2003BCCA0670.htm

Before:	The Honourable Mr. Justice Esson
	The Honourable Mr. Justice Hall
	The Honourable Madam Justice Saunders
	The Honourable Mr. Justice Low
	The Honourable Mr. Justice Smith

M. Taylor, M. Double, L. Riddle and A.S. Maclure	Counsel for the Appellant, Canada (Indian Affairs)
P. Grant, D. Soroka and B. O’Reilly	Counsel for the Respondents, T.W.N.A., E.A.J., G.B.S. and E.R.M.
Place and Date of Hearing:	Vancouver, British Columbia
January 27 and 28, 2003
Place and Date of Judgment:	Vancouver, British Columbia
5 December, 2003

Written Reasons by:

The Honourable Mr. Justice Smith

Concurred in by:

The Honourable Mr. Justice Esson
The Honourable Mr. Justice Hall
The Honourable Madam Justice Saunders
The Honourable Mr. Justice Low

Reasons for Judgment of the Honourable Mr. Justice Smith:

I INTRODUCTION

[1] These reasons concern appeals and cross appeals from judgments of the Supreme Court of British Columbia pronounced on 9 August 2001 following concurrent trials of two actions for damages for psychological injuries and associated losses. For convenience, I will refer to the parties to these appeals as plaintiffs and defendants according to their respective roles in the underlying actions.

[2] The actions arose out of sexual assaults inflicted by the defendant Clarke upon several students at St. George’s Indian Residential School near Lytton, British Columbia in the 1960s and 1970s. Mr. Clarke, who was a dormitory supervisor at the school, took no part in the trials or in these appeals. He was convicted in 1988 of several counts of sexual assault of former students of the school and was sentenced to serve eleven years in prison.

[3] In an earlier Supreme Court action emanating from Mr. Clarke’s abusive conduct, Madam Justice Dillon awarded damages to a former student against Mr. Clarke, Canada, and the Anglican Church. She apportioned fault in negligence between Canada (40%) and the Church (60%): see M.(F.S.) v. Clarke, [1999] 11 W.W.R. 301, [1999] B.C.J. No. 1973 (Q.L.)(B.C.S.C.). The parties in these appeals agreed to be bound in the underlying actions by her findings, subject to an appeal by the Church of her division of liability between Canada and the Church. We were to have heard that appeal immediately after hearing these appeals but it was adjourned pending final agreement on a possible settlement between Canada and the Church. These appeals and cross appeals, therefore, concern only damages.

[4] In the action underlying appeal CA028940 (the T.W.N.A. appeal), seven plaintiffs claimed against several defendants, including Canada, which brought third-party proceedings against the Church. As four of the plaintiffs settled their claims during the trial, only three remain as parties to these appeals. In the action underlying appeal CA028939 (the E.R.M. appeal), E.R.M. claimed against both Canada and the Church, among others, while Canada claimed contribution from the Church in a third-party proceeding.

II THE IMPUGNED JUDGMENTS

[5] The entered judgments are unconventional in form. Among other departures from customary practice, they blend the trial judge’s orders of redress with his findings, which, when they are set out in a judgment, are normally recited as matters of introductory information. Thus, in the T.W.N.A. judgment, orders are made that each plaintiff:

...is hereby granted judgment in the amount of $..., jointly and severally, against the defendants Canada and Derek Clarke founded in negligence and further against Canada founded in vicarious liability.

[Emphasis added]

and, in the E.R.M. judgment, an order is made that E.R.M.:

...is hereby granted judgment in the amount of $191,500, jointly and severally, against the Defendant Canada, the Defendants and Third Parties the General Synod, the Diocese of Cariboo and Derek Clarke founded in negligence and further against Canada, the General Synod and the Diocese of Cariboo jointly and severally founded in vicarious liability.

[Emphasis added]

[6] Regrettably, the disregard of conventional practice in the drawing and settling of the judgments has placed this Court in a predicament. The judgments do not result from the defendant Clarke’s negligence, as the judgments say; rather, they are grounded in the sexual assaults that he perpetrated upon the plaintiffs. This error might affect the judgments for punitive and aggravated damages. However, it would serve no one’s interests to dispose of these appeals on the bases recorded in the judgments and I will proceed as if the judgments simply ordered, as they should have, that the plaintiffs recover the sums awarded against each defendant without description of their roots in law, which are identified in the reasons for judgment.

[7] In the formal judgment in the T.W.N.A. action, the trial judge ordered judgment against Mr. Clarke and Canada for E.A.J. in the amount of $185,000, for T.W.N.A. in the amount of $173,000, and for G.B.S. in the amount of $159,000. As well, he granted judgment for Canada against the Church for contribution and indemnity for 60% of the sum of those amounts. In addition, he granted judgment for $25,000 for each plaintiff against Canada for punitive damages. In his reasons for judgment, he identified the heads of damages included in the judgment, as follows:

T.W.N.A. Non-pecuniary $140,000

Cost of future care 8,000

Aggravated 25,000

Punitive 50,000

E.A.J. Non-pecuniary $150,000

Cost of future care 10,000

Aggravated 25,000

Punitive 50,000

G.B.S. Non-pecuniary $130,000

Cost of future care 4,000

Aggravated 25,000

Punitive 50,000

[8] In his reasons for judgment (¶ 362), the trial judge assessed punitive damages for each plaintiff of $25,000 against Canada and $25,000 against the Church. No award was recorded in the formal judgment, however, for the punitive damages assessed against the Church.

[9] In the judgment entered in the E.R.M. action, the trial judge ordered judgment against Mr. Clarke, Canada, and the Church in the amount of $191,500. As well, he granted judgment for punitive damages against Canada and the Church in the amount of $25,000 each. In his reasons for judgment, he identified the heads of damages as follows:

Non-pecuniary $140,000

Cost of future care 26,500

Aggravated 25,000

Punitive (Canada) 25,000

Punitive (Church) 25,000

[10] I will turn now to the issues raised on the appeals.

III THE ERRORS ALLEGED

[11] Canada, the sole appellant, alleges in its factum that the trial judge erred in the following four respects:

(1) in failing to take into account, in his assessment of non-pecuniary damages, circumstances and events in the lives of the plaintiffs occurring before and after the sexual assaults by Mr. Clarke and thereby misapplying the decision in Athey v. Leonati, [1996] 3 S.C.R. 458;

(2) in awarding aggravated damages against Canada;

(3) in awarding punitive damages against Canada; and

(4) in assessing non-pecuniary damages higher than the range for such damages in comparable sexual assault cases.

[12] In the cross appeals, the plaintiffs each assert that the trial judge failed to apply the proper principles of assessment and that he made “palpable and overriding” errors of fact in dismissing their claims for damages for past and future “loss of opportunity” to earn income.

[13] I would dismiss Canada’s appeals against the awards of punitive and aggravated damages. However, in my view, the trial judge proceeded upon wrong principles in his assessment of non-pecuniary damages and of damages for impaired earning capacity, and I would allow the appeal and the cross appeals on that ground. Since the trial judge did not make the findings of fact necessary for a proper assessment of these damages, the claims must be remitted to the trial court for assessment. In the result, it is not necessary to address Canada’s submission that the awards of non-pecuniary damages are inordinately high or the plaintiffs’ submissions that the trial judge made fundamental factual errors.

IV ANALYSIS

1. Non-pecuniary damages and impairment of earning capacity

(a) Causation and assessment of damages – General principles

[14] The way in which Canada has framed its first ground of appeal suggests that Athey v. Leonati established new principles of law, but this is not so. The decision merely summarizes and explains well-settled principles, including those applicable to causation and the assessment of damages.

[15] In simple terms, a tort is comprised of a duty of care owed by the defendant to the plaintiff and a breach of that duty that causes loss and damage to the plaintiff. Proof of those elements is proof of liability. The extent of the liability is determined on an assessment of damages, which follows the finding of liability. Duty and breach were not in issue in Athey v. Leonati, nor are they in issue here. We are concerned with causation and assessment.

[16] Determining the cause of loss and damage must be kept separate from the assessment of damages to compensate for that loss and damage, since different principles govern the two questions. The analytical distinction between causation and compensation may be illustrated by reference to Athey v. Leonati. The appellant in that case suffered a disc herniation as a result of the combined effect of a pre-existing disposition and injuries he had sustained in two motor vehicle accidents. Major J., speaking for the court, distinguished between causation and the assessment of damages in his summary of the applicable principles:

[41] ...If the injuries sustained in the motor vehicle accidents caused or contributed to the disc herniation, then the defendants are fully liable for the damages flowing from the herniation. The plaintiff must prove causation by meeting the “but for” or material contribution test. Future or hypothetical events can be factored into the calculation of damages according to degrees of probability, but causation of the injury must be determined to be proven or not proven.

[17] Proof on a balance of probabilities that the wrongful conduct was a factual cause of the damage is necessary (Athey v. Leonati ¶ 13) but not sufficient to establish liability. The wrongful conduct must also be shown to be the legal cause of the injury, since a defendant is not liable for damage that is “too remote” from the wrongful conduct. At one time, it was thought that a defendant should be liable for all direct loss caused by his wrongful conduct, even if the particular loss was an unforeseeable consequence: Re Polemis, [1921] 3 K.B. 560 (C.A.). However, Overseas Tankship (U.K.) Ltd. v. Morts Dock & Engineering Co. Ltd. (“Wagon Mound”), [1961] A.C. 388 (P.C.), known as Wagon Mound No. 1, established that only reasonably foreseeable losses attract liability.

[18] This qualification of the test for legal causation called into question the continuing vitality of the traditional “thin skull” rule, first announced in Dulieu v. White and Sons, [1901] 2 K.B. 669 at 679:

If a man is negligently run over or otherwise negligently injured in his body, it is no answer to the sufferer’s claim for damage that he would have suffered less injury, or no injury at all, if he had not had an unusually thin skull or an unusually weak heart.

[19] As Major J. said in Athey v. Leonati, this rule:

[34] ...makes the tortfeasor liable for the plaintiff’s injuries even if the injuries are unexpectedly severe owing to a pre-existing condition. The tortfeasor must take his or her victim as the tortfeasor finds the victim, and is therefore liable even though the plaintiff’s losses are more dramatic than they would be for the average person.

[20] Smith v. Leech Brain & Co. Ltd., [1962] 2 Q.B. 405 addressed the rule in light of the new requirement of reasonable foreseeability. Mr. Smith, an employee of the defendant in its ironworks, was burned on the lip by a splash of molten metal as a result of a breach by the employer of its duty of care. The burn became malignant and Mr. Smith subsequently died. The burn was a cause-in-fact of the cancer, but the issue was whether it was the legal cause so as to make the defendant liable at the suit of Mr. Smith’s widow, who relied on the thin skull rule, citing Dulieu v. White and Sons, supra. The employer argued that the rule was inconsistent with the reasonable foreseeability test announced in Wagon Mound No. 1, supra, and that while the burn was foreseeable, the cancer was not. Lord Parker C.J. concluded there was no inconsistency and found the defendant liable, stating, at 415:

...it seems to me that this is plainly a case which comes within the old principle. The test is not whether these employers could reasonably have foreseen that a burn would cause cancer and that he would die. The question is whether these employers could reasonably foresee the type of injury he suffered, namely, the burn. What, in the particular case, is the amount of damage which he suffers as a result of that burn depends upon the characteristics and constitution of the victim.

