Hamstra (Guardian ad litem of) v. British Columbia Rugby Union

Major J. -- This appeal deals with the effect of the jury’s learning during the trial that the defendant may have insurance coverage. Should there be an automatic discharge of the jury or should the trial judge have the discretion to assess the likelihood of prejudice and fashion the appropriate remedy?

Facts

On May 11, 1986 the plaintiff respondent Mark Hamstra, then 18, was rendered a quadriplegic owing to severe spinal injuries which he suffered as a result of the collapse of a scrum in a rugby match held at a secondary school in Langley, British Columbia. The match was conducted under the auspices of the defendant appellant The British Columbia Rugby Union (B.C. Rugby). The defendant appellant Brian Rigby was one of the coaches who supervised the match on behalf of B.C. Rugby. Hamstra and his father commenced an action against Rigby, B.C. Rugby and the Board of School Trustees of School District No. 35 (the Board) for damages caused by their failure to supervise the game properly and allowing the scrum to become unbalanced and collapse.

The respondents elected a trial by judge and jury. On the eighth day of the trial, Bruce Baldo, one of the players at the match, was cross-examined by counsel for the appellant B.C. Rugby. An issue arose about what was contained in a previous statement taken from this witness by Mr. Hanby, an insurance adjuster. The transcript of the testimony is:

Q. All right. Now, what you’re commenting on now, I gather, is the manner in which the statement was taken from you you believe to be unfair; is that correct?

A. I thought -- yeah, after reading it I felt -- basically he had written it down all in his handwriting which is quite hard to read.

Q. Yes.

A. And the only time I got a copy of it was when I was talking to Bill Neen. And he wasn’t going to give me a copy but I said I’ve got -- he wouldn’t give me a copy unless I produced the other copy of basically the writing that looked like chicken scratch. So I gave him that and he gave me a written copy and I looked through it and read it and I found he did, you know, being an insurance adjuster, of course, modified it to tailor his needs, fitting in a few words here and there. And I didn’t like that at all.

None of the parties objected to the reference to an insurance adjuster nor did the trial judge comment on it.

On the fourteenth day of the trial, Georrrey B. Legh, called by the Board as an expert in rugby football, was being cross-examined by counsel for the respondents, when the following exchange took place:

Q. . . . My question is that you were concerned about the financial affairs of The B.C. Rugby Union?

A. Yes.

Q. And you are concerned that this lawsuit is going to hurt those financial affairs, now aren’t you?

A. Not at all.

Q. You’re not at all?

A. No. I assume some insurance company is going to pay for it.

No objection was made by any of the counsel after this reference to insurance. However, the trial judge interrupted and made the following comments:

The Court: I just want to stop you for a moment, Mr. Stanton, I’m sorry. Ladies and gentlemen of the jury, I may just forget that last answer in my charge to you. I just want you to be aware that you do not and will not decide this case on the basis that maybe somebody else is going to pay for it. You’ve heard that answer and it shouldn’t have come out. It did come out and I just want to warn you now that that has nothing whatever to do with this case or how you decide this case. You decide this case on the evidence before you.

Mr. Stanton: That was not intentional on my part.

The Court: No, Mr. Stanton, I’m not suggesting for a minute it was. I’m not suggesting for one minute that it was. I just want to warn the jury that they’re to just totally ignore that answer.

After the lunchtime adjournment, counsel for B.C. Rugby brought a motion for an order that the jury be discharged on the ground that its defence might be prejudiced by the reference that it might have insurance. The trial judge granted the motion.

In accordance with Rule 41(6) of the Supreme Court Rules, B.C. Reg. 310/76, as amended by B.C. Reg. 178/83, s. 7, the respondents were given the option of a new trial before a new jury or continuing the trial with the trial judge sitting alone. Rule 41(6) provides:

RULE 41

. . .

(6) Where, for any reason other than the misconduct of a party or his counsel, a trial with a jury would be retried, the Court, with the consent of the party who required a jury trial, may continue the trial without a jury.

The Hamstras were given the weekend to decide, and elected to continue before the judge sitting alone. At the conclusion of the trial the action was dismissed: (1989), 1 C.C.L.T. (2d) 78 (B.C.S.C.).

