Silos Replace Apples: Treatment of Collateral Benefit Deductions in the Court of Appeal

By Meredith Harper Dec 17, 2018

Released at the same time as Cadieux v. Cloutier, 2018 ONCA 903, in Carroll v. McEwen, 2018 ONCA 902, the Ontario Court of Appeal dealt with the treatment of statutory accident benefits under s. 267.8 of the Insurance Act, R.S.O. 1990, c. I.8.

As described in detail in Cadieux, section 267.8 of the Insurance Act addresses the intersection of tort damages and accident benefits to prevent double recovery by eligible claimants. Sections 267.8(1), (4) and (6) require the tort award to be reduced by corresponding categories of designated accident benefits that have been received by the injured party before trial. Pursuant to sections 267.8(9) and (10), where damages have been recovered for income loss, loss of earning capacity, expenses that have been or will be incurred for health care, or other pecuniary loss, accident benefits  subsequently received that correspond to those general categories of damages are subject to a statutory trust to facilitate repayment in favour of the persons who paid the damages. Finally, section 267.8(12) empowers courts to exercise discretion to assign broad categories of future accident benefits payments to the tortfeasor or the tort liability insurer. The Court of Appeal commented on section 267.8(12)(a) and found that is provided for the assignment of three broad categories of accident benefits , namely:

  • those “in respect of income loss or loss of earning capacity” (section 267.8(12)(a)(i));
  • those “in respect of expenses for health care” (section 267.8(12)(a)(iv)); and,
  • those “in respect of pecuniary loss, other than income loss, loss of earning capacity and expenses for health care” (section 267.8(12)(a)(vi)).

Section 224(1) defines “health care” as including all goods and services paid for by “medical, rehabilitation and attendant care benefits”. This case raised questions about when an assignment order can be made of accident benefits paid “in respect of expenses for health care.”

In this case, total damages awarded by the jury was $2,610,774.32 with $2,232,000 allotted for future care costs. The defendants’ insurers offered to pay the judgement in full in exchange for the trial judge ordering a conditional assignment for future accident benefits (attendant care, and medical and rehabilitation benefits) that the plaintiff would be entitled to. The plaintiff appealed the assignment.

The plaintiff argued that the conditional assignment order violated the matching principles required by this court’s decision in Gilbert v. South, 2015 ONCA 712, and that, in any event, the conditional assignment order was premature since the judgment had not been paid when the conditional assignment order was made.

The plaintiff argued that  that the strict “apples to apples” matching requirement in Bannon v. McNeely (1998), 38 O.R. (3d) 659 (C.A.), could not be satisfied because the jury award for “future care costs” was not particularized.

The Court of Appeal concluded that silo approach adopted in Cadieux, should apply to the assignment of accident benefits in this case. The five judge panel stated that the silo approach is: consistent with the current statutory language; fair to plaintiffs, defendants, and their insurers; and, promotes efficiency in motor vehicle accident litigation.

The Court of Appeal found that the provisions of section 267.8 of the Insurance Act is are meant to ensure fair compensation and prevent double recovery. The Court’s conclusion was that there was no principled or technical reason why a different matching regime should apply to the accident benefits received after trial.

In Carroll v. McEwen, the Court found that is was obvious that there was an overlap between the tort award and accident benefits payments. Yet, by using strict matching authorities the plaintiff sought to benefit from the fact that the jury question did not specify the precise kinds of “future care costs” the jury was awarding, or their amounts. The argument descended into a debate about who is responsible for the form of jury questions.

Regarding the plaintiff’s second issue on appeal, the Court of Appeal concluded that requiring a damages award to be paid before an assignment order can be made is impractical. The Court found that a damages award cannot be paid before the trial has ended and the damages to be recovered have been identified. Further, the Ontario Court of Appeal found that section 267.8(12) avoids the need for subsequent assignment motions by expressly empowering trial judges to make orders to assign “subject to any conditions the court considers just.” The Court offered harsh criticism on the plaintiff’s lawyer in stating that counsel should not “be exploiting technicalities to frustrate the efficacy of judicial orders.”

The Court of Appeal upheld the trial judges conditional assignment and imposed on of their own. The Court ordered the plaintiff to disclose to the defendants’ insurer the amount that she has received in accident benefits.

It is worth noting that the plaintiff also appealed the trial judge’s order for costs, where it was less than half of the costs the plaintiff was seeking. The Ontario Court of Appeal denied leave to appeal on the issue of costs. The Court found that the trial judge offered several reasons for reducing the costs order, including sanctioning the plaintiff’s lawyer for attempting to “trick” the defendants relating to a settlement offer. The Court relied on it’s previous decision in McNaughton Automotive Ltd. v. Co-operators General Insurance Company, 2008 ONCA 597, in stating that considerable deference should be given to the trial judge’s discretion in determining the entitlement, scale and quantum of a costs order.

Meredith Harper is the author of this blog and co-chair of the firm's Appellate Advocacy practice group. If you have a question about this decision or a similar file, please contact Meredith

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