[21] Thus, the thin skull rule is a rule of liability relating to legal causation. It was applicable in Athey v. Leonati because, as Major J. said:

[47] ...The pre-existing disposition may have aggravated the injuries, but the defendant must take the plaintiff as he finds him. If the defendant’s negligence exacerbated the existing condition and caused it to manifest in a disc herniation, then the defendant is a cause of the disc herniation and is fully liable.

[22] The defendant is “fully liable” because liability cannot be apportioned between causes (Athey v. Leonati ¶ 19-23). Once causation has been proven, the tortfeasor is fully liable for whatever damage his or her wrongful conduct has caused the plaintiff.

[23] The extent of the defendant’s liability is determined in an assessment of damages. Smith v. Leech Brain & Co. Ltd., supra illustrates the different considerations applicable to causation and compensation. Although Lord Parker C.J. held the employer fully liable for the unexpectedly severe consequences of its breach of duty on the basis of the thin skull rule, the employer was not liable to pay damages to the full extent of the widow’s loss. A note at the end of the case, included by the reporter at 416, states:

[His Lordship considered the question of damages, observed that he must make a substantial reduction from the figure taken for the dependency because of the fact that the plaintiff’s husband might have developed cancer even if he had not suffered the burn, and awarded the plaintiff £3,064 17s. 0d.]

[24] This reduction of the award reflects a fundamental principle governing the assessment of damages, which Major J. expressed in Athey v. Leonati as follows:

[32] ... The essential purpose and most basic principle of tort law is that the plaintiff must be placed in the position he or she would have been in absent the defendant’s negligence (the “original position”). However, the plaintiff is not to be placed in a position better than his or her original one. It is therefore necessary not only to determine the plaintiff’s position after the tort but also to assess what the “original position” would have been. It is the difference between these positions, the “original position” and the “injured position”, which is the plaintiff’s loss.

[25] See also Ratych v. Bloomer, [1990] 1 S.C.R. 940 at 964, where McLachlin J. (as she then was) observed that damages are awarded to compensate for the plaintiff’s actual loss, that is, to restore the plaintiff to his or position as if the tort had not occurred.

[26] The assessment of damages engages the “crumbling skull” doctrine. The doctrine is named after the thin skull rule, but “crumbling skull” is an “awkward label” (Athey v. Leonati ¶ 34). This is because the word “crumbling” misleadingly implies an active process of disintegration when in fact the plaintiff’s original position encompasses more than actively deteriorating conditions. Confusion arises when the label “crumbling skull” is assumed to contrast “manifest and disabling” conditions with latent conditions triggered by the tort, which are seen in this context as “thin skull” cases.

[27] Major J. described the “crumbling skull” principle as a “fairly simple idea” (Athey v. Leonati ¶ 34), and explained it in the following terms:

[35] The so-called “crumbling skull” rule simply recognizes that the pre-existing condition was inherent in the plaintiff’s “original position”. The defendant need not put the plaintiff in a position better than his or her original position. The defendant is liable for the injuries caused, even if they are extreme, but need not compensate the plaintiff for any debilitating effects of the pre-existing condition which the plaintiff would have experienced anyway. The defendant is liable for the additional damage but not the pre-existing damage: Cooper-Stephenson, supra, at pp. 779-780 and John Munkman, Damages for Personal Injuries and Death (9th ed. 1993), at pp. 39-40. Likewise, if there is a measurable risk that the pre-existing condition would have detrimentally affected the plaintiff in the future, regardless of the defendant’s negligence, then this can be taken into account in reducing the overall award: Graham v. Rourke, supra; Malec v. J.C. Hutton Proprietary Ltd., supra; Cooper-Stephenson, supra, at pp. 851-852. This is consistent with the general rule that the plaintiff must be returned to the position he would have been in, with all of its attendant risks and shortcomings, and not a better position.

[28] Accordingly, a pre-existing condition, whether it is quiescent or active, is part of the plaintiff’s original position.

[29] The confusion engendered by the misleading label is identified and dispelled in the following passage from Allen M. Linden, Canadian Tort Law, 7th ed. (Markham, Ont.: Butterworths, 2001) at 348 (I have inserted the footnotes in the text):

An attempt was made to distinguish between the legal treatment of a “thin skull” and a “crumbling skull”, where maladies were merely exacerbated or accelerated, but this has been nipped in the bud. [Price v. Garcha (1989), 2 C.C.L.T. (2d) 265 (B.C.C.A.) (per Wallace J.A.); affg (1988), 44 C.C.L.T. 1 (per Gow J.). See Athey, supra, at 473-74]. Whereas the factual situation differs slightly, there is no difference between these two situations in terms of tort liability for the consequences; the only difference is in the assessment of damages, they being less in cases of pre-existing frailty and deteriorating conditions [Pryor v. Bains and Johal (1986), 69 B.C.L.R. 395, at p. 397 (C.A.), Athey, ibid.] than with completely healthy persons. Thus, when an accidental injury caused a relapse of multiple sclerosis dormant for 16 years, the defendant was held responsible, but for an appropriately reduced amount. [York v. Johnston (1997), 37 C.C.L.T. (2d) 299 (B.C.C.A.)].

[30] The statements in this passage are fully supported by the authorities cited. In my view, there is no need to obscure the damages inquiry by metaphorical references to “thin skulls” and “crumbling skulls.” Major J.’s “simple idea” is clear and direct, and both latent and active pre-existing conditions must be considered in assessing the plaintiff’s original position.

[31] This point was made clearly in York v. Johnston (1997), 37 B.C.L.R. (3d) 235 (C.A.). The plaintiff in this case suffered a relapse of her multiple sclerosis after being injured in an automobile accident. Madam Justice Newbury characterized it as a “thin skull” case, in which it was not appropriate to apportion liability, but found that the trial judge was nonetheless entitled to reduce the plaintiff’s damages to reflect the risk of relapse that was inherent in her preaccident state (¶ 7). Madam Justice Newbury’s comments on the distinction between causation and compensation are apt in the present context:

[5] It is certainly difficult to differentiate conceptually in a case such as this one, between the court’s task with respect to causation – making findings as to past events which may result in the apportionment of damages – and the court’s task with respect to the measurement of damages – a task that includes considering events that might have occurred in the future “but for” the accident and what may happen in the future in light of the accident, and which usually results in the discounting or reduction of damages….

[6] Of course, the judgment as to the measure of damages is a much more subtle one than that as to causation, not only because it involves a consideration of mere contingencies as well as probabilities, but because of the range of results available in the discounting of the award, as opposed to the “all or nothing” choice that must be made with respect to causation. But the two issues do not operate at cross-purposes even where, as in this case, there is only one “cause” in tort law for the plaintiff’s injury. The question is what award is appropriate to reflect the difference between the plaintiff’s original state (including the risk, to which she was subject immediately prior to the accident, of the relapse of her latent condition) and the state in which she now finds herself.

[Emphasis in original]

[32] Thus, the plaintiff’s latent condition (her multiple sclerosis, which was in remission) was taken into account in the assessment of damages as part of her original position.

[33] The crumbling skull principle was not applicable in Athey v. Leonati because there was no finding of any measurable risk that the disc herniation would have occurred without the accident, and there was therefore no basis to reduce the award to take into account any such risk.

[34] Thus, the defendants in Athey v. Leonati were liable to the full extent of the plaintiff’s loss and damage and were required to pay damages accordingly. The trial judge’s error was that she apportioned her award of damages between the accidents and the non-tortious background causes on the basis of proportionate liability. The defendants were fully liable for the unexpectedly severe injury because, on the application of the thin skull rule, they had to take the plaintiff as they found him (¶ 47). Moreover, on the facts found by the trial judge, they were liable to compensate the plaintiff to the full extent of his loss (¶ 49). Major J. noted, however:

[48] Had the trial judge concluded (which she did not) that there was some realistic chance that the disc herniation would have occurred at some point in the future without the accident, then a reduction of the overall damage award may have been considered. This is because the plaintiff is to be returned to his “original position”, which might have included a risk of spontaneous disc herniation in the future.

[35] Major J. discussed the ideas of “measurable risk” and “realistic chance” in Athey v. Leonati under the familiar heading “Adjustments for Contingencies.” In this context, he contrasted past events, which must be proven on a balance of probabilities and are thereafter treated as certainties (¶ 28), with hypothetical and future events:

[27] Hypothetical events (such as how the plaintiff’s life would have proceeded without the tortious injury) or future events need not be proven on a balance of probabilities. Instead, they are simply given weight according to their relative likelihood: Mallett v. McMonagle, [1970] A.C. 166 (H.L.); Malec v. J.C. Hutton Proprietary Ltd. (1990), 160 C.L.R. 638 (Aust. H.C.); Janiak v. Ippolito, [1985] 1 S.C.R. 146. For example, if there is a 30 percent chance that the plaintiff’s injuries will worsen, then the damage award may be increased by 30 percent of the anticipated extra damages to reflect that risk. A future or hypothetical possibility will be taken into consideration as long as it is a real and substantial possibility and not mere speculation: Schrump v. Koot (1997), 18 O.R. (2d) 337 (C.A.); Graham v. Rourke (1990), 74 D.L.R. (4th) 1 (Ont. C.A.).

[36] Unrelated intervening events must be taken into account in the same way as pre-existing conditions. If such an event would have affected the plaintiff’s original position adversely in any event, the net loss attributable to the tort will not be as great and damages will be reduced proportionately (Athey v. Leonati ¶ 31-32).

[37] These principles of assessment apply equally to non-pecuniary damages and to damages for loss or impairment of earning capacity: see Steenblok v. Funk (1990), 46 B.C.L.R. (2d) 133 (C.A.) and Rosvold v. Dunlop (2001), 84 B.C.L.R. (3d) 158, 2001 BCCA 1, where this Court said:

[9] Because damage awards are made as lump sums, an award for loss of future earning capacity must deal to some extent with the unknowable. The standard of proof to be applied when evaluating hypothetical events that may affect an award is simple probability, not the balance of probabilities: Athey v. Leonati, [1996] 3 S.C.R. 458. Possibilities and probabilities, chances, opportunities, and risks must all be considered, so long as they are a real and substantial possibility and not mere speculation. These possibilities are to be given weight according to the percentage chance they would have happened or will happen.

[38] I will turn next to how the trial judge misapplied these principles in his assessment of non-pecuniary damages and in his consideration of damages for impairment of earning capacity.

(b) Non-pecuniary damages – Failure to consider realistically possible contributing causes

[39] The learned trial judge conflated the questions of liability and compensation in his analysis; he applied the principles of causation to determine liability and, as well, to determine the extent of the liability. Once he had decided that the sexual assaults were a material cause of the plaintiffs’ psychological difficulties, he concluded that pre-existing inherent conditions and unrelated intervening events were irrelevant to the assessment of damages unless it could be shown with certainty that they would have led to the plaintiffs’ psychological difficulties in any event.