The respondents appealed successfully to the Court of Appeal for British Columbia. The Court of Appeal restricted their reasons to the error by the trial judge in discharging the jury and ordered a new trial: (1995), 4 B.C.L.R. (3d) 127 (C.A.). B.C. Rugby and Rigby appeal from the decision of the Court of Appeal for British Columbia to this Court.

Judgments below

Supreme Court of British Columbia (1989), 1 C.C.L.T. (2d) 78

The trial judge relied on O’Neil v. Pacific Great Eastern Railway (1971), 24 D.L.R. (3d) 628 (B.C.C.A.), where Maclean J.A. stated at p. 630 that “[a] trial Judge has the inherent power to prevent either party being prejudiced by references which might lead to an improper verdict”. His reasons for discharging the jury were:

I am concerned here from the impression that I formed when Mr. Legh gave this evidence to the effect that he assumed an insurance company would pay for this, that the jury may well have formed the impression that I did, and that is that in fact there is insurance here. . . .

It is with great reluctance that I have concluded that the evidence of Mr. Legh even standing alone, but especially coupled with that of Mr. Baldo, is such that The B.C. Rugby Union might be prejudiced by that reference. I say that because of the position of The B.C. Rugby Union as a voluntary non-profit organization.

. . .

I am concerned that it will be difficult for this jury, no matter what I may say to it, to get out of its heads the impression that I formed, if they should, that there is insurance here and that this could have a material impact on their deliberations when it comes to The B.C. Rugby Union. And I emphasize that in this case it is references which might lead to an improper verdict as opposed to references which would inevitably lead to an improper verdict.

In any event, even if the standard of care that the court will exact from The B.C. Rugby Union is the ordinary standard of care that is exacted from any other person in a negligence action, I still have the concerns I have expressed before in these Reasons.

And there is no doubt in my mind that the prejudice may well be there, and it is enough if it might lead to an improper verdict.

I repeat again that I have done this with the greatest of reluctance. We have had 14 days of trial. They have been difficult days some of them. Counsel, I know, have done their best. I must say in these Reasons that I am not faulting anyone for any of these statements that came out. I am satisfied they were all unintentional but they are there and there is nothing I can do about that.

Now, on the basis of what I have said before I have no alternative but to exercise my discretion and to discharge this jury and I so do.

Court of Appeal for British Columbia (1995), 4 B.C.L.R. (3d) 127, with additional reasons (1995), 8 B.C.L.R. (3d) 136

The Court of Appeal held that a jury should only be discharged if prejudice is created and the discharge is necessary to prevent an improper verdict. The court concluded that the trial judge had erred in discharging the jury because he had based his decision on the premise that the references to insurance might result in the jury’s not paying attention to the fact that B.C. Rugby was subject to a lower standard of care owing to its status as a voluntary non-profit organization. Furthermore, they concluded that the trial judge did not consider the factors from the course of the trial which weighed against discharging the jury, including the facts that the trial was well advanced at the time of the second reference, that the references were made innocently, and that there was no fault on the part of the plaintiffs. The court concluded that the verdict of the jury would not inevitably have been the same as that of the trial judge, and held that a new trial was necessary.

Issues

1. Did the trial judge err in discharging the jury owing to the references to the possibility that B.C. Rugby was insured?

2. If the trial judge did err in discharging the jury, are the respondents entitled to a new trial despite their election to continue before the trial judge sitting alone?

Analysis

Did the trial judge err in discharging the jury owing to the references to the possibility that B.C. Rugby was insured?

The Law

In Bowhey v. Theakston, [1951] S.C.R. 679, aff’g [1950] O.R. 524 (C.A.), a negligence action arising out of a motor vehicle accident, a witness disclosed information which suggested that the defendant was insured. A five-member panel of this Court was unanimous in holding that a jury should be discharged automatically if something occurs from which the jury might reasonably infer that the defendant is insured. Cartwright J. (as he then was) for the majority stated at p. 683:

I do not understand there to be disagreement between the learned Justices of Appeal as to the principles to be deduced from the cases discussed in their reasons. They appear to me to agree (i) that where something occurs during the course of the trial from which the jury may reasonably infer that the defendant is insured the services of that particular jury should be dispensed with; (ii) that the trial judge should afford counsel a full opportunity of making submission before deciding what course should then be followed; and (iii) that having done so it is for the trial judge to decide whether to continue the trial himself without a jury or to direct that the case shall proceed before another jury. I respectfully agree with Laidlaw J.A. that the application of these principles is not dependent on the answer to the question as to which counsel inadvertently brought about the mention of insurance.

He concluded that, since the jury might have inferred that the defendant was insured, the trial judge had erred in refusing to discharge the jury and continuing the trial. However, the defendant’s appeal was dismissed because the trial judge had given the defendant the choice of proceeding with the same jury or with the trial judge sitting alone, and the defendant had declined to elect, and therefore the defendant could not now complain that the trial judge had proceeded with the same jury. Kellock J. writing for himself and Estey J. disagreed only with this last point. He would have allowed the appeal because the trial judge should have ordered a new trial.

Theakston has been waning authority since 1951 that a trial judge has no discretion but must discharge the jury once a reference to insurance is made. See Koebel v. Rive, [1958] O.R. 448 (C.A.). Its rationale is that such a reference is prejudicial to the defendant as the jury will be more inclined to find the defendant liable if they think that a third party insurer will pay the damages. While the question of insurance or who pays should be irrelevant this Court concluded that knowledge of insurance was so significant it would likely cloud the jury’s judgment. This view confirmed what had been said as early as 1908 in Loughead v. Collingwood Shipbuilding Co. (1908), 16 O.L.R. 64 (Div. Ct.), aff’d (1908), 12 O.W.R. 697 (C.A.), per Falconbridge C.J., at pp. 65-66:

But it would be absurd, I humbly think, for us to affect not to know what is notorious, namely, that defences by or on behalf of insurance companies are not favoured, but the reverse, by juries. If it came to the knowledge of a jury that the defence is not by or on behalf of one of their neighbours, but of an insurance company, which is paid to protect the neighbour against just such risks, this must have a strong effect upon them in arriving at a conclusion.

A defendant, whose business possibly constitutes the main industry of the town, who employs dozens or hundreds of operatives, whose fortnightly pay-lists find their way into the pockets of people in the town and in the county who deal in the necessities and luxuries of life, is looked on with a more favouring eye than is the stranger insurance company. Therefore, the improper practice of trying to inform the jury who the real defendant is ought to be stamped out. The mere putting of the question does all the mischief. The jury will draw their own inferences from the objection taken by defendants’ counsel and the ruling of the Court. The real defendant is placed in a position of manifest and incurable disadvantage. The proper course for the Judge in such a case would be to discharge the jury, and put off the trial to the next ensuing sittings or, preferably, to discharge the jury and try out the case himself.

Typical of the criticism invited by the Theakston rule is that found in John Sopinka, The Trial of an Action (1981), at pp. 31-32:

It is questionable whether the principles enunciated by the majority in the Theakston case are valid today, even when the trial judge concludes that the evidence is such that the jury would infer that the defendant is insured. . . . [The] rationale has been invalidated by the requirement that all motorists be insured, a fact of life well known to the jury. Furthermore, that knowledge does not appear to have had the effect predicted. . . .

. . .

. . . powerful evidence that juries are aware that defendants are insured and this fact has not beclouded their judgment. Telling the jury that the defendant is insured merely tells them what they already know.

In McCormick on Evidence (4th ed. 1992), vol. 1, §201, at pp. 856-57, the authors criticize the analogous prohibition in the United States against admitting evidence that the defendant is insured:

Despite its nearly universal acceptance, the wisdom of the general prohibition on injecting insurance into the trial, as it currently operates, is questionable. When the rule originated, insurance coverage of individuals was exceptional. In the absence of references to insurance at trial, a juror most probably would not have thought that a defendant was insured. Today, compulsory insurance laws for motorists are ubiquitous, and liability insurance for homeowners and businesses has become the norm. Most jurors probably assume that defendants are insured.

A majority of the Supreme Court of New South Wales made the following statement in Wellington v. Lake George Mines Pty. Ltd., [1962] S.R. (N.S.W.) 326, at p. 327:

We wish to say at once that in our opinion the discharge of a jury is, by reason of the attendant consequences of frustration and delay in the administration of justice, such a serious step that it should only be taken where real injustice cannot otherwise be avoided. Thus to discharge a jury in an accident case in these days of practically universal insurance because a reference to insurance is inadvertently made during the hearing is, in our opinion, an outmoded and wrong procedure.

