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Automobile Insurance - SABS - Overview

Cadieux v. Cloutier (Ont CA, 2018)

In this case the Court of Appeal conducts an overview of the tort and statutory SABS elements of the automobile insurance scheme:
B. Statutory Accident Benefits and Tort Damages

(1) Overview

[10] Ontario’s automobile accident compensation scheme has two components. The first is based on mandatory automobile insurance, which provides “no-fault” first-party benefits (through SABs) to anyone injured in an automobile accident. The second component is a right to sue the “at fault” driver in a civil tort action, subject to certain statutory thresholds and deductibles, and a common law cap on non-pecuniary general damages: Andrews v. Grand & Toy Alberta Ltd., 1978 CanLII 1 (SCC), [1978] 2 S.C.R. 229; Thornton v. School District No. 57 (Prince George), 1978 CanLII 12 (SCC), [1978] 2 S.C.R. 267; Arnold v. Teno, 1978 CanLII 2 (SCC), [1978] 2 S.C.R. 287.

[11] SABs are the “no-fault” component of this scheme. They are available to anyone involved in a motor vehicle accident in Ontario, whether as driver, passenger, or pedestrian, and regardless of who was at fault.

[12] There are three broad categories of SABs under the Insurance Act and the Statutory Accident Benefits Schedule, O. Reg. 34/10. These were referred to in El-Khodr as silos. The first category provides income replacement benefits or, if the person was not employed at the time of the accident, “non-earner” benefits, or “caregiver benefits”, if they provided caregiver services to another person at the time of the accident.

[13] The second category is health care benefits. “Health care” is a defined term in s. 224(1) of the Insurance Act. It “includes all goods and services for which payment is provided by the medical, rehabilitation and attendant care benefits provided for in the Statutory Accident Benefits Schedule.” The Statutory Accident Benefits Schedule sets out in detail the available health care benefits. Health care expenses include medical, rehabilitation and attendant care benefits, goods and services of a medical nature, rehabilitation expenses, and services provided by an attendant or by a long-term care facility, nursing home, home for the aged, or chronic care hospital.

[14] The third category of benefits addresses “other pecuniary loss”, which includes lost educational benefits, expenses of visitors, and housekeeping and home maintenance expenses.

[15] There are limits on the quantum of SABs and time period for which some SABs can be claimed, depending on the nature of the claimant’s injuries – namely, whether they are classified as “catastrophic impairment”, “non-catastrophic impairment”, or within the “minor injury guideline”. SABs are available to claimants immediately after the accident and on an ongoing basis.

[16] The tort component of compensation permits an injured person to pursue a civil action for damages against the person(s) responsible for the accident. Subject to statutory thresholds and deductibles, and a common law cap on general damages, the plaintiff may claim all pecuniary and non-pecuniary losses incurred as a result of the accident. These can include past and future loss of income, medical expenses, costs of care, costs of housekeeping and home maintenance expenses, as well as general damages for pain and suffering and loss of enjoyment of life. In theory, an award of tort damages will put the injured plaintiff in the position that he or she would have been had the injury not occurred, so far as money can do.

[17] These two forms of compensation – SABs and tort damages – are independent of one another. It is inevitable, however, that there will be overlap between the compensation provided to an accident victim by no-fault SABs and the award of damages to that person in a civil tort action. Section 267.8 of the Insurance Act contains provisions designed to address this overlap and to prevent double recovery. It reflects the principle that victims should be fairly compensated, but not over-compensated. Automobile insurers, who provide first-party benefits through SABs insurance, should not be required, when wearing their fault based liability insurer hats, to compensate an accident victim twice for the same losses. In preventing double recovery, the statutory regime modifies the common law “collateral source” rule – that insurance or other benefits available to the injured plaintiff do not reduce the amount for which the tortfeasor is liable: see Boarelli v. Flannigan, 1973 CanLII 690 (ON CA), [1973] 3 O.R. 69 (C.A.).

[18] In broad terms, s. 267.8 of the Insurance Act provides that: (a) the tort award must be reduced by the SABs received by the injured party before judgment (s. 267.8(1), (4), and (6)); and (b) SABs received by the plaintiff after judgment must be held in trust for or assigned to the defendant or tort insurer, until such time as the benefits have been exhausted or the defendant has been fully reimbursed for the payments it made under the judgment (s. 267.8(9)).

[19] Before turning to the facts of this appeal, and the issues it raises, it will be helpful to set out and briefly comment on the relevant statutory provisions.

(2) Statutory Provisions

[20] The relevant provisions of the Insurance Act are set out below:
267.8 (1) In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the damages to which a plaintiff is entitled for income loss and loss of earning capacity shall be reduced by the following amounts:

1. All payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for statutory accident benefits in respect of the income loss and loss of earning capacity.

2. All payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for income loss or loss of earning capacity under the laws of any jurisdiction or under an income continuation benefit plan.

3. All payments in respect of the incident that the plaintiff has received before the trial of the action under a sick leave plan arising by reason of the plaintiff’s occupation or employment.



