Canada: It's Not Complicated (Anymore)

Court of Appeal Explains the Relationship between SABS and Tort Damage Awards

Two recent Ontario Court of Appeal decisions have provided clarity on the uncertain relationship between tort damage awards and Statutory Accident Benefits (SABs) under s 267.8 of the Insurance Act.

While heard together, these cases address different aspects of the tort damage award/SABs relationship. Cadieux v Cloutier addressed the deductibility of SABs paid before trial, whereas Carroll v McEwan addressed the deductibility and assignment of SABs to be paid after trial.


  • The silo approach prevails over the strict "apples to apples" matching approach in the deduction of SABs received both before and after trial;
  • Past and future SABs are to be treated as combined for the purposes of deduction;
  • SABs deductions are allocated amongst defendants based on their share of liability;
  • SABs should be deducted on a gross basis, not net of legal fees;
  • The prejudgment interest amendments are procedural and apply retrospectively; and,
  • Assignment orders made prior to payment are valid and improve motor vehicle accident litigation efficiency.


Cadieux and Saywell (a defendant in this action), both pedestrians, had an altercation which resulted in Saywell pushing Cadieux towards the road and onto the path of a truck driven by the defendant Cloutier. Consequently, Cadieux suffered brain damage and orthopaedic injuries, ultimately becoming incapable of managing his affairs.

He settled both his SABs claim and his tort claim against Cloutier prior to trial. The SABs settlement comprised of: (1) past and future income replacement benefits, (2) past and future medical benefits, and (3) past and future attendant care benefits. The tort claim against Saywell proceeded to trial, where a jury apportioned liability equally amongst the three parties, and awarded Cadieux approximately $2.3 million in damages for FLA claims, past and future loss of income, housekeeping, and future costs of care.

The jury made no award for costs of future attendant care, but did make an award for an acquired brain injury support worker. The trial judge adopted a silo approach by treating the award as a medical/rehabilitation benefit and ordering deductions accordingly. The main issue on appeal was whether this approach was appropriate, or whether the strict "apples to apples" matching approach should be used instead.


  1. The silo approach prevails over the strict "apples to apples" matching approach in the deduction of SABs received before trial

    The Court of Appeal upheld the trial judge's decision to deduct SABs on a silo approach, noting the strict "apples to apples" matching approach was no longer tenable under the current legislative regime and unnecessarily complicated tort actions by focusing on immaterial distinctions. It further noted strict matching encourages formalistic legal strategies that detract focus from whether double recovery is occurring.

  2. Past and future SABs are to be treated as combined for the purposes of deduction

    The Court of Appeal found no basis for making a distinction between past and future SABs, concluding they should be combined in each silo prior to deduction. Additionally, there was no basis for excluding SABs paid directly to third parties, as the amounts were nevertheless available to Cadieux.

  3. SABs deductions are allocated amongst defendants based on their share of liability

    The Court of Appeal supported the trial judge's finding that SABs deductions are to be allocated based on the proportionate liability of each defendant, regardless of whether a Pierringer agreement resulted in fewer defendants at trial. It noted this interpretation was consistent with the general principles of statutory interpretation, as well as the principles of equity and common sense. It further noted that doing otherwise would undercompensate the plaintiff, unjustly enrich non-settling defendants, and ultimately discourage pre-trial settlement.

  4. SABs should be deducted on a gross basis, not net of legal fees

    The Court of Appeal also held SABs should be deducted from the tort award on a gross basis, finding the trial judge's deduction of legal costs was inconsistent with the wording in the Insurance Act and was unfair to Cadieux by undercompensating him.

  5. The prejudgment interest amendments are procedural and apply retrospectively

    The Court of Appeal found the amendments to the Insurance Act were procedural and should apply retrospectively, endorsing the reasons in the Cobb and El-Khodr decisions.

The Carroll v McEwen Appeal


Carroll was catastrophically injured after being hit by a vehicle operated by McEwan, while walking on a road. She, along with members of her family (the "appellants") brought this action against McEwan and his wife, the owner of the vehicle. As the damages claimed exceeded the coverage under the defendants' policy with Aviva Canada Inc., the appellants also claimed under their own "inadequately insured motorist" coverage with Pilot Insurance Company.

At trial, the jury awarded Carroll approximately $2.6 million in damages. Aviva and Pilot received a conditional order from the trial judge that upon paying the judgment in full, they would receive an assignment of Carroll's future SABs, effectively reducing their net liability.


  1. The silo approach prevails over the strict "apples to apples" matching approach in the deduction of SABs received after trial

    Consistent with the approach applied in Cadieux, the Court of Appeal rejected the strict matching approach in favour of the silo approach in the assignment of future SABs. It noted that not only did s 267.8 of the Act not support an interpretation permitting further subdivisions of the SABs beyond the three broad categories, but also that there is no principled reason why a different matching regime should apply to SABs received after trial.

  2. Assignment orders made prior to payment are valid and improve motor vehicle accident litigation efficiency

    Another issue was whether damages must be paid before an assignment order can be made, as the language in s 267.8(12)(a) authorizes assignment of SABs from the "plaintiff who recovered damages in the action". As the insurers had not paid the damages at the time of trial, the plaintiffs had not "recovered damages in the action" at the relevant time.

The Court of Appeal found that requiring damages to be paid before an assignment order can be made is impractical, and allowing assignment orders to be made before payment alleviates the need for post-trial motions to obtain assignments. It noted s 267.8(12) expressly empowers trial judges to make orders for assignment "subject to any conditions the court considers just", thereby making the assignment itself conditional. Therefore, the assignment would be consistent with the provision, as it would not be triggered until the plaintiffs fully recovered damages.

Implications Going Forward

Going forward, deductions will be made from the applicable silo without needing to match individual benefits against identical heads of damages, resulting in simplicity and ease of application. Per the Insurance Act, these silos are: (1) health care expenses, (2) income replacement benefits, and (3) other pecuniary loss (including lost educational benefits, visitor expenses, housekeeping/home maintenance). Therefore, the benefits received for health care expenses, for example, can offset any damages awarded at trial for healthcare related losses.

This approach applies to SABs received before and after trial. Accordingly, there should be fewer disputes regarding the categorization of damages or timing of SABs payments, resulting in more efficient motor vehicle accident litigation.

The use and support of conditional assignment orders should also contribute to efficient litigation, by encouraging insurers to reduce their net liability by paying a judgment in full and receiving an assignment of a plaintiff's future SABs, as well as reducing the need for such post-trial motions.

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.

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