August 1, 2022
Fatal Accident Claims in Canada
FATAL ACCIDENT CLAIMS AND DAMAGES IN CANADA
Janis D. McAfee & Robert Smith
June 2020 (updated to August 2022)
|Janis D. McAfee|
Actions for damages arising from a fatality have several unique aspects that insurers should understand when instructing defence counsel and setting reserves. This paper provides an overview of the types of claims allowed under the laws of the various Canadian provinces and territories.
As a preliminary point, fatal accident claims are an area of Provincial and Territorial jurisdiction, under Canada’s federal structure. Although there are many broad similarities between different jurisdictions’ statutes, a fatality in one province might not be treated in the same manner as a fatality in another.
II. CLAIMS MADE BY THE ESTATE OF THE DECEASED
At common law, all claims related to the deceased die with the deceased, regardless of injuries or losses sustained by the deceased’s estate or family. This draconian approach was modified by legislation in the nineteenth century to allow for recovery for such losses. All common law provinces and territories now have legislation to allow the deceased’s estate and family members to assert two distinct types of claims against a tortfeasor responsible for the death.
A. Pain and Suffering Between the Dates of Injury and Death
First, the estate may claim for the deceased’s pain and suffering resulting from her or his wounds between the accident and the date of death. There is a wide range of damages based on how long the deceased lived prior to death and how painful her or his injuries were.
B. Punitive Damages
Second, an estate may in some jurisdictions also seek punitive damages. Punitive damages are not compensatory in nature. Rather, they are akin to a civil fine placed against a tortfeasor who engaged in behaviour that deserves condemnation. In New Brunswick, they are allowed under section 17 of the Fatal Accidents Act, but such claims have been rejected by courts in Ontario, British Columbia, and Nova Scotia.
III. CLAIMS MADE BY FAMILY MEMBERS OF THE DECEASED
A. Pecuniary Claims
In several jurisdictions, legislation allows family members to commence litigation in order to recoup pecuniary claims, i.e., actual expenses incurred as a result of the fatal accident. For instance, section 61 of the Ontario Family Law Act allows family members to recover actual expenses reasonably incurred for the benefit of the person killed, actual funeral expenses reasonably incurred, a reasonable allowance for travel expenses, and a reasonable allowance for the value of the housekeeping or care services the claimant provided to the victim before death. In British Columbia, the Family Compensation Act allows a spouse, parent or child of the deceased to recover actual or expected losses of pecuniary benefits arising from the relationship that would have continued.
These amounts often constitute only minor portions of most fatality claims, and can be
challenged on their reasonableness.
B. Grief and Bereavement
In some provinces, family members of the deceased may receive damages for grief and bereavement. Damages for grief are authorized by statute in Alberta, Saskatchewan, the Yukon Territory, and Quebec (as well as in the UK).
C. Loss of Care, Guidance, and Companionship
These damages are awarded to compensate survivors for the “deprivation of the society, comfort and protection which might reasonably be expected had the [deceased] lived — in short, the loss of the rewards of association which flow from the family relationship and are summarized in the word “companionship””.
Given the intangible value of family relationships, these awards are difficult to affix with certainty. Some provinces have resorted to legislating tariffs that determine levels of compensation. For example, Alberta’s Fatal Accidents Act, s. 8, provides the following mandatory awards for “grief and loss of the guidance, care and companionship of the deceased person”:
1. $82,000 to the spouse or adult interdependent partner of the deceased;
2. $82,000 to the parent or parents or the deceased person divided equally if the action is brought to benefit both parents; and
3. $49,000 to each child of the deceased person.
Saskatchewan also has mandatory damages for these heads of damages in its Fatal Accidents Act, but differs from Alberta in that it allows a far broader range of family members to claim bereavement damages; in addition to spouses, parents, and children, Saskatchewan also allows claims from grandchildren, stepchildren, adopted children, and any “person to whom the deceased stood in loco parentis to the deceased”. Other provinces and territories have their own definitions of which relations to the deceased may claim for loss of care, guidance and companionship, so it is important to check the applicable legislation to determine the scope of the potential claim against the at-fault party.
Provinces that do not specify compensation by statute typically award compensation within generally accepted and predictable ranges, based on the relationship of the claimants to the deceased (i.e., spouse, sibling, child, grandchild, etc.) The reason for this categorical approach to awards of this matter was best expressed by Punnett J. in Panghali v. Panghali: “[m]oney cannot buy a suitable replacement for a parent”.
In British Columbia, awards for the loss of care, guidance and companionship are relatively modest. Claimants must show that the death has deprived them of the care and guidance they would otherwise have reasonably expected from the deceased. Infant children are awarded damages at the higher end, while older children are awarded less. Adults do not typically receive any damages of this kind, unless they are able to prove an extraordinary dependence on the deceased. In British Columbia, the range of damages at the high end is typically $25,000 to $35,000, (potentially increased to account for future inflation.)
Courts in Ontario award a range of damages under that province’s Family Law Act. Typically, children of the deceased receive between $40,000 and $50,000, whereas grandchildren are typically awarded between $10,000 and $20,000.
Until very recently, what had been considered the “high end of the range” in Ontario was laid out in the 2011 case of Fiddler v. Chiavetti, in which a mother lost her daughter in a car accident. The Court of Appeal reduced a $200,000 award to $125,000, but noted that $125,000 was not a hard limit and could be adjusted in future cases to account for inflation.
However, in 2021, in Moore v. 7595611 Canada Corp., the Court of Appeal revisited this figure, upholding the jury award of $250,000 for loss of care, guidance, and companionship to each of the deceased’s two parents.
It should be noted, however, that the facts in Moore were especially tragic. The adult deceased had been a victim of a fire. She had suffered third-degree burns over half her body. As the deceased clung to her life on life support, her parents witnessed parts of her body disintegrating before their eyes. She had been especially close with her parents. Ultimately, her parents had to make the very difficult decision to remove their child from life support, after a brain scan showed no brain activity. In short, while Moore has set a new “high water mark” for damages for loss of care, guidance, and companionship in Ontario, very few cases will such tragic facts as to warrant a similar award.
Other subtle differences exist in this area between jurisdictions. The Alberta and Saskatchewan mandatory systems do not require the family members to prove their suffering, or prove the closeness of their relationships with the deceased. The Ontario system permits claimants to lead evidence in the rare cases where the generally accepted ranges are insufficient.
D. Nervous Shock
A deceased’s survivors may also bring actions for “nervous shock”. This is an antiquated term describing a negative psychological reaction to seeing a family member’s death. The established rule has long been that the family member must either see the death or its immediate aftermath in order to recover for psychological distress. However, recent decisions from the Ontario Superior Court of Justice suggest that the rule may be changing with society’s increased acknowledgment and understanding of the mental health consequences of such events, as well as the way in which technology (smart phones and cell phone, in particular) allows us to “witness” events without geographical proximity.
In Snowball v. Ornge, the crash of a helicopter ambulance that took the life of Christopher Snowball. His family commenced an action in negligence for damages for mental distress. The defendant moved to strike the claim because no right of action exists for mental distress resulting from negligently caused death unless the family members witnessed the accident or its aftermath, so the family members’ mental distress was not legally compensable. The Ontario Superior Court of Justice (trial level) allowed the claims to continue. It held that no absolute bar exists against claimants who did not directly witness the injury or its aftermath.
However, in Sigurdson et al v. Nornord Inc. et al., a trial judge held that the “potential for liability becomes unwieldy” if a defendant owes a duty of care to every sufficiently close family member of the deceased and dismissed the claims of family members who did not witness the death or its aftermath. It should be noted that the claims of these family members were dismissed, in any event, due to a lack of proximity. The court also confirmed that “simply witnessing [the death or its aftermath] does not in itself give rise to a duty of care and that a proximity analysis is still required.”