[40] Further, he refused to consider pre-existing inherent conditions unless their effects were already manifest and disabling. Thus, he failed to consider whether these potentially causal factors would have contributed to the plaintiffs’ loss and damage absent the sexual assaults and, as well, whether there was a realistic chance that the plaintiffs would have suffered their effects anyway in the future. As a result, he may have ordered the defendants to pay damages for losses for which they are not responsible.

[41] As well, he contravened the fundamental principle that damages are to restore a plaintiff to the position that he or she would have been in absent the tort by choosing the date of entry into the residential school as the benchmark for determination of the plaintiffs’ “original positions.”

[42] In my view, these errors require us to remit the matter to the Supreme Court for an assessment of non-pecuniary damages on proper principles.

[43] The trial judge began his discussion of the assessment of non-pecuniary damages by referring to the submissions of Canada and the Church that there were other causal events contributing to the plaintiffs’ psychological difficulties and by observing that he had to consider “what part of the plaintiffs’ present psychological status can be said to be caused by the sexual assaults?” (¶ 294, 295). Although this was the proper question for the trial judge to ask for the assessment of damages, he erred in seeking the answer in the principles that determine causation.

[44] After referring to Athey v. Leonati, the learned trial judge correctly instructed himself on the principles of causation (¶ 296-299). He said essentially that if the plaintiffs’ current psychological conditions would not have occurred but for the sexual assaults, the defendants were liable. As well, if the sexual assaults and the alleged non-tortious causal factors were each a sufficient cause of the plaintiffs’ loss (in which case the “but for” test is unworkable), the sexual assaults were a material cause and the defendants were liable.

[45] Then, the trial judge continued:

[299] In paragraph 15 of Athey, the court noted that causation is established where the defendant’s negligence “materially contributed” to the injury, so long as that contributing factor is more than “de minims”. [sic]

[300] An example of the application of these principles in a sexual assault case where non-tortious factors were present is M.M. v. R.F. (1997), 52 B.C.L.R. (3d) 127 (C.A.), a case involving the sexual assault of a female child by her step-brother. In that decision, Donald J.A., who wrote the minority judgment, considered Athey. He set out the fundamental rule that the plaintiff is entitled to be placed in the position in which she would have been had the tort not occurred. He went on to hold (Esson and Cumming JJA. agreed with Donald J.A. on this point) that even if there had been non-tortious causes that contributed to the plaintiff’s condition, the plaintiff would be entitled to full recovery from the defendant so long as the tort was a “material contribution” to the plaintiff’s injury.

[301] The pre-St. George’s experiences of the plaintiffs would be relevant only if at the time they entered St. George’s it was already apparent that their present psychological status was inevitable. This could be demonstrated if the evidence disclosed that the plaintiffs, at the time they first entered the residential school, were suffering a “manifest and disabling” condition”. See: Pryor v. Bains and Johal (1986), 69 B.C.L.R. 395 (C.A.). The defendants have failed to persuade me this is so.

[46] With respect, the learned trial judge made several errors in this passage of his reasons.

[47] First, he failed to recognize the fundamental inconsistency in the propositions (¶ 300) that the purpose of an award of damages is to return a plaintiff to his or her original position, on the one hand, and that the plaintiff is entitled to full recovery despite non-tortious contributing causes of the injury so long as the tort was a “material contribution,” on the other. The latter proposition ignores the plaintiff’s original position by putting him in a position that assumes no pre-existing contributing conditions and no independent intervening causal events, that is, in a better position than his or her original position. This error flowed from the erroneous application of the thin skull rule to the assessment of damages.

[48] The trial judge’s misunderstanding of the thin skull and crumbling skull rules led him into further error in paragraph 301, quoted above. It was not correct to say that the alleged non-tortious causal factors were irrelevant unless they had already become manifest in a disabling condition and unless the defendants could prove that they would have inevitably led to the plaintiffs’ present conditions. Whether manifest or not, a weakness inherent in a plaintiff that might realistically cause or contribute to the loss claimed regardless of the tort is relevant to the assessment of damages. It is a contingency that should be accounted for in the award. Moreover, such a contingency does not have to be proven to a certainty. Rather, it should be given weight according to its relative likelihood.

[49] Further, the trial judge erred in choosing the date of entry into the school as the benchmark for the assessment of damages (¶ 301). In doing so, he overlooked the fundamental principle that damages are awarded to restore the plaintiff to the position in which he or she would have been if the tort had not occurred: see B.(M.) v. British Columbia (2001), 87 B.C.L.R. (3d) 12, 2001 BCCA 227 ¶ 96, app. all’d on other grounds, 2003 SCC 53. The plaintiffs’ original positions in this case were to be determined by identifying their positions immediately before they were sexually assaulted and projecting where they would have been at the date of trial had the sexual assaults not occurred. The time lapse between the date of entry into the school and the sexual assaults may be of some consequence in light of evidence that unrelated events during this period adversely affected the psychological status of some of the plaintiffs.

[50] In taking the approach he did, the trial judge relied upon the law as stated by this Court in M.(M.) v. F.(R.) (1997), 52 B.C.L.R. (3d) 127 (C.A.). I have concluded, with respect, that on this issue the decision of this Court is in error and should be overruled on the ground that it does not accord with the principles of assessment of damages as laid down in Athey v. Leonati. The action of M.M. was brought to recover damages for a long course of sexual abuse inflicted upon her by a young man who was aged 21 when the abuse began. During those years, the plaintiff was living as a foster child in the home of the young man’s parents, where he also lived. The action was brought against the son and his mother, who was joined on the ground that she had been negligent in failing to prevent the abuse and had breached her fiduciary duty as a foster parent. The trial judge awarded damages against the son, who did not defend, but dismissed the action against the mother.

[51] The plaintiff appealed that dismissal and also sought an increase in the award of damages. The appeal was heard by Esson, Cumming, and Donald JJ.A. Esson and Donald JJ.A. delivered lengthy reasons from which it is clear that the principal issue was whether the mother was liable. In the result, for the reasons of Esson J.A., concurred in by Cumming J.A., Donald J.A. dissenting, it was held that the appeal on liability should be dismissed. There were a number of issues on damages but I need refer only to the question of whether the trial judge, having fixed non-pecuniary damages at $100,000, erred in law in reducing that award to $60,000 on the ground that 40% of the damage was attributable to causes other than sexual abuse by the son. This Court held that there was no evidence to support that apportionment: the sole cause of the plaintiff’s psychological condition was the sexual abuse that had triggered her latent alcoholism (¶ 65, 67). Those findings on evidentiary issues are not directly relevant to the present discussion. What is relevant is that the Court went on to say:

[67] ...Even if it could be said that other non-tortious causes contributed to the plaintiff’s condition, so long as the tort was a material contribution to the harm ..., the plaintiff is entitled to full recovery from the wrongdoers.

[52] In support of this proposition, the Court referred to paragraphs 19, 20 and 23 of Athey v. Leonati, where Major J. explained that there can be no division of a single injury between causes and that a tortfeasor whose conduct was a cause of the plaintiff’s loss is fully liable. However, with respect, the statement quoted above misapplies the finding in Athey v. Leonati by overlooking the fundamental principle of damages that a plaintiff is not entitled to be put in a better position than his or her original position: the plaintiff is entitled to “full recovery” only for the damage caused by the defendant’s wrongful conduct, and not for loss and damage that would have occurred anyway.

[53] The essence of the error in M.(M.) v. F.(R.) was in treating the thin skull rule as determinative of damages and in regarding the crumbling skull doctrine as applicable only where the plaintiff’s inherent condition was already active. Thus, it is said:

[61] ...Other causes may only be reckoned if the plaintiff had a manifest and disabling condition prior to the abuse: Pryor v. Bains (1986), 69 B.C.L.R. 395 (B.C.C.A.), at 399-400...

[54] Pryor v. Bains (1986), 69 B.C.L.R. 395 (C.A.), which was referred to in the passage quoted above from Canadian Tort Law, does not support the proposition that only manifest and disabling conditions may be considered in reduction of damages. Rather, it established only that such conditions should be taken into account. In that case, the plaintiff had a pre-existing condition that was already manifest and disabling at the time of the tort. This Court held that the defendant was liable only to the extent that the wrongful conduct exacerbated the pre-existing condition. This is consistent with proper principle.

[55] The Court in M.(M.) v. F.(R.) considered that pre-existing conditions that were not certain to result in harm were irrelevant to an assessment of damages. It said:

[62] ... in order for the thin skull rule not to operate, there would have to be evidence that the plaintiff was bound to become an alcoholic regardless of childhood sexual abuse.

[56] For the reasons I have explained, I do not regard this as the correct approach to pre-existing conditions and their inherent risks.

[57] I find support for this analysis in other decisions of this Court.

[58] I have already referred to York v. Johnston, supra, which approached the assessment of damages in a manner consistent with my analysis. Another example is Edgar v. Freedman (1997), 40 B.C.L.R. (3d) 87 (C.A.), where this Court affirmed (¶ 55-68) the applicability of the principles of damages assessment set out in Athey v. Leonati to a pre-existing susceptibility to emotional or psychological injury and to a brain tumour that would have become symptomatic regardless of the tort. The Court sustained a damages award that had been reduced to take account of the portion of the plaintiff’s loss and damage that he would have suffered in any event.

[59] Similarly, in McKelvie v. Ng (2001), 156 B.C.A.C. 225, 2001 BCCA 384, which was handed down several weeks before the trial judge’s decision, Saunders J.A., speaking for the Court, stated that it is necessary to adjust a damages award for any measurable risk that pre-existing conditions would have detrimentally affected the plaintiff in the future, regardless of the defendant’s wrongful conduct. The plaintiff in that case suffered from three asymptomatic pre-existing conditions when he was injured in an automobile collision. The trial judge found that the collision “was a substantial cause” of the injuries, in that it made active the previously quiescent conditions. Relying on the passages in Athey v. Leonati that explain that there can be no apportionment of liability between causes, she awarded the plaintiff damages to compensate to the full extent of his damage without regard to its other causes. In remitting the matter to the trial court for an assessment of damages, Saunders J.A. observed that, although the trial judge referred to the latent conditions when she discussed causation, she made no reference in assessing damages to whether there was a measurable risk that pre-existing conditions would have detrimentally affected the plaintiff in future absent the tort. She continued:

[13] ... That consideration is discussed in Athey v. Leonati as necessary to assessment of the plaintiff’s original position. Such a consideration ensures that the plaintiff is compensated only for the losses suffered as a result of the defendant’s negligence.

