In the 2018 decisions of Cadieux v. Clouthier and Carroll v. McEwen, the Ontario Court of Appeal clarified the manner in which accident benefits are to be deducted from awards of tort damages.
In the past, there were two approaches. The 2015 case of Gilbert v. South was an example of the strict matching or apples-to-apples approach. In contrast, the 2016 case of Bassandra v. Sforza is an example of the silo approach, which requires the tort award only to match generally with the broad corresponding Statutory Accident Benefits Schedule (“SABS”) categories.
As a result of the competing decisions, the Court convened a five-judge panel in order to affirm the silo approach to the deduction of SABS.
The Insurance Act provides for three broad categories of SABS: weekly benefits (income replacement, non-earner benefits and caregiver benefits); health care benefits (medical, rehabilitation and attendant care); and, benefits for other pecuniary loss (lost educational benefits, expenses of visitors and housekeeping and home maintenance expenses).
Under the silo approach, benefits received by the plaintiff are to be deducted from a tort award for corresponding damages.
Income replacement benefits are to be deducted from damages for loss of income.
Health care benefits are to be deducted from damages for medical, rehabilitation and attendant care costs, even though the two may not match precisely. For example, if the plaintiff received $200,000 for medical and rehabilitation expenses but the jury awards $200,000 for medical expenses only, the full amount of the SABS in this silo is deducted.
In similar fashion, if the plaintiff received $100,000 for the expenses of visitors and housekeeping expenses but the jury awards $100,000 for housekeeping expenses only, the full amount of the SABS in this silo is deducted.
Damages received for past and future losses are to be aggregated in each silo before the applicable SABS deductions are made.
The Court also clarified that the tort defendant is only entitled to receive its proportionate share of the deduction. If two defendants split liability equally, each defendant only receives a 50% deduction of the SABS. This approach also applies in the case of partial settlement agreements, such as a Mary Carter or Pierringer Agreement where the liability of one of the defendants is capped. SABS received after trial, which are to be held in trust for the defendant, are to be paid in the same proportion.
The Court also clarified that SABS are to be deducted on a gross basis, without a reduction for the plaintiff’s legal costs, bearing in mind that the plaintiff may seek the recovery of those costs as part of the costs in the tort action.