Tuffnail, et al v. Meekes et al, 2017 ONSC 4610

CITATION: Tuffnail, et al v. Meekes et al, 2017 ONSC 4610

COURT FILE NO.: 3724-11

DATE: 20170920

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Gregory Alan Tuffnail, Patricia Diane Tuffnail, David Alan Tuffnail and Michael Alan Tuffnail

Plaintiffs

– and –

Steven Andrew Meekes, State Farm Mutual Automobile Insurance Company, Sharon Carlene Drown as Litigation Administrator for the Estate of Thomas Michael Bolton

Defendants

– and –

Steve Coulthard

Third Party

James D. Virtue and Rasha El-Tawil, for the plaintiffs

Joseph Masterson, for State Farm Mutual Insurance Company

Bruce R. Mitchell, for Sharon Carlene Drown as Litigation Administrator for the Estate of Thomas Michael Bolton

James K. Brown, for Steve Coulthard

HEARD: June 1 and 2, 2017

H. A. Rady

Introduction

[1] The plaintiffs obtained judgment for $3.565 million dollars following a jury trial in the spring of 2017.

[2] The claim arose from a single car accident that occurred on September 3, 2009. Mr. Tuffnail was a passenger in a vehicle being driven by Mr. Meekes who was impaired. Mr. Meekes lost control of the vehicle; Mr. Tuffnail was ejected and grievously injured; and a second passenger, Kris Petrie, was killed. The three men had earlier attended a wedding reception hosted by Mr. Bolton. Mr. Coulthard tended bar that evening. Mr. Tuffnail alleged that he and Mr. Meekes had been over-served alcohol which contributed to the accident and hence his injuries.

[3] Following the verdict on May 10, 2017, the parties returned to court to make submissions in connection with several issues that will be elaborated below. It is fair to say that the issues are complicated; some are interrelated; and they impact on the defence group’s monetary obligation to the plaintiffs and among themselves.

The Jury Verdict

[4] In response to a series of questions, the jury concluded that Mr. Meekes, Mr. Bolton and Mr. Coulthard were negligent and their negligence caused or contributed to Mr. Tuffnail’s injuries. They assigned the relative degrees of fault as follows:

Mr. Meekes 65%

Mr. Bolton 18%

Mr. Coulthard 10%

[5] The jury also concluded that Mr. Tuffnail was contributorily negligent by 7 percent, which was then reduced by 45 percent by reason of the defendants having over-served Mr. Tuffnail so he did not appreciate the risk of driving with Mr. Meekes. Accordingly, the defendants were then responsible in the following degrees:

Mr. Meekes 65%

Mr. Bolton 20.03%

Mr. Coulthard 11.12%

Mr. Tuffnail 3.85%

[6] Mr. Meekes admitted liability before trial. He tendered his policy limits of $200,000 and an allowance for interest and costs for a total of $275,000.

[7] The policy limits of the other parties opposite are:

• Mr. Bolton $2,000,000

• Mr. Coulthard $1,000,000

• State Farm $800,000 (ie. State Farm limits $1,000,000 less Meekes limits $200,000)

The Pleadings

[8] Notice of the claim was sent to Mr. Meekes and State Farm on January 21, 2010. State Farm is the plaintiffs’ insurer and provided underinsured coverage under the OPCF 44R endorsement of their policy. The claim was issued on March 18, 2011. It was amended on January 2, 2013 to add Mr. Bolton. Notice was delivered to him on August 21, 2012. Mr. Bolton issued a third party claim for contribution and indemnity against Mr. Coulthard on April 16, 2013. State Farm did so as well on April 3, 2014. The plaintiffs never sued Mr. Coulthard directly. Mr. Coulthard defended the main action.

[9] Mr. Petrie’s family also sued the same defendants pursuant to the Family Law Act, R.S.O. 1990, c. F.3. State Farm was a defendant because it provided OPCF 44R coverage to the Petrie family too. They agreed to abide the jury’s decision in the Tuffnail action in respect of liability for their claims. Damages were agreed at $185,000 plus interest and costs for a total of $260,000. Their pleadings essentially mirrored those in the Tuffnail action. Their action was commenced on June 14, 2011. They did not sue Mr. Coulthard either. Mr. Bolton and State Farm brought third party claims against Mr. Coulthard on April 16, 2013 and April 3, 2014 respectively.

The Issues for Determination

[10] From the plaintiffs’ perspective, these are the issues:

a) Does Mr. Tuffnail have access to the full underinsured coverage under the OPCF 44R endorsement of his State Farm automobile insurance policy or has his failure to sue Mr. Coulthard reduced the quantum of State Farm’s liability?

b) Are the defendants entitled to an assignment of his remaining claims for accident benefits against his accident benefit insurer?

c) Does Mr. Bolton have a claim over for contribution or indemnity against Mr. Coulthard?

d) What is the applicable prejudgment interest rate for non-pecuniary damages?

[11] State Farm also claims that it is entitled to judgment against Mr. Meekes, Mr. Bolton and Mr. Coulthard in accordance with its rights of subrogation. Mr. Coulthard seeks leave to amend his statement of defence to the third party to plead limitation defences to State Farm’s subrogation claim.

[12] There is an issue between Mr. Bolton and Mr. Coulthard about the nature of their legal relationship: Was Mr. Bolton an employer? Does vicarious liability arise?

[13] Finally, there is the determination of the characterization of Mr. Coulthard’s liability vis-à-vis Mr. Bolton. Is it joint or several?

Discussion

1. What is the applicable prejudgment interest rate?

[14] The plaintiffs submit that they are entitled to prejudgment interest on their non-pecuniary damages calculated at five percent. The defendants submit the rate is lower.

[15] On January 2, 2015, new legislation related to the calculation of prejudgment interest for non-pecuniary losses in actions arising from the use of operation of an automobile came into effect. The Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014 amends s. 258.3 of the Insurance Act by adding the following new provision:

(8.1) Subsection 128(2) of the Courts of Justice Act does not apply in respect of the calculation of prejudgment interest for damages for non-pecuniary loss in an action… [for loss or damage from bodily injury or death arising from the use or operation of an automobile].

[16] The effect of the new provision is that the five percent prejudgment interest rate for non-pecuniary losses no longer applies. Instead, the prejudgment interest rate for non-pecuniary losses will be equal to the prejudgment interest rate for pecuniary losses. The current rate is 1.3 percent.