Simply hearing the accident occur over the phone may qualify as “witnessing the accident”. In Labrosse v. Jones et al., the defendant brought a summary judgment motion to dismiss the action, where the plaintiff heard the accident over a phone conversation, attempted to assist her daughter over the phone at the time, and was ultimately diagnosed with post-traumatic stress disorder. The trial judge held that success in the action, while difficult, was not impossible and dismissed the summary judgment motion.
E. Dependency Claims
Generally speaking, damage awards are intended to put plaintiff in the position that they would have been in had the tort not occurred. In the case of a claim by a deceased’s dependents, the courts strive to award damages sufficient to allow the dependents to continue enjoying the standard of living they would have experienced had the deceased lived.
The heads of damages in a claim by the dependents of the deceased typically include:
(1) loss of financial support,
(2) loss of household services and child care (loss of dependency);
(3) loss of inheritance; and,
(4) management fees and tax gross-up.
E.1 Loss of Financial Support
In order to demonstrate a loss of financial support, plaintiff’s counsel must first establish the base year income of the deceased and then adduce expert evidence to construct the deceased’s likely earnings throughout the rest of her or his probable life. This typically requires evidence relating to the deceased’s education and work history, as well as general statistical averages of similarly situated individuals.
While many claims involving a loss of financial support are derived from more traditional sources of income (such as an employer), courts have made financial loss awards where the deceased’s income stemmed from social assistance. In these cases, judgments are often arbitrary and turn on the specific set of facts surrounding the deceased’s extent and involvement with childcare. For instance, in Parker v. Richards, the deceased’s income was based solely on social assistance. The court used the standard approach to determine the amount of expenses exclusively for the deceased’s benefit, as well as the amount of expenses for the family’s general benefit, and then calculated past and future losses. The court then chose an arbitrary fixed monthly amount to calculate the loss.
Depending on the cause of death, statutory death benefits may be deductible from damages awarded in a tort action. In Gurniak v. Nordquist, a Quebec resident was killed in an automobile accident in British Columbia His spouse and children received a spousal death benefit, as well as funeral expenses and dependents benefits under Quebec’s no-fault insurance scheme. The family also commenced a tort action under the British Columbia Family Compensation Act. The defendants sought a declaration under British Columbia’s Insurance Motor Vehicle Act, s. 25, that the Quebec benefits be deducted from any damages awarded in the tort action. This section defined deductible benefits to include those paid under other contracts or plans of automobile insurance wherever issued or in effect, as long as those benefits were similar to those described in Part 6 of the British Columbia Insurance Motor Vehicle Act. The trial judge found that the spousal death and funeral expense benefits were deductible, but that the dependents’ benefits were not. The parties reached a settlement, but the defendants brought an application requesting that the court determine if any portion should be reduced. The Court of Appeal found that the benefits were not deductible because they were not paid pursuant to a contract of indemnity. This was appealed.
The Supreme Court of Canada allowed the appeal, which turned on what was meant by “similar” under s. 25. The court held that “similar” did not mean identical and only required a consideration of whether the benefits, not overall insurance regimes, were of the same general nature and character. The Supreme Court held that the statutory accident benefits paid to the respondents under the Quebec Automobile Insurance Act were similar to benefits paid under Part 6 of the BC Insurance Act, and thus, must be deducted from the overall tort award pursuant to s. 25 of the Insurance Motor Vehicle Act.
E.2 Housekeeping and Childcare
Plaintiffs must also establish the amount of housekeeping and childcare services the deceased provided to the family unit. Plaintiffs will still be entitled to the value of these services even if they do not intend to hire third parties to replace the deceased’s services and their actual expenditures on such services since the death are not consistent with the level of services for which they claim. Rather, the court will value the services that the family has lost and award damages accordingly.
