By Barry W. Kwasniewski and Cameron Axford

Personal injury claims are costly affairs for charities and not-for-profits, especially when the court rules in favour of the plaintiff. A recent decision from the Ontario Court of Appeal demonstrates just how significant damage awards can be in particular cases. Such awards can be devastating if they exceed liability insurance limits, which for many organizations is $2 million per occurrence.

Aubin v Synagogue and Jewish Community Centre of Ottawa (Soloway Jewish Community Centre), decided by the Ontario Court of Appeal on August 15, 2024. involved an appeal of a trial judge’s prejudgment interest order. The appellants were Doris Aubin, who had suffered a serious head injury in 2015 when she fell on the respondent’s premises and her spouse, Aimee Zweig.

At the initial jury trial, the appellants were awarded total damages of $3,602,839.83 (after a five per cent deduction for contributory negligence). Of that amount, $216,000 represented Ms. Aubin’s non-pecuniary damages for pain and suffering and $665,595 was awarded as her past pecuniary damages. Her spouse, Aimee Zweig, was awarded non-pecuniary damages of $85,000 under s. 61 of the Family Law Act, for loss of care, guidance, and companionship. The balance of the jury’s award was for future losses, medical care and assisted living.

The central issue on appeal was the trial judge’s decision to deviate from the presumptive five percent prejudgment interest rate for non-pecuniary damages, setting it at 1.3 percent, and for past pecuniary damages, setting it at 0.8 percent. The appellants argued that the trial judge erred in her approach and that the interest rates should be set at 8.46 percent based on the rate of return earned by the respondents‘ insurer and their own investments.

The Court of Appeal found that the trial judge erred in several ways. First, she failed to give effect to the statutory presumption of the five percent prejudgment interest rate for non-pecuniary damages. Second, she misconstrued the purpose of non-pecuniary damages, concluding that they covered future as well as past losses. Third, she misinterpreted the criterion of prejudgment interest rates, allowing it to overwhelm her analysis to the exclusion of other relevant factors under s. 130(2) of the Courts of Justice Act (CJA), including the interest earned by the respondents’ insurer and the appellants’ investments.

The Court of Appeal also found that the trial judge erred in her interpretation of “market interest rates” under s. 130(2)(a) of the CJA, as it held that “market interest rates“ should be interpreted broadly, not necessarily defined by reference to any particular index.

Based on these findings, the Court of Appeal allowed the appeal and set aside the trial judge’s prejudgment interest award. It ordered that the prejudgment interest rate for the appellants’ non-pecuniary damages be set at 8.46 percent and that the rate for Ms. Aubin’s past pecuniary damages be set at 8.46 percent, which significantly increased the award for the appellants.

Aubin is notable for charities and not-for-profits as it is an example of a how significant damage awards can be in personal injury cases – in this case, in excess of $3 million. As many organizations have general liability insurance policies limited to $2 million per occurrence, directors and officers may want to consult with their insurance and legal advisors to assess if their current coverage is adequate. Charities and not-for-profits are exposed to liability on a multitude of fronts, especially those that operate physical spaces open to the public or members, and it is essential that they are protected against significant claims.

​Read the September 2024 Charity & NFP Law Update