[17] The debate was whether the change has retroactive effect. The Superior Court had ruled on either side of the argument. See for example, Cirillo v. Rizzo, 2015 ONSC 2440 and El-Khodr v. Lackie, 2015 ONSC 4766. The Divisional Court held that it did not in Carr v. Modi, 2016 ONSC 7255. The issue was argued in the Court of Appeal in April 2017 in the El-Khodr case and in Cobb v. Long Estate, 2017 ONCA 717. The court released its decisions on September 19, 2017 while this decision was on reserve. It concluded that the change applies with retrospective effect.

[18] The plaintiffs had originally offered a compromise: to calculate interest at 5 percent from the date of notice to the date of the amendment (January 1, 2015) and 1.3 percent after (subject to a caveat in the event of an appeal). It is not clear to me whether a compromise is still on the table given the court’s ruling this week.

[19] In any event, the matter now having been settled by the Court of Appeal, no further comment need be made unless the parties wish to make submissions about whether s. 128 of the Courts of Justice Act, R.S.O. 1990 c. C.43 should be modified pursuant to s. 130. In the Cobb case, the Court of Appeal upheld the trial judge’s exercise of discretion to award prejudgment interest at three percent pursuant to that section.

2. Proposed Amendment of Third Party Claim to Plead Limitation

[20] The third party seeks leave to plead limitation defences in the Tuffnail and Petrie actions. In support, he relies on an affidavit sworn by Mr. Vitols, a partner at the law firm conducting the third party’s defence. Mr. Vitols deposes that it was only following the conclusion of trial, Mr. Masterson, on behalf of State Farm, advised that his client intended to pursue a subrogated action (or an action by assignment) against Mr. Coulthard for any monies it might be required to pay the plaintiffs. He further deposes that State Farm had asserted a claim for contribution and indemnity only and not by virtue of subrogation. Accordingly, Mr. Coulthard seeks to amend his third party defence to plead a limitation defence pursuant to the Limitations Act, 2002, S.O. 2002, c. 24.

[21] He also asks to amend his defence in the Petrie action to plead the same two year limitation, this one arising by virtue of the Trustee Act, R.S.O. 1990, c. T. 23.

[22] The expiry of a limitation period is a substantive, affirmative defence that must be pleaded. Rule 25.07(4) of the Rules of Civil Procedures provides:

In a defence, a party shall plead any matter on which the party intends to rely to defeat the claim of the opposite party and which, if not specifically pleaded, might take the opposite party by surprise or raise an issue that has not been raised in the opposite party’s pleading.

[23] The law is well settled that the parties to a lawsuit are entitled to have a resolution of their dispute on the basis of the issues raised in the pleadings. There is a long line of authority making it clear that a limitation period must be pleaded.

[24] See, for example, S. (W.E.) v. P. (M.M.) (2000), 2000 CanLII 16831 (ON CA), 50 O.R. (3d) 70 (C.A.); leave to appeal refused (2001), 149 O.A.C. 397 (note) (S.C.C). In that case, the court noted that r. 25.07 applies to pleadings relating to limitations that might bar an action. The trial judge raised the limitation period and whether it applied to a counterclaim during closing submissions. It had not been pleaded or argued by the parties. The Court of Appeal noted:

I see no reason for departing from these authorities in the present appeal. The fact that the trial judge gave counsel time to prepare submissions on the issue after he raised it during closing argument does not remove the potential prejudice to Paquet. If Strong had raised the issue in his pleadings, Paquet might have tried to settle, or even have abandoned, her counterclaim. Either decision might have had costs consequences. Another potential source of prejudice arises from the fact that counsel for Paquet might have adopted different tactics at trial. In particular, counsel might have called different or additional evidence to support an argument that the discoverability principle applied.

[25] On the other hand, r. 26.01 stipulates that leave to amend a pleading must be granted at any stage of an action in the absence of non-compensable prejudice.

[26] Mr. Coulthard submits that he only became aware after the verdict was rendered that State Farm intended to advance a subrogated claim against him. This, it is argued, caused him to consider it necessary to raise a limitation defence. He submits that there is no prejudice to State Farm, notwithstanding that the evidence is complete and a verdict rendered. He says there is nothing that State Farm could or would have done differently during the presentation of evidence or in argument and therefore, prejudice does not arise. Moreover, a successful plea does not itself amount to the kind of prejudice contemplated by the Rule.

[27] In contrast, State Farm says it would have conducted its case differently had it known that there was a limitation issue. For example, it would have asked Mr. Tuffnail questions bearing on the discoverability of the claim against Mr. Coulthard at his examination for discovery and at trial. It also submits that prejudice is presumed.

[28] State Farm also notes that Mr. Coulthard raised the possibility of a limitation defence some three years prior to the opening of trial. However, it did not seek to plead a limitation defence before trial.

[29] I have concluded that the amendment cannot be made at this late stage. I acknowledge that it is possible to amend a pleading even post-verdict, for example, to amend the prayer for relief to accord with a verdict on damages. However, in this case, it seems to me unlikely that Mr. Coulthard could have failed to appreciate what State Farm was seeking against him regardless of its legal label. In its third party claim, State Farm identified it as contribution and indemnity – but State Farm is not a joint tortfeasor but rather a party pursuant to the OPCF 44R coverage. Its claim against Mr. Coulthard arises not by virtue of the Negligence Act, R.S.O. 1990 c. N. 1 but is one for indemnity by operation of subrogation. Indeed, in its statement of defence and crossclaim, State Farm specifically pleads at para. 23 that it “has a potential subrogated interest that it is entitled to recover from the tortfeasors”. Mr. Coulthard would have received this pleading as required by r. 25.03(1). He must surely have appreciated the true substance of the claim.

[30] Moreover, I am persuaded that real prejudice arises because evidence would undoubtedly have been led on the issue of discoverability. It is now too late. There is no evidentiary basis on which I could determine the issue. And as the court observed in S. (W.E.), trial tactics might have been affected. Similarly, pre-trial strategies may have been altered. As noted, prejudice is presumed.

[31] In respect of the Petrie claim, there is an issue respecting the Trustee Act that raises a somewhat different challenge. Section 38(3) of the Act provides as follows:

An action under this section shall not be brought after the expiration of two years from the death of the deceased.

[32] It is clear that the concept of discoverability has no application to the limitation under that Act. In Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549, the court discussed discoverability in the context of the Highway Traffic Act, R.S.O. 1990, c. H. 8. This rule of construction is dependent on the language of the relevant statute. Thus, Major J. observed as follows:

…the judge-made discoverability rule is nothing more than a rule of construction. Whenever a statute requires an action to be commenced within a specified time from the happening of a specific event, the statutory language must be construed. When time runs from “the accrual of the cause of action” or from some other event which can be construed as occurring only when the injured party has knowledge of the injury sustained, the judge-made discoverability rule applies. But, when time runs from an event which clearly occurs without regard to the injured party’s knowledge, the judge-made discoverability rule may not extend the period the legislature has prescribed. [Emphasis added.]

