Strict Matching the Deduction of SABs Awards from Tort Settlements Considered

October 10, 2017, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Two jury verdicts on damages from car accidents were heard before the Ontario Court of appeal. The decisions in El-Khodr v Lacke and Cobb v. Lond Estate both released on September 19, 2017.

The Court of Appeal was asked to consider when SABs benefits can be deducted from jury awards – specifically what are the circumstances under which the statutory accident benefits can be assigned or deducted from jury awards to the defendant after trial.

In El-Khodr the trial judge followed prior Court of Appeal jurisprudence in Bannon v. McNeely and Gilbert v. South finding section 267.8 of the Insurance Act required strict matching for a defendant to benefit from either an assignment or a deduction.

The Court of Appeal relaxed the strict matching test, finding that when sec 267.8 of the Insurance Act is interpreted by trial judges, they should take into consideration whether "the pre-trial benefit received generally fits within one of the broad statutory categories of damages". This can take the form of an income loss, or health care. This approach is broader than matching specific damages against specific benefits such as physiotherapy with physiotherapy.

The Court of Appeal went on to find that in respect of deductions, the Insurance Act does not distinguish between past and future losses determining that whether the loss was past or will occur in the future is irrelevant for deductibility. Finally, the Court of Appeal found that applying Bannon may no longer represent good law in Ontario. Gilbert was not found to apply to this case.

The following is a summary of the findings:

  1. The deduction from Jury Award for SABs payed (Cobb)

In Cobb, the issue before the Court of Appeal was the extent to which the statutory accident benefits that the plaintiff had received were deductible from the jury's award for damages.  The trial judge reduced the loss of income award to $0 as the $150,000 jury award was less than the $159,300 already paid in IRBs. In the matter of the housekeeping claim the trial judge reduced the past housekeeping award but did not deduct the remaining monies received from the jury's future housekeeping award.

In the application of section 267.8 of the Insurance Act the Court of Appeal considered what SABs benefits are permitted to be deducted from tort awards. It found the trial judge correct in the reduction of the past and future income loss award made by the jury to zero, but that he should have also deducted the remaining monies from the future housekeeping award as well.

  1. The assignment of Future Benefits

The case of El-Khodr considered Mr. El-Khodr who was catastrophically impaired, and the SABs that are available for the rest of his life. In this case the jury awarded the following damages for future care:

Attendant Care Costs/Assisted Living $1,450,000

Professional Services $424,550

Housekeeping and Home Maintenance $133,000

Medication and Assistive Devices $82,429


Upon the jury’s award, the trial judge found that Mr. El-Khodr was not entitled to future accident benefits for professional services, or for medication and assistive devices. Since the verdict sheet didn’t require the jury to specify awards under categories, the trial judge reasoned that the defendants could not meet their onus to show that they were deducting "apples from apples".

The Court of Appeal disagreed, finding the strict matching requirement applied by the trial judge was not required pursuant to s. 267.8 of the Insurance Act. This case considered a catastrophically impaired Mr. El-Khodr and the provisions permitting the assignment of future health care benefits should be given effect. The Court stated that there is little risk that the plaintiff should suffer loss as the plaintiff’s tort award will compensate him and he will not be worse off if he is denied coverage in the future by his insurer.

The Court of Appeal clearly has taken the path of encouraging trial judges to seek a broader approach in the determining of the deduction and assignment of SABs. The approach taken in earlier decisions such as Bannon which required strict matching is now being questioned as a matter of good law. This approach is applied to CAT impaired plaintiffs, non-CAT cases, and those not yet settled may be more complex. The Court of Appeal also cautioned counsel against the lumping of claims together with the goal of making it more difficult to match SABs awards against tort awards. The court explicitly stated that future plaintiffs should structure their claims according to the broad categories of s. 267.8 of the Insurance Act:

  • a claim for past and future income losses
  • a claim for past and future health care expenses
  • a claim for other past and future pecuniary losses that have SABs coverage
  • a claim for any past and future pecuniary losses lacking SABs coverage
Posted under Accident Benefit News, Catastrophic Injury

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