In fact, the limited life expectancy of the rule was predicted by Kellock J. in Theakston, supra, at p. 687:

I take the law, therefore, to be established as laid down in Loughead’s case, with which I respectfully agree. While it may come about that as a result of compulsory insurance or other circumstances, the mention of insurance before a jury may lose the significance which, up to the present, it has been considered to have in cases of the character under discussion, I do not think that circumstances have sufficiently changed since that decision to render its principle no longer applicable.

Laskin J.A. (as he then was) made a similar observation on behalf of the Court of Appeal for Ontario almost twenty years later in Hellenius v. Lees, [1970] 1 O.R. 273 (C.A.), aff’d [1972] S.C.R. 165, at p. 280:

The rationale of the law -- that prejudice may result by revealing to the jury that there is an insurance fund (albeit of an undetermined amount) which is available to answer all or part of the claim against a defendant -- may be regarded as somewhat ingenuous today in the light of common knowledge of the prevalence of motor vehicle insurance. . . .

Furthermore, the black letter rule in Theakston is premised on the assumption that knowledge of a defendant’s insurance will cloud a jury’s judgment. I agree with the Court of Appeal for British Columbia in the case at bar, at p. 141, that “juries are held in higher esteem now than they perhaps were at the time of the decisions of the courts of Ontario upon which Theakston v. Bowhey is founded”. This view has been supported by statements of this Court. In R. v. Swain, [1991] 1 S.C.R. 933, Lamer C.J. stated at p. 996:

I have a high regard for the intelligence and common sense of Canadian juries and for the ability of trial judges to explain difficult concepts of law to the jury.

In R. v. Corbett, [1988] 1 S.C.R. 670, Dickson C.J. stated at p. 692:

The very strength of the jury is that the ultimate issue of guilt or innocence is determined by a group of ordinary citizens who are not legal specialists and who bring to the legal process a healthy measure of common sense. The jury is, of course, bound to follow the law as it is explained by the trial judge. Jury directions are often long and difficult, but the experience of trial judges is that juries do perform their duty according to the law.

See also R. v. Hill, [1986] 1 S.C.R. 313, per Dickson C.J., at p. 334. While these statements refer to juries in criminal cases their abilities remain as reliable in civil trials.

The strict rule set out in Theakston has been eroded by the passage of time. The absolute rule has diminished to one involving the trial judge’s discretion. Trial judges have more recently discharged juries only when a reference to insurance has been considered prejudicial and a discharge has been considered the only remedy. In the result, Theakston has been the subject of much judicial distinguishing. See Morin v. Rochon (1983), 42 O.R. (2d) 301 (H.C.), Jackson v. Inglis (1985), 7 O.A.C. 377 (C.A.), Michaud v. Wales (1991), 8 C.C.L.I. (2d) 57 (Ont. Gen. Div.), Cameron v. Excelsior Life Insurance Co. (1978), 27 N.S.R. (2d) 218 (S.C.T.D.), Currie v. Nova Scotia Trust Co. (1969), 1 N.S.R. 274 (S.C.T.D.), Schon v. Hodgins, [1988] O.J. No. 839 (Dist. Ct.), Federal Business Development Bank v. Lakeland Drilling Ltd. (1985), 61 A.R. 381 (Q.B.), and Alden v. Hutcheon, [1960] Que. Q.B. 539.

The criticisms of the rule in Theakston in today’s society are sound. The fact that courts have not followed it for some time is significant. It is now generally accepted that the jury in a civil action should not be discharged automatically simply because something has occurred in the trial from which the jury might reasonably infer that the defendant is insured. It seems sensible that it should still be for the trial judge to determine whether in the particular circumstances of the trial a reference to insurance has been prejudicial to the interests of the parties. If the reference is prejudicial the trial judge has the ability to deal with it. If the trial judge concludes that the prejudice is so severe that specific instructions or like means cannot dispel the prejudice the trial judge may discharge the jury. It is apparent that in most cases the trial judge could fashion a remedy to remove the prejudice short of discharging the jury.