[33] In Smith Estate v. College of Physicians and Surgeons (1998), 1998 CanLII 1523 (ON CA), 41 O.R. (3d) 481 (C.A.), the deceased committed suicide after the defendant College suspended his licence to practice medicine. His widow sued for wrongful death and loss of income as executrix of his estate; and in her personal capacity and as litigation for their minor children under the Family Law Act. The action was commenced two years and four months after Dr. Smith’s death. The court concluded that the main action was barred by the limitation in s. 38(3) of the Trustee Act. So too were the Family Law Act claims because they are derivative in nature. They depend upon the entitlement of the principal to recover damages from the tortfeasor within the circumstances his injury or death.

[34] As a result, it is more difficult for State Farm to submit that it would have conducted its case differently elicited evidence on the issue of discoverability because the concept has no application in the circumstances.

[35] The parties are agreed that State Farm has essentially stepped into the Petrie plaintiffs’ shoes in order to pursue its subrogated action. The parties are agreed that State Farm’s right of subrogation can be no better than the plaintiffs’ cause of action. State Farm’s third party claim in the Petrie action was delivered on April 3, 2014. Accordingly, the claim would have been barred if brought then by the Petries. However, for the same reasons expressed in para. 26 above, the proposed amendment is too late. There is obvious prejudice to the Petries. Their strategy in proceeding with the case would undoubtedly have been affected. It is simply too late now to permit the amendment.

3. State Farm’s Right of Subrogation

[36] An insurer’s rights of subrogation arise by virtue of the provisions of the Insurance Act, R.S.O. 1990, c. I.8. Section 278(1) provides:

An insurer who makes any payment or assumes liability therefor under a contract is subrogated to all rights of recovery of the insured against any person and may bring action in the name of the insured to enforce those rights.

[37] There is also a subrogation clause in the OPCF 44R endorsement. It provides in s. 20:

Where a claim is made under this change form, the insurer is subrogated to the rights of the eligible claimant by whom a claim is made and may maintain an action in the name of that person against the inadequately insured motorist and the persons referred to in s. 7 of this change form.

[38] Therefore, s. 20 conferred on State Farm the right to pursue a subrogated claim against Mr. Meekes. He tendered his policy limits prior to trial and Mr. Bolton, Mr. Coulthard and State Farm agreed not to pursue any claim against him personally.

[39] Section 7 of the endorsement includes for the purposes of subrogation “the insurers of a person jointly liable with the inadequately insured motorist for the damages sustained by an insured person”.

[40] State Farm submits that Mr. Coulthard and Mr. Bolton fall within s. 7(b) of the endorsement because they are jointly and severally liable with Mr. Meekes. Accordingly, it is entitled to pursue its rights of subrogation against them.

[41] I do not believe either Mr. Bolton or Mr. Coulthard take any position respecting State Farm’s right of subrogation (aside from the limitation issue already determined). However, Mr. Coulthard submits that his liability is several. For reasons elaborated below, I have concluded otherwise.

[42] In view of the plain language of the Insurance Act, State Farm’s right of subrogation is established.

4. How is the relationship between Mr. Bolton and Mr. Coulthard to be characterized?

[43] It is axiomatic that a hotel operator is vicariously liable for the actions of its employees who breach the Liquor Licence Act R.S.O. 1990, c. L.19 or the common law: Jordan House Ltd. v. Menow, 1973 CanLII 16 (SCC), [1974] S.C.R. 239.

[44] However, the general rule at common law is that a person who engages an independent contractor will not be liable for the contractor’s negligence. See 671122 Ontario v. Sagaz Industries Canada Inc., 2001 SCC 59, [2001] 2 S.C.R. 983 and Leutis v. British Columbia, 1997 CanLII 304 (SCC), [1997] 3 S.C.R. 1145.

[45] Mr. Coulthard submits that he was an employee or agent of Mr. Bolton and as a result, Mr. Bolton is vicariously liable for his negligence. He says that because of the employment or agency relationship, Mr. Bolton is precluded from pursuing a claim for indemnity from him.

[46] Mr. Bolton denies that an employment or agency relationship existed between them and Mr. Coulthard is properly characterized as an independent contractor. As a preliminary matter, I note that Mr. Coulthard pleaded in his statement of defence that he was Mr. Bolton’s agent. There is no reference to an employment relationship.

[47] The Supreme Court of Canada has had occasion to consider the hallmarks or indicia of an employment relationship in the Sagaz decision, supra. The court offered guidance about how to recognize an employment relationship, acknowledging that there is “no universal test”. It said at para 47:

Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. [in Wiebe Door Services Ltd. v. Minister of National Revenue] that a persuasive approach to the issue is that taken by Cook J. in Market Investigations, supra. The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker’s activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.

[48] Mr. Coulthard points to the following factors as supporting this contention that he was an employee:

• Mr. Bolton supplied the tools and supplies for Mr. Coulthard’s work by purchasing the alcohol to be sold;

• Mr. Coulthard undertook no financial risk and had no opportunity to profit;

• Mr. Bolton had the right to control Mr. Coulthard’s work and performance;

• Mr. Coulthard did not regularly engage in the business of serving alcohol; and

• Mr. Coulthard was integral to the operation of the special occasion permit because he had his Smart Serve designation and was a member of the Optimist Club.

[49] Mr. Bolton responds that there was no employment relationship between them and that Mr. Coulthard was an independent contractor. I agree. Even if he was not strictly speaking an independent contractor, he would be most accurately described as a volunteer. Notwithstanding that Mr. Bolton purchased the alcohol to be served, none of the other indicia of an employment relationship existed. For example:

• there was no employment contract;

• Mr. Coulthard was only asked to tend bar because he was a friend; he had his Smart Serve Certificate; and he was an Optimist Club member – the latter two being requirements of the Club;

• Mr. Coulthard was engaged by others to serve alcohol on several occasions each year;

• Mr. Coulthard was paid by Mr. Bolton what is best described as an honorarium of $100, which he donated back to the bride and groom as a wedding gift;

• There was no payroll and no source deductions;

• Mr. Bolton did not supervise or train Mr. Coulthard;

• Mr. Coulthard was accompanied by his wife who assisted him at the bar without Mr. Bolton’s approval or request;

• the equipment (the bar and glassware) was supplied by the Club and not by Mr. Bolton; and

• neither Mr. Coulthard nor Mr. Bolton considered there to be an employment relationship.

