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Insurance (Auto) - Non-Earner Benefits. Kolapully v. Myles
In Kolapully v. Myles (Ont CA, 2024) the Ontario Court of Appeal considers the deduction of SABS non-earner benefits, to avoid double-recovery when they are also awarded in tort:[59] To determine the proper interpretation of the Act as it relates to the deductibility of non-earner benefits, it is necessary to review the history of the legislation and how its evolution sought to prevent double recovery. For accidents that occurred between 1971 and October 1989, a provision of the Insurance Act, R.S.O. 1980, c. 218, which originated in S.O. 1971, c. 84, s. 17, applied. Section s. 239(2) provided:(2) Where a claimant is entitled to the benefit of insurance as provided in [the relevant Schedule], this, to the extent of payments made or available to the claimant thereunder, constitutes a release by the claimant against the person liable to the claimant or his insurer. [60] For accidents occurring between October 1989 and January 1994, a revised provision applied in the Insurance Act, R.S.O. 1990, c. I.8, which originated in S.O. 1990, c. 2, s. 57. Subsection 267(1) provided:(1) The damages awarded to a person in a proceeding for loss or damage arising directly or indirectly from the use or operation of an automobile shall be reduced by:
(a) all payments that the person has received or that were or are available for no-fault benefits and by the present value of any no-fault benefits to which the person is entitled; [61] In Bannon v. McNeely, 1998 CanLII 4486 (ON CA), [1998] 38 O.R. (3d) 659 (C.A.), dealing with an accident that occurred in 1991, this court interpreted the 1989-1994 statutory scheme, and determined that the proper method for deducting statutory accident benefits from tort damages was the “apples to apples” or “strict matching” approach. Under that approach, “apples should be deducted from apples, and oranges from oranges”, meaning statutory accident benefits were only deductible based on a “precise matching of individual benefits within those against the identical heads of damages”: Bannon, at p. 679; Cadieux, at para. 39.
[62] In 1996, the legislature amended the statutory scheme to prescribe three categories of statutory accident benefits, each to be deducted from a corresponding category of tort damages:Income loss and loss of earning capacity
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.
1996, c. 21, s. 29.
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Health care expenses
(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.
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Other pecuniary loss
(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. 1996, c. 21, s. 29. [63] Two lines of case law emerged after the introduction of the new statutory language in 1996. The first line continued using the “apples to apples” approach formulated in Bannon and applied it to cases governed by the new provision: see e.g., Gilbert v. South (2015), 127 O.R. (3d) 526, 2015 ONCA 712. In Walker v. Ritchie, 2005 CanLII 13776 (ON CA), [2005] 197 O.A.C. 81 (C.A.), this court also applied the “apples to apples” approach in concluding that non-earner benefits are not akin to loss of income and therefore are not deductible from damages awards for loss of income.
[64] The second line of cases rejected the “apples to apples” approach, opting instead for a more flexible “silo” approach: see e.g., Basandra v. Sforza (2016), 2016 ONCA 251 (CanLII), 130 O.R. (3d) 466 (C.A.), at para. 21, and El-Khodr v. Lackie (2017), 2017 ONCA 716 (CanLII), 139 O.R. (3d) 659, at paras. 35, 60, 70, and 71. Under the silo approach, all statutory accident benefits falling within the same broad category are deductible from all damages awards in the corresponding broad category. This line of cases followed the Supreme Court’s decision in Gurniak v. Nordquist, 2003 SCC 59, [2003] 2 S.C.R. 652, which rejected the use of the strict matching approach by the British Columbia Court of Appeal dealing with similar statutory language. MacFarland J.A observed the emergence of this approach in El-Khodr, at para. 70: “As appears in this court’s decision in Basandra, courts are moving towards a more relaxed approach that considers whether the pre-trial benefit received generally fits within one of the broad statutory categories of damages.” The case law shows that the effect of this new approach was to make statutory accident benefits more frequently deductible from tort damages awards.
[65] In Cadieux, a five-judge panel of this court resolved the conflict in favour of the silo approach: at paras. 4, 12-14, 39, 56, and 57-120. They observed:[T]he statutory provisions in force when Bannon was decided did not group benefits to be deducted into categories or silos. Instead, it lumped all accident benefits together and required their deduction from the tort award. In contrast, the current statute sets out broad categories of SABs from which the tort award must be deducted. [66] In light of the statutory changes and the Supreme Court’s rejection of the strict matching approach in Gurniak, the Cadieux court held that the proper interpretation of the current version of s. 267.8 “does not support matching at a more particular level than the three silos of income loss, health care expenses and other pecuniary loss”: at para. 85. The silos are described at paras. 12-14: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. [Emphasis added.]
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 third category of benefits addresses “other pecuniary loss”, which includes lost educational benefits, expenses of visitors and housekeeping, and home maintenance expenses. Note the underlined words, which put non-earner benefits in the silo for income replacement benefits.
[67] The key principle is that the deduction from the tort pecuniary damages award is confined to the apposite silo. If the claimant gets no damages award for future income loss, for example, the amount the claimant received for income loss under the SABS is not deducted from any award under the other two silos – “health care benefits” or “other pecuniary loss”. An additional principle is that statutory accident benefits are never to be deducted from general damages for pain and suffering: Insurance Act, s. 267.8(7). The court applies this reasoning to the facts of the case in paras 70-82.
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