Still no closer to an answer in issue of proving legal causation

By Tony Poland, LegalMatters Staff • The challenge of proving legal causation is often misunderstood and a recent divisional court decision dealing with a catastrophic injury claim does little to clarify the issue, says Barrie-area litigator Steve Rastin.

Rastin, senior counsel at Rastin Gluckstein, says the court made the correct decision in Thiruchelvam v. RBC General Insurance Company but for the wrong reasons.

“This is an accident benefits case and it is relevant because it deals with the whole issue of causation, which is arguably a seriously misunderstood area of the law,” he tells LegalMattersCanada.ca. “This case is not just about accident benefits. It arguably has application to any situation where you need to prove causation, whether that in contract, tort cases or statutory interpretation litigation. This decision has the potential to deflect recent attempts by appellate courts to provide clarity to this murky legal question.

‘The waters just became muddier’ with this ruling

“This ruling is much more important than the case itself,” Rastin adds. “Every compromised baby case, every medical negligence, mass tort and financial impropriety case has to consider the question of causation. And the waters just became muddier.”

He says the case, which saw the court restore an accident benefits arbitration decision, perpetuates the confusion surrounding causation. This decision would benefit from appellate review Rastin says.

“I submit this needs more consideration. I believe that the state of the law, as it applies to the Standard Accident Benefits Schedule (SABS), medical negligence and tort would benefit from a revisiting of the analysis in this case,” he says. “I understand leave to appeal has been sought. If that happens, the insurance company is going to try to reverse the decision. I believe that outcome is correct; however, the Court of Appeal could assist litigants if it could be urged for find that the original arbitrator’s decision was correct, and was, in fact based on the ‘but for’ test of causation and there is not need to invoke, or even discuss, material contribution.

Causation can be complicated and become even more challenging in cases where multiple factors are present, Rastin says.

He explains that in order to prove someone is responsible in a negligence claim, you must first establish a standard of care. An example would be if you slipped on ice in a homeowner’s driveway in the winter. If the homeowner failed to clear the ice all winter, that would be considered a breach of duty. The next legal step is to prove causation which requires the plaintiff to prove that the breach of standard of care caused the loss.

‘Many, many claims are lost on causation’

“Causation is whenever I did wrong that caused a loss,” Rastin says. “Many, many claims are lost on causation, which doesn’t always get the attention it needs.”

The test for causation is ‘but for,’ says Rastin.  There is line of cases, flowing from a Supreme Court of Canada case called Athey v. Leonati that suggests that there is another test called the “material contribution” or “material contribution to risk” test.  

The Supreme Court made it clear that the ‘but for’ test should be the default.  Some like Rastin argue that it should be the only test, but others, including the Divisional Court in Thiruchelvam suggest that there is still room for the material contribution test.

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In Thiruchelvam v. RBC General Insurance Company, the plaintiff claimed he was catastrophically impaired as a result of a 2013 motor vehicle accident. He had been involved in two previous accidents within a week in 2002.

An arbitrator found the third accident materially worsened his psychological condition, leading to catastrophic impairment.  Rastin notes that the arbitrator was arguably still using the ‘but for’ test, and was referencing material contribution in a medical and not a legal sense.

The ‘but-for’ test was called for

The insurance provider appealed and the Director’s Delegate ruled the arbitrator erred in applying the less-stringent material contribution test. The Director correctly ruled that the arbitration should have used the ‘but-for’ test.  

However, he found (contrary to the record) that the claimant was already catastrophically impaired prior to the subject motor vehicle accident, and he ruled in favour of the insurer.  The key takeaway is that the Director’s Delegate made an improper finding of fact that led to an incorrect legal conclusion, Rastin says.

The divisional court later reversed the Director’s decision but for all the wrong reasons, he says. The Divisional Court made what Rastin submits is an incorrect determination that the original arbitrator had used the material contribution test, and found that using this test was appropriate in a SABS case.

Material contribution test was the wrong way to go

Rastin says using the material contribution test was the wrong way to go.

“The ‘but-for’ test makes sense. But for the accident, there would not have been a problem. Another way of saying it is it’s a counterfactual, he says, which is a fancy way of saying what would have happened if the event had not occurred. In this case, would the plaintiff have been catastrophic if the subject accident had not occurred?

Rastin says while the arbitrator in Thiruchelvam v. RBC General Insurance Company was found to have used a material contribution test, a closer examination of the facts shows something else.

“The arbitrator basically says this person was involved in three different accidents. He had problems before the third accident, but the last accident made him materially worse,” he says. “I would argue that what the arbitrator really did was apply a ‘but-for’ analysis.

“The third accident pushed him over line for catastrophic impairment,” Rastin adds. “You don’t need to use material contribution to get to that test. You just say. `But for the third accident, would his injuries be catastrophic?’”

He says with this decision, the Divisional Court has “taken an aspect of the law that we need to become clearer and made it murkier all over again.”

‘The analysis in this case goes the wrong way’

“In my view, the analysis in this case goes the wrong way. A close reading of the case supports the analysis that the arbitrator was really applying the ‘but-for’ test,” Rastin says. “Divisional court should have simply said the Director was wrong to find that the plaintiff was catastrophically injured already because the evidence wasn’t there and the ‘but-for’ test provides the answer. That would have been a nice clear analysis.” 

He says an understanding of Supreme Court cases, such as Clements v. Clements, which lays out the difference between material contribution and the ‘but-for’ test, is needed. 

“We have been trying to get to a but-for test because that seems to be what the Supreme Court is advocating in Clement,” Rastin says. “Then this case appears and leads to confusion because it seems to say all cases should use the ‘but-for’ analysis except when they shouldn’t. I am dubious this analysis would survive close scrutiny.”