[50] Accordingly, Mr. Coulthard is properly characterized as either an independent contractor rather than an employee, or a volunteer. Vicarious liability does not arise on this basis.

5. Is Mr. Bolton vicariously liable for the actions of Mr. Coulthard even in the absence of an employment relationship?

[51] The next step in the analysis is whether vicarious liability arises at common law on the basis of agency.

[52] Professor Fridman in his text book Canadian Agency Law (Toronto: LexisNexis Canada Inc., 2017) discusses the concept of agency and liability between principal and agent. He notes that an agent is traditionally defined as a party who has been empowered by another party, the agent’s principal, to affect the principal’s legal rights and obligations in dealings with third parties. The liability of a principal for the wrongful acts of an agent will depend on considerations similar to those involved in determining the vicarious liability of an employer for the wrongful act of an employee. A principal is jointly and severally liable, along with the agent, for any wrong committed by the agent within the scope of the agent’s actual, apparent or usual authority.

[53] I am not persuaded that Mr. Coulthard was Mr. Bolton’s agent at common law. Mr. Coulthard was not empowered to affect Mr. Bolton’s legal rights or obligations. In my view, in the circumstances of this case Mr. Coulthard had his own obligations completely independent of Mr. Bolton by virtue of his Smart Serve certificate. This conclusion is underscored by the jury’s particularization of the negligence of each of Mr. Bolton and Mr. Coulthard. For example, in response to the question respecting Mr. Bolton, the jury said:

As the special occasion permit holder and as the commercial host he: encouraged excessive drinking, allowed guests to drink and drive, did not understand the Liquor Licence Act and Regulations, did not encourage responsible drinking, did not assign anyone to monitor the door, did not arrange alternate transportation for guests, did not create policies that promote responsible service and moderate drinking practices.

[54] In respect of Mr. Coulthard, the jury found:

As the SmartServe certified bartender he: failed to follow the SmartServe protocol for monitoring the signs of intoxication ie: the green, yellow, red system, did not monitor or keep track of the drinks being served or consumed, and failed to prevent drinking to the point of intoxication.

[55] Mr. Coulthard submits that vicarious liability can also arise by statute. In this case, the provisions of the Liquor Licence Act are pertinent. Section 39 of the Act provides:

The following rules apply if a person or an agent or employee of a person sells liquor to or for a person whose condition is such that the consumption of liquor would apparently intoxicate the person or increase the person’s intoxication so that he or she would be in danger of causing injury to himself or herself or injury or damage to another person or the property of another person:

1. If the person to or for whom the liquor is sold commits suicide or meets death by accident while so intoxicated, an action under Part V of the Family Law Act lies against the person who or whose employee or agent sold the liquor.

2. If the person to or for whom the liquor is sold causes injury or damage to another person or the property of another person while so intoxicated, the other person is entitled to recover an amount as compensation for the injury or damage from the person who or whose employee or agent sold the liquor.

[56] Is Mr. Coulthard an agent within the meaning of the Act? He says that he is. He submits the determination requires an exercise in statutory interpretation, which requires the words of an Act be read in their entire context and in their grammatical sense, harmoniously with the scheme of the Act, the object of the Act and the intention of the legislature. See Harvey v. Talon International Inc., 2017 ONCA 267 quoting from Elmer Driedger, Construction of Statutes, 2nd ed. (Toronto: Butterworths, 1983), at p. 87, and Rizzo & Rizzo Shoes Ltd., Re, 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27 at para. 21.

[57] The policy underlying the Liquor Licence Act is captured in the following passage in Dickerson v. 1610396 Ontario Inc., 2010 ONCA 894:

In its current form, s. 39 imposes a statutory liability in certain circumstances on a commercial establishment for the harm caused by its business of selling liquor. This reflects the general policy of the Act to regulate the production, sale and use of liquor in the interest of safety and the general welfare of the public: see R. v. Royal Canadian Legion, 1971 CanLII 372 (ON CA), [1971] 3 O.R. 552 (C.A.) at p. 556. It imposes special responsibilities on those who would profit from the supply and sale of alcohol in order to reduce the risk associated with that trade: see Childs v. Desormeaux, 2006 SCC 18, [2006] 1 S.C.R. 643, at para. 20.

[58] It seems to me to be artificial and inconsistent to conclude that Mr. Coulthard is neither an employee nor an agent at common law but is for the purposes of the Liquor Licence Act. Accordingly, I conclude that Mr. Bolton is not vicariously liable for the negligent acts of Mr. Coulthard as employee or agent, whether at common law or by statute.

6. Does Mr. Bolton have a claim for contribution and indemnity from Mr. Coulthard?

[59] Mr. Bolton submits that he has a claim on the basis of joint liability. Mr. Coulthard responds that his liability is several. In other words, his liability is limited to the degree of fault found by the jury. I pause here to note that Mr. Coulthard did not plead that his liability was limited. It was raised at the conclusion of the trial after the jury had delivered its verdict.

[60] The analysis begins in the Negligence Act. Section 1 speaks to the rights of contribution and indemnity between tortfeasors, which did not exist at common law. It provides:

Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly or severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.

[61] Section 2 provides:

A tortfeasor may recover contribution or indemnity from any other tortfeasor who is, or would if sued have been, liable in respect of the damage to other persons suffering damages as a result of a tort.

[62] Section 5 provides:

Wherever it appears that a person not already a party to an action is or may be wholly or partly responsible for the damages claimed, such person may be added as a party defendant to the action upon such terms as are considered just or may be made a third party to the action in the manner prescribed by the rules of court for adding third parties.

[63] The nature of the liability of concurrent tortfeasors inter se is discussed in Sale v. O’Grady’s Restaurant, 2011 ONSC 2437. Justice Strathy (as he then was) conducted a thorough analysis of the relevant principles, which I summarize:

• The law in Ontario dealing with concurrent torts and contribution between concurrent tortfeasors was altered radically by the passage of the legislation now known as the Negligence Act. The legislation makes two major changes in the law applicable to concurrent tortfeasance: all concurrent tortfeasors, whether joint or several, are jointly and severally liable to the injured person for the damages concurrently caused and there is now a right of contribution between concurrent tortfeasors. [quoting from David Cheifetz, Apportionment of Fault in Tort (Aurora: Canada Law Book, 1981)].

• The effect of section 1 of the Negligence Act is to make all persons sued, who caused or contributed to the damage suffered by the plaintiff jointly and severally liable to the plaintiff for the damage. This is referred to by the Ontario Law Reform Commission in its Report on Contribution Among Wrongdoers and Contributory Negligence (Toronto: Ministry of the Attorney General, 1988) as “in solidum liability” (chapter 3). The purpose of the legislation is to facilitate full recovery of the loss for the plaintiff, while at the same time providing a mechanism for each of those who contributed to the loss to share the financial responsibility in the proportions of their respective degrees of fault.

• It is therefore axiomatic that the plaintiffs’ judgment against each defendant found at fault to any degree, be in the amount of 100 percent of the damages suffered. Of course, the plaintiff cannot collect more than 100 percent in total from all defendants, so that satisfaction of any amount against one is satisfaction against all. However, as between themselves, the defendants are each entitled to contribution and indemnity to the extent of any overpayment to the plaintiff of their own proportionate share. Any defendant who successfully claimed over against a third party is also entitled to contribution from that third party to the extent of that party’s fault. [quoting from Martin v. Listowel Memorial Hospital (2000), 2000 CanLII 16947 (ON CA), 51 O.R. (3d) 384 (C.A.)].

• Section 5 of the Negligence Act is the procedural remedy that permits a defendant to exercise its right to contribution and indemnity, under section 1 of the Negligence Act, against a person who is not already a party to the action, by moving to add the person as a defendant or by taking third party proceedings. [Emphasis added.]

• The rights of contribution and indemnity conferred by the Negligence Act exist between concurrent tortfeasors – those persons whose conduct causes a single loss in another. The statue is not concerned with the acts of several tortfeasors whose actions produce different damage in the same persons. In those circumstances, several tortfeasors were, and still are, only liable for the damage they each caused: Ontario Law Reform Commission, Report on Contribution Among Wrongdoers and Contributory Negligence (Toronto: Ministry of the Attorney General, 1988) at p. 8; Cheifetz at p. 7.

[64] In Lawson. v. Viersen, 2012 ONCA 25, the court reiterated:

[35] In summary, the Negligence Act makes concurrent tortfeasors, that is, persons whose conduct causes a single loss to another, jointly and severally liable. It also provides for the right of concurrent tortfeasors to claim contribution and indemnity from another tortfeasor provided the statue is not concerned with the acts of several tortfeasors whose actions produce different damage to the same person. In those circumstances, several tortfeasors are liable only for the damage they respectively caused.

[65] In this case, Mr. Bolton and Mr. Coulthard are several, concurrent tortfeasors because they caused the same injury to the plaintiffs as a result of their separate tortious acts. It is clear from the foregoing that by virtue of the Negligence Act, Mr. Bolton would have a claim for contribution and indemnity from Mr. Coulthard.

[66] Mr. Coulthard argues that the provisions of the Negligence Act are displaced by contract. An implied contract was discussed in McFee v. Joss, 1925 CanLII 386 (ON CA), [1925] O.J. No 202 (C.A), a dated case that still is good law. In that case, the court said:

… an implied contract of indemnity arises in favour of a person who, without fault on his part, is exposed to liability and compelled to pay damages on account of the negligence or tortious act of another, provided the parties are not joint tortfeasors… This right of indemnity is based upon the principle that everyone is responsible for his own negligence, and if another is, by a judgment of a court, compelled to pay damages which ought to have been paid by the wrongdoer, such damages may be recovered from the wrongdoer”.

[67] In Creasy v. Sudbury (Regional Municipality) (1999), 1999 CanLII 3820 (ON CA), 93 A.C.W.S. (3d) 561 (C.A.), the court noted:

This section applies when there are two or more persons who are at fault or negligent causing damage to the plaintiff. In that case, they are each fully liable to pay the awarded damages to the plaintiff, or, in other words, they are jointly and severally liable to the plaintiff. However, as between themselves, they bear the financial responsibility to the plaintiff in the proportions that they are respectively found to be at fault, in the absence of any contract express or implied.

Where two parties who have caused damage to a plaintiff have a relationship with each other which is in the form of a contract either express or implied, and which governs their obligations to each other in the eventuality which in fact occurs, then the Negligence Act does not override that contract but has no application to those parties in respect of their obligations as between themselves. This makes sense because there is no need for legislative intervention or assistance in those situations where parties know that they may each incur liability to third parties as a result of an undertaking in which they may each incur liability to third parties as a result of an undertaking in which they are both participating. They are able to structure their financial arrangements, including insurance, in accordance with the obligations to each other undertaken within their agreement. A similar analysis led Cory J. to note in Lewis (Guardian ad litem of) v. British Columbia, supra, that one of the policy reasons for imposing liability on British Columbia for the negligence of its contractor was that the Crown may stipulate for indemnification by its contractor for negligently performed work as a condition of entering into the contract to do the work.

[68] Both Mr. Bolton and Mr. Coulthard rely on Fenn v. City of Peterborough, 1979 CanLII 77 (ON CA), [1979] 25 O.R. (2d) 399 (C.A.).

[69] Mr. Coulthard points to this passage in the Fenn decision in support of his position:

The City’s claim against the Commission, made in the same third party proceedings, rests on the common law right of a principal who is found vicariously liable to a plaintiff by reason of the negligence of his agent in the performance of his authorized duties to be indemnified by the agent. It is not a right which has been pursued frequently, but its existence is clear. It is an exception to the common law rule that there could be no contribution between joint tortfeasors. The principal asserting the right must himself have been without fault in the occurrence which caused the damage. No one in this case has alleged any positive fault on the part of the City, its liability is purely vicarious. Hence all the necessary ingredients of a good claim for indemnity are present.

[70] In other words, under the implied contract of indemnity, a party is disentitled if he or she is liable for the plaintiffs’ damages. The authors of Remedies in Tort, (Aurora: Thomson Reuters Canada Limited, 2017) note:

The party asserting the right to indemnity must himself have been without fault in the occasion which caused the damage; otherwise he is not entitled to claim indemnity.

[71] Mr. Bolton relies on it for the following propositions:

• Where a principal is found liable solely because of the negligent actions of its agent, the principal is entitled to be indemnified by its agent for the principal’s vicarious liability to a plaintiff of the negligence of its agent;

• The underlying principle [that a principal is entitled to be indemnified by its agent for the principal’s vicarious liability for its agent’s negligence] is not confined to cases of agency; it has been applied even where there are no contractual relations at all between the wrongdoer and a person who is vicariously liable for the damages occasioned by the wrongful act;

• “The … claim [for indemnity] … rests on the common law right of a principal who is found vicariously liable to a Plaintiff by reason of negligence of his agent in the performance of his authorized duties to be indemnified by the agent. It is not a right which has been pursued frequently, but its existence is clear. It is an exception to the common law rule that there could be no contribution between joint tortfeasors”.

[72] If I understand his position correctly, Mr. Bolton advances this argument in the alternative; that is, in the event I found that he is vicariously liable for Mr. Bolton as his agent.

[73] In my view, there is no basis on which to find an implied contract that displaces section 1 of the Negligence Act. I have already determined that there is no employment relationship between them or one of agency either at common law or by statute. It follows that Mr. Bolton must succeed in his third party claim against Mr. Coulthard for contribution and indemnity pursuant to the Negligence Act.

7. Do the Plaintiffs have Access to coverage under OPCF 44R endorsement of State Farm Policy?

[74] As already noted, the plaintiffs did not sue Mr. Coulthard. He participated as a third party, having been joined by State Farm and Mr. Bolton. An issue arises whether the plaintiffs’ failure to sue Mr. Coulthard has an impact on what State Farm may be obliged to contribute to the judgment.

[75] State Farm takes the position that its policy is excess to the Coulthard policy limits. Put another way, it says that if the plaintiffs had sued Mr. Coulthard and if he had been found liable to the plaintiffs, the proceeds of his insurance policy would be available to the plaintiffs and would be deducted before State Farm would be obliged to pay anything. It says the fact that the plaintiffs did not sue Mr. Coulthard is not relevant to the issue of whether his insurance proceeds are available for purposes of calculating State Farm’s obligation.

[76] The plaintiffs agree that State Farm’s $800,000.00 is excess insurance but in this case, it is in excess to the proceeds of the Meekes and Bolton policies only. They say the Coulthard proceeds are not available to them because he is not a defendant.

[77] The determination of this issue has important implications for the plaintiffs and State Farm. If State Farm is correct, its exposure is $3.565 million less $200,000 (from Meekes) less $2 million (from Bolton) less $1 million (notionally from Coulthard) or $365,000. If the plaintiffs are correct, State Farm’s obligation is $3.565 million less $200,000 less $2 million or $800,000 (its limit under OPCF 44R).

[78] It is helpful in the analysis to remember for what underinsured coverage is designed. In Somersall v. Friedman, 2002 SCC 59, the court described it in this way:

The specific purpose of the SEF 44 Endorsement [the predecessor of OPCF 44R] is to provide coverage in exchange for a premium paid by the insured, for injuries sustained by the insured and eligible other occupants of the vehicle, in motor vehicle accidents caused by motorists who are not insured or whose liability limits are insufficient to compensate the injuries suffered by the claimants. Although the form of the SEF 44 is standardized, it is an optional coverage for which the premium paid is in addition to the premium paid for the coverage purchased under the standard automobile policy.

The essence of this endorsement is that the insured protects himself, by making the extra payment, from the risk of being injured by an inadequately insured motorist. The insured pays a fee to the insurer to make direct compensation in the even that such an accident occurs.

[79] The relevant portion of the endorsement is worded as follows:

6. The amount to an eligible claimant under this change form shall be calculated by determining the amount of damages the eligible claimant is legally entitled to recover from the inadequately insured motorist, and deducting from the amount the aggregate of the amounts referred to in Section 7 of this change form, but in no event shall the insurer be obliged to pay an amount in excess of the limit of coverage as determined under Section 4 and 5 of this change form.

7. The amount payable under this change from to an eligible claimant is excess to an amount received by the eligible claimant from any source, other than money payable on death under a policy of insurance, and is excess to amounts that were available to the eligible claimant from

(b) the insurers of a person jointly liable with the inadequately insured motorist for the damages sustained by an insured person…

[80] The current incarnation of s. 7(b) is different than its predecessor, which read:

4 (a) the amount payable under this endorsement to any eligible claimant shall be ascertained by determining the amount of damages the eligible claimant is legally entitled to recover from the inadequately insured motorist and deducting form the amount the aggregate of the amounts referred to in paragraph 4(b), but in no event shall the Insurer be obliged to pay any amount in excess of the limit of coverage as determined under paragraph 3 of this endorsement.

(b) The amount payable under this endorsement to any eligible claimant is in excess to any amount actually recovered by the eligible claimant from any source (other than money payable on death under a policy of insurance) and is excess to any amounts the eligible claimant is entitled to recover (whether such entitlement is pursued or not) from:

(ii) the insurers of any person jointly liable with the inadequately insured motorist for the damages sustained by an insured person… [Emphasis added].

[81] Under the former provision, it was clear that before an insured could access his underinsured coverage, he was obliged to seek recovery from all possible tortfeasors (or to deduct those sums from the excess coverage.) That wording has been changed in the current endorsement by eliminating the reference to entitlement, whether or not pursued.

[82] Unfortunately, the phrase “amounts that were available to the eligible claimant” has not been considered in the context of OPCF 44R. So it is helpful to begin with first principles. Insurance contracts such as OPCF 44R are interpreted contra proferentem - in the other words, in favour of the insured. This principle has been repeated by the Supreme Court on several occasions, including in Sansalone v. Wawanesa Mutual Insurance Co., 2000 SCC 24, [2000] 1 S.C.R. 551 in which the court reasoned:

Since insurance contracts are generally adhesionary, the standard practice is to construe ambiguities against the insurer… A corollary of this principle is that “coverage provisions should be construed broadly and exclusion clauses narrowly”… Therefore, one must always be alert to the unequal bargaining power at work in insurance contracts, and interpret such policies accordingly.

[83] See also Derksen v. 539938 Ontario Ltd., 2001 SCC 72. Any ambiguity must be resolved in favour of the insured: Chilton v. Co-operators General Insurance Co. (1997), 1997 CanLII 765 (ON CA), 32 O.R. (3d) 161 (C.A.)

[84] I have concluded that the change in the language of OPCF 44R is significant and signals that it is not necessary for an insured to pursue all possible tortfeasors before becoming entitled to access his own insurance. There is support for this conclusion in Myers-Gordon v. Martin, 2017 ONSC 872, the only case thus far that analyzes the current form of s. 7(b) of the OPCF 44R. The case is factually similar, involving several plaintiffs who suffered serious injuries in a motor vehicle accident. The defendants were the impaired, at-fault driver and the host of a keg party.

[85] The parties, having agreed on the value of the plaintiffs’ damages, which exceeded all insurance, moved for a determination of State Farm’s obligation under the OPCF 44R coverage. Justice Arrell reasoned:

[31] … That means, in my view, that State Farm is responsible to pay to their insured’s any difference between what they receive proportionately from the two homeowners policies, after all other Plaintiffs claiming from the inadequately insured at fault driver are also proportionately compensated, and their judgment for their damages, up to the limit of $300,000.00.

[86] Accordingly, the word “available” was interpreted to mean the proportionate share of what the plaintiff actually receives from the tortfeasors and not their full policy limits.

[87] This is consistent with what I perceive to be the underlying rationale of decisions such as Sansalone, supra. It is also consistent with the approach taken in connection with uninsured motorists. In those cases, an insured is not obliged to pursue all potential tortfeasors before being entitled to access his own uninsured motorist insurance.

[88] State Farm relies on the decision in Loftus v. Robertson, 2009 ONCA 618. The plaintiff had failed to sue an at-fault uninsured driver and others. She sought to recover under the uninsured portion of her policy. The court analyzed the issue in the following way:

[41] Third, case law interpreting Section 265 of the Insurance Act has noted that the section was enacted to alleviate “the plight of motorists injured by drivers of uninsured automobiles” and that the purpose of this section is to provide “a safety net for victims injured by the actions of uninsured motorists” and at the same time “internalize costs to the activity (driving a motor vehicle) which created them”: Barton v. Aitchison, at p. 287; Gignac v. Neufeld (1999), 1999 CanLII 2182 (ON CA), 43 O.R. (3d) 741 (C.A.), at p. 750; Chambo v. Musseau, at p. 308.

[42] We see no indication in the language of Section 265 of the Insurance Act or of the Schedule that it was the intention of the legislature to require victims of uninsured drivers to engage in potentially speculative and costly litigation against potential joint tortfeasors who may be insured rather than relying on the coverage paid for in their own policies of insurance.

[43] In our view, Section 7(3) of the Motor Vehicle Accident Claims Act, R.S.O. 1990, c. M. 41 and Section 7 of the Family Protection Coverage Endorsement (OPCF-44R) contained in Ms. Loftus’s policy support our interpretation. Both of these provisions make it clear that an injured party may resort to the protection or coverage provided only as a matter of last resort. Had the legislature intended a similar result with respect to the uninsured coverage required by Section 265 of the Insurance Act, it could have said so. The relevant provisions read as follows:

Section 7(3) of the Motor Vehicle Accident Claims Act:

7(3) The Ministry shall not pay out of the Fund any amount in respect of a judgment unless the judgment was given in an action brought against all persons against whom the applicant might reasonably be considered as having a cause of action in respect of the damages in question and prosecuted against every such person to judgment or dismissal.

Section 7 of the Family Protection Coverage Endorsement:

7. The amount payable under this change form to an eligible claimant is excess to an amount received by the eligible claimant from any source, other than money payable on death under a policy of insurance, and is excess to amounts that were available to the eligible claimant from

(b) the insurers of a person jointly liable with the inadequately insured motorist for the damages sustained by an injured person.

[Emphasis added].

[89] State Farm submits that the Court of Appeal interpreted OPCF 44R in the same way as the Motor Vehicle Accident Claims Fund as requiring plaintiffs to seek recovery from all reasonably possible tortfeasors. However, the court’s comments were obiter and did not consider the change in the language between SEF 44 and OPCF 44R. It seems to me that if the intention was to require plaintiffs to pursue all possible sources, the language of SEF 44 would have been retained. At the very least, there is an ambiguity that must be resolved in favour of the insured.

[90] Accordingly, I have concluded that Mr. Coulthard’s insurance is not available to the plaintiffs.

8. Are the defendants entitled to an assignment of Mr. Tuffnail’s future claims for statutory accident benefits (SABs) against his accident benefit insurer?

[91] Mr. Bolton and Mr. Coulthard seek an assignment of Mr. Tuffnail’s ongoing claim for future income loss and future care costs from his insurer (State Farm). The plaintiffs resist an assignment of future care costs or the imposition of a trust.

[92] The relevant sections of the Insurance Act are reproduced below:

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 statutory accident benefits and by the present value of any statutory accident benefits to which the person is entitled;

(b) all payments that the person has received under any medical, surgical, dental, hospitalization, rehabilitation or long-term care plan or law and by the present value of such payments to which the person is entitled;

(c) all payments that the person has received or that were or are available for loss of income under the laws of any jurisdiction or under an income continuation benefit plan and by the present value of any such payments to which the person is entitled; and

(d) all payments that the person has received under a sick leave plan arising by reason of the person’s occupation or employment.

267.8 (9) Future collateral benefits – A plaintiff who recovers damages for income loss, loss of earning capacity, expenses that have been or will be incurred for health care, or other pecuniary loss in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile shall hold the following amounts in trust:

1. All payments in respect of the incident that the plaintiff receives after the trial of the action for statutory accident benefits in respect of income loss or loss of earning capacity.

2. All payments in respect of the incident that the plaintiff receives after the trial of the action for income loss or loss of earning capacity under the laws of any jurisdiction or under an income continuation benefit plan.

3. All payments in respect of the incident that the plaintiff receives after the trial of the action under a sick leave plan arising by reason of the plaintiff’s occupation or employment.

4. All payments in respect of the incident that the plaintiff receives after the trial of the action for statutory accident benefits in respect of expenses for health care.

5. All payments in respect of the incident that the plaintiff receives after the trial of the action under any medical, surgical, dental, hospitalization, rehabilitation or long-term care plan or law.

6. All payments in respect of the incident that the plaintiff receives after the trial of the action for statutory accident benefits in respect of pecuniary loss, other than income loss, loss of earning capacity and expenses for health care.

(10) Payments from trust – A Plaintiff who holds money in trust under subsection (9) shall pay the money to the persons from whom damages were recovered in the action, in the proportion that those persons paid the damages.

(12) Assignment of future collateral benefits – The court that heard and determined the action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of the automobile, on motion, may order that, subject to any conditions the court considers just,

(a) the plaintiff who recovered damages in the action assign to the defendants or the defendants’ insurers all rights in respect of all payments to which the plaintiff who recovered damages is entitled in respect of the incident after the trial of the action,

(i) for statutory accident benefits in respect of income loss or loss of earning capacity,

(ii) for income loss or loss of earning capacity under the laws of any jurisdiction or under an income continuation benefit plan,

(iii) under a sick leave plan arising by reason of the plaintiff’s occupation or employment,

(iv) for statutory accident benefits in respect of expenses for health care,

(v) under any medical, surgical, dental, hospitalization, rehabilitation or long-term care plan or law, and

(vi) for statutory accident benefits in respect of pecuniary loss, other than income loss, loss of earning capacity and expenses for health care; and

(b) the plaintiff who recovered damages in the action co-operate with the defendants or the defendants’ insurers in any claim or proceeding brought by the defendants or the defendants’ insurers in respect of a payment assigned pursuant to clause (a).

