In a recent email alert we considered the issue of advance
payments under the Fair Practice Regulation and the Insurance Act
(you can view the original alert by
clicking here). In Shannon v. 1610635 Alberta Inc., 2014
ABCA 393 ("Shannon") the Alberta Court of Appeal
once again addresses the same issue of pre-trial advance payments
under both section 5.6 of the Fair Practice Regulation
("Regulation") and section 581 of the
Insurance Act ("Act").
The Plaintiff in Shannon was involved in a rear-end
motor vehicle collision. Injuries were sustained by the Plaintiff
and he applied for an advance payment as he had no money, no way to
raise money, and was unable to work to pay for medical treatments.
The Plaintiff owned land in other provinces that could not be
borrowed against. The Chambers Judge, in granting the Plaintiff a
pre-trial advance, imposed a condition that the land be mortgaged
to provide security for repayment of any advance payments that
would be above the final award or settlement at trial.
In affirming the decision of the Chambers Judge, Justice
Côté of the Court of Appeal clarified the law
regarding advance payments under the Regulation and the
Act by setting out a two part test which requires a
Plaintiff to demonstrate:
the defendant is probably liable to
the plaintiff for the amount requested (or more); and
without that payment, the plaintiff
is likely to go without necessities (or things broadly analogous),
or unlikely to be able to prosecute his or her claim for
In addition to these requirements, Justice Côté
suggested a court should weigh the Plaintiff's financial burden
against the probability of overpayment, and consider imposing terms
(such as the security required by the Chambers judge in this case)
to mitigate risk to the Defendant.
Similar to the decision in Stewart, Shannon should provide a
warning to insurers of the potential for increased applications for
advances, particularly if liability is admitted early in the
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about your specific circumstances.
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