Canada: Tort Assignments Of Accident Benefits Impermissible: D’ettorre v. Coachman Insurance Co.

In this special edition of BLG's Insurance and Tort Liability Newsletter, we provide comments regarding four recent court decisions which may be of interest to you.

Tort insurers who have or may wish to take an assignment of a plaintiff's accident benefit claim as part of a settlement of the tort claim should be aware that such assignments were recently found to be impermissible at law. In D'Ettorre v. Coachman Insurance Co., 2012 ONSC 3613, the Superior Court of Justice ruled that, short of a trial or judicial assessment of damages, such assignments are not permissible under Ontario insurance legislation.

In attempting to settle a tort claim, tort insurers will often not be satisfied with the "credit" that a plaintiff is prepared to provide the tort insurer for accident benefits not yet received by the plaintiff. The tort insurer may be tempted to enter into a full and final settlement of the tort action by having the plaintiff assign his/her outstanding accident benefits to the tort insurer. The tort insurer would then be free to pursue the plaintiff's available accident benefits. Although, the tort insurer would ordinarily have no claim in law for the insured's accident benefits, such assignments allow the tort insurer to seek recovery directly from the accident benefit insurer.

The Superior Court of Justice has concluded such arrangements are not permissible under Ontario's Insurance Act.

In 2001, the plaintiff in D'Ettorre v. Coachman was injured in a motor vehicle accident when a timber-hauling tractor trailer veered off course and collided with his truck. The plaintiff sued the owners of the truck, who were insured by the Nordic Insurance Company of Canada ("Nordic"). The claim was settled in 2008. Due to the presence of a minor plaintiff, the settlement was court-approved. Included in the approved terms was an assignment of the entirety of the plaintiff's unclaimed accident benefits.

In the meantime, the plaintiff claimed and received benefits from his accident insurer, Coachman Insurance Company ("Coachman"). In 2005, Coachman stopped paying the plaintiff's income replacement benefit. After mediation attempts failed, the plaintiff applied to the Financial Services Commission of Ontario for arbitration. Nordic took the plaintiff's place at the eventual arbitration as a result of the earlier assignment.

Coachman, however, objected to the arrangement. It argued that under the Insurance Act, specifically the Statutory Accident Benefits Schedule (the "Schedule"), an assignment of accident benefits was only permissible following a trial. The argument was based on s. 65(1) of the Schedule, which makes the assignment of a statutory accident benefit void.

The only applicable exception to this rule is found in s. 267.8(12) of the Insurance Act:

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.

Coachman argued that as no trial had taken place, the assignment was barred by the statute. The plaintiff and Nordic argued that the equivalent of a trial had taken place when the Court reviewed and approved the settlement through the consent order.

The Ontario Financial Services Commission agreed with Nordic and the plaintiff, finding (at para. 75) that a "consent order is still an order of the court. A hearing, however brief, disposed of the matter."

Coachman appealed to the Commission's Office of the Director of Arbitrations. The appeal was heard by the Director's Delegate who looked to the case law but could find no support for equating a consent motion with a trial. The closest case law involved cases where the court had performed an assessment of damages. That was not enough (at paras. 19-23):

The repetition of the phrase "the trial of the action" through s. 267.8 sends a strong message.

[...]

An assessment of damages by a court means that the parties do not know beforehand what damages will be awarded, so even in an ex parte hearing the plaintiff has to prove them. That is not what happened here, as the parties agreed to the damages and settled them before going to court.... To paraphrase what Smith J. stated in Stokes, the legislature chose not to include the words "or after settlement of the action" in s. 267.8(12) when drafting the section and is presumed to have intended to mean what was said in the section as written, namely that the section only applied where a plaintiff recovered damages after a trial of the action.

The Director's Delegate therefore overturned the initial decision at arbitration.

Nordic and the plaintiff appealed to the Superior Court of Justice. The matter was heard before a panel of three justices, who unanimously sided with the Director's Delegate. The court agreed that the Schedule required a judicial determination and that the approval of a consent judgment was not a judicial determination. For an assignment to be valid, short of through a trial, a defendant's tort insurer must seek the court's guidance through an assessment of damages.

For insurers, this represents a more uncertain avenue. A court may not agree with the parties' own assessment of damages, and the end determination may differ greatly from the proposed settlement (potentially to the detriment of the defendant's insurer). In the face of such risk, an assessment of damages may not be attractive.

However, the only alternative short of settling without an assignment of accident benefits is to not settle at all, ultimately requiring a trial. It seems that there is a resulting new calculus for tort insurers – if accident benefits must be assigned, then an assessment of damages (or a trial) is unavoidable.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions