Brownell et al. v. Tannahill et al. [Indexed as: Brownell v. Tannahill]

52 O.R. (3d) 227

[2000] O.J. No. 4496

Docket No. C33585

Court of Appeal for Ontario

Charron, MacPherson and Sharpe JJ.A.

November 30, 2000

Insurance--Automobile insurance--No-fault benefits--Weekly no-fault benefits paid under s. 13 of Statutory Accident Benefits Schedule--Accidents occurring before January 1, 1994 being akin to damages for loss of income rather than to general damages--Benefits not to be deducted from award of general damages in action for damages for personal injuries arising out of motor vehicle accident--Statutory Accident Benefits Schedule --Accidents Before January 1, 1994, R.R.O. 1990, Reg. 672, s. 13.

On a motion for the determination of a question of law in an action for damages for personal injuries arising out of a motor vehicle accident, the motions judge held that weekly no-fault benefits paid to the plaintiff by her insurer under s. 13 of the Statutory Accident Benefits Schedule--Accidents Before January 1, 1994 (the "SABS") were not deductible from any award of general damages. The Divisional Court allowed the defendants' appeal. The plaintiff appealed.

Held, the appeal should be allowed.

Section 13 benefits are akin to damages for loss of income, not to general damages. They are essentially available where a person of working age is unable to meet the criteria under s. 12 of the SABS but is nonetheless prevented from seeking employment or education as a result of the injuries received. Accordingly, s. 13 benefits are not deductible from an award of general damages.

APPEAL from a judgment of the Divisional Court (Farley and Coo JJ., Cameron J. dissenting) (1999), 1999 15090 (ON SCDC), 45 O.R. (3d) 760 allowing an appeal from the determination of a question of law.

Bannon v. McNeely (1998), 1998 4486 (ON CA), 38 O.R. (3d) 659, 159 D.L.R. (4th) 223, 34 M.V.R. (3d) 189 (C.A.) (sub nom. Bannon v. Hagerman Estate), appld Other cases referred to Andrews v. Grand & Toy Alberta Ltd., 1978 1 (SCC), [1978] 2 S.C.R. 229, 8 A.R. 182, 83 D.L.R. (3d) 452, 19 N.R. 50, [1978] 1 W.W.R. 557, 3 C.C.L.T. 225; Stoangi v. Royal Insurance Co. of Canada, [1995] O.I.C.D. No. 152, File No. A-008238; Thornton v. Prince George School District No. 57, 1978 12 (SCC), [1978] 2 S.C.R. 267, 83 D.L.R. (3d) 480, 19 N.R. 552, [1978] 1 W.W.R. 607, 3 C.C.L.T. 257 Statutes referred to Insurance Act, R.S.O. 1990, c. I.8, s. 267(1)(a) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 21 Statutory Accident Benefits Schedule--Accidents Before January 1, 1994, R.R.O. 1990, Reg. 672 (Insurance Act), ss. 12, 13

Barry L. Evans, for appellants. Ian D. Kirby, for respondents.

The judgment of the court was delivered by

CHARRON J.A.: --

A. Overview

[1] The issue on this appeal is whether weekly no-fault benefits received by the appellant Margaret Brownell from her insurer are deductible from any award of general damages awarded to her in this motor vehicle claim against the respondents Sherry-Lee Tannahill and Helen Tannahill.

[2] The motor vehicle accident in question occurred on September 28, 1992. The weekly benefits were paid under s. 13 of the Statutory Accident Benefits Schedule--Accidents Before January 1, 1994, R.R.O. 1990, Reg. 672 ("SABS"). The issue of deductibility arises under s. 267(1) (a) of the Insurance Act, R.S.O. 1990, c. I.8, which provides in general terms that damages awarded to a person as a result of a motor vehicle accident claim are to be reduced by the amount of no-fault benefits received by that person.