(4) In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the damages to which a plaintiff is entitled for expenses that have been incurred or will be incurred for health care shall be reduced by the following amounts:

1. All payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for statutory accident benefits in respect of the expenses for health care.

2. All payments in respect of the incident that the plaintiff has received before the trial of the action under any medical, surgical, dental, hospitalization, rehabilitation or long-term care plan or law.



(6) In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the damages to which a plaintiff is entitled for pecuniary loss, other than the damages for income loss or loss of earning capacity and the damages for expenses that have been incurred or will be incurred for health care, shall be reduced by all payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for statutory accident benefits in respect of pecuniary loss, other than income loss, loss of earning capacity and expenses for health care.



(8) The reductions required by subsections (1), (4) and (6) shall be made after any apportionment of damages required by section 3 of the Negligence Act.

(9) A plaintiff who recovers damages for income loss, loss of earning capacity, expenses that have been or will be incurred for health care, or other pecuniary loss in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile shall hold the following amounts in trust:

1. All payments in respect of the incident that the plaintiff receives after the trial of the action for statutory accident benefits in respect of income loss or loss of earning capacity.

2. All payments in respect of the incident that the plaintiff receives after the trial of the action for income loss or loss of earning capacity under the laws of any jurisdiction or under an income continuation benefit plan.

3. All payments in respect of the incident that the plaintiff receives after the trial of the action under a sick leave plan arising by reason of the plaintiff’s occupation or employment.

4. All payments in respect of the incident that the plaintiff receives after the trial of the action for statutory accident benefits in respect of expenses for health care.

5. All payments in respect of the incident that the plaintiff receives after the trial of the action under any medical, surgical, dental, hospitalization, rehabilitation or long-term care plan or law.

6. All payments in respect of the incident that the plaintiff receives after the trial of the action for statutory accident benefits in respect of pecuniary loss, other than income loss, loss of earning capacity and expenses for health care.

(10) A plaintiff who holds money in trust under subsection (9) shall pay the money to the persons from whom damages were recovered in the action, in the proportions that those persons paid the damages.



(12) The court that heard and determined the action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of the automobile, on motion, may order that, subject to any conditions the court considers just,

(a) the plaintiff who recovered damages in the action assign to the defendants or the defendants’ insurers all rights in respect of all payments to which the plaintiff who recovered damages is entitled in respect of the incident after the trial of the action,

(i) for statutory accident benefits in respect of income loss or loss of earning capacity,

(ii) for income loss or loss of earning capacity under the laws of any jurisdiction or under an income continuation benefit plan,

(iii) under a sick leave plan arising by reason of the plaintiff’s occupation or employment,

(iv) for statutory accident benefits in respect of expenses for health care,

(v) under any medical, surgical, dental, hospitalization, rehabilitation or long-term care plan or law, and

(vi) for statutory accident benefits in respect of pecuniary loss, other than income loss, loss of earning capacity and expenses for health care; and

(b) the plaintiff who recovered damages in the action co-operate with the defendants or the defendants’ insurers in any claim or proceeding brought by the defendants or the defendants’ insurers in respect of a payment assigned pursuant to clause (a).

(13) Subsection (9) no longer applies if an order is made under subsection (12).



(20) For the purposes of subsections (1), (3), (4) and (6), the damages payable by a person who is a party to the action shall be determined as though all persons wholly or partially responsible for the damages were parties to the action even though any of those persons is not actually a party.
[21] We will discuss the application of these provisions below, but we note several key features of the legislation.

[22] First, as a matter of statutory interpretation, ss. 267.8(1), (4), and (6) require the deduction of SABs received prior to trial from damages received in a tort action on a silo basis. That is, SABs for income loss are to be deducted from the tort award for income loss (s. 267.8(1)); SABs for health care expenses are to be deducted from the tort award for health care (s. 267.8(4)); and SABs for other pecuniary loss are to be deducted from the tort award for other pecuniary loss (s. 267.8(6)). There is no reasonable interpretation of the legislation, in our view, that permits either a more generalized approach to deduction (that is, a deduction of SABs in one silo from a jury award for damages falling within another silo) or a more particularized approach to deduction (that is, the deduction of particular SABs within a silo only from damages for the identical head of damage awarded by the jury within the same silo).

[23] Second, the deductions of SABs from the tort award are to be made taking into account the apportionment of damages to account for the plaintiff’s contributory negligence under s. 3 of the Negligence Act, R.S.O. 1990, c. N.1 (s. 267.8(8)). In addition, the deductions of SABs as between defendants must be allocated to the defendants based on their respective shares of liability. We will discuss the application of these requirements in due course.

[24] Third, SABs received after trial are to be held in trust by the plaintiff and paid to the tortfeasor(s) in the same proportion that they paid the tort damages awarded (s. 267.8(9) and (10)). Alternatively, the court may order that the plaintiff assign to the tortfeasor its right to future SABs. The application of these provisions is discussed in our reasons in the Carroll appeal.

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