Once the base year income is calculated, the court must choose the appropriate dependency rate in order to calculate the survivor’s entitlement to damages. In general, the dependency rate of one member of a couple is approximately 70% of the deceased spouse’s after-tax income. This means that the deceased’s contribution to the family unit will be discounted by approximately 30%. This discount reflects the portion of the deceased’s labour that only went to their own welfare and not the welfare of the family unit.
Though the 70% dependency rate is a general rule of thumb, there are two different approaches used by courts to determining the appropriate dependency rate: the “sole dependency” approach and the “cross dependency” approach.
The sole dependency approach is a more straightforward calculation that only considers the deceased’s income. The cross dependency approach, in contrast, assumes that the death of one spouse has provided the surviving spouse with a certain amount of savings that would have been used to pay for items the deceased would have used. One weakness of the cross dependency approach is that it may lead to a nil award if the deceased earned far less money than the survivor (and, therefore, the survivor’s “benefit” from the death, in the form of reduced expenditures, outstripped the amount of money the deceased brought to the family).
The sole dependency and cross dependency approaches represent the two extremes of calculation. Courts have taken a pragmatic approach in recent years and have used a “modified sole dependency” approach. It uses the sole dependency approach, but reduces the rate of dependency in the case of dual-earner households by between 50-70%.
A surviving spouse’s dependency upon the deceased may come to an end because of the potential remarriage of the survivor or the possibility that the spouses may have eventually divorced. The probability of these events can be taken into account using generally-available data from Statistics Canada. Most courts take these factors into account, but they are largely unwilling to find that remarriage would completely eliminate all dependency on the decreased spouse. Therefore, courts have normally only reduced dependency awards by nominal amounts to take these possibilities into account.
When awarding damages to a dependent child, courts have taken the approach that the child’s dependency on his or her parents ends when the child reaches the age of majority. There are two exceptions to this general approach. The first is where parents financially support the post-secondary education of a child. The second is where the children expect to receive valuable services (such as childcare) from their parents. These two exceptions may lengthen the duration of dependency. The plaintiffs will have to lead evidence to prove that they were likely to receive these benefits.
The term of the award for financial dependency is typically the life expectancy of the deceased and the survivor. A dependent child’s term is limited to the period of time during which the child would have been financially dependent on the deceased. As discussed above, this may not be limited to the age of 18 or 21 if the child had a reasonable expectation that their parents would have provided support during post-secondary education.
E.3 Loss of Inheritance
In certain cases, the deceased’s children may claim for a loss of inheritance. This means those children can be awarded dependency damages up to a certain age, and then a loss of inheritance claim beyond that point. In order to receive loss of inheritance damages, children must provide evidence establishing that the deceased had a pattern of income and savings that would have resulted in a significant estate remaining at the end of what would have been the deceased’s natural lifespan.
Predictions regarding the size of a person’s estate are subject to speculation and conjecture.
Claimants must also prove that they would have likely inherited the deceased’s estate, but for the untimely death. In the recent case of Higgins v. Arseneau, the New Brunswick Court of Appeal rejected such a claim, holding that the likelihood the claimants would have inherited the estate was “vanishingly small”, since the estate had been set aside in trust for a young disabled family member and could only be collected by the claimants if the disabled family member predeceased them.
The defence’s argument to a claim for loss of inheritance is that the survivors benefit from an “acceleration of the estate”, meaning they obtain the estate sooner than they otherwise would have. The counterargument to this from the plaintiff’s perspective is that the deceased, had she or he lived, would have built up a larger estate to pass onto the dependents. These factors must be proven through actuarial evidence and will be balanced against one another by the trial judge. It is worth noting that the Prince Edward Island Fatal Accidents Act precludes courts from reducing awards to dependents based on the acceleration of the estate.
Generally, courts will not tie an award for loss of inheritance to future income. While a person often accumulates greater assets as their income rises, there is no necessary mathematical connection between the rise in income and the amount of assets left to dependants on death. Additional income can be used in a variety of ways.