[3] It is common ground between the parties that, given the present state of the law, the question turns on whether the no- fault benefits were intended to compensate Mrs. Brownell for a type of loss akin to general damages. It is only in that event that her award of general damages in the amount of $50,000 must be reduced by the $15,000 received in s. 13 benefits. Mrs. Brownell contends that the s. 13 benefits are intended to compensate her for a loss that is not akin to general damages but, rather, akin to damages for loss of income and that, consequently, they are not deductible. The respondents take the position that the benefits are more akin to general damages and that they are deductible.

[4] The parties brought a motion for the determination of a question of law before trial pursuant to Rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The motions judge, Murphy J., determined the issue in favour of Mrs. Brownell and held that the no-fault benefits were not deductible. This decision was reversed by majority judgment on appeal to the Divisional Court (Farley and Coo JJ.; Cameron J. dissenting). The court held that the weekly benefits were deductible. I have concluded that the position advanced by Mrs. Brownell is preferable. In my view, the weekly benefits are not akin to general damages and, hence, they are not deductible from her award of general damages.

B. Analysis

[5] The full text of s. 13 of the SABS is appended to this judgment. I reproduce the more relevant part here for ease of reference.

13(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident, a weekly benefit during the period in which the insured person suffers substantial inability to perform the essential tasks in which he or she would normally engage if he or she meets the qualifications set out in subsection (2).

(2) The following qualifications apply to an insured person who claims weekly benefits under subsection (1):

1. He or she as a result of and within two years of the accident must have suffered a substantial inability to perform the essential tasks in which he or she would normally engage.

2. He or she must not be entitled to receive a benefit under section 12 at the time of the payment of a benefit under this section or, if entitled to a benefit under that section, he or she must be a primary caregiver as described in subsection (4) and have only income from self-employment from work in his or her home.

3. He or she must attain the age of sixteen years before being eligible to receive the weekly benefit . . .

[6] Section 267(1)(a) provides that any award of damages is to be reduced by the full amount of any no-fault benefits received by the insured:

267(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;

[7] In Bannon v. McNeely (1998), 1998 4486 (ON CA), 38 O.R. (3d) 659, 159 D.L.R. (4th) 223 (C.A.), this court held that s. 267(1) must be read in accordance with the intended purpose of the provision that there be no double recovery. The court held [at p. 687 O.R.] that no-fault benefits deducted under s. 267(1)(a) "must be deducted from a head of damage or type of loss akin to that for which the no-fault benefits were intended to compensate". The court held further that if the no-fault deduction exceeds the amount awarded under the specific head of damages to which the no-fault benefits can be attributed, resort cannot be had to another portion of the damage award.

[8] As indicated earlier, the appellant submits that s. 13 benefits are akin to damages for loss of income. In support of her contention, the appellant relies mainly on the criteria for eligibility for s. 13 benefits and on a comparison of the s. 13 benefits to the s. 12 benefits for loss of income:

12(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident a weekly income benefit during the period in which the insured person suffers substantial inability to perform the essential tasks of his or her occupation or employment if the insured person meets the qualifications set out in subsection (2) or (3).

The full text of s. 12 is appended to this judgment.

[9] Counsel for the respondents does not seriously dispute that s. 12 benefits are akin to damages for loss of income and that, as such, they would not be deductible from an award of general damages under the principle in Bannon v. McNeely. They maintain, however, that s. 13 benefits are different and that they are more akin to general damages.

