Canada: Case Summary: MacLeod V Marshall

The burden of proof for economic loss (past and future loss of income) for a minor plaintiff with no established career path at the time of the accident is only that of a real and substantial possibility, as opposed to the balance of probabilities.

MacLeod v. Marshall, 2019 ONCA 842, per Thorburn, J.A.

Facts + Issues

The Plaintiff MacLeod was born in 1969. He was sexually abused by Father Marshall while he was a student at St. Charles College, a school run by The Basilian Fathers of Toronto ("the Basilians").  At the time he was a minor and had no established career path.

MacLeod commenced proceedings against Marshall in 2012 and the case went to trial in 2018. The parties agreed that MacLeod had established on a balance of probabilities that Marshall owed a duty of care to MacLeod, that Marshall breached his duty of care to MacLeod, and that MacLeod suffered injury as a result of the abuse for which the Basilians were vicariously liable. The parties also agreed that the abuse caused or materially contributed to MacLeod's general damages, aggravated damages, and future care costs, but the Basilians did not admit that the sexual abuse resulted in any loss of income or that it should attract punitive damages.

The trial judge instructed the jury as follows:

1. That for MacLeod's claim for past loss of income need only be proven on the standard of a real and substantial possibility. On appeal, the Basilians argued that this lower burden of proof only applied to future income loss.
2. That the jury must assess how the Plaintiff's life would have gone had he not suffered sexual abuse and that this hypothetical need only be proven on the standard of a real and substantial probability that such losses were caused by the sexual abuse. On appeal, the Basilians argued that the standard was proof on a balance of probabilities.

In terms of the quantification of damages for the economic loss, the jury was provided with several possible income earning scenarios MacLeod could have pursued, and the jury was instructed to consider the chance that MacLeod would have pursued them, bearing in mind positive and negative contingencies, and to quantify the loss by awarding him the damages that commensurate with the chance that MacLeod would have earned that additional income.

Regarding the claim for punitive damages, the judge suggested $225,000 to the jury.

The jury awarded MacLeod $350,000 in general damages, $75,000 in aggravated damages, $56,400 for future treatment costs, $1,588,781 lump sum for past and future income loss, and $500,000 in punitive damages (far in excess of the judge's suggestion). The trial judge awarded pre-judgment interest at the rate of 5%.

The Basilians appealed the jury verdict and the judge's order for pre-judgment interest on the following three grounds:

1. The trial judge erred by failing to properly instruct the jury on the burden of proof for claims for past loss of income for sexual abuse;
2. The award of punitive damages was excessive; and
3. The trial judge erred in setting the rate of pre-judgment interest at 5% for non-pecuniary damages.

HELD: For the plaintiff, in the main; appeal dismissed regarding the damages but allowed regarding the rate of pre-judgment interest assessed.

1. The Court of Appeal held that the trial judge's legal instruction given to the jurors to determine entitlement and quantum of damages for loss of income contained no reversible error.
   1. The Court held that typically, where a plaintiff has an established career path, damages for income loss from the date of the accident to the date of trial (past income loss) must be proven on a balance of probabilities.  However, where the plaintiff was a minor with no established career path, even past loss of income is based on a hypothetical career path and, accordingly need only be proven on the standard of a real and substantial possibility:

15   Typically, in the case of an adult plaintiff who was working at the time of the accident, there is a clear benchmark from which to determine whether there was a loss of income and to quantify past loss of income: for example, where a plaintiff was working and earning a given income before an accident and is no longer able to work after the accident, past income can be used to determine what the future income would be. As such, it should be determined on a balance of probabilities.

16   However, in Mallett v. McMonagle (1969), [1970] A.C. 166 (U.K. H.L.), at p. 176, cited with approval in Janiak v. Ippolito, [1985] 1 S.C.R. 146 (S.C.C.), at p. 170, Lord Diplock held that:

The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was. In determining what did happen in the past a court decides on the balance of probabilities. Anything that is more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards.

17   In the case of a claim for economic loss following childhood sexual abuse, both past and future loss of income claims involve a consideration of hypothetical events because the child had not earned income prior to the assault. The jury must therefore determine not what did happen in the past but the chance that something would have happened, had the sexual abuse not happened in the past.

18   This requires a determination of loss of earning capacity, not the loss of actual earnings. Since the plaintiff is not required to prove hypothetical events on a balance of probabilities, the burden of proof for entitlement is that of real and substantial possibility: Athey, at para. 27; Janiak, at p. 170. This is because we must now consider what kind of career the victim would have had, had he not been sexually abused: Andrews, at p. 251.

. . .

22   Therefore, in order to establish entitlement to past and future economic loss, MacLeod need only prove there is a real and substantial possibility that the sexual abuse caused his economic loss.

[Emphasis by the Court]

2. The Court of Appeal stated that, for addressing the issue of economic loss stemming from childhood sexual abuse, the jury should have been instructed as follows:

19   For these reasons, in addressing the issue of economic loss in this case, the jury should have been instructed to:

1. Determine responsibility for the tort on a balance of probabilities: This means the jury had to satisfy themselves on a balance of probabilities that Marshall committed the tortious act of sexually abusing MacLeod resulting in harm;

2. Examine the possibility of economic harm: If responsibility for the tort is established, the jury must evaluate whether there is a real and substantial possibility that MacLeod would have earned more income than he did up to the date of trial and beyond, had he not been sexually abused; and

3. Where a real possibility of economic harm is established, quantify the harm: Where the jury is satisfied that there is a real and substantial possibility that MacLeod would have earned more income, the jury must assess the percentage chance that economic loss would be sustained and quantify damages in accordance with that percentage chance.