[60] To the same effect is Hosak v. Hirst (2003), 9 B.C.L.R. (4th) 203, 2003 BCCA 42, where the question at trial was whether an automobile collision that caused soft tissue injuries to the plaintiff’s neck and mid-back had also aggravated a pre-existing asymptomatic degenerative condition of his cervical spine. The trial judge decided that, although the plaintiff was suffering from the effects of the pre-existing condition at the time of the trial, he had not proven that his suffering was caused by the automobile collision. Nevertheless, she awarded non-pecuniary damages on the basis that the collision may have aggravated the pre-existing condition on a temporary basis. Madam Justice Rowles, speaking for this Court, summarized her reasons for ordering a new trial in a passage that is apt in the present context:

[10] ...I am of the view that the learned trial judge misapprehended evidence critical to the issue of causation and erred in law by conflating the issue of causation (whether the accident caused the pre-existing condition to be “activated or aggravated”) with an issue relevant to the assessment of damages (whether there was a measurable risk that the pre-existing condition would have detrimentally affected the plaintiff in the future, regardless of the respondent’s negligence). In other words, it is my respectful view that as well as misapprehending material evidence on the issue of causation, the trial judge erred in law by not distinguishing between the principles of law that had to be applied in determining the issue of causation and those that apply to the assessment of damages.

[61] The plaintiffs attempted to distinguish these cases on the basis that, in each of them, the pre-existing condition was manifest and disabling at the time of the tort. For the reasons I have explained, I do not regard that as a relevant distinction.

[62] The Supreme Court of Canada recently reiterated the nature and effect of the “crumbling skull” rule in K.L.B. v. British Columbia, 2003 SCC 51, where McLachlin C.J.C. said:

[60] ...This rule is intended to ensure that the plaintiff is not put in a position better than that which he or she would have been in had the tort not been committed. It applies where the plaintiff has a pre-existing condition that would have caused or increased the risk of damage in any case. Dillon J. concluded that the appellants’ prior home life, with its extreme material deprivations and marital discord, brought them within the ambit of the crumbling skull rule. Their early experiences, in her view, would have caused long-term psychological damage in any event.

She did not mention any requirement that the pre-existing condition be manifest and disabling at the time of the tort.

[63] Accordingly, with respect, the trial judge erred in principle when he concluded that pre-existing susceptibilities and disabilities and unrelated intervening traumatic events were not relevant once it was shown that the sexual assaults were a material cause of the plaintiffs’ present difficulties unless it could be shown that the pre-existing matters were already manifest and their consequences inevitable.

[64] The plaintiffs contend that, in any event, the following passage demonstrates that the trial judge found no causal connection between the previous conditions and events and their present conditions:

[302] For reasons I will discuss below, I conclude that while one can point to some unfortunate aspects of the plaintiffs pre-St. George’s lives, these difficulties fall far short of a demonstrated manifest and disabling condition. Indeed, some of them could well fit the de minimus [sic] description, by which I simply mean that, when compared with the enormity of repeated sexual assaults upon captive children, they pale in significance. But more importantly as the legal test is not one of comparison, I find the evidence fails to persuade me that these pre-St. George’s experiences would have caused the psychological harm now evident in the plaintiffs.

[Emphasis added]

[65] The emphasized passage suggests that the trial judge may have turned his mind to reduction of the award for damage caused by non-tortious contributing causes, but the passage does not amount to a finding of fact that there was no measurable risk that the plaintiffs’ pre-St. George’s experiences would have detrimentally affected them regardless of the tort. It must be read in light of the trial judge’s misstatements in the preceding and following paragraphs of the burden of proof with respect to the effect of pre-existing conditions:

[303] … I conclude that these pre-school and post-school experiences did not lead inexorably to the plaintiffs’ current psychological status…

[66] Thus, the finding of fact in paragraph 302 was simply that the plaintiffs’ pre-St. George’s experiences were not bound to result in the psychological harm for which they seek compensation. This finding is susceptible to appellate review because it flows from application of the wrong standard of proof.

[67] In any event, following this statement, the trial judge returned to an analysis based on the proposition that the “material” cause of the harm is determinative. He reasoned that, unless the non-tortious causes alleged were the “primary” cause of the harm, they were not to be taken into account at all in the assessment of damages.

[68] Thus, after concluding that claims for damages arising out of the alleged non-sexual torts were time-barred, he referred to the defendants’ argument:

[295] ...I have already set out that the defendants say that the primary causes of the plaintiffs’ difficulties are to be found in the quality, or the lack of quality, of their lives before they attended St. George’s. They also point to tragic incidents in their lives after St. George’s as causal events contributing to current psychological difficulties.

He rejected the defendants’ submissions that the pre-existing conditions and susceptibilities and the subsequent psychological trauma were the “primary” causes of the loss and damage suffered by the plaintiffs and concluded that they were, therefore, irrelevant. It is implicit in his reasoning that he concluded there were secondary causes in addition to the sexual assaults and it is clear that he failed to consider whether these other causes contributed to the plaintiffs’ present psychological conditions.

[69] For example, in awarding damages to E.A.J., the trial judge said:

[314] I accept Dr. Söchting's opinion that the combined effect of the sexual assaults and the lack of support at the time are the major cause of his current psychological problems. I find the importance of the sexual assaults alone, given all of the circumstances, to be more than that caught by the expression "having made a material contribution".

[Emphasis added]

[70] In respect of T.W.N.A., he noted that “there was a chaotic aspect to his pre-St.George’s life which put him at risk,” but his assessment of damages did not reflect that risk. He concluded:

[327] With respect, I have no doubt in concluding upon the evidence that the sexual assaults upon T.W.N.A. as a child by a figure in authority from whom he could not escape, and for a long period of time, are the primary cause of his problems since he left St. George's. These factors contribute materially to his current psychological difficulties.

[Emphasis added]

[71] The trial judge referred to evidence that, because E.R.M.’s parents were alcoholics, he had “an elevated risk of abusing alcohol.” However, in awarding damages to E.R.M., he said:

[336] I am satisfied that it is the sexual assaults, including their nature, frequency, duration and circumstances, that are the prime cause of his difficulties.

[Emphasis added]

[72] The references to materiality in the reasoning with respect to T.W.N.A. and E.A.J. demonstrate that the trial judge treated causal materiality as the yardstick for the measure of damages. Moreover, implicit in the expressions of relative cause used by the trial judge in the above passages is a recognition, which could be supported on the evidence, that other causes contributed to the plaintiffs’ present psychological status. If those other causal factors had their genesis in unrelated psychological trauma or in pre-existing conditions or susceptibilities that might realistically have materialized in psychological injury absent the sexual assaults, they should have been considered by the trial judge and reflected in his awards of damages.

[73] It cannot simply be assumed that children coming from difficult backgrounds would have necessarily experienced psychological damage in any event. As McLachlin C.J.C. said in K.L.B. v. British Columbia, supra:

[60] ...Dillon J. concluded that the appellants’ prior home life, with its extreme material deprivations and marital discord, brought them within the ambit of the crumbling skull rule. Their early experiences, in her view, would have caused long-term psychological damage in any event.

[61] The appellants challenge this conclusion, on the grounds that it simply cannot be assumed that poverty and marital difficulties are equivalent in their effects to verbal, physical or sexual abuse. In my view, the appellants are correct insofar as they are suggesting that trial judges may not simply assume that children who have come from impoverished or difficult homes would have sustained extensive psychological damage in any case. Life below the poverty line, though difficult, does not automatically rob children of their sense of self-worth; nor does it automatically prevent parents from maintaining a loving and supportive home for their children. However, there is no evidence in this case that Dillon J. arrived at her conclusion on the basis of such unwarranted assumptions, rather than on the basis of a clear appreciation of the evidence before her.

[74] Here, there was similar evidence that was capable of supporting the conclusion that these plaintiffs’ psychological dysfunctions were, at least in part, the result of causes unrelated to the sexual assaults.

[75] The trial judge made no comment about the “primary” or “major” cause of the plaintiff G.B.S.’s problems. However, there was evidence from which he could have concluded that there were material causes, in addition to the sexual assaults, of G.B.S.’s present pain, suffering, and loss of quality of life. For example, Dr. Penfold opined, under the heading “Pre-existing adjustment”:

Earlier experiences may make a child more vulnerable to abuse, and more likely to suffer damage. [G.B.S.] remembers little about the years before he entered residential school. We do know that he had multiple hospital admissions. This can make a child anxious, insecure, fearful of authority, and fearful of separation from parent figures. The child would be more anxious when they [sic] started school, as indeed happened with [G.B.S.]. Many children, however, outgrow early childhood insecurities so that it is likely that [G.B.S.] would be much less anxious and fearful if he had not suffered abuse at residential school. In addition to the hospitalisations, financial stresses and his mother’s drinking may have had an effect on [G.B.S.].

[Emphasis added]

[76] Dr. Daylen also expressed opinions suggestive of other material causes, of which the trial judge made no express mention. As to G.B.S.’s shyness, she opined:

Thus, although [G.B.S.]’s experiences of sexual assault may have exacerbated his pre-existing shyness, it is my impression that his current social restraint is non-pathological and primarily represents long-standing personality traits that developed during his early childhood.

[Emphasis added]

As to his alcohol abuse, she said:

Substance abuse has sometimes been associated with sexual abuse in the literature; however, substance abuse is a complex phenomenon that must be viewed within the context of numerous other especially potent factors such as familial alcohol abuse patterns, peer pressure and attitudes, and community base rates. As noted previously, all of these latter factors were present in this case and likely contributed to [G.B.S.]’s alcohol consumption.

[Emphasis added]

[77] G.B.S.’s shyness and alcoholism were important factors in the trial judge’s assessment of damages. The first was the basis of Dr. Penfold’s opinion that G.B.S.’s symptoms meet some of the criteria for diagnoses of “Avoidant Personality Disorder” and “Schizotypal Personality Disorder,” which the trial judge accepted as compensable personality disorders. Dr. Penfold also opined that G.B.S.’s alcoholism, although in full remission, had detrimentally affected his schooling and employment in the past and would require counselling in future.

[78] In my view, the trial judge erred in principle in his approach to the assessment of damages and, as he failed to turn his mind to the issue of realistically possible contributing causes, absent the sexual assaults, of the plaintiffs’ pain, suffering, and diminished quality of life, we cannot be confident that he assessed damages on a proper basis. Because he considered them to be irrelevant to his assessment of damages, he made no findings as to the nature or effect of either the alleged predispositions and susceptibilities or of the independent intervening psychological trauma. There was evidence at trial on these matters, some of it conflicting. The trial judge’s bare statement, at paragraph 281 of his reasons, that “generally speaking, where the psychiatric/psychological evidence called by the plaintiffs conflicts with that called by the defendants, I reject that of the defendants and accept that of the plaintiffs” is not an adequate substitute for a considered analysis of the evidence when there is no indication in his reasons that he turned his mind to the issues to which the conflicting evidence was relevant. I would accordingly allow Canada’s appeal on this ground and, since this Court is in no position to make the findings of fact that the trial judge ought to have made, I would remit this matter for an assessment of non-pecuniary damages in accordance with the principles outlined above.

(c) Loss of earnings and impairment of earning capacity

[79] The trial judge dismissed the plaintiffs’ claims for damages for “past wage loss” and for “impairment of their capacity to earn in the future” on the basis that they had “failed on a balance of probabilities to prove any wage loss, past or future” (¶ 371). In reaching these conclusions, the trial judge overlooked or misapprehended important evidence. As well, he imposed on the plaintiffs an incorrect standard of proof for their claimed future losses. He failed to consider whether there was a real and substantial possibility that the plaintiffs would have achieved higher earnings in the future had they not been sexually assaulted and to compensate them by an award reflecting that chance.

