The Importance of Certainty When Pursuing the Deduction of Collateral Benefits

The jury in Gilbert v. South et al., 2014 ONSC 3485 (CanLII), awarded the plaintiff general damages, future care costs and damages for past and future income loss and loss of housekeeping.

The plaintiff had been injured in a motor vehicle accident in 2010. The plaintiff’s injuries were non-catastrophic. He was entitled to certain statutory accident benefits including up to $100,000 for medical and rehabilitation, subject to a 10-year time period.

The plaintiff had received some medical benefits totalling $14,822.50 and housekeeping benefits totaling $14,822.50. The plaintiff had neither applied for nor received income replacement benefits or attendant care benefits and the time period to receive same had expired. The time period had also expired for the plaintiff to receive future housekeeping benefits. The defendant did not seek relief in relation to the benefits that may have been available to the plaintiff but were not pursued.

Prior to judgment being formally entered, the defendant brought a motion seeking various forms of relief relating to “certain future statutory accident benefits and other collateral benefits” received or to be received by the plaintiff.

The defendant relied on s.267.8 of the Insurance Act which in certain prescribed circumstances imposes trust, payment and assignment obligations on plaintiffs who in motor vehicle accident cases obtain certain types of litigated recovery for losses which also may be addressed by certain collateral benefits (para 8).

Justice Leach set out the general principals relating to the application of this section, including the following (pars 9):

·         the object of these provisions is to prevent “double recovery” by the plaintiff. The provisions assume that the plaintiff has obtained, through litigation, damages covering the same loss otherwise covered by the collateral benefits;

 

·         concern of double-recovery is balanced by concern that a plaintiff should receive full compensation and not recover less than that to which he is entitled. Statutory provisions of this nature are strictly interpreted and applied;

 

·         deductions from a plaintiff’s damage award to prevent double-recovery will be made only if it is absolutely clear that the plaintiff’s entitlement to such collateral benefits is certain, and the plaintiff received compensation for the same benefits in the tort judgment. Evidence of “likelihood” and “probability” is not enough to warrant a deduction. A “very strict onus of proof” applies in relation to such matters, and it must be “patently clear” that the preconditions for an appropriate deduction have been established.

Justice Leach held that there were too many uncertainties as to entitlement and overlap to grant the relief requested and the defendant’s motion was denied. There was no evidence as to the total amount or the nature of statutory accident benefits the plaintiff would definitely receive.

A further obstacle to the relief requested by the defendant was that the jury awarded the plaintiff $57,250.00 for “future care costs” but the jury did not indicate, and was not asked to indicate, the extent to which any of this amount was allocated to the time period during which the plaintiff may be entitled to medical and rehabilitation benefits. Of importance, Justice Leach notes that this uncertainty may have been avoided by the posing of more specific questions to the jury.

This decision stresses the importance of quantifying future entitlement to collateral benefits in advance of trial and the importance of taking care to ask the necessary questions of the jury in order to identify any overlap between the tort award and collateral benefits.

Deduction of Collateral Benefits at Trial

Brown v. Campbell, (2012) 109 O.R. (3rd) 306 (S.C.J.)

After a jury trial where the plaintiff was awarded damages for past income loss, the defendant asked the judge to reduce the amount by long term disability benefits received the plaintiff. The plaintiff was self-employed and had purchased a long term disability policy for himself. The request for the deduction had not been made at trial, and had first arisen when the final judgment was being taken out. Both parties had addressed the issue in their evidence. The jury award for past income loss did not match either the amount suggested by the plaintiff or the defendant. Justice Nolan refused to make a deduction post trial. She held the defendant should have made be request at trial so she could have charged the jury on it. In addition, since the jury's verdict was less than the amounts submitted by both parties, it appeared the jury had in fact made the deduction in their assessment of the damages.

One issue left open by the Court is whether the disability benefits would have been deductible in any event, given that the plaintiff was self-employed and Justice Nolan noted the law is not settled with respect to whether LTD benefits purchased privately are captured by s. 267.8 of the Insurance Act.

Deductibility of CPP Disability Benefits

The plaintiff in Demers v. B.R. Davidson Mining & Development Ltd. [2011] ONSC 2046 received CPP benefits following a car accident in 1999. A dispute arose as to the deductibility of these benefits.

Prior to November 1, 1996 it was clear that CPP benefits were not deductible. The law in this respect became less clear with the enactment of Bill 59. This Bill dealt with car accidents occurring after November 1, 1996 and before October 1, 2003. As a result of its enactment, s.267.8(1) of the Act provided for the deduction of benefits for “loss of earning capacity”. What wasn’t clear was whether this included CPP benefits.

To complicate matters further, there were two conflicting court decisions. The court in Meloche v. McKenzie ,[2005] O.J. No. 3761 (S.C.J.) looked to the 2003 amendments which specify that CPP benefits are deductible and concluded that this amendment must be a clarification of the original legislation. The court in Sonnenberger v. Creamer, [2009] O.J. No. 754 (S.C.J.) made the opposite finding as it took the position that the amendment did not provide for retrospective application.

There is also a Court of Appeal decision, Kosanovic v. Wawanesa Mutual Insurance Co., [2004] O.R. (3d) 161 (C.A.) which held that CPP benefits were not deductible for this time period. This case was not considered by the court in Meloche and arguments were made by the defendants in Demers that this case should not be considered.

Shaw J. found Kosanovic relevant and binding but also focused on two principals of statutory interpretation to settle the issue: 1) the ordinary meaning of a legislative provision should prevail absent a good reason to reject it; and 2) there must be something in the wording of the provision or in the circumstances in which it is enacted to indicate that the provision is meant to be retroactive. He concluded that the legislation in effect in 1999, when the accident occurred, does not expressly provide for the deduction of CPP benefits and the amended legislation does not indicate retroactivity.

As a result of this case there appears to be two distinct periods of time: 1) accidents which occurred between October 23, 1989 and September 30, 2003 (CPP benefits not deductible); and 2) accidents which occurred after October 1, 2003 (CPP benefits deductible).

Unprotected Defendants Entitled to Deduct Collateral Benefits under s. 267.8

Burhoe v. Mohammed (2010), 97 O.R. (3d) (391) (S.C.J.)

The plaintiff was in a motor vehicle accident on December 21, 2001 when his vehicle was struck by a vehicle being operated by a parking valet at a hotel. The accident fell within the Bill 59 regime. As a result of his employment, the plaintiff received long term disability benefits, and might continue to do so after the trial. This was a motion for the determination of questions of law related to the interpretation of s. 267.8 of the Insurance Act.

The court held that both unprotected and protected defendants are entitled to deductions for long term disability benefits under section 267.8(1) of the Insurance Act. Since the section does not differentiate between protected and unprotected defendants, Justice Wein held that the unprotected defendants were entitled to deduct the collateral benefits, and were also entitled to the benefit of the trust and assignment provisions in sections 267.8(9), (10) and (12) with respect to future benefits.

This decision is useful in helping to clairfy for unprotected defendants what benefits they are entitled to deduct.