This decision deals with two common issues in insurance and professional-negligence cases: double recovery, and whether a lawyer can set off unpaid legal fees against a client’s claim.
First, the court considered whether a plaintiff who settled her tort claim for a global lump sum could later recover the same accident-benefit-type losses from her former lawyer. The Plaintiff argued that because the settlement was not allocated by category, none of it could be deducted from her later claim. The court rejected this. It found she had claimed the same losses – income replacement, medical and rehabilitation expenses, attendant care, and housekeeping – in both proceedings, relying on the same expert evidence, and offered no proof of any new or different losses. Rather than conducting a formal credit analysis, the court dismissed the claim on causation grounds, holding that the plaintiff failed to show any negligence caused a loss she would not otherwise have recovered.
Second, the court considered whether the lawyer could offset unpaid legal fees against the claim. Statutory set-off did not apply, so the court turned to equitable set-off. In light of the lawyer’s breaches of the standard of care, inadequate billing records, and the fact that substantial fees had already been paid from a prior accident-benefits settlement with little value to the client, the court significantly reduced the fees claimed. Because the plaintiff’s action failed, however, no set-off ultimately applied.
The lengthy judgement in Barkley v. Sloan et al., 2025 ONSC 6057 sets out several noteworthy takeaways for lawyers practicing personal injury and insurance law, most notably:
- Plaintiffs bear a mitigating responsibility to take reasonable steps in light of a lawyer’s error.
- It is critical that lawyers document all critical discussions and decisions in writing and give thorough advice on early settlements.
- Misstating core provisions can amount to negligence.
But what about the financial aspect of judgements in the realm of Accident Benefits and Tort claims? Should a plaintiff be able to recover from both avenues? The short answer is No.
The longer, more comprehensive answer requires an understanding of the compensation system in Ontario for motor vehicle cases. An individual who is involved in a motor vehicle collision has two avenues to be compensated for their injuries:
- Accident Benefits (AB) under the Statutory Accident Benefits Schedule (SABS), and
- A potential Tort claim against the at-fault party.
Despite the availability of both avenues, they do not operate independently as affirmed in Barkley. The law does not permit recovery from Accident Benefits to be excluded when calculating Tort damages.
In paragraph 306 of the decision , Justice Nightingale clarifies that “the intention of s.267.8 of the Insurance Act and SABS provides for some overlapping of coverage for loss of income and health care expenses.” However, it also allows for “tort defendants to deduct accident benefit amounts received by the plaintiffs from their corresponding ‘silo’ tort damages to avoid double recovery.”
This system ensures fairness and prevents windfalls. If plaintiffs could collect the same loss twice, it would be more beneficial to be injured than uninjured. This is contrary to the principles of damages and recovery and it is an outcome that the court has continuously rejected.
It is good practice for lawyers to think twice about early AB settlements and be transparent with their clients about the relationship between AB and Tort claims and recovery.
This blog is the fourth in a series on Barkley v Sloan. If you have questions about double recovery and its implications, please contact Arian Aria at 647-427-3363.
