Court File and Parties

COURT FILE NO.: CV-18-00003477-0000 DATE: 20231031

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Lisa Majerczyk, Plaintiff AND: Rodolfo Manalo, Defendant

BEFORE: S. J. WOODLEY J

COUNSEL: Doug Wright, Counsel for the Plaintiff Michael Kennedy, Counsel for the Defendant

HEARD: October 10, 2023

REASONS FOR DECISION FOR RULING: RE ASSIGNMENT OF COLLATERAL BENEFITS

OVERVIEW

[1] This motion was argued before me on October 10, 2023, at which time I provided the parties with my ruling. These are the reasons relating to that ruling.

[2] On January 10, 2017, the plaintiff and defendant were in a motor vehicle accident that resulted in an action by the plaintiff for compensation for injuries arising from the accident. The trial of the action was heard by a jury over four weeks in May and June of 2023.

[3] At the conclusion of the trial, the jury awarded the plaintiff damages, inter alia, for past income loss of $15,143 and for future income loss of $360,000.

[4] It is agreed between the parties that the present-day value of the $360,000 future income loss award is $349,000.

[5] The defendant insurer The Wawanesa Mutual Insurance Company seeks an Order pursuant to s. 267.8 (12)(a) of the Insurance Act for the plaintiff to assign to the defendant’s insurer all rights in respect of all payments to which the plaintiff is entitled in respect of the incident after the trial of this action for:

i. income replacement benefits under the Statutory Accident Benefits Schedule; and

ii. income loss or loss of earning capacity under the laws of any jurisdiction or under an income continuation benefit plan, including but not limited to Canada Pension Plan disability benefits.

[6] The defendant also requests an order pursuant to s. 267.12(b) that the plaintiff execute any assignment or consent to the payment of any such assigned benefits until the plaintiff attains 65 years of age in the defendant’s favour.

[7] The plaintiff acknowledges that the defendant is entitled to an assignment of all future payments received by the plaintiff on account of income replacement benefits (both statutory and CPP benefits) but submits that such assignment is limited to 10 years, being the duration of income loss replacement awarded by the jury. The plaintiff consents to execute any necessary documents to assign to the defendant any income replacement benefits due to her commencing June 6, 2023, for a 10-year period ending June 6, 2033.

THE ISSUE

[8] The question before me is whether the statutory regime under s. 267.8(12) of the Insurance Act entitles the defendant to receipt of all future collateral income benefits to age 65 (for a further 29 years) or for 10 years (to age 46 years).

DETERMINATION OF THE ISSUE

[9] As per my oral ruling, and for the reasons that follow, I find that under the statutory regime under s. 267.8(12) of the Insurance Act, that the defendant is entitled to receipt of all collateral income benefits for a 10 year period (to age 46 years), from June 6, 2023 to June 6, 2033, in accordance with the verdict of the jury.

ANALYSIS AND THE LAW

Issue 1: What are the proper considerations for an order pursuant to s. 267.8 (12)(a) of the Insurance Act for assignment of payments for income loss and earning capacity loss to the defendant’s insurer?

a. Does the statutory regime under s.267.8(12) of the Insurance Act entitle the insurer to an assignment of all future collateral income benefits?

[10] The Insurance Act s. 267.8 includes provisions for the treatment of collateral income benefits once a plaintiff recovers damages for loss of income. Section 267.8 states as follows:

(9) 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. (Emphasis added).

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. (Emphasis added).

Payments from trust

(10) 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 proportions that those persons paid the damages. 1996, c. 21, s. 29.

Assignment of future collateral benefits

(12) 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,

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). 1996, c. 21, s. 29.

[11] The legislative purpose of s. 267.8 (9-12) of the Insurance Act is to allow for fair compensation to injured plaintiffs and to prevent double recovery due to the overlap between tort benefits and other collateral benefits. As stated by the Court of Appeal in Nemchin v. Green, 2021 ONCA 238 at para 22, it is well established that the legislative purpose of s. 267.8 is to promote fair compensation and prevent double recovery. The guiding principle is that victims should be fairly but not over-compensated, and to prevent double recovery.