[93] In its decision respecting Mr. Tuffnail’s future income loss, the jury awarded him the full present value of his future income loss as claimed less the management fee that had been sought. The plaintiffs note that under the SABs, Mr. Tuffnail may be entitled to income replacement benefits in the future of up to $400 a week based on 80 percent of his net pre-accident income provided he is “suffering from a complete inability to engage in any employment or self-employment for which he is reasonably suited by education, training or experience”.

[94] At this point, Mr. Tuffnail’s claim against his own insurer for SABs is outstanding. However, if he recovers the full value of his damages for future income loss, then he agrees that the defendants are entitled to either a trust or an assignment of future income replacement benefits.

[95] In respect of future care costs, below is a chart setting out what the plaintiff sought and what the jury awarded:

Head of Damages	Amount Requested	Gross amount awarded	Net amount after Contrib. -3.85%
Medical/rehabilitation needs	$453,299.93	$273,518	$262,987.56
Attendant care needs	$677,012.62	$373,488	$359,108.71
Housekeeping and home maintenance	$244,588.77	$240,508	$231,248.44
Management Fee	$68,745.00	$0	$0
Housing modification needs	$253,484.00	$175,000	$168,262.50

[96] The jury clearly performed its own calculations with respect to future care costs. The total claimed was $1,697,130. The jury awarded $1,062,514.

[97] The relevant provisions are set out in s. 267.8(12) of the Act. They were discussed at length in Gilbert v. South, 2015 ONCA 712. The court observed:

The purpose of these statutory provisions is to ensure that a successful plaintiff in a tort action is not over-compensated by the receipt of collateral benefits – in other words, to ensure that the plaintiff does not obtain “double recovery”: Sutherland v. Singh, 2011 ONCA 470, 106 O.R. (3d) 553. In his ruling the trial judge set out – correctly in my opinion – the principles governing the imposition of a trust or an order for an assignment under the provisions of s. 267.8 at para. 9.

[98] In his decision, which was affirmed by the Court of Appeal, the trial judge reasoned:

Their object is to prevent, in the particular circumstances indicated therein, a “double recovery” by a plaintiff .The provisions assume that the plaintiff has obtained, through the litigation, damages covering the same loss otherwise covered by the collateral benefits…

However, concern to ensure mandated prevention of such double-recovery is balanced by concern that a plaintiff would receive full compensation and not recover less than that to which he or she is entitled: ie., by being subjected unfairly to deductions based on collateral benefit entitlements that are in double and/or which may not truly overlap with sums recovered in a tort judgment. In particular: deductions from a plaintiff’s damage award to prevent double recovery will be made only if it is absolutely clear that the plaintiff’s entitlement to such collateral benefits is certain, and that the plaintiff received compensation for the same benefits in the tort judgment, (as “apples should be deducted from apples, and oranges from oranges”). Evidence of “likelihood” and “probability” in that regard is not enough to warrant a deduction. Rather, a “very strict onus of proof” applies in relation to such matters, and it must be “patently clear” that the preconditions for an appropriate deduction have been established. If there is uncertainty as to a plaintiff’s receipt of such benefits, the value of the benefits entitlement, and/or the extent (if any) to which recovered tort damages relate to the same type of expense covered by the benefits received, matters are not “beyond dispute” in the sense required for a deduction, and no deduction should be made. See Chrappa v. Ohm (1998), 1998 CanLII 893 (ON CA), 38 O.R. (3d) 651 (Ont. C.A.), at p. 657; Bannon v. Hagerman Estate (1998), 1998 CanLII 4486 (ON CA), 38 O.R. (3d) 659 (Ont. C.A.), at p. 679; Cowles v. Balac, 2005 CanLII 2038 (ON SC), [2005] O.J. No. 229 (Ont. S.C.J.), at paragraph 205, affirmed 2006 CanLII 34916 (ON CA), [2006] O.J. No. 4177 (Ont. C.A.); Moore v. Cote, [2008] O.J. No. 3541 (Ont. S.C.J.), at paragraph 9; and Hoang (Litigation Guardian of) v. Vicentini, supra at paragraphs 27-28, 36 and 45.

[99] However, Gilbert was the subject of comment in the El-Khodr decision. The court casts some doubt about whether the Bannon decision referred to in the Gilbert decision remains good law but it expressly declined to determine the issue. The court also said Gilbert was restricted to its facts and in particular, the “trial judge’s determination that the jury award encompassed future care costs for which accident benefits would not be received”.

[100] This most recent decision of the Court of Appeal makes it clear that a strict matching requirement is not necessary, but rather the “court is required to match statutory benefits that fall generally into the ‘silos’ created by the s. 267.8 of the Insurance Act with the tort heads of damage”. The court went on to elaborate:

[60] … Income awards are to be reduced only by SABs payments in respect of income loss and health care awards only by SABs payments in respect of health care expenses. The latter item is, I suggest, deliberately broad enough to cover all manner of expenses that relate to health care and would include medications, physiotherapy, psychology sessions, assistive devices and the like. All manner of other expenses that are covered by SABs and that do not fall under the income category or the health care category, fall into the “other pecuniary losses” category.

[61] There is nothing in the language of the current Ontario statutory scheme that would require any further subdivision based on common-law heads of damage. In other words, although the legislation requires us to match apples with apples, the relevant categories of “apples” are the statute’s categories, not the common law’s. (Emphasis original).

[101] The court noted as well:

If there is no trust or assignment in respect of the SABs to which he will be entitled and which he will receive in the future for medication, assistive devices and professional services, he will be over-compensated and his receipt of any such benefits with no obligation to account to the tort insurer will constitute double recovery – a result this legislative scheme was specifically designed to avoid.

[102] In this case, the jury awarded damages under the “broad silos” described by the court in El-Khodr and in accordance with the jury questions drafted collaboratively by the parties. As El-Khodr makes clear, the fact the jury awarded less than that claimed does not mean that the plaintiff is being undercompensated. See paras. 77 and 78. This is the sum that the jury concluded was his entitlement.

[103] As a result, unless I have overlooked something, it appears that El-Khodr mandates that Mr. Tuffnail hold in trust or assign any future SABs to which becomes entitled.

[104] I would be pleased to hear from counsel if there are any other outstanding issues that require consideration – costs, for example.

“Justice H. A. Rady”

Justice H. A. Rady

Released: September 20, 2017