[10] First, the respondents note that general damages are intended to compensate individuals for matters such as pain and suffering, loss of amenities and enjoyment of life, loss of expectation of life and to make life more endurable: see Andrews v. Grand & Toy Alberta Ltd., 1978 1 (SCC), [1978] 2 S.C.R. 229 at pp. 262-63, 83 D.L.R. (3d) 452 at p. 477 and Thornton v. Prince George School District No. 57, 1978 12 (SCC), [1978] 2 S.C.R. 267 at p. 284, 83 D.L.R. (3d) 480 at p. 490. Second, they draw a parallel to the s. 13 benefits that are intended to compensate an individual who, as a result of a mental, psychological or mental injury, suffers a substantial inability to perform the essential tasks in which he or she would normally engage. They submit that "essential tasks", in the context of s. 13, include more than the ability to perform the work of a "homemaker" and can include personal care, long-distance driving, routine physical activities such as walking, sitting, standing and lying down: se e Stoangi v. Royal Insurance Co. of Canada, [1995] O.I.C.D. No. 152, File No. A-008238 at p. 9. They argue that these compensable losses under s. 13 are all akin to general damages. Consequently, they submit that the weekly benefits paid under s. 13 must be deducted from an award of general damages in order to avoid double recovery.

[11] The appellant's argument is to the contrary. Counsel submits that s. 12 and s. 13 are very similar and that this is a strong indicator that s. 13 benefits are intended to compensate an injured person who is not in receipt of income for losses akin to damages for loss of income. In particular, the appellant notes the following:

(a) Payments under s. 13 are at a flat rate and paid weekly, not in a lump sum. This form of payment is associated with an income replacement scheme and not with the usual lump sum payment for pain and suffering.

(b) Payments under s. 13 are only payable to those who have attained 16 years of age and, hence who are of working age.

(c) The value of the work done in the home by the insured is recognized under s. 13(4). The homemaker's loss of his or her ability to perform these tasks is therefore recognized as being akin to a loss of income.

(d) Payments under s. 13 are not payable if the recipient qualifies for benefits under s. 12: s. 13(2). The appellant argues that if s. 12 benefits were akin to damages for loss of income and s. 13 benefits were akin to general damages as contended, there would be no reason for this provision because there would be no double recovery.

(e) Payments under s. 13 are reduced by any payment for loss of income: s. 13(3). Again, if s. 13 benefits were akin to general damages, there would be no logic to this deduction.

(f) Similarly, the insurer may deduct from benefits payable under both sections 80% of any income received or available from any occupation or employment subsequent to the accident.

(g) Both s. 12 and s. 13 benefits are still payable even if the recipient is on social assistance: s. 14(2).

(h) The insurer is not required to pay weekly benefits under s. 13 for any week in which the insured person attends school.

[12] Having regard to the whole of s. 13, particularly when viewed in the context of other sections of the SABS, I find the appellant's argument persuasive. Consequently, I agree with her position that s. 13 benefits are akin to damages for loss of income. They are essentially available where a person of working age is unable to meet the criteria under s. 12 but is nonetheless prevented from seeking employment or education as a result of the injuries received.

C. Disposition

[13] I would therefore allow the appeal, quash the order of the Divisional Court and restore the order made by Murphy J. The appellant is entitled to her costs of the appeals before the Divisional Court and this court.

Appeal allowed.

INCOME BENEFIT

12(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident a weekly income benefit during the period in which the insured person suffers substantial inability to perform the essential tasks of his or her occupation or employment if the insured person meets the qualifications set out in subsection (2) or (3).

(2) The following qualifications apply to an insured person who claims a weekly benefit under subsection (1):

1. He or she must have been at the time of the accident,

i. employed or self-employed,

ii. on a temporary lay-off, or

iii. entitled to start work within one year under a legitimate offer of employment made before the accident and evidenced in writing.

2. He or she as a result of and within two years of the accident must have suffered a substantial inability to perform the essential tasks of his or her occupation or employment.

(3) A person who was unemployed and who was not self-employed at the time of the accident is qualified to receive a weekly benefit under subsection (1) if he or she was employed or self-employed for any 180 days in the twelve-month period before the accident, and if he or she as a result of and within two years of the accident has suffered a substantial inability to perform the essential tasks of the occupation or employment in which he or she spent the most time during the twelve-month period before the accident.