[12] The defendant’s entitlement to an assignment of future collateral benefits is based on s. 267.8(12) of the Insurance Act. This section is a comprehensive system to address collateral benefits received by or available to a plaintiff in motor vehicle litigation.

[13] Section 267.8 provides that collateral benefits are applied by way of reduction (past benefits which have already been adjusted) and/or by way of trust or assignment (future benefits), against damages payable for income loss, loss of earning capacity, health-care expenses, and other pecuniary losses.

[14] Future collateral benefits, meaning those to which a plaintiff has the right of payment after trial, are addressed in s. 267.8(9)- (14).

[15] The first element relevant to future collateral benefits is the trust in favour of a defendant. Section 267.8(9) provides that a plaintiff who has recovered damages under one or more of the named headings “shall” hold certain amounts in trust for the defendant.

[16] If an assignment order is made, the requirement for the plaintiff to hold amounts in trust no longer applies. Instead, the plaintiff is required to co-operate with the defendant “in any claim or proceeding brought by the [defendant] in respect of a payment assigned” (s. 267.8(12)(b)).

[17] In the present case, an order for the assignment of future income benefits, including CPPD and SABS Income Replacement Benefits, is required to prevent double recovery, during the time period limited by the jury’s award.

b. Did the jury’s award account for all past and future loss of income by the plaintiff?

[18] At trial, the Plaintiff presented expert witness evidence to assist the jury to calculate the plaintiff’s loss of income and the jury charge provided as follows.

In the present case, three scenarios were considered by the plaintiff regarding the future loss of income claim. For your assistance, the plaintiff’s expert calculated that the loss of income from the date of trial to the date of the alleged “intended” retirement (July 23, 2052), if found to be due to the plaintiff, would be as follows:

i. Scenario 1 – present value of future income losses from May 16, 2023 to age 65 – based on inflation adjusted average earnings of full and part-time medical administrative assistants $1,180,906.00.

ii. Scenario 2 – present value of future income losses from May 16, 2023 to age 65 – based on inflation adjusted earnings of full- time medical administrative assistants $1,342,933.00.

iii. Scenario 3 – present-day value of future income losses from May 16, 2023 to age 65 – based on her inflation adjusted 2016 earnings $911,344.

Alternatively, instead of utilizing the scenarios provided by the plaintiff, you may decide to calculate the annual income loss, and the number of years of lost income. As indicated below the “OR” portion of Question #3 on the verdict sheet. First, based on the evidence presented at trial and the instructions I have provided based on future income losses at paragraph 260 of this charge, you may determine a reasonable and fair estimate the Ms. Majerczyk’s 2023 annual income. You should assess her earning capacity as if she had not had the accident, and insert this figure, where indicated at Question #3. Next, you should assess a reasonable and fair estimate of the number of years the plaintiff will have lost earnings over her working life, as a result of the injuries sustained from the January 10, 2017 accident. To determine this question, I refer you to paragraph 260 of this charge.

[19] In addition to the charge, the jury was provided with a Verdict Sheet having a series of questions for the jury to answer to return its verdict. The question related to future loss of income is as follows:

(3) At what amount, if any, do you assess the plaintiff’s special damages for future loss of income as a result of the accident on January 10, 2017? Answers ONLY ONE of the following options:

Total future income loss: $ OR

Annual income loss: $ Number of years:

[20] The jury returned the Verdict Sheet having chosen the “alternative” method based on the following specific instructions: “Alternatively, … you may determine a reasonable and fair estimate of Ms. Majerczyk’s 2023 annual income” and …“you should assess a reasonable and fair estimate of the number of years the plaintiff will have lost earnings over her working life, as a result of the injuries sustained from the January 10, 2017 accident”.

[21] The Verdict Sheet evidences that the jury found the sum of $36,000 to be a reasonable and fair estimate of the plaintiff’s 2023 annual income and that 10 years was a reasonable and fair estimate of the number of years the plaintiff will have lost earnings … as a result of the injuries sustained”.

