Court of Appeal for Ontario

Date: 2019-04-24 Docket: C65257

Judges: Doherty, Paciocco and Zarnett JJ.A.

Between

Jeffrey Grieves Plaintiff (Respondent)

and

Andrea Parsons and Daniel Sheridan Defendants (Appellants)

Counsel

David Zuber and James Tausendfreund, for the appellants

Jonathan Lerman and Aron Zaltz, for the respondent

Heard: April 15, 2019

On appeal from: The judgment of Justice Robert Charney of the Superior Court of Justice, dated March 21, 2018.

Reasons for Decision

[1] This appeal concerns the amount of collateral benefits that ought to have been deducted under s. 267 of the Insurance Act, R.S.O. 1990, c. I.8, from a jury's award in a personal injury case, and the effect of those deductions on the trial judge's costs award. At the conclusion of this appeal, we dismissed it with reasons to follow. These are those reasons.

[2] After a trial of his claim for personal injuries arising from a motorcycle accident that occurred in July 2012, the jury awarded the respondent damages payable by the appellants in the following amounts: $50,000 for general damages, $61,000 for past lost income and $90,000 for future lost earnings.

[3] The trial judge found that the plaintiff's claim did not meet the threshold to fall within one of the exceptions in s. 267.5(5) of the Insurance Act, and therefore he disallowed the general (non-pecuniary) damages award. The trial judge then considered what adjustments to the balance of the jury's award would be required under the Insurance Act due in part to the respondent's receipt of other payments.

[4] The trial judge deducted $25,393.73 under s. 267.8(1)2 for the long-term disability benefits the respondent had received. No issue is raised about that deduction. Based on ss. 267.5(1)1 and 267.5(1)2(ii) of the Insurance Act, the trial judge also reduced the net past lost income award from $61,000 to $41,533.28. That reduction is also not in dispute.

[5] The trial judge deducted $33,821.77 on account of income replacement benefits paid to the respondent. In doing so, he accepted the respondent's position that the further sum of $2,887.94, which had also been paid, should not be included in the collateral benefits deduction: it arose from an overpayment by the insurer State Farm and the respondent was legally obliged to repay that amount to State Farm under s. 52(1) of the Statutory Accident Benefits Schedule, O. Reg. 34/10.

[6] The trial judge also refused to deduct the $5,460 in short-term disability benefits that had been paid to the respondent. These benefits were paid in relation to a period of time when the plaintiff was not working, between May 10, 2017 and July 5, 2017. The claim form submitted for those payments based the claim on an injury to the plaintiff's left shoulder rotator cuff. The trial judge had instructed the jury that any damages resulting from injuries to the respondent's left shoulder were not caused by the motorcycle accident of 2012, and he made a similar finding in his threshold decision. He found that it was unlikely that there was any overlap between the jury's award and the short-term disability payments. Accordingly, they were not deductible under s. 267.8(1) of the Insurance Act.

[7] As a result of the trial judge's deductions, the respondent's judgment totaled $72,317.78. This exceeded the appellants' r. 49 offer of $70,000. The respondent therefore received a costs award for the entire action.

[8] Before us the appellant challenges the trial judge's refusal to deduct the overpayment of $2,887.94 and the short-term disability benefits of $5,460. The appellants' success on either issue would render the respondent's judgment less favourable than the r. 49 offer. In that event, the appellants ask that the costs award be adjusted accordingly. Even if this court does not vary the damages award, the appellant asks this court to vary the costs award in the interest of proportionality, because the respondent's judgment only narrowly exceeded the amount of the r. 49 offer.

Short-Term Disability Benefits

[9] We reject the argument that the short-term disability benefits should have been deducted from the jury's award. In his reasons, the trial judge properly referred to his instruction to the jury that any damages resulting from the respondent's left shoulder injury were not caused by the motorcycle accident, and to his conclusion on the threshold motion that the respondent's left side shoulder pain was not causally related to the motorcycle accident. The short-term disability benefits had been paid because of the respondent's inability to work due to problems with his left shoulder. The trial judge reasoned that, given the modest amount of the jury's award, and the instruction he gave to the jury, it was "unlikely that there is any overlap between the short term disability benefits provided by Great West Life for the plaintiff's left shoulder injury between May and July 2017, and the income loss awarded by the jury in relation to the plaintiff's right shoulder injury."

[10] The trial judge was in the best position to assess whether there was any overlap between the jury's award and the short-term disability benefits. His assessment was reasonable and it is entitled to deference from this court. We are not persuaded that there was any reversible error in his decision that warrants appellate intervention.

Overpayment Issue

[11] The appellants and the respondent both sought to introduce fresh evidence relating to the overpayment issue. We admit the fresh evidence.

[12] We reject the argument that the overpayment of $2,887.94 ought to have been included in the amounts deducted from the jury's award. The trial judge relied on correspondence from the insurer (State Farm) that had made the overpayment, notifying the respondent of his obligation to pay it back on the basis that the respondent had been working when he received it. There was no dispute about the correspondence's authenticity. He also relied on the legal obligation to repay that amount under s. 52(1) of the Statutory Accident Benefits Schedule, which the respondent admitted. In our view, a payment made to the respondent by the insurer on the mistaken understanding that the respondent was not working, reclaimed by the insurer, and acknowledged as a legal repayment obligation by the respondent, is not a payment received or available for income loss and loss of earning capacity within the meaning of s. 267.8(1) of the Insurance Act. Deducting such a payment from the jury's award would not serve the purpose of s. 267.8 of the Insurance Act, preventing double recovery, which informs the interpretation of the provision's language: see for example Bassandra v. Sforza, 2016 ONCA 251, 130 O.R. (3d) 466, at para. 18.

[13] The appellants' fresh evidence does not affect this conclusion. The fact that State Farm was apparently reimbursed by another insurer, Economical, under a loss transfer arrangement for its payments to the respondent did not appear to affect State Farm's position that it was entitled to repayment of the overpayment from the respondent. Indeed, the respondent was not even made aware that State Farm had received this loss transfer payment from Economical. Nothing in the record before us suggests that that inter-insurer arrangement somehow released the respondent from his obligation to return the overpayment.

[14] The fresh evidence submitted by the respondent does, however, reinforce our conclusion that the overpayment should not have been included in the trial judge's deduction. The respondent obtained a release from the successor of State Farm, after trial, of his obligation to return the overpayment in consideration for the release of the respondent's claim against State Farm's successor for certain further benefits. Valuable consideration was exchanged in that release, and it is not for the court to judge whether the claims released were precisely equal in ultimate value – the parties gave them that effect by virtue of the release. The point is that the respondent fulfilled his repayment obligation to the satisfaction of the person entitled to return of the overpayment.

Costs Award

[15] Given the result, the r. 49 offer was not more favourable than the judgment obtained by the respondent. We would not vary the costs award on that ground. Nor do we see an error in principle in the trial judge's decision to award the respondent, as the successful party, costs of the entire action where the result he obtained was more favourable than the appellants' offer to settle.

Disposition

[16] Accordingly, we dismissed the appeal. Based on the agreement of the parties, we awarded the costs of the appeal to the respondent, fixed in the sum of $15,000 inclusive of disbursements and applicable taxes.

"Doherty J.A."

"David M. Paciocco J.A."

"B. Zarnett J.A."