rationally necessary
to satisfy the objectives of punitive damages
namely, retribution, deterrence and denunciation.
On the retrial of the punitive damages award,
the trial judge awarded the plaintiff $550,000
in punitive damages, increasing the amount
awarded at the first trial by $525,000. On the
retrial of the malicious prosecution claim, the trial
judge found the Township liable. The Township
appealed both decisions to the Court of Appeal.
COURT OF APPEAL
In affirming the finding of malicious prosecution,
the Court of Appeal held that all four elements
of the test for malicious prosecution were
present. Specifically, the criminal proceedings
were “initiated” by the Township; they ended in
the plaintiff’s favour; there was no reasonable
and probable cause for the prosecution; and the
Township acted maliciously.
The Township’s appeal focussed on the first
element of the test for malicious prosecution,
and the Court of Appeal rejected the Township’s
argument that it did not initiate the criminal
proceedings. The Court of Appeal found that
The Court of Appeal stressed that an award of
punitive damages must be considered in light of
any damages previously awarded to the plaintiff.
Compensatory damages and costs awards
contain punitive elements. The sum of all awards
must produce an amount that is rationally
required to punish the defendant and meet the
objectives of punitive damages.
Based on the fact that the Township’s conduct in
this case was egregious, prolonged and of great
adverse impact, and considering the amounts the
plaintiff had already been awarded, the majority
of the Court of Appeal held that a punitive
damages award in the amount of $450,000
was appropriate.
IMPLICATIONS
The facts in this case are quite extreme and
involve egregious conduct on the part of a
municipal employee. Comparable cases would
likely be very rare. Nevertheless, this decision
is notable for municipalities who could find
themselves exposed to potentially uninsured and
very significant punitive damages awards for the
egregious conduct of a single employee.
3
COURT STRIKES CLAIMS AGAINST CROWN
E.B.F. (Litigation Guardian of ) v. Her Majesty the Queen in
Right of Ontario et al, 2013 ONSC 2581
The plaintiff was arrested on June 26, 2008 for repeatedly sexually assaulting his
daughter. The criminal charges against him were resolved by way of a peace bond on
December 2, 2009. The plaintiff commenced an action against a number of parties
including Her Majesty in the Right of Ontario and the Attorney-General of Ontario
(collectively the “Crown defendants”) on June 10, 2011 claiming damages for false arrest,
false imprisonment, breach of Charter rights and negligent investigation. On a motion,
the Superior Court of Justice struck the action against the Crown defendants.
The Crown defendants argued that the plaintiff’s
claims for false arrest, false imprisonment and
breach of Charter rights relating to the arrest
should be struck because the plaintiff did not
commence the claim within two years of his
arrest. The plaintiff argued that the limitation
period should run from the date he entered the
peace bond because he was not able to make
a determination of whether his arrest was
wrongful until he received legal advice and the
results of an investigation conducted through
his criminal defence counsel. He led evidence
of a psychologist who had interviewed him for a
parental assessment in 2007, before the arrest,
who opined, among other things, that the plaintiff
had weak insight into his legal problems.
In striking these claims, the Court confirmed
that the torts of false arrest, false imprisonment
and breach of Charter rights related to an arrest
crystallize on the date of arrest. There was no
“persuasive evidence” in this case to suggest
that the plaintiff was suffering from a disability
or psychiatric disorder at the time of the
AUTHOR
George Wray
416.367.6354
[email protected]
arrest that would have affected his ability to
appreciate the arrest, the charges and the
belief in his innocence.
The Court also considered whether the criminal
charges were terminated in favour of the plaintiff.
Although this question is typically addressed in
the context of a malicious prosecution claim,
the parties in this case agreed that the claim
for negligent investigation could only proceed
if the criminal charges were terminated in the
plaintiff’s favour. The Court found that, while the
Crown concluded it had no reasonable prospect
of conviction, the criminal charges were only
withdrawn when the plaintiff agreed to enter into
a peace bond. In agreeing to the peace bond, the
plaintiff extinguished the risk of being prosecuted
criminally and agreed to criminal penalties
should he breach the terms of the peace bond.
The peace bond was a necessary “give”
in order to secure the Crown’s withdrawal of the
charges. Therefore, the criminal charges were
not terminated in favour of the plaintiff, and the
claim for negligent investigation was also struck.
INSURANCE AND TORT LIABILITY BULLETIN | MARCH 2013
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MUNICIPALITY, CONTRACTOR AND
SUB-CONTRACTOR LIABLE WHERE
PLAINTIFF FELL AT AN INTERSECTION
UNDER CONSTRUCTION
Botosh v Ottawa (City), 2013 ONSC 5418
On November 8, 2003, the 26 year old plaintiff fell at an intersection in a high pedestrian
traffic area, where a construction project was taking place. She was on her way home
from the grocery store, walking along her usual route, carrying a modest amount of
groceries. She alleged that she crossed the road and tripped while stepping onto the
sidewalk. The plaintiff had mild cerebral palsy which affected the left side of her body.
She injured her right shoulder in the fall.
The intersection had been under construction
since May 2003. The municipality had hired
a general contractor to complete the road
rehabilitation and construction. The general
contractor in turn had hired a sub-contractor
to pave the road. By the time of the accident,
most of the reconstruction had taken place.
However, the location of the plaintiff’s fall had not
been completed, and she encountered a height
differential of approximately 1.5 inches. Upon
completion of the construction project, the height
differential in the location of her fall was to be
negligible. The plaintiff testified, and the Court
accepted, that the warning signs regarding the
ongoing construction had been removed, and
she was unaware that construction was
still underway.
