A decision released on March 1, 2016 by Justice Perell of the
Superior Court serves as a useful reminder to insurers of the
demanding notice requirements that apply to requests for repayment
under Section 47 of the SABS.
The Plaintiff was involved in an accident on May 26, 2004. His
accident benefit insurer was Intact Insurance Company. The parties
disputed entitlement to an Income Replacement Benefit. Nearly two
years passed, and on May 3, 2006 the parties agreed to the terms of
a consent Order that required Intact to pay an Income Replacement
Benefit from September 27, 2005 on an ongoing basis.
At the time of the agreement Intact understood that it was the
only insurer paying benefits.
This proved to be incorrect in the light of subsequent
The Plaintiff had an ongoing lawsuit against Equitable Life for
collateral benefits. In April 2007 he was paid benefits by
Equitable Life for the period commencing September 2004.
The Plaintiff applied for CPP in September 2007. In September
2008 his CPP disability benefits were approved with retroactive
effect to November 2006.
Intact came to learn about the receipt of these benefits. It was
then in a position to reduce the Income Replacement Benefit based
on the deduction for collateral payments foreseen by Section 7(1)
of the SABS.
But Intact was in an awkward position at this point. Although
the consent Order foresaw a reduction of benefits based on
collaterals, Intact was also bound by Section 287 of the
Insurance Act that prevented an insurer from altering an
order "unless the person agreed or unless the Director or
an arbitrator so orders in a variation..."
Intact sought consent to vary the Order. For whatever reason,
the Plaintiff refused that consent.
Intact also applied for arbitration concerning revision of the
Order. Since Intact had commenced litigation on the issue, the
arbitrator decided to defer the issue to the Court.
In his reasons Justice Perell explained that in support of its
claim for repayment, Intact was required to comply with the notice
requirements of Section 47(2) of the SABS. This notice must
(a) identification of the type of benefit that was
overpaid; (b) the payment period for which repayment is sought;
and (c) the amount of repayment sought."
In Justice Perell's view "the amount claimed need
not be perfectly correct, but it should be substantially
This might sound simple enough, but Justice Perell determined
that Intact's two attempts to provide such notice failed to
comply with the notice requirements.
In its first request, Intact sought repayment of $69,000 or 170
weeks of Income Replacement Benefits, although the applicable
regulation foresaw repayment for only 12 months (i.e. 52 week
period). For this reason "the amount requested was not
substantially correct; it was grossly incorrect."
In its second repayment request, Intact repeated its legal
position and advised that an accountant had been retained to
calculate the quantum of the repayment. Justice Perell concluded
that this too did not satisfy the notice requirement as
the amount of the repayment was left undetermined.
In the peculiar circumstances of this case, Intact's
delivery of an accountant's report on March 14, 2008
was deemed to satisfy the notice requirements of Section
47(2), as the report came closest to calculating the correct amount
of the overpayment for the 12 month period (calculated by Justice
Perell at $11,150 with respect of the Plaintiff's receipt of
benefits from Equitable Life, with deductions made for the
Plaintiff's legal expenses).
As for the CPP benefits received by the Plaintiff, Justice
Perell concluded that although an accountant's report had been
served concerning that calculation, no formal notice was issued for
repayment of that benefit, and accordingly no order for repayment
would be made for those benefits.
Although containing a set of what the Judge called "a
freakishly complicated set of facts," the decision provides
useful guidance to insurers about what to do in the face of a
Plaintiff who resists a request for repayment. Justice Perell
Intact could have pushed promptly for a formal variation of the
May 3, 2006 consent Order rather than bring an action before the
Intact could have sought repayment on a graduated basis rather
than on a lump sum pursuant to section 47(5) of the SABS.
The decision also serves as a useful reminder that in serving a
notice for repayment under Section 47 of the SABS, the amount of
the repayment should never be "grossly
incorrect" but instead "substantially
correct." This will ensure that the request for repayment
is deemed valid should an order ever be necessary to enforce the
request for repayment.
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