[80] The trial judge accepted “much of what each of [the psychological and psychiatric] expert witnesses said, but [did] not accept all of it” (¶ 280). As well, he said:

[282] ...it is apparent from the evidence of these plaintiffs and other witnesses such as their spouses or other family members that they all suffer, to a greater or lesser degree, significant psychological difficulties which impact constantly upon the quality of their lives...

This finding that each plaintiff continues to suffer from psychological damage is reflected in his awards of sums to provide for the cost of future psychotherapy.

[81] The trial judge made no reference, however, to the extensive evidence of the effects of these psychological problems on the earning capacity of each of the plaintiffs.

[82] The trial judge’s misapprehension of the evidence in respect of E.A.J. exemplifies his treatment of the evidence on impaired earning capacity generally.

[83] The trial judge accepted evidence that E.A.J. is suffering from post-traumatic stress disorder that has engendered maladaptive coping mechanisms including “using alcohol, reckless driving, unannounced escapes from people who care for him, and a rigid and inflexible approach to both work and leisure including cultural activities” and accepted that these things “significantly reduce the quality of his life” (¶ 312). He concluded that the sexual assaults were “the major cause of his current psychological problems” (¶ 314).

[84] As well, he concluded that E.A.J.’s alcoholism was a result of the sexual abuse. He said:

[309] I am satisfied that the sexual abuse was a significant factor in EAJ’s later abuse of alcohol. He testified that he drank "to forget about" what he went through at the residential school. This is important, for Dr. Söchting concludes he drinks because of the sexual abuse and is depressed because of the sexual abuse. Dr. Daylen concluded he is depressed because he drinks. While it is difficult to separate the source of depression, I accept EAJ’s testimony that a major reason he abused alcohol was to blank out the rapes.

[309] I also accept, as found by Dr. Söchting, that EAJ’s tendency to isolate himself is a result, in the main, of his treatment at St. George's, and that it has had a significant impact upon him and his family.

[85] However, the trial judge made no reference to the expert evidence concerning the effect of E.A.J.’s psychological damage on his employability.

[86] For example, there was the evidence of Dr. Söchting that:

...His work problems are, therefore, in my view a bi-product [sic] of his maladaptive ways of coping with the sexual assaults. Depending on his recovery, this may continue to cause him difficulties for a long time both at home and in a future work setting.

[87] As well, although they attributed E.A.J.’s psychological problems in the main to causes other than the sexual assaults, the defendant’s expert witnesses, Dr. Daylen and Dr. Pullyblank, noted the effect of his psychological impairments on his employability.

[88] For example, Dr. Daylen, a clinical and consulting psychologist, opined that E.A.J. is an alcoholic in full remission. She continued:

In summary, it is my impression that [E.A.J.]’s currently [sic] psychological functioning is characterised by depressed mood, anxiety, hostility and anger, and marked suspiciousness and distrust of others resulting in interpersonal difficulties. Based on [E.A.J.]’s self-report it appears that his difficulties were considerably exacerbated by his alcohol abuse. He described his concerns as having ameliorated since he quit drinking. In addition, it is likely that his psychological functioning has also improved by his becoming involved in a stable, loving relationship. However, it is my impression that [E.A.J.] continues to experience clinically significant psychological difficulties that cause him distress and interfere with his day-to-day functioning. It is likely that his functioning has also been negatively affected during the past 1-2 years as he has had to participate more extensively in the civil litigation process, which is clearly anxiety provoking for him.

[Emphasis added]

[89] Under the heading “Education and Employment,” Dr. Daylen stated:

...it appears that he did not return to complete his Grade 12 after being suspended for drug use. It is likely that his use of alcohol (primarily) and drugs significantly interfered with his ability to return to school during the next decade. Similarly, it is my impression that his alcohol consumption significantly interfered with his ability to work during those years.

[Emphasis added]

[90] Dr. Pullyblank, relying on Dr. Daylen’s opinion and on his own extensive clinical and testing information, gave opinion evidence as to E.A.J.’s vocational prospects, in which he said:

At the present time, [E.A.J.]’s main barriers to employment include psychological distress and impaired social relatedness, limited credentials, lack of transportation, modest intellectual skills, and living in a comparatively isolated area with an impoverished job market. These factors, particularly in combination with his pre-1991 substance abuse, have seemingly limited him to sporadic employment in unskilled and semi-skilled employment. To the extent that [E.A.J.]’s emotional functioning improves and he establishes a more substantial career in the future, then these barriers to employment have contributed to a delay in his career development.

...In my opinion, [E.A.J.] was capable of completing training in Heavy Duty Mechanics and going on to work in this field, but his substance abuse and emotional difficulties got in the way.

[Emphasis added]

[91] This evidence was uncontroverted and, while the trial judge was certainly entitled to reject it, it appears that he overlooked it. There is no indication in his reasons for judgment that he turned his mind to this evidence of the effects of the psychological and emotional injuries on E.A.J.’s employability. Rather, he rejected E.A.J.’s claim under this head in this way:

[365] ...[E.A.J.] gave some evidence about leaving at least one job because he took a dislike to his boss. Dr. Söchting attributes his “oppositional and inflexible attitude in employment settings” to a lack of trust and respect for authority figures.

[366] This may be, but in my view, it does not tie the plaintiff’s employment history to the sexual abuse which he suffered. There is ample evidence that the entire residential school experience (for example the cutting of hair, the segregation from family, the racist epithets, the corporal and other ridiculously cruel forms of punishment, the crushing of native languages and disparaging of native foods) would engender in children a distrust of and disrespect for authority.

[92] The trial judge’s attribution of E.A.J.’s difficulties in obtaining and maintaining gainful employment to his “disrespect for authority” demonstrates, in my view, that he overlooked or misapprehended the uncontested evidence of the profound effects on E.A.J.’s earning capacity of his alcoholism, depression, and other manifestations of his psychological damage. As well, it exposes an error in principle in that the trial judge treated one “cause” of the loss as dispositive of the assessment of damages and failed to consider the relative contribution of the psychological damage to the extent of the loss.

[93] The trial judge made similar errors in respect of the other plaintiffs and dismissed their claims for damages for impaired earning capacity for similar reasons. He noted that T.W.N.A. has been trained as a teacher, counsellor, and community service worker but that he works only 25 hours per week because “he chooses to do so as he and his family wish to live in or near the Stein Valley. This decision cannot, in my view, be laid at the feet of the defendants” (¶ 367).

[94] As to E.R.M., he observed that, although E.R.M. is a journeyman carpenter:

[368] ...employers would rather hire less qualified workers for less cost. He also said that he left his job in 1994 because of a dispute with a supervisor. Importantly, he testified subsequently he and his wife made the choice that he would stay home and his wife would work.

[95] G.B.S.’s claim was rejected because it was based “upon the theory that he has the ability to have sought higher education or higher paying positions and has failed to do so because of the long-term effects of the sexual abuse at St. George’s.” The trial judge concluded that he was content in his present job and “is not interested in going back to school” (¶ 369-370).

[96] Since the trial judge found that the sexual assaults were a cause of the plaintiffs’ psychological and emotional difficulties, he was obliged to consider the evidence that the plaintiffs suffer from impaired earning capacities as a result of those psychological and emotional difficulties and to award damages to the extent that the difficulties were a cause of that impairment. He did not address his mind to a comparison of the plaintiffs’ present earning capacities with their original earning capacities, absent the sexual assaults.

[97] Further, in dismissing these claims on the basis of the plaintiffs' choices of employment, he overlooked the factors described in Brown v. Golaiy (1985), 26 B.C.L.R. (3d) 353 at 356 (S.C.), where Finch J. (as he then was) said that the factors relevant to a claim for impaired earning capacity include:

1. whether the plaintiff has been rendered less capable overall from earning income from all types of employment;

2. whether the plaintiff is less marketable or attractive as an employee to potential employers;

3. whether the plaintiff has lost the ability to take advantage of all job opportunities which might otherwise have been open to him, had he not been injured; and

4. whether the plaintiff is less valuable to himself as a person capable of earning income in a competitive labour market.

[98] As well, he failed to recognize that, even though these plaintiffs have made employment choices, their psychological impairments may have foreclosed future possibilities for them. As Southin J.A. said in Palmer v. Goodall (1991), 53 B.C.L.R. (2d) 44 (C.A.) at 59:

Because it is impairment that is being redressed, even a plaintiff who is apparently going to be able to earn as much as he could have earned if not injured or who, with retraining, on the balance of probabilities will be able to do so, is entitled to some compensation for the impairment. He is entitled to it because for the rest of his life some occupations will be closed to him and it is impossible to say that over his working life the impairment will not harm his income earning ability.

[99] Accordingly, I would allow the cross appeals. Because the trial judge has not made the necessary findings of fact to permit an assessment of damages for impaired earning capacity, I would remit this issue to the trial court for an assessment in accordance with proper principles.

2. Aggravated and Punitive Damages

(a) General principles

[100] Aggravated damages are compensatory in nature, while punitive damages are awarded as punishment for egregious conduct. The distinction is explained by McIntyre J. in Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085 at 1098-99:

Punitive damages, as the name would indicate, are designed to punish. In this, they constitute an exception to the general common law rule that damages are designed to compensate the injured, not to punish the wrongdoer. Aggravated damages will frequently cover conduct which could also be the subject of punitive damages, but the role of aggravated damages remains compensatory....

Aggravated damages are awarded to compensate for aggravated damage. As explained by Waddams, they take account of intangible injuries and by definition will generally augment damages assessed under the general rules relating to the assessment of damages. Aggravated damages are compensatory in nature and may only be awarded for that purpose. Punitive damages, on the other hand, are punitive in nature and may only be employed in circumstances where the conduct giving the cause for complaint is of such nature that it merits punishment.

See also Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595, 2002 SCC 18 ¶ 157.

[101] Aggravated damages are awarded to compensate for intangible emotional injury: see Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130 ¶ 188-189 and Huff v. Price (1990), 51 B.C.L.R. (2d) 282 (C.A.), where this Court said, at 299:

...aggravated damages are an award, or an augmentation of an award, of compensatory damages for non-pecuniary losses. They are designed to compensate the plaintiff, and they are measured by the plaintiff's suffering. Such intangible elements as pain, anguish, grief, humiliation, wounded pride, damaged self-confidence or self-esteem, loss of faith in friends or colleagues, and similar matters that are caused by the conduct of the defendant; that are of the type that the defendant should reasonably have foreseen in tort cases or had in contemplation in contract cases; that cannot be said to be fully compensated for in an award for pecuniary losses; and that are sufficiently significant in depth, or duration, or both, that they represent a significant influence on the plaintiff's life, can properly be the basis for the making of an award for non-pecuniary losses or for the augmentation of such an award. An award of that kind is frequently referred to as aggravated damages. It is, of course, not the damages that are aggravated but the injury. The damage award is for aggravation of the injury by the defendant's highhanded conduct.

[102] Aggravated damages are not a separate head of damages. Rather, they are an augmentation of general damages to compensate for aggravated injury: see Norberg v. Wynrib, [1992] 2 S.C.R. 226 at 263 and Y.(S.) v. C.(F.G.) (1996), 26 B.C.L.R. (3d) 155 at ¶ 36 (C.A.).

[103] Punitive damages, on the other hand, are an exception to the general rule that damages are compensatory. Their provenance is described in Daniels v. Thompson, [1998] 3 N.Z.L.R. 22 at 28 (C.A.):

The origin of exemplary damages (probably better described as punitive damages), is usually said to lie in two cases decided in 1763, Huckle v. Money (1763) 2 Wils 205 and Wilkes v. Wood (1763) Lofft 1. In those cases substantial damages awarded by juries for improper interference by public officials with subjects were justified as “exemplary damages”. The purpose of the awards was said to punish and deter, and to express the jury’s outrage at the defendant’s conduct. A related purpose mentioned in subsequent cases was to appease the victim and to discourage revenge: for example Merest v. Harvey (1814) 5 Taunt 442, where the Judge more specifically referred to the undesirable practice of duelling. Punishment and deterrence are of course purposes which are served by the criminal law. The introduction of criminal law purposes into the law of torts did not represent a new development, but reflected the common historical roots of the laws of tort and crime. Both branches of the law being addressed in large parts to same type of conduct, the modern separation of their different purposes and procedures was still being completed at that time.

[104] Punitive damages are triggered by conduct that may be described by such epithets as high-handed, malicious, vindictive, and oppressive. They are awarded where the court feels that the award of compensatory damages will not achieve sufficient deterrence and that the defendant’s actions must be further punished. As explained by the Supreme Court of Canada in Hill v. Church of Scientology, supra:

[196] Punitive damages may be awarded in situations where the defendant’s misconduct is so malicious, oppressive and high-handed that it offends the court’s sense of decency. Punitive damages bear no relation to what the plaintiff should receive by way of compensation. Their aim is not to compensate the plaintiff, but rather to punish the defendant. ...They are in the nature of a fine which is meant to act as a deterrent to the defendant and to others from acting in this manner. It is important to emphasize that punitive damages should only be awarded in those circumstances where the combined award of general and aggravated damages would be insufficient to achieve the goal of punishment and deterrence.

(b) Background facts

[105] As has already been noted, the formal judgments are for specific sums against Canada, the Church defendants, and Mr. Clarke “founded in negligence” and “further against Canada, [and the Church defendants] jointly and severally founded in vicarious liability.” These awards include the $25,000 allocated by the trial judge for aggravated damages in each case, but do not include the awards for punitive damages.

[106] Before I discuss the appeals from the awards of aggravated and punitive damages, it will be useful if I set out some of the background facts to which the parties agreed.

[107] In M.(F.S.) v. Clarke, supra, Dillon J. described the organization of St. George’s School. The parents of students were required to sign an admission form in which they entrusted guardianship and jurisdiction of their children to Canada and authorized Canada to delegate guardianship “in providing for this pupil’s welfare, education, medical and social engagements” (¶ 63). The role of the principal was central to the operation of the school. Madam Justice Dillon referred to his duties and responsibilities as follows:

[65] Canada also regulated and inspected the physical premises at the school, established regulations for operation of the school and provided instruction and guidance on financial administration. Regulations established in 1953 required the principal to, among other things: make known a set of rules appropriate for the proper operation of the school; supervise the performance of duties by staff; suspend any pupil guilty of

conduct "injurious to the moral tone or well-being of the school"; and provide and supervise measures to ensure the health, safety and welfare of the pupils. The regulations also provided that:

The principal of every school shall assume the responsibilities of parent or guardian with respect to the welfare and discipline of the pupils under his charge.

There is no evidence of any rules promulgated by the principal of St. George's. Nor is there evidence as to what, if any, measures were taken by either the department or the church to ensure that these regulations were followed.

[108] The principal was directly responsible to the Department of Indian Affairs (¶ 76) although, as a member of the clergy, he was also under the authority of the Bishop of the diocese (¶ 78). As Dillon J. said:

[84] ...practical management of St. George’s was under the control of one man, the principal. He allocated funding received from the government and the NEC according to criteria set from time to time, hired all staff, and had complete control over the operations of the residence and school. It was apparent through advertisements and correspondence that staff were hired based first upon their church membership and spiritual values. The principal had complete control over the terms of employment of child care workers. Their responsibilities were set out by the principal.

...

[86] The principal also reported regularly to the Department of Indian Affairs on such matters as funding, class size and school enrollment, physical plant, and care and safety of students.

[87] The principal acted as counsellor to the students under both roles as administrator and church leader.

[109] Mr. Clarke was hired and paid by the principal, was under the principal’s supervision, and reported to the principal (¶ 90-92). He commenced employment as a dormitory supervisor at the school in 1965.

[110] Anthony William Harding, an Anglican Church clergyman, was appointed assistant principal in 1969 and principal in 1971. Reverend Harding learned of Mr. Clarke’s sexual abuse of some students at St. George’s in May 1973. He spoke to Mr. Clarke about it and Mr. Clarke immediately resigned “for personal reasons.” Reverend Harding wrote a letter of recommendation for Mr. Clarke later that month, expressing appreciation for his past services in child care and hope that his “personal problems” would be cleared up. Madam Justice Dillon found that, through Reverend Harding, knowledge of Mr. Clarke’s behaviour came to the attention of the Bishop of the diocese at about the time of Mr. Clarke’s departure. The Church undertook no investigation and made no report to the police. Nor did it inform Canada. Madam Justice Dillon found, as well, that Reverend Harding was sexually abusing students. She concluded (¶ 40) that Reverend Harding, together with those personnel in the diocese who knew of Mr. Clarke’s conduct, purposefully covered up Mr. Clarke’s sexual assault of F.S.M. to avoid attracting attention to the school.

[111] Canada essentially admitted that it was an employer of Mr. Clarke, and Dillon J. concluded that the school was a “joint venture” of Canada and the Church and that they are jointly vicariously liable for Mr. Clarke’s wrongful acts (¶ 158-159). She apportioned liability 60% to the Church and 40% to Canada because the Church did not inform Canada about Mr. Clarke’s conduct and thereby deprived Canada of an opportunity to investigate and to assist Mr. Clarke’s victims in a timely way. As I have noted, this apportionment was appealed and may have been settled.

(c) Canada is directly liable for punitive damages

[112] Against that background, I turn, first, to the award of punitive damages.

[113] In imposing punitive damages against Canada, the trial judge made the following findings:

[350] I am satisfied that if punitive damages may be awarded within the categories of liability found by Dillon J. and binding upon me (because of the agreement between the parties in this case), the dreadful circumstances found here warrant such damages. The institutional defendants’ failure over so many years to uncover the terrible crimes of Clarke, the failure of the defendants to report the matter to the police and to the parents of these children (particularly in light of the fact that the principal, Rev. Harding, was himself abusing children), and the failure to move immediately when the sexual assaults came to light to see to the needs of the children, demonstrated in the words of Legg J. (as he then was), in Meyer v. Gordon (1981), 17 C.C.L.T. (B.C.S.C.), a “disregard of every principle of decency which is the foundation” for an award of punitive damages. The defendants’ conduct was both arrogant and high handed. The well-being of these violated children was sacrificed, as Dillon J. said in paragraph 40, “so as not to attract attention to St. George’s School” and, I would add, to protect Clarke and the then administrator, Rev. Harding.

...

[357] Dillon J., at paragraphs 180 and 181, said that the principal Rev. Harding could have or should have taken action long before he did:

If Harding did not become aware of Clarke’s sexual misconduct, he ought to have. Knowledge of Clarke’s sexual abuse would have been revealed through proper supervision of Derek Clarke, proper establishment and enforcement of rules disallowing students in staff quarters, and proper observation of general conduct of students at the residence by the administrator in the course of his regular duties. The administrator should have been aware of the behavior of children on the playground and childhood gossip which was apparent to a relatively novice teacher at the local school who acted swiftly to deal with the matter. If he was not, then he was willfully blinded by his own desires to avoid detection of lax moral conduct and sexually abusive behavior at St. George’s. Other institutions had rules against children being in the rooms of dormitory supervisors which were enforced by the principal. It is hardly likely that Harding would establish or enforce rules against having children in the rooms of staff when he engaged in that very behavior. Clarke’s sexual activity continued for eight years with such frequency that it is unreasonable to expect that it would have gone unnoticed with reasonable supervision of his activities in the dormitory. Harding certainly perceived the danger of sexual relations between students and staff at least two years prior to open disclosure of Clarke’s behavior when Harding took the first steps in discipline of another child care worker for this very kind of conduct. If Harding did not know of Clarke’s behavior, then he certainly ought to have known or he was willfully blind to it.

Harding’s knowledge attaches to his employers, the Crown and the Anglican Church. Both of them failed to take reasonable supervisory precautions against sexual abuse by dormitory supervisors, particularly Derek Clarke. Both were in a position to have acted to prevent the misbehavior.

(emphasis added)

[358] To this must be added the callous and reprehensible decision taken by Rev. Harding to hush up Clarke’s abominable behavior. As noted above, he failed to go to the police, he failed to tell the parents, and he failed utterly in his responsibility to do something for these damaged children. Not only that, on May 22, l973, Rev. Harding, in his capacity as Canada’s administrator and on the letterhead of the Department of Indian Affairs and Northern Development, wrote a letter to Clarke advising him that “your resignation is accepted”, and incredulously he added:

Your past services in the field of practical Child Care have been appreciated and we trust that your personal problems will soon be cleared up.

[359] I find this comes within the expression “blameworthy” as that word is used by the Court of Appeal in Robitaille [Robitaille v. Vancouver Hockey Club (1981), 124 D.L.R. (3d) 228 (B.C.C.A.)]. Like Dillon J., I am cognizant of the probable explanation for this appalling sentiment - that Rev. Harding too was abusing children.

[360] I am aware that Dillon J. found that because of the failure of the Church to disclose Clarke’s abuse, “the Crown was deprived of an opportunity to contain the psychological injury” to the plaintiffs. This finding, however, must be read in light of her finding in the paragraph quoted above, that “Harding’s knowledge attaches to his employers, the Crown and the Anglican Church”. This is similar to the knowledge of McLeod and Greatorex in the Hollett case. [R.(G.B.) v. Hollett (1996), 139 D.L.R.(4th) 260 (N.S.C.A.), leave to appeal refused, [1996] S.C.C.A. No. 541]. In the word “knowledge”, I include Harding’s despicable and selfish decision, calculated to protect himself and the school, to abandon the children by failing to go to the police or the families, and in neglecting to find appropriate psychological counselling support services.