In my opinion, this Court should overrule its decision in Theakston as it relates to the automatic discharge of the jury. In Minister of Indian Affairs and Northern Development v. Ranville, [1982] 2 S.C.R. 518, Dickson J. (as he then was) stated at p. 527 that this Court is willing, where there are compelling reasons for doing so, to overturn its own previous decisions.

There are a number of compelling reasons for no longer following Theakston. The most significant is that the fact of insurance is now widely known and therefore the rationale for the rule is no longer valid. Modern juries are aware in some cases, i.e., automobile accidents, that insurance is compulsory. They are also aware that insurance is a common commodity in a variety of other ways.

The decision whether to discharge the jury should be a matter within the discretion of the trial judge. In exercising this discretion, the trial judge should consider whether in the circumstances the reference to insurance would likely result in real prejudice to the defendant. That is, the trial judge should consider whether the reference has caused a substantial wrong or miscarriage of justice, so that it would be unfair to continue with the present jury. See Michaud, supra, per Abbey J. at pp. 61-62:

. . . essentially, as I see it, the court must weigh all of the circumstances of the particular case and determine whether the disclosure which has been made would likely result in real prejudice such that it would be unjust to continue the trial as presently constituted.

The suggested approach has been neatly summarized in The Trial of an Action, supra, at p. 33:

It is submitted that the change in circumstances alluded to by Kellock J. in his dissent has occurred and it is time to re-assess Theakston v. Bowhey, in light of that change. This change has been recognized by our trial courts and by the highest court. Juries know about insurance and there is no evidence that their verdicts have been unduly affected. There is therefore no justification for assuming that a mention of insurance is ipso facto a miscarriage of justice. The tri-partite rule in Theakston v. Bowhey, should be replaced by one rule. A party complaining of a reference to insurance should be required to persuade the trial judge that a substantial wrong or miscarriage has been occasioned. The Court of Appeal should not interfere with the trial judge’s decision unless it has not been judicially exercised.

In assessing the likelihood of prejudice, the trial judge should consider whether the fact that the defendant is insured is well known. In a motor vehicle accident where the defendant is subject to compulsory automobile insurance, the reference to insurance is unlikely to result in prejudice, since the members of the jury will already know that the defendant is insured. However, in some cases it will not be evident whether a particular defendant is insured against liability. In these latter cases the potential for prejudice may be greater. It is for the trial judge to assess the likelihood of prejudice in any given case.

If the trial judge determines that the reference to the defendant’s being insured is likely to result in prejudice, the jury should not be discharged automatically. The jury should only be discharged if the trial judge considers that the prejudice cannot be cured. In most cases the jury will be able, with proper instructions from the trial judge, to disregard the fact of insurance in determining liability and assessing damages.

The cost and delay of having a new trial with a new jury is but one consideration for the trial judge. In each case there will be a variety of factors to consider. No formula is available. It must remain a matter for the trial judge. If he or she is satisfied that instructions to the jury will remove the possible prejudice that is the course to follow. See McCormick on Evidence, supra, §201, at p. 859:

If disclosure of the fact of insurance really is prejudicial, the corrective is not a futile effort at concealment, but the usual fulfillment by the court of its function of explaining to the jury its duty to decide according to the facts and the substantive law, rather than upon sympathy, ability to pay, or concern about proliferating litigation and rising insurance premiums.

There is a general public awareness that insurance coverage is a fact of life. Further this Court has recognized that juries are knowledgeable and well able to follow directions on legal issues whether complex or straightforward. It follows that although the final determination of the issue will be left to the discretion of the trial judge, as a general rule the reference to insurance will not result in the case being taken from a jury. In such cases, a direction from the judge that the matter of insurance coverage is completely irrelevant and should not be a factor in their deliberations will suffice.

It has long been established that, absent an error of law, an appellate court should not interfere with the exercise by a trial judge of his or her discretion in the conduct of a trial. This applies with equal force to a decision to retain or discharge the jury. It cannot be overstated that the trial judge is in the best position to determine how to exercise this discretion.

Application to the Facts of this Case

The question is whether the references to insurance in this case created prejudice and if so whether the trial judge erred in the exercise of his discretion by discharging the jury.

