In the province of Ontario, anyone injured in an automobile accident has two avenues for compensation: they can sue the “at-fault” driver in a civil tort action, or they can apply for Statutory Accident Benefits (“SABs”), which are the mandatory automobile insurance “no fault” benefits. While these two forms of compensation are independent of one another, the Insurance Act contains provisions designed to address overlap and prevent double recovery. Where an injured party has already received compensation from the “at fault” party, it cannot claim SABs for the same amount. In releasing decisions for the companion cases of Cadieux v Clouthier and Carroll v McEwen the Court cleared up much of the uncertainty surrounding the deduction of SABs from the cost award in tort actions.

Historical treatment of SABs

Before the Court of Appeal for Ontario released the Cadieux/Carrol decisions, the state of the law was unsatisfactory. In Bannon v. McNeely the Court of Appeal for Ontario held that courts should only deduct SABs from damages where the specific benefit could be connected to a head of damages for identical loss.  This “strict matching approach” was followed for many years, up to an including the Gilbert v. South decision in 2015. 

The problem with the strict matching approach was that the statutory framework the Bannon decision was based on evolved significantly, and the matching approach was no longer suitable. When Bannon was decided, the statutory regime directed the court to deduct the present value of the future “no fault” benefits the plaintiff was entitled to from the damages award against the defendant. Absent the “strict matching approach” Plaintiffs who were ineligible to receive anticipated benefits would be under-compensated. Now, courts are not required to calculate the present value of the future “no fault” benefits and the risk for under-compensation does not exist. 

The decisions after Bannon exposed confusion about the treatment of SABs because even though the Supreme Court rejected the strict matching approach in Gurniak, lower courts continued to follow it. In the subsequent case of El-Khodr, the trial judge still followed the strict matching approach.  This decision was over-turned on appeal, but only because the Court was able to factually distinguish the case from Gilbert. The El-Kodhr decision did not adequately address the imprecision of the jurisprudence and confusion about the correct approach persisted. 

Implementing the silo approach

To end the uncertainty, and to ensure the common law evolved alongside the statutory framework, the Court of Appeal for Ontario held in the Cadieux/Carrol decisions that the following three silos for damages are sufficient: income loss, health care expenses and other pecuniary loss.  A plaintiff need only show what amounts they have expended in relation to their injuries and present them on a “gross” basis under each head of damages. There is no need to engage in a further matching of damages. The court denounced the strict matching approach stating, it “unnecessarily complicates tort actions by focusing on immaterial distinctions or labels for heads of damages”¹.  Indeed, in earlier cases, plaintiffs would have to fit their expenses under very specific damages categories in order to be compensated. 

The court also held that there was no longer any need to treat past and future income loss differently, as the silo approach applies to the deduction of SABs received before trial. Since the statutory framework has evolved to include assignment and trust provisions, there is no risk of under-compensation. 

 

Impact on proceedings 

The Ontario Trial Lawyers Association, intervening on the matter, opposed the adoption of the silo approach. It submitted that the silo approach “would complicate jury trials by forcing plaintiffs to advance claims for which they have already been fully compensated by SABs”².  The Court disagreed. Further, the OTLA submitted that requiring plaintiffs to prove all expenses would make trials longer and more expensive. The Court did not accept this submission, reminding lawyers that “plaintiffs should be required to claim at trial all damages arising from the accident.³”  The general view was that time spent proving expenses would be recovered ten-fold by a smoother process. 

In Summary

In rendering the Cadieux and Carrol decisions, the Ontario Court of Appeal made it clear that the strict matching approach is no longer the correct approach for deducting SABs from tort damage awards. The evolution of the statutory framework necessitated a change and the silo approach will result in more streamlined decisions. In rendering these decisions the court considered the silo approach consistent with the statutory language of s. 267.8, fair to plaintiffs, defendants and their insurers, and efficient in the resolution in motor vehicle accident litigation⁴. 

The case bears close reading on the mechanics of how the deductions are to be made and has left for a further decision the question of whether the plaintiff can claim the legal fees expended in obtaining the SABs benefits. 

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Shawn O’Connor

Chloe Waind, Articling Student

1] Cadieux at para 87

[2] Ibid at para 58

[3] Ibid at para 88

[4] Ibid at para 8.