The Court found all three defendants (the
municipality, the general contractor and the
subcontractor) liable. The Court noted that one
of the purposes of ramping at intersections
was to ensure that those with disabilities or
accessibility needs were able to negotiate
crossing streets safely. The Court held that it was
foreseeable that, without temporary ramping
in place and without some warning that the
sidewalk was incomplete, a height differential
of 1.5 inches was a tripping hazard, given
that under normal circumstances there would
have been almost no height differential. The
Defendants knew or ought to have known about
the state of non-repair and failed to take the
appropriate steps to rectify that condition.
Although citing the Municipal Act, the Court also
cited and seemed to rely on the provisions in the
Occupiers’ Liability Act in finding the municipality
liable, noting that an occupier cannot avoid
its responsibilities by not paying attention to
the practices of a co-occupier. It is not clear
whether the Court was referred to section 10(2)
5
of the Occupiers’ Liability Act, which specifically
states that the Occupiers’ Liability Act does not
apply to a municipality where it is the occupier
of a public road. In addition, it appears that the
municipality’s defence may have been assumed
by the contractor, and the extent to which a
separate defence was advanced on behalf of
the municipality is unclear.
In any event, the Court found that the facts in
this case demonstrated that all three defendants
continued to be occupiers of the intersection
by virtue of their obligations to the public and
the fact that they each bore some responsibility
for ensuring site safety. The municipality had
an inspector attending regularly to monitor
the progress of work, and the contractor also
monitored the work of its subcontractor. The
primary responsibility, however, rested with
the sub-contractor as it had control over the
site. Accordingly, the Court held that the subcontractor was 50% liable, and the municipality
and contractor were each 25% liable for the
plaintiff’s damages.
Despite the fact that the plaintiff had safely
navigated the intersection before and was
capable of negotiating modest changes in
elevation when walking, the Court found no
contributory negligence.
Although not specifically addressed in this
decision, this case is a reminder of the
importance of appropriate indemnification
and hold harmless language in favour
of municipalities in contracts relating to
construction projects.
AUTHORS
Robin Squires 416.367.6595 [email protected] Andrew McLean, Articling Student
416.367.6218
[email protected]
INSURANCE AND TORT LIABILITY BULLETIN | MARCH 2013
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PLAINTIFF AND MUNICIPALITY
EQUALLY LIABLE FOR SIDEWALK
TRIP AND FALL ACCIDENT
Grayling v. Haldimand (County), 2014 ONSC 198
The Ontario Superior Court of Justice recently awarded damages of over $200,000 against
a municipality for a trip and fall accident on a sidewalk and applied 50% reduction for the
plaintiff’s own contributory negligence.
On November 25, 2009, the plaintiff, a 29 year
old hairdresser, was walking from the salon
where she worked to the drug store when she
stubbed her toe on a difference in elevation
between two sidewalk slabs. She took about
five steps forward and fell onto her right arm,
sustaining a right upper arm fracture and
a full thickness tear of the rotator cuff. She
commenced an action against the County of
Haldimand (the “County”).
The Court first considered whether a condition
of non-repair existed, noting that pedestrians
should not expect a perfectly flat sidewalk
surface. Not every difference in elevation
between two sidewalk slabs would necessarily
be a condition of non-repair. However, the
Court identified some bench marks as to when
differences in elevation become conditions of
non-repair for which a municipality could be
liable. The Court cited cases referring to the
“judicial rule of thumb” that a variance of threequarters of an inch could constitute non-repair.
Once a plaintiff establishes a condition of nonrepair, then a municipality may escape liability
by demonstrating that it exercised proper care
and diligence in the inspection and maintenance
of the sidewalk. The Court cautioned that areas
of high pedestrian traffic, like the location of the
plaintiff’s fall, require greater vigilance on the
part of municipalities than less busy areas.
In this case, the Court found that the difference in
elevation which caused the plaintiff’s fall was in
all likelihood between three-quarters of an inch
to one and one-quarter inches. This was more
than a minor trip ledge, and it constituted a state
of disrepair. The Court then considered what
steps the County took to inspect and maintain
the sidewalk. The County had an annual sidewalk
inspection performed by County staff or college
students whereby they identified differences in
elevation and placed anything exceeding onehalf inch on a repair list, with the most serious
ones exceeding one inch to be repaired “as soon
as practical.” The Court was not critical of the
County’s policy. That said, the Court concluded
that, in its 2009 inspection, the County either failed
to recognize the hazard or, recognizing it, failed to
act with reasonable dispatch in repairing it.
7
The Court found that the plaintiff was also
responsible for her accident. She did not pay
enough attention to where she was walking, and
the difference in elevation was there to be seen.
Accordingly, the plaintiff and the County were
each 50% liable for the accident.
The total damages award was $215,530 before
applying the 50% reduction. The plaintiff’s
general damages were assessed at $50,000
on a 100% basis. The rotator cuff tear caused
AUTHOR
Jonathan Chen
416.367.6736
[email protected]
significant discomfort and disability, limiting
her ability to contribute to homemaking,
housekeeping and outdoor maintenance tasks.
The Court also awarded $144,530 for future
care costs which included $16,697.24 for
physiotherapy until the age of 60, $75,735
for housekeeping until the age of 70, and
$50,114.18 for gardening, window cleaning and
curtain washing until the age of 70. The plaintiff
was also awarded $9,000 for past income loss
and $12,000 for loss of future income.
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