Two references to insurance were made at the trial. The first reference was made by Mr. Baldo, one of the rugby players present at the match. He referred to a statement that he had completed for an insurance adjuster. The second reference was made by Mr. Legh, an expert witness testifying for the Board. He testified that he was not concerned about the financial impact of the lawsuit against B.C. Rugby because he assumed that some insurance company would pay any damages awarded against the association.

The respondents submitted that the trial judge erred in discharging the jury in two respects. First, the trial judge erred because he followed the rule set out in Theakston that the discharge is automatic once a reference to insurance is made. Second, the trial judge erred because he based his decision to discharge the jury on the premise that B.C. Rugby was subject to a lower standard of care owing to its voluntary non-profit status.

The first submission of the respondents is incorrect. The reasons for judgment do not support the conclusion that the trial judge applied the rule in Theakston. The trial judge did not refer to or rely on Theakston in his reasons. He never stated that he was bound to discharge the jury automatically because of the references to insurance. He referred to the statement in O’Neil, supra, at p. 630 that “[a] trial Judge has the inherent power to prevent either party being prejudiced by references which might lead to an improper verdict”. Furthermore, he invited submissions from counsel on whether he should discharge the jury. This would have been unnecessary if he thought the discharge was automatic.

The trial judge recognized that he should proceed on the basis that the decision whether to discharge the jury was to be determined by weighing the possible prejudice, and using his discretion he said:

I am concerned here from the impression that I formed when Mr. Legh gave this evidence to the effect that he assumed an insurance company would pay for this, that the jury may well have formed the impression that I did, and that is that in fact there is insurance here. . . .

It is with great reluctance that I have concluded that the evidence of Mr. Legh even standing alone, but especially coupled with that of Mr. Baldo, is such that The B.C. Rugby Union might be prejudiced by that reference.

. . .

I am concerned that it will be difficult for this jury, no matter what I may say to it, to get out of its heads the impression that I formed, if they should, that there is insurance here and that this could have a material impact on their deliberations when it comes to The B.C. Rugby Union. And I emphasize that in this case it is references which might lead to an improper verdict as opposed to references which would inevitably lead to an improper verdict.

. . .

I repeat again that I have done this with the greatest of reluctance. . . .

Now, on the basis of what I have said before I have no alternative but to exercise my discretion and to discharge this jury and I so do.

The reasons of the trial judge make it obvious that he did not automatically discharge the jury but considered, first, if the references to insurance were prejudicial, and if so whether he could, by instructing the jury, remove the prejudice. He concluded that he could not and it was only then that he exercised his discretion and discharged the jury.

The second submission of the respondents also fails. They submitted that the trial judge mistakenly based his decision to discharge the jury on the premise that B.C. Rugby was subject to a lower standard of care in negligence because of its voluntary non-profit status. In fact, the trial judge expressly stated in his ruling that he would have discharged the jury even if B.C. Rugby was subject to the ordinary standard of care:

In any event, even if the standard of care that the court will exact from The B.C. Rugby Union is the ordinary standard of care that is exacted from any other person in a negligence action, I still have the concerns I have expressed before in these Reasons.

As the trial judge made it clear that his decision to discharge the jury did not depend on the standard of care, the standard he proposed and ultimately imposed on B.C. Rugby is irrelevant in this appeal.

Conclusion

The reasons of the trial judge indicate that he proceeded on the basis that the decision whether to discharge the jury owing to the references to insurance was a matter within his discretion. He considered the prejudice to B.C. Rugby caused by the references in the circumstances of the case and concluded that it was appropriate to discharge the jury. He did not base the exercise of his discretion on any wrong principle. In my opinion, the trial judge did not commit any error in discharging the jury and the Court of Appeal was wrong to intervene.

If the trial judge did err in discharging the jury, are the respondents entitled to a new trial despite their election to continue before the trial judge sitting alone?

The appellants argued that even if the trial judge erred in discharging the jury, the respondents are precluded from seeking a new trial because they elected to proceed with the judge sitting alone. As I have concluded that the trial judge did not err in discharging the jury, this question is moot.

Disposition

I would allow the appeal of both the appellant The British Columbia Rugby Union and the appellant Brian Rigby with costs, set aside the order of the Court of Appeal for British Columbia for a new trial and refer the matter back to the Court of Appeal to deal with the other issues raised on the original appeal before that court.