[114] Canada concedes that punitive damages can, as a matter of law, be awarded in some circumstances for negligent conduct. However, Canada argues, the conduct that the trial judge characterized as “arrogant and high handed” was that of Reverend Harding. Since Mr. Clarke’s abominable conduct was hidden from Canada by Reverend Harding, Canada says, the trial judge was wrong to punish Canada for the failure to uncover Mr. Clarke’s crimes, to report the matter to the police and to the parents of the victims, and to see to the needs of the children victimized by Mr. Clarke. In Canada’s submission, no conduct on its part was of a character that would justify imposing an award of punitive damages.

[115] I cannot accede to that submission.

[116] The trial judge (¶ 355) expressed his agreement with Chipman J.A., in his concurring reasons in R.(G.B.) v. Hollett (1996), 139 D.L.R.(4th) 260 (N.S.C.A.), leave to appeal refused, [1996] S.C.C.A. No. 541, who commented (at 320) that “while I would take a narrow view of the Court’s power to impose punitive damages vicariously, this case is one of those exceptional ones where such should be the result.” However, I have come to the conclusion that vicarious liability was not the basis of the trial judge’s decision on this point.

[117] In R.(G.B.) v. Hollett, the plaintiff brought action against the Crown and a Crown employee for damages arising out of emotional, physical, and sexual assaults committed upon her by the employee, Hollett, while she was being held in a reform school. The trial judge found Hollett liable for the assaults and found the Crown liable for negligence in failing to dismiss him upon learning, at a time that preceded his involvement with the plaintiff, of other complaints made against him.

[118] On the appeal, Chipman J.A. based his conclusion on his view that punitive damages may be awarded against an employer “if a managerial agent of the employer has acted recklessly in the engaging or the retaining of an employee with the resultant foreseeable danger of harm of the type which occurred here” (at 320). On the other hand, Pugsley, J.A., who wrote the majority decision, imposed liability for punitive damages because the senior employees had permitted the appointment of Hollett as the counsellor of the young, naïve, and vulnerable female plaintiff when they knew of his earlier reprehensible conduct with others under his charge and, in the circumstances, their acts, “because of their respective positions, should be taken to have been the acts of their employer” (at 317). Thus, Pugsley J.A. imposed liability for punitive damages on the employer directly, not vicariously.

[119] The trial judge also relied (¶ 356) on Robitaille v. Vancouver Hockey Club (1981), 124 D.L.R. (3d) 228 (B.C.C.A.), where this Court held (at 250) that punitive damages can be awarded in negligence cases where the negligence “flowed from, and was directly linked with, the arrogant and high-handed conduct of the officers and servants of the defendant.”

[120] Robitaille concerned a professional hockey player who suffered a serious spinal injury that was misdiagnosed by the team’s doctors. Although he continued to complain of symptoms, the coaching staff, medical staff, and team management dismissed his complaints as unfounded. The team threatened him with suspension if he refused to play. He played and, as a result of a heavy check by an opposing player, his injury was exacerbated to the extent that it became disabling and ended his career prematurely. The Court quoted (at 248) from the findings of the trial judge:

This was not the conduct of ordinary employees. Therefore, the question whether exemplary damages should be awarded simply on the basis of vicarious liability does not arise. It was top management – the president and the general manager – who decided upon and played the major part in implementing the course of action.

On the basis of this and other findings and the supporting evidence, this Court observed (at 249) that the case for punitive damages was “overwhelming.” Thus, the wrongful acts of “top management” were the acts of the employer itself, and liability for punitive damages was imposed directly, not vicariously.

[121] Both Robitaille and the majority reasons in Hollett represent applications of the “identification theory” of corporate liability. Under this theory, the question is whether the wrongdoer was acting as agent or servant of his employer or whether his conduct was the very conduct of the employer itself. The question is answered by applying the test propounded by Iacobucci J. in “Rhone” (The) v. “Peter A.B. Widener” (The), [1993] 1 S.C.R. 497 at 520-21:

...the focus of [the] inquiry must be whether the impugned individual has been delegated the “governing executive authority” of the company within the scope of his or her authority. I interpret this to mean that one must determine whether the discretion conferred on an employee amounts to an express or implied delegation of executive authority to design and supervise the implementation of corporate policy rather than simply to carry out such policy. In other words, the courts must consider who has been left with the decision-making power in a relevant sphere of corporate activity.

[122] The trial judge hinged his conclusion on what he described (¶ 360) as “Harding’s despicable and selfish decision, calculated to protect himself and the school, to abandon the children by failing to go to the police or the families, and in neglecting to find appropriate psychological counselling support services.” In my opinion, that finding, coupled with his reliance on Robitaille, demonstrates that, despite his reference to the comments of Chipman J.A. in Hollett, vicarious liability is not the true basis of his award of punitive damages against Canada in this case. His conclusion that Reverend Harding’s conduct was egregious and deserving of punishment is not challenged and is supported by the evidence. In my view, he found Canada liable for punitive damages because the blameworthy conduct of Reverend Harding that took his conduct beyond “mere negligence” was, in fact, the conduct of Canada. Indeed, he distinguished W.R.B. v. Plint (2001), 93 B.C.L.R. (3d) 228, 2001 BCSC 997 on the basis that the trial judge’s decision in that case was that punitive damages cannot be awarded against a vicariously liable party whereas, in this case, there were findings of reprehensible conduct “specifically referable to the employer” (¶ 361).

[123] Under the identification theory, the question is whether Reverend Harding, in suppressing Mr. Clarke’s conduct and in failing to provide assistance to Mr. Clarke’s victims, was acting on behalf of Canada as its agent or servant or whether his conduct was the very conduct of Canada itself. The delegation to Reverend Harding of responsibility for the operation of St. George’s School included the duty to make policies with respect to conduct and to enforce them for the welfare of the students. He failed to do either. He was the de facto parent and guardian of the students by delegation of that status from Canada with the permission of the parents of each child. As such, he was governed by the “careful parent test,” which imposes the standard of a prudent parent solicitous for the welfare of his or her child: K.L.B. v. British Columbia, supra ¶ 14. Accordingly, he had the duty to take reasonable steps to prevent foreseeable harm, including the duty to investigate Mr. Clarke’s transgressions upon learning of them, and to provide assistance to the children who were Mr. Clarke’s victims. He had a duty, as well, to inform the parents of the horrible things that had happened to their children.

[124] As the Court noted in Robitaille (at 251), the tortious conduct that attracts punitive damages takes its character from the circumstances that accompany and are associated with the conduct. Thus, in assessing punitive damages, the court is not confined to the immediate circumstances of the commission of the tort. In Norberg v. Wynrib, supra, LaForest J. observed (at 267-268) that punitive damages are not restricted to conduct that is harsh, vindictive, or malicious but may be based on conduct that amounts to arrogance and callousness or that “was of a type to offend the ordinary standards of decent conduct in the community.” The conduct of Reverend Harding, as found by Dillon J. in passages adopted by the trial judge, and as augmented by the trial judge’s observation that the decision to “hush up” Mr. Clarke’s behaviour was “callous and reprehensible,” certainly falls within these descriptions.

[125] In my view, the award of punitive damages against Canada can be supported on the basis that Reverend Harding was “top management” and his deplorable conduct was the conduct of Canada itself. It is no answer to say that Reverend Harding hid Mr. Clarke’s conduct from Canada, since Reverend Harding was Canada in these circumstances. Accordingly, I would not interfere with the trial judge’s decision to hold Canada directly liable for punitive damages.

[126] Having reached that conclusion, it is not necessary to consider whether the doctrine of vicarious liability can carry the freight of punitive damages for Reverend Harding’s reprehensible conduct to Canada in the circumstances of this case.

(d) Canada is vicariously liable for aggravated damages

[127] That leaves for consideration the propriety of the award of aggravated damages against Canada.

[128] The trial judge’s reasons in relation to aggravated damages were these:

[343] The plaintiffs submit that any award of non-pecuniary damages should be increased by an amount of "aggravated" damages in order to compensate fully the plaintiffs for the losses they sustained as a result of the sexual assaults. They rely upon the aggravating factors set out by the Court of Appeal in Y.(S.) v. C.(F.G.) (1996), 26 B.C.L.R. (3d) 155 at paragraphs 57 through 59. These include considerations of whether the defendants were in a position of trust, whether the defendant's response was characterized by remorse, the age of the plaintiffs at the time of the assaults, the nature, number, frequency and duration of the assaults, and the physical pain and mental suffering associated with the assaults.

[344] All of the plaintiffs in this case were under the control of the defendants or their agents at the time of the assaults. The defendants were in a position of authority and trust over the plaintiffs. The plaintiffs were children. They were, in effect, helpless at the time, cut off from their extended families and even from siblings also resident in the school.

[345] The experience at St. George's was, as Dillon J. found, like the military. That in itself may not have been unacceptable at the time, but the use of that authoritarian coercive milieu to facilitate sexual assaults was and is unacceptable and is an aggravating factor.

[346] The defendants, although they have now expressed some remorse, did nothing for many years. Since the commencement of these actions, they have defended the claims with tenacity, requiring the plaintiffs to relive their experiences and repeat the stories a number of times, including in a public courtroom.

[347] I conclude the sheer horror of what happened to these children, and in particular the fact that for all of them the assaults continued over a period of time that must of [sic] seemed exceedingly long to children, warrants an award of aggravated damages.

[348] An award of aggravated damages must not be so small that it fails to make the point, but being compensatory, it must not cross the line to an amount that is punitive. In the circumstances of this case, I assess aggravated damages at $25,000 and augment EAJ’s compensatory award by that amount. I find each of the plaintiffs similarly entitled to aggravated damages, and therefore augment the award of non-pecuniary damages for the other three plaintiffs by the same amount.

[129] Canada submits that aggravated damages may be awarded only against the person guilty of misconduct and that, in this case, that person was Mr. Clarke. Canada invokes Hill v. Church of Scientology, supra, ¶ 195 in support of this submission. In the referenced passage, Cory J. stated that “there cannot be joint and several responsibility for either aggravated or punitive damages since they arise from the misconduct of the particular defendant against whom they are awarded.” Canada refers, as well, to R.A.R.B. v. British Columbia, 2001 BCSC 667, M.B. v. British Columbia, 2000 BCSC 735, and G.(R.B.) v. Hollett, supra. In Canada’s submission, the trial judge erred in law by awarding aggravated damages against Canada without finding that its conduct aggravated the injuries of the plaintiffs.

[130] In my view, Canada is vicariously liable for the aggravated damages awarded in this case and I would reject Canada’s submission that aggravated damages cannot be awarded against it in the absence of some conduct by Canada that aggravated the plaintiffs’ losses.

[131] The question of joint and several liability for aggravated damages did not arise on these facts in the same way as it did in Hill v. Church of Scientology. The passage of that decision at paragraph 195, upon which Canada relies, must be considered in its context. Hill v. Church of Scientology and the cases that Cory J. referred to as authority for the proposition that there can be no joint and several liability for aggravated damages were defamation cases. In such cases, proof of actual malice on the part of one defendant will serve to aggravate damages against that defendant, but joint and several tortfeasors who acted without malice will not be required to pay aggravated damages. Cory J. did not have in mind the case of a single tortfeasor for whom another is jointly and severally liable vicariously. Thus, Hill v. Church of Scientology has no application in the circumstances of this case.

