Last month, Justice Colin McKinnon gave judgment for the plaintiff against the City of Ottawa in a slip-and-fall case: Cerilli v. Ottawa (City). (Justice McKinnon probably did not endear himself to the city fathers (and mothers) with the opening words of his decision: “The month of January does not attract hordes of tourists to the City of Ottawa. It is a cold and miserable month, characterized by falling snow and icy conditions. There is little daylight. It is a happy month for those who enjoy winter sports, but a depressing one for drivers and pedestrians.”)
The plaintiff, a hairdresser, slipped and fell on a city sidewalk, breaking her ankle. His Honour found that because of her injuries, she was no longer able to continue working as a hairdresser. However, the plaintiff had found other work and, by the time of trial, was earning more than she had been earning in her previous career.
Justice McKinnon elected to deal with the claim for future income loss by awarding damages for loss of competitive advantage:
I prefer to deal with the Plaintiff’s future lost income claim on the basis of her loss of competitive advantage. I am satisfied that because of her injuries Ms. Cerilli will suffer economic loss because of the impairment of her ability to compete for employment: see Borland v. Muttersbach, [1984] O.J. No. 481 at para. 72 (H.C.J.). Damages for loss of competitive advantage have been awarded where the injury could have some impact on the Plaintiff’s future employability: see O’Day v. Facoetti Estate, [2002] O.J. No. 2274 at para. 67 (S.C.J.). I would find that Ms. Cerilli’s marketability as an employee has been substantially affected by her injury: see Honey v. Gamache, [1997] O.J. No. 582 at para. 28 (S.C.J.). The fact that she is now unable to continue to work full-time in the area she chose work, namely that of being a hairdresser, is compensable in damages.
Justice McKinnon’s ruling on the issue of costs was released this week. It appears from those reasons that counsel for the City of Ottawa took issue with prejudgment interest having been awarded on the damages for loss of competitive advantage. (The issue was raised in the context of an offer to settle and whether or not the result at trial was better than the offer.) McKinnon J. maintained his view, that interest should be awarded:
Counsel for the Defendant has argued that this is not the case because interest should not have been calculated on the award for competitive advantage, which if correct would reduce the reward to below $260,000 which would arguably be less than the September 2006 offer. I do not agree. The loss of competitive advantage occurred directly as a result of the accident and there is no reason why interest on the amount should not be paid from the date of the accident.
It is an interesting question, whether prejudgment interest should be awarded on damages for loss of competitive advantage. On the one hand, such damages represent compensation, at least indirectly, for future loss of income. Since that loss has not yet been suffered, so the argument goes, the plaintiff has not had the loss of use of the money, which is what prejudgment interest under s. 128 of the Courts of Justice Act is intended to redress.
On the other hand, damages for loss of competitive advantage are usually awarded when a court cannot quantify a future pecuniary loss, but is satisfied that the plaintiff will probably incur one. On this theory, the damages are more in the nature of compensation for loss of a capital asset (the ability to earn income). Proponents of this theory would argue that the loss having been suffered at the time of the accident, prejudgment interest should be payable.
Mr. Justice Gerald Morin is a colleague of Justice McKinnon on the Superior Court bench in Ottawa. He has just taken supernumerary status. Back in 1997, Justice Morin had occasion to consider this issue in Earl v. Lang. At the trial of that action, His Honour had awarded damages of $50,000 to the plaintiff for loss of competitive advantage. To the time of trial, the plaintiff had not lost income but Morin J. concluded that “there is a certain degree of uncertainty in his employment future”:
While there is a real and substantial risk of some loss of income in the future for this particular individual the risk is minimized by Gary’s employment history, his reputation in the work force and his personal courage in doing his work, notwithstanding his disabilities. In my view, a fair and reasonable award on this head of damage would be $50,000. I point out that this award is meant to compensate Gary for his loss of competitive edge.
However, Justice Morin did not think that prejudgment interest was payable on those damages:
Although the award of $50,000 was on account of Gary’s loss of competitive edge, the fact of the matter is that that loss to this date has not reflected itself in any actual loss of income and may very well not reflect itself in any actual loss of income in the future. I agree with Lang’s counsel, Mr. Charron, that in real terms my award is not in any way representative of a loss incurred by Gary to date and I agree with Mr. Charron that accordingly the concept of prejudgment interest should not attach to this award and I so find. It should be noted that in the decisions referred to me by plaintiff’s counsel Mr. Herbert where prejudgment interest was awarded on damages for loss of competitive advantage. The issue as to whether the plaintiff was entitled to such prejudgment interest appears not to have been argued and the interest was awarded as a matter of course.
Which approach is correct? We’re not sure, but in light of Justice McKinnon’s decision, the issue may now receive more attention.