The Court of Appeal of Alberta has rendered a decision in the Morrow v. Zhang case. The unanimous decision, written by Madam Justice Rowbotham, was released on Friday, June 12, 2009. In essence, the Court of Appeal held that the Alberta Minor Injury Regulation, A.R. 123/2004, does not violate the Canadian Charter of Rights and Freedoms. As a result, the Court of Appeal upheld the $4,000 cap limiting non-pecuniary general damages for injuries defined as minor pursuant to the legislation.

In the trial decision rendered on February 8, 2008, Associate Chief Justice Wittmann struck the cap on the basis that the provisions of the Minor Injury Regulation violated the injured Plaintiffs’ right to equality under Section 15 of the Charter. He reasoned that limiting non-pecuniary damages for minor soft tissue injuries reinforces stereotyping and prejudice that minor injury sufferers are generally malingerers. He further concluded that the cap effectively placed less value on the pain suffered by minor injury sufferers than on other injury sufferers. Associate Chief Justice Wittmann concluded that the objective of the Minor Injury Regulation was to reduce insurance premiums. He held that the prejudice to minor injury sufferers resulting from the violation of their Section 15 Charter rights outweighed that objective and that the increased benefits for accident victims in the legislation 1 would not, in the eyes of a reasonable person, overcome the distinction created by the cap on non-pecuniary damages. The Minor Injury Regulation was therefore struck down as being unconstitutional.

The Court of Appeal reversed the decision of Associate Chief Justice Wittmann and held that the Minor Injury Regulation does not infringe the rights provided by either Section 7 or 15 of the Charter. Section 7 provides Canadians the right to security of the person. In response to the argument that the Minor Injury Regulation violates the rights set forth in Section 7 of the Charter, Justice Rowbotham noted that the Minor Injury Regulation does not coerce a victim to accept certain treatment, nor does it limit the discretion of health care practitioners to prescribe certain treatment. As such, the Court of Appeal refused to accept the argument that the provisions of the Minor Injury Regulation violate the physical and psychological security of the person by requiring that they proceed with treatment as set out in the Diagnostic and Treatment Protocols Regulation.

On the issue of the alleged violation of the Plaintiffs’ right to equality pursuant to Section 15 of the Charter, Justice Rowbotham agreed with the conclusion of Associate Chief Justice Wittmann that the provisions of the Minor Injury Regulation distinguish between minor injury claimants and claimants suffering other injuries. She further concurred that this distinction was made on the enumerated ground of disability. However, she held that Associate Chief Justice Wittmann erred in concluding that the distinction was discriminatory and that the insurance reforms, when analyzed as a complete package, perpetuate the stereotyping of individuals suffering minor soft tissue injuries. She concluded that when the minor injury legislation is properly analyzed as a whole, it meets the needs and circumstances of the claimants. In this regard, she noted that Associate Chief Justice Wittmann appeared to disregard the increased medical benefits now available to claimants in exchange for the cap on non-pecuniary damages for pain and suffering.

In short, while the provisions of the Minor Injury Regulation distinguish on the basis of disability, those provisions were held not to be discriminatory and the legislation as a whole was held to respond to the needs and circumstances of those who suffer from minor injuries.

The Plaintiffs are expected to seek leave to appeal to the Supreme Court of Canada. An application for leave to appeal must be filed within 60 days of the decision being pronounced, excluding the month of July, which means that it must be filed by September 11, 2009. Few cases are granted leave to appeal to the Supreme Court of Canada. Most applications for leave to appeal are denied and leave is granted in approximately 10% of cases involving Charter arguments.

If leave to appeal to the Supreme Court of Canada is sought, it is expected to take between 4 and 5 months for the Court to issue a decision on the leave application. If leave to appeal is granted, it will likely be 6 to 8 months before oral argument is heard. Once heard, it usually takes approximately 6 months for the Supreme Court of Canada to render a decision.

In the interim, the Plaintiffs may seek a stay of the Court of Appeal’s decision pending an application for leave to appeal and/or the decision of the Supreme Court of Canada if leave is granted. A successful stay application would mean that the minor injury cap would remain out of force until either the application for leave to appeal is heard, or the decision of the Supreme Court of Canada is rendered.

Our office issued an Insurance Advisory on June 23, 2004, notifying clients that the Minor Injury Regulation had been proclaimed in force effective October 1, 2004. A number of terms and phrases were identified in that bulletin as likely to become the subject of litigation and ultimately, judicial determination. There has been little judicial consideration of the specific provisions of the Minor Injury Regulation due to the ongoing litigation regarding the underlying constitutionality of the Minor Injury Regulation. With the reinstatement of the Regulation, and likewise, the cap on general damage awards for minor injuries, the insurance industry is essentially back in the position it was in just prior to Associate Chief Justice Wittmann’s decision declaring the Minor Injury Regulation to be unconstitutional. We now expect that various provisions of the Minor Injury Regulation will become the subject of litigation in the near future.

The legislated $4,000 cap is adjusted to account for inflation on an annual basis. The Alberta Superintendent of Insurance issued Bulletin 01-09 dated February 2, 2009, stipulating that effective January 1, 2009, the value of the $4,000 cap adjusted for inflation is $4,504 for all claims arising on or after January 1, 2009.