[22] The jury fixed the plaintiff’s future income loss entitlement at $360,000 which the parties agree has a present value of $349,000.

[23] The jury’s award equals their reasonable and fair estimate of the amount of income the plaintiff will have lost due to the injuries sustained.

[24] Despite the defendant’s submissions, the jury’s award does not represent a loss of future income to the plaintiff’s retirement date. The award was clearly limited to a 10-year period – and not otherwise.

[25] To require the plaintiff to assign all future collateral benefits over the 10-year period of the jury’s award will satisfy the intent of the legislation and will prevent the plaintiff from receiving double recovery. For instance, the jury awarded the plaintiff $36,000 per year for 10-years for income replacement. If the plaintiff were not required to assign her future collateral benefits for a 10-year period, the result would be that the plaintiff would receive the jury’s award of $36,000 per year plus her collateral benefits of approximately $20,000 per year resulting in payment of income over the 10-year period of approximately $56,000 per year. As the jury determined that the plaintiff was entitled to $36,000 per year, any amount exceeding this amount would be “overcompensation”. It is the amount that exceeds the jury’s award that is intended to be paid or assigned to the defendant – which payments in the present case are limited by jury’s award to 10 years from the date of trial.

[26] Any other interpretation would result in under compensation and unfairness to the plaintiff and could cause a gross injustice to be perpetrated upon a vulnerable individual.

[27] Demonstration of this point is quite straight forward:

i. In the present case, the jury awarded the plaintiff $36,000 per year for a 10-year period for income replacement. As per the provisions of the Insurance Act, the plaintiff will receive or be credited with $36,000 per year for 10 years and any collateral benefits otherwise payable to the plaintiff will be assigned to the defendant throughout the 10-year period, or until June 6, 2033.

ii. Once the 10- year period ends on June 6, 2033, the plaintiff’s assignment to the defendant of her collateral benefits ceases.

iii. If, on June 6, 2033, the plaintiff is able to return to work, payment of collateral benefits will cease being made in the ordinary course as the plaintiff will no longer be entitled to the benefits and the plaintiff will only receive employment income.

iv. If, on June 6, 2033, the plaintiff remains disabled, the plaintiff will receive all collateral benefits that she may be entitled, as her sole source of income.

v. If I were to accept the defendant’s argument, then the plaintiff remains disabled on June 6, 2033, the defendant would have no ongoing obligation to pay any income to the plaintiff and the defendant would continue to receive all collateral benefits that the plaintiff may be entitled to receive leaving the plaintiff with no income and no ability to support herself.

[28] If I were to accept the defendant’s argument, the plaintiff would be left with no income and ability to support herself from any source, including social benefit sources provided by the Canadian government.

[29] Any such result would place disabled persons in dangerous and tenuous situations with unthinkable results. Clearly this is not the scenario that was intended by the legislation.

[30] The purpose of the Insurance Act is to ensure that an injured person is fairly- compensated but not overly compensated. In the present case this result is achieved by limiting the defendant’s assignment to the length of the jury award which is 10 years.

ORDER TO ISSUE

[31] For the foregoing reasons, the following Order shall issue:

i. An order pursuant to s. 267.8 (12)(a) of the Insurance Act for the plaintiff to assign to the defendant’s insurer, The Wawanesa Mutual Insurance Company, all rights in respect of all payments to which the plaintiff is entitled in respect of the incident after the trial of this action for Income Replacement Benefits under the Statutory Accident Benefits Schedule, Canada Pension Plan Disability Benefits, and any other benefit payable for loss of income, for a 10-year period commencing from the date of the jury’s verdict in this matter (June 6, 2023) and terminating on the 10-year anniversary of such date (June 6, 2033).

ii. An order pursuant to s. 267.8(12)(b) of the Insurance Act that the plaintiff who recovered damages in the action co-operate with the defendant or the defendant’s insurer in any claim or proceeding brought by the defendants or the defendants’ insurers in respect of a payment assigned.

iii. An order that the plaintiff is entitled to her costs of this motion which costs shall be included as part of the overall cost award following trial.

Justice S. J. Woodley

November 2, 2023