[132] In R.A.R.B. v. British Columbia, the Crown was held liable for sexual assaults committed upon a ward of the Superintendent of Child Welfare while he was residing in a residential school. The trial judge concluded that the Crown had been negligent in placing the plaintiff in a psychiatric ward with a known sexual predator and, thereafter, in failing to take reasonable steps to prevent the sexual assaults. She dismissed claims that the Crown was vicariously liable for the wrongs of the abusers. As well, she dismissed the claims for aggravated and punitive damages against the Crown, stating, in the passage relied upon by Canada:

[147] The present state of the law militates against such claims in cases like this one. Where a party is found liable for the intentional wrong-doing of another in ordinary negligence or vicarious liability, that party is not liable for aggravated or punitive damages which might be awarded against the primary wrong-doer: Hill v. Church of Scientology of Toronto (1995), 126 D.L.R. (4th) 129 (S.C.C.); and A.(C.) v. C.(J.W.) (1998), 60 B.C.L.R. (3d) 92 at 122-125 (C.A.).

[133] As the basis of the Crown’s liability was its own negligence and as it was not found to be vicariously liable for the sexual assaults, the trial judge’s comment that there can be no vicarious liability for aggravated or punitive damages is obiter. To the extent that she was citing Hill v. Church of Scientology for the limited proposition that a joint and several contributing tortfeasor whose tort has not aggravated the plaintiff's injuries cannot be liable for aggravated damages, the trial judge’s reliance on this decision was well placed.

[134] However, with respect, her reliance on A.(C.) v. Critchley (1998), 166 D.L.R. (4th) 475, (sub nom. A.(C.) v. C.(J.W.)) 60 B.C.L.R. (3d) 92 (C.A.) for the idea that there cannot be vicarious liability for aggravated damages was based on a misunderstanding of that case.

[135] The trial judge in M.B. v. British Columbia likewise misinterpreted Critchley. The plaintiff in M.B. v. British Columbia sued the Crown for damages arising out of sexual assaults perpetrated upon her by the foster father with whom the Crown had placed her. The trial judge held the Crown vicariously liable for the wrongs committed by its contractor, the foster parent. She refused, however, to make an award of aggravated damages against the Crown, considering herself bound by Critchley and by Hill v. Church of Scientology.

[136] As I have explained, Hill v. Church of Scientology is not determinative of whether aggravated damages may be attributed vicariously to another party. Accordingly, the trial judge in M.B. v. British Columbia erred in considering herself bound by that decision. Moreover, she misunderstood the basis of the decision in Critchley. There, four wards of the Superintendent of Child Welfare brought action for damages against the Crown. They had been physically and sexually abused at a youth ranch by Critchley, its proprietor. At trial, Allan J. found the Crown liable directly for breach of fiduciary duty and, as well, liable vicariously for Critchley’s wrongs: A.(C.) v. C.(J.W.) (1997), 35 B.C.L.R. (3d) 234 (S.C.). Her awards to the plaintiffs included aggravated damages in each case. She stated:

[341] As I noted earlier, the individual awards for general damages reflect the aggravated circumstances of the sexual assaults and, accordingly, those awards incorporate aggravated damages. Generally, there cannot be joint and several responsibility for either aggravated or punitive damages because they arise from the misconduct of a particular defendant: Hill v. Church of Scientology (1995), 126 D.L.R. (4th) 129 (S.C.C.). However, the considerations in this case compel a different conclusion. The Crown is vicariously liable for all of the harm caused by Critchley, including the aggravated nature of the assaults. Additionally, it is in breach of its fiduciary duties to the plaintiffs. I conclude that there is no basis for relieving the Crown for liability for the aggravated component of the compensatory damages.

[Emphasis added]

[137] Allan J. went on to impose an additional award of aggravated damages against the Crown based on further findings that the government had returned the plaintiffs to the ranch for three days after being advised of Critchley’s sexual abuse of them; that when the government closed the ranch, it did not notify the plaintiffs’ parents of the abuse; that the Crown witnesses denied liability during their testimony; and that no responsible Crown official had expressed any remorse. For those reasons, she made a discrete award of $20,000 in aggravated damages to each plaintiff.

[138] This Court allowed the Crown’s appeal from the award of aggravated damages with respect to the additional $20,000 awards, but on the basis that these awards lacked sufficient factual foundation, not because it objected in principle to vicarious liability for aggravated damages. Chief Justice McEachern’s reasons for overturning the awards were as follows:

[128] As the first point mentioned above, namely the return of three residents to Arden Park, this was not a proper ground for an additional award of aggravated damages to these plaintiffs. It is unlikely the plaintiff M.D. was harmed by these three days as Mr. Critchley was not there then, and the fact the same award was made to each plaintiff makes it apparent the award was more for punishment than for compensation.

[129] Next, with respect to the failure to notify the parents of all Arden Park residents of Mr. Critchley's misconduct, the judge's finding that this contributed to the inability of these plaintiffs to cope with the effects of their abuse, makes this a possible basis for damages but this failure on the part of the Crown did not contribute to the humiliation but rather to the extent of the damage suffered by the plaintiffs which should be included within the general damage award. To classify this award out as aggravated damages, in my view, creates a risk of duplication, and is not in any event a proper basis for aggravated damages.

...

[131] With respect to the attitude of Crown witnesses, it must be remembered that liability was being disputed, and mea culpas can hardly be expected in such circumstances.

[139] It is important to note that the Court did not interfere with the general awards of non-pecuniary damages, which incorporated aggravated damages for aggravated injury. Chief Justice McEachern explained why:

[122] The plaintiffs’ individual damage awards expressly reflected the aggravating circumstances of the sexual and other assaults committed by Mr. Critchley. Although the trial judge expressly recognized that, generally speaking, there cannot be joint and several responsibility for aggravated damages because they can only arise from the misconduct of a particular defendant, she did not accept the Crown’s submission that it should be relieved of the aggravated damage component of those awards. Instead, the trial judge held the Crown responsible for all of the harm done by Mr. Critchley and for the additional damage done by the Crown in breaching its fiduciary duties to the plaintiffs.

[123] Notwithstanding the different conclusions I have reached about fiduciary duties in this case, I would not interfere with the plaintiffs' compensatory awards because the Crown has not appealed against those awards except to the limited extent just mentioned and it is not feasible to quantify the aggravated damage components in each award.

[Emphasis added]

[140] Thus, the Court did not consider whether Allan J. had erred in principle in concluding that her finding of vicarious liability could serve to support an award of aggravated damages against the government. Accordingly, the trial judges in R.A.R.B. v. British Columbia and M.B. v. British Columbia were wrong to rely on Critchley for the proposition that there cannot be vicarious liability for aggravated damages.

[141] I have summarized above the facts of R.(G.B.) v. Hollett, supra, the final case upon which Canada relies. Since the trial judge found the Crown liable directly in negligence in that case, he declined to consider whether the Crown was vicariously liable for the wrongful conduct of Hollett. He awarded aggravated damages on the basis that the Crown’s conduct was responsible for the plaintiff’s humiliation (at 307). The Nova Scotia Court of Appeal unanimously reversed that award but the question of vicarious liability for the aggravated damages was not in issue. Accordingly, I need say no more about that decision.

[142] As Hill v. Church of Scientology does not decide whether a party held liable jointly and severally by reason of vicarious liability for another’s tortious conduct is responsible for aggravated damages, and as no authority in point has been mentioned, the question must be answered on a principled basis.

[143] Normally, aggravated damages are awarded to compensate for the injury inflicted by tortious conduct - in this case, by Mr. Clarke’s sexual assaults. Vicarious liability for compensatory damages is imposed in cases of sexual assault for reasons expressed in the leading cases of Bazley v. Curry, [1999] 2 S.C.R. 534 and Jacobi v. Griffiths, [1999] 2 S.C.R. 570, where the Court held that an employer may be liable for wrongs deliberately committed by agents or employees despite the absence of any fault on the part of the employer. McLachlin J. (as she then was), speaking for the Court in Bazley, founded her analysis on policy. She said that two major policy considerations lie at the heart of the doctrine of vicarious liability:

[30] First and foremost is the concern to provide a just and practical remedy to people who suffer as a consequence of wrongs perpetrated by an employee. Fleming expresses this succinctly (at p. 410): "a person who employs others to advance his own economic interest should in fairness be placed under a corresponding liability for losses incurred in the course of the enterprise". The idea that the person who introduces a risk incurs a duty to those who may be injured lies at the heart of tort law....

[32] The second major policy consideration underlying vicarious liability is deterrence of future harm. Fixing the employer with responsibility for the employee's wrongful act, even where the employer is not negligent, may have a deterrent effect. Employers are often in a position to reduce accidents and intentional wrongs by efficient organization and supervision. Failure to take such measures may not suffice to establish a case of tortious negligence directly against the employer. Perhaps the harm cannot be shown to have been foreseeable under negligence law. Perhaps the employer can avail itself of the defence of compliance with the industry standard. Or perhaps the employer, while complying with the standard of reasonable care, was not as scrupulously diligent as it might feasibly have been.

[144] Holding vicariously liable parties responsible for aggravated damages based on the conduct of the tortfeasor furthers these policy goals.

[145] As aggravated damages are compensatory, it is logical to require a vicariously liable party to compensate the victim for all damage caused. To relieve such a party from liability for aggravated damages would undermine the important social goal of providing compensation and would leave certain plaintiffs under-compensated. This would inevitably be the result in sexual assault cases where it is so difficult to separate the physical and psychological injury suffered by the plaintiffs.

[146] Further, imposing vicarious liability for aggravated damages promotes deterrence. Since vicarious liability is based on the introduction or enhancement of a risk, it is fair to require the person who introduced or enhanced the risk to bear the costs of its fruition. This cost will provide an incentive to take steps to prevent the type of behaviour that will attract an award of aggravated damages.

[147] Moreover, aggravated damages are not a separate head of damages. They are awarded as part of non-pecuniary general damages to compensate for aggravated damage. To hold that a vicariously liable party is responsible only for the non-aggravated portion of the loss caused is simply not feasible, as Chief Justice McEachern observed in Critchley (¶ 123) and would impose a complex and difficult burden on trial judges and juries.

[148] For those reasons, I would reject Canada’s submission that the trial judge erred in holding it vicariously liable for the aggravated components of the damages awards.

V SUMMARY

[149] In summary, I would dismiss Canada’s appeals from the awards of punitive and aggravated damages. I would allow Canada’s appeal in regard to non-pecuniary damages and I would allow the cross appeals. I would remit the issues of non-pecuniary damages and damages for loss of earnings and impairment of earning capacity to the trial court for

assessment in accordance with proper principles.

“The Honourable Mr. Justice Smith”

I agree:

“The Honourable Mr. Justice Esson”

I agree:

“The Honourable Mr. Justice Hall”

I agree:

“The Honourable Madam Justice Saunders”

I agree:

“The Honourable Mr. Justice Low”

Citation:	*T.W.N.A. v. Canada (Ministry of Indian Affairs),*
	2003 BCCA 670