E.4 Management Fees and Tax Gross-up
Income tax gross-up is the difference between the value of the lump sum award that is required when no taxes are deducted from investment income and the lump sum award that is required when investment income is taxed. This consideration is only relevant to dependent adults, as persons under the age of 21 are not taxed on investment income earned from an award of damages.
Management fees can be added to the award if the claimant lacks the mental capacity to manage her or his own finances. They can also be added to an award if a mandated discount rate (2.5% in Ontario pursuant to Rule 53.09 of the Rules of Civil Procedure) exceeds the rate that an unsophisticated investor could hope to obtain on the market.
F. Children’s Contributions to Parents
If the evidence supports it, parents may be awarded damages for the financial contributions they expected to receive from their deceased children. One particularly interesting aspect of this stems from the Confucian concept of filial piety. In Sum v. Kan, the court heard from two experts regarding the practice followed by some families of Chinese descent whereby children make symbolic financial contributions to show respect to their parents. The court found that these contributions can total 10-20% of the child’s gross income and were made regardless of the financial need of the parents. There was evidence that the deceased, the plaintiffs’ 23-year-old son, followed this tradition. As a result, the court awarded the plaintiffs $13,000 in past support from the deceased and $90,000 in future support.
The concept of filial piety has been examined on other occasions by courts, primarily in British Columbia, and other cases have found that awards given to the parents of deceased children for contributions of this nature can be modified to reflect a number of contingencies. These include whether it was reasonable in all of the circumstances for the parents to expect the payments to continue for the remainder of the parents’ lives, and how adherent the family was to traditional Confucian principles.
In Smith v. Vance, the deceased’s parents brought a claim for an unfulfilled proposal that the deceased would purchase their home, with them living there, for up to 25 years. The plaintiffs argued that the deceased planned to purchase the family home, with a mortgage and a promissory note to the plaintiffs for the remaining balance. The plaintiffs in turn, would be entitled to rent the residence at a fixed rental cost, which would be put towards the promissory note. The plaintiffs argued that this had been discussed with the deceased on two prior occasions and the deceased had been agreeable. The court found that the appropriate award was largely an exercise of business judgment. The standard of proof for past facts and hypothetical events was one of a “real and substantial possibility” and not mere speculation. Although this was a lower threshold than a balance of probabilities, it was a higher threshold than that of something that was only possible and speculative.
G. Contributory Negligence
Damages awarded under dependency claims can be reduced if contributory negligence is found on part of the deceased. In Park v. VW Credit Canada Inc., the plaintiff’s family brought a claim under the Family Compensation Act. Their daughter died in a single car accident, while she was a passenger in a vehicle driven by her live-in boyfriend, who was intoxicated at the time. One of the issues raised was whether any damages available should be reduced as a result of contributory negligence, because the deceased rode with the defendant when she knew or ought to have known that it was unsafe due to his consumption of alcohol (which was found to be three times over the legal limit). The court determined that the evidence established that the deceased had been with the defendant driver while he was drinking heavily. The court reduced the overall damages by 20% on account of her contributory negligence.
IV. CONCLUSION: PRACTICAL ASPECTS OF ASSESSING FATALITY CLAIMS
As shown above, the defence of fatality claims differs in many respects from the defence of claims for tortious injury. They require an understanding of the unique legislation applicable to each jurisdiction, as well as the rules related to determining the appropriate forum for bringing an action where a tort was committed in one province or territory and the claimant family members reside in another province or territory.
Insurers involved in contentious fatality claims will need to retain experts, such as accountants, actuaries, and economists, and it is imperative to obtain sufficient documentation in order to properly instruct those experts. The practicalities of assessing these claims will require close cooperation between defence counsel, the appropriate experts and insurance professionals. All of the circumstances must be considered in these emotionally charged and legally-nuanced files.