(4) Subject to subsection (5), the weekly benefit under subsection (1) will be the lesser of,

(a) $600 plus, if Optional Benefit 2 has been purchased, the amount of the benefit chosen; and

(b) 80 per cent of the insured person's gross weekly income from his or her occupation or employment, less any payments for loss of income, except Unemployment Insurance benefits,

(i) received by or available to the insured person under the laws of any jurisdiction or under any income continuation benefit plan, or

(ii) received under any sick leave plan.

(5) The insurer is not required to pay a weekly benefit under subsection (1),

(a) for the first week of the disability;

(b) for any period in excess of 156 weeks unless it has been established that the injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience.

(6) The insurer is not required to pay a weekly benefit under subsection (1) to a person described in subparagraph iii of paragraph 1 of subsection (2) until the day the person would have been entitled under the contract to begin employment unless before that day the person is qualified for a benefit under another paragraph of that subsection.

(7) The following rules apply to the calculation of gross weekly income:

1. A person's gross weekly income shall be deemed to be the greatest of,

i. his or her average gross weekly income from his or her occupation or employment for the four weeks preceding the accident,

ii. his or her average gross weekly income from his or her occupation or employment for the fifty-two weeks preceding the accident,

iii. $232.

2. When a person becomes qualified to receive an income benefit under subparagraph iii of paragraph 1 of subsection (2), the person's gross weekly income shall be deemed to be the greatest of,

i. if the person was qualified under either subparagraph i or ii of paragraph 1 of subsection (2), his or her gross weekly income as determined under paragraph 1,

ii. the gross weekly income payable under the contract of employment,

iii. $232.

3. Business expenses which cease as a result of the accident shall be deducted from a person's income from self-employment before calculating his or her gross weekly income.

BENEFIT IF NO INCOME

13(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident, a weekly benefit during the period in which the insured person suffers substantial inability to perform the essential tasks in which he or she would normally engage if he or she meets the qualifications set out in subsection (2).

(2) The following qualifications apply to an insured person who claims weekly benefits under subsection (1):

1. He or she as a result of and within two years of the accident must have suffered a substantial inability to perform the essential tasks in which he or she would normally engage.

2. He or she must not be entitled to receive a benefit under section 12 at the time of the payment of a benefit under this section or, if entitled to a benefit under that section, he or she must be a primary caregiver as described in subsection (4) and have only income from self-employment from work in his or her home.

3. He or she must attain the age of sixteen years before being eligible to receive the weekly benefit.

(3) The weekly benefit under subsection (1) will be $185 less any payments for loss of income, except Unemployment Insurance benefits,

(a) received by or available to the insured person under the laws of any jurisdiction or under any income continuation benefit plan; or

(b) received under any sick leave plan.

(4) The insurer will pay to an insured person who is receiving a weekly benefit under subsection (1), or who but for section 17 would be entitled to the weekly benefit, a benefit of $50 per week if Optional Benefit 3 has not been purchased, or $100 per week if it has been purchased, for each person who at the time of the accident was residing with the insured person and in respect of whom the insured person was the primary caregiver if the person receiving the care was less than sixteen years of age or if the person required the care because of physical or mental incapacity.

(5) The maximum amount payable under subsection (4) is $200 per week, if Optional Benefit 3 has not been purchased, and $400 per week if it has been purchased.

(6) A weekly benefit under subsection (4) ceases,

(a) when the person cared for attains age sixteen, unless he or she is incapacitated;

(b) when the incapacity of the person cared for ceases; or

(c) when the insured person ceases to be eligible for a benefit under subsection (1) or when the insured person would cease to be eligible had he or she not been disqualified under section 17.

(7) A person cannot receive benefits under this section and section 12 at the same time.

(8) The insurer is not required to pay a weekly benefit under this section,

(a) for the first week of the disability;

(b) for any period in excess of 156 weeks unless it has been established that the injury continuously prevents the insured person from engaging in substantially all of the activities in which the person would normally engage.