2. For quantification of loss of income, the Court set out how a jury should be instructed.
   1. This involves assessing the chance that the plaintiff's hypothetical as to his post-accident career path was likely to have occurred:

23   Where a plaintiff establishes that there is a real and substantial possibility the sexual abuse caused economic loss, damages are assessed by conducting the following analysis:

1. What economic opportunities the plaintiff might have had, had the sexual abuse not taken place;

2. What further income the plaintiff could have earned, if any; and

3. The chance that the plaintiff would have earned that additional amount, after taking into account the various contingencies.

24   In quantifying the financial loss, the trier of fact must assess the chance that what the plaintiff says would have happened, would indeed have happened. In such cases, the plaintiff is entitled to compensation, but commensurate with the percentage chance that the plaintiff would have earned that income but for the defendant's actions. Damages are commensurate with the value of the chance of earning that income: Janiak, at p. 170; Mallet, at p. 176.

25   In assessing damages in this case therefore, the jury should have been instructed to:

1. Determine what MacLeod's life could have looked like and what economic opportunities he might have had, had the sexual abuse not taken place;

2. Decide what the monetary value is of those possible opportunities, had the sexual abuse not taken place;

3. Estimate the chance that MacLeod would have earned the sum(s) claimed, had the abuse not taken place; and

4. Quantify damages commensurate with the chance that that opportunity would have materialized. Compensation is limited to the degree of probability that the defendant was responsible for the loss.

2. The trial judge was held not to have erred in charging the jury on quantification, although he could have been clearer:

31  While the charge might have been put more clearly in respect of the fact that damages for income loss must be commensurate with the percentage chance that the opportunity would have materialized, the trial judge made no reversible error in articulating the legal principles. The Basilians' counsel did not object to the charge and made no submissions to the trial judge or in his closing to the jury on this issue.

3. Additionally, the Basilians' legal counsel did not object to the jury charge and did not make submissions to the trial judge or in his closing to the jury on the issue of economic loss.

2. The Court of Appeal held that the trial judge's legal instruction given to the jurors in respect of punitive damages contained no error and the quantum of damages awarded was not so excessive as to warrant judicial interference.

1. The Court summarized the law regarding punitive damages:

33  The question on an appeal of punitive damages is whether the quantum of damages is so plainly unreasonable and unjust as to satisfy the court that no jury reviewing the evidence as a whole and acting judicially could have arrived at it. The more reprehensible the conduct, the higher the rational limits to the potential award: Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595 (S.C.C.), at paras. 96, 112.

34   The factors enumerated in Whiten, at para. 113, to determine the blameworthiness of the defendant's conduct include:

1.  whether the misconduct was planned and deliberate;

2.  the intent and motive of the defendant;

3.   whether the defendant persisted in the outrageous conduct over a lengthy period;

4.   whether the defendant concealed or attempted to cover up the misconduct;

5.   the defendant's awareness that what was done was wrong;

6.   whether the defendant profited from the misconduct; and

7.   whether the interest violated by the misconduct was known to be deeply personal to the plaintiff (e.g., professional reputation) or a thing that was irreplaceable.

2. Although the jury awarded punitive damages well above the $225,000 range suggested by the trial judge, it was held that it was justified in that the jury's reasons for the award appropriately corresponded with several of the factors set out for determining blameworthiness in Whiten.

36   In rendering its award, the jury was no doubt taking into account the evidence that the Basilians knew Marshall had been abusing boys before he was even ordained, they allowed Marshall to sexually abuse children for more than three decades as a teacher and religious figure, and they decided to move him to different schools when incidents of abuse were reported instead of preventing further harm.

37   While the award is high, the jury took into account the general objective of punitive damages as punishment, deterrence, and denunciation. The decision also addresses the factors set out in Whiten to determine the blameworthiness of the defendant's conduct. The more reprehensible the conduct, the higher the rational limits for punitive damages.

38   The jury may well have been concerned by the fact that the Basilians did not follow their own policy set in 1991, regarding the need to reach out to the victims. This failure to follow their own policy undercuts the Basilians' argument that they should not be judged by contemporary standards, as the Basilians failed to meet even their own standards.

39   For these reasons, the quantum is not so plainly unreasonable and unjust as to warrant judicial interference. I would also dismiss this ground of appeal.

1. "In rendering its award, the jury was no doubt taking into account the evidence that the Basilians knew Marshall had been abusing boys before he was even ordained, they allowed Marshall to sexually abuse children for more than three decades as a teacher and religious figure, and they decided to move him to different schools when incidents of abuse were reported instead of preventing further harm" (at paragraph 36).

3. The Court of Appeal also found that the jury properly took into account the general objectives of punishment, deterrence, and denunciation in their punitive damages award.
4. Additionally, the Court of Appeal noted that the Basilians' failure to follow their own policy from 1991 regarding the need to reach out to the victims undercut their argument that they should not be judged by contemporary standards.

3. The Court of Appeal held that the trial judge erred in setting the rate of pre-judgment interest at 5% for non-pecuniary damages.
   1. The trial judge had a general right to exercise discretion in awarding pre-judgment interest but failed to articulate any of the factors listed in s. 130 of the Courts of Justice Act, RSO 1990, c C.43 [CJA].
   2. In setting pre-judgment interest at 5% for non-pecuniary damages based on the rate provided in r. 53.10 of the Rules of Civil Procedure, RRO 1990, Reg 194, he specifically failed to place any weight, or at least any sufficient weight, on the consideration of market interest rates from the date the cause of action arose. The trial judge was required by s. 130 (2) of the CJA to consider such changes in market interest rates.
      1. The annual pre-judgment interest rate should have been 1.3% to reflect the interest rates during the relevant pre-judgment period.

Commentary 

This decision is particularly useful for clarifying the burden of proof for economic loss in a case involving childhood sexual abuse or, indeed, for any minor plaintiff who did not have an established career path at the time of the accident.