Statutory Accident Benefits – Access to Justice Issues
Ontario’s auto insurance reforms are causing a lot of discussion – from both a positive and a negative viewpoint. For the most part, the public does not understand what it means to have benefits reduced until such time as they are faced with paying out of their own pocket for medical treatment once the Statutory Accident Benefits are exhausted and treatment is not covered by OHIP.
Those who are injured in a motor vehicle accident through no fault of their own may be able to fund the treatment through private lenders and claim not only the cost of the treatment, but also the interest paid on borrowing the money.
The case of Bourgoin v. Ouellette et al. – New Brunswick Court of Queen’s Bench dealt with this issue. In this case a number of disbursements were being assessed. One in particular was the interest owed on a loan taken out by the Plaintiff from a company called Seahold Investments Inc.
To quote the case: “It remains to determine whether the interest charged by Seahold Investments Inc. constitutes a disbursement which is refundable to the plaintiff by the defendants, and if so, is a monthly compound interest of 2.4 % reasonable.”
Seahold Investments Inc. is a private corporation which provides temporary financing to victims of personal injury who are awaiting insurance claim settlements allowing them, for example, to keep their house, vehicle, and to care for their family.
This type of financing would also apply to legal costs and disbursements in lawsuits pending a settlement. This was the case in this matter. The interest rate charged is 2.4% compounded monthly. This is a very high interest rate compared to regular market rates however it is unlikely that regular financial markets would lend money under these circumstances.
Numerous cases were reviewed in this decision. The Plaintiff’s counsel argued that without the assistance of Seahold Investments Inc., his client would not have had the access to justice to which he was entitled.
Although various arguments were put forward by defense counsel, including that interest charges are not part of the refundable expenses since they come under the costs of a contingent fee agreement between a lawyer and a client, the judge ruled that this interest was not interest charged by the lawyer to his client, but was in fact interest charged by Seahold.
The final decision was that the interest is claimable. To quote the judge “The only option which seemed to be open to him in order to have access to justice, claim his rights and obtain such a considerable settlement, was to get a loan from a financial institution able to support his allowable disbursements for the duration of the action. Seahold Investments Inc. was the institution that agreed to do it, at a very high interest rate, but also at an elevated risk to itself.
It must be noted that the Bank of Nova Scotia did not want to take on the risk for a lesser amount.”
With the recent changes to the Statutory Accident Benefits in Ontario, many plaintiffs will be faced with having to borrow money for treatment once the $50,000 cap is exhausted. The new legislation reduces the medical and rehabilitation expense from the present $100,000 for noncatastrophic injuries to $50,000; however, the $50,000 now includes the cost of assessments.
Today many serious injury cases exceed the $100,000 cap without including the cost of assessments. In the case of serious injuries, which do not meet the catastrophic designation, the $50,000 will be exhausted long before settlement is achieved.
The plaintiffs will have to pay for treatment out of their own pockets, which in most cases is not possible. They will therefore have to access private lending institutions in Ontario such as BridgePoint Financial Services and Lexfund who will fund this treatment. In addition, when obtaining treatment outside the Statutory Accident Benefits legislation the health care providers will not be restricted by the hourly rates of the SABs and can charge full market rate.
So, in applying the Access to Justice reasoning in the Bourgoin case, the cost of the treatment and the interest charged should be claimable from the defendant. This will undoubtedly increase the settlements in tort actions. It remains to be seen if Ontario will follow this decision.
Access to Justice Issues
If you have questions about personal injury or Access to Justice,
please contact one of our personal injury lawyers at (613) 728-8057.
You can also contact Donna Robinson directly at (613) 288-3215 or by email at drobinson@tslawyers.ca.
This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions.
Significant Decision on Definition of Catastrophic Impairment
Today, the Court of Appeal released its decision in the Kusnierz v Economical case.
http://www.ontariocourts.on.ca/decisions/2011/2011ONCA0823.htm
The Court allowed the appeal, declaring that Mr. Kusnierz met the definition of catastrophic impairment under the SABS and is entitled to enhanced medical and rehabilitation benefits.
OTLA intervened in this case and was represented by Jim Vigmond, Brian Cameron, Adam Little and Troy Lehman.
This is a significant victory for the plaintiff bar and OTLA’s ongoing efforts to lobby the government to resist restrictions to the definition of catastrophic impairment.
Cale Harrison, Personal Injury Lawyer
In his decision, MacPherson J.A. did “not agree with the trial judge’s conclusion and his reasons in support of it. I prefer the opposite conclusion and the reasons of Spiegel J. in Desbiens v. Mordini….The language of the SABS, the purpose of the Guides, the Guides’ references to combining physical and psychological impairments, and the goals of the SABS lead me to conclude that the combination of physical and psychological impairments is appropriate under cl. 2(1.1)(f).”
OTLA continues to fight for the rights of injured victims in Ontario. As a leading legal authority on auto insurance, our voice is being heard.
Cale Harrison
Personal Injury Lawyer
charrison@tslaawyers.ca
Brokers Errors and Omissions – Brokers & Agents Need to go Beyond Explaining Coverage
Insurance brokers in Ontario need to be concerned about potential claims from clients if they fail to properly notify insureds’ explaining the new optional benefits scheme in Ontario’s auto insurance regime.
Brokers would be wise to review the case of Fletcher v. Manitoba Public Insurance Co.
In this case the Fletchers suffered severe injuries as a result of an automobile accident caused by the driver of the other vehicle. The driver of the other vehicle did not carry sufficient insurance to cover the losses.
The Fletchers were residents of Manitoba and were therefore insured under the mandatory public insurance scheme “Autopac.” Under this scheme the owner of a motor vehicle must purchase insurance which provides minimum collision and public liability coverage. In addition, “underinsured motorist coverage” (UMC) is available upon the payment of a slightly higher premium. At the time of the accident the Fletchers were insured through Autopac. He had asked for the maximum coverage available; however, it was determined after the accident that they did not carry UMC.
It was ruled that the Manitoba Public Insurance failed in its duty to properly inform the Fletchers of the full range of coverage available to them and in particular UMC and awarded damages to the Fletchers to the extent of the shortfall.
Although the initial decision was appealed the final outcome was that the decision was upheld. To quote the decision “The sale of automobile insurance is a business in the course of which information is routinely provided to prospective customers with the expectation that they rely on it.”
It was determined that a duty was owed to its customers to inform them of all available coverage, its purpose and its cost. In this case we are dealing with Government insurance; however, it was noted that the onus on the Government is not as onerous as that imposed on private agents and brokers.
The panel of judges in the Supreme Court of Canada wrote “…private insurance agents owe a duty to their customers to provide not only the information about available coverage, but also advice about which forms of coverage they require in order to meet their needs.”
This case illustrates that Brokers and Agents need to go beyond informing their clients of the available coverages. They also need to determine what kind of coverage each client needs. Simply mailing out or handing out information is not sufficient. With the new optional benefits under the SABs, the Brokers and Agents need to go further.
There are all sorts of mailings that have gone out to consumers explaining the benefits and the optional benefits but this does not go far enough. The Broker needs to determine what the needs of the client actually are. A close look at the mailings shows that they have almost too much information and are too detailed for the average consumer to understand.
The mailings don’t describe what can happen if the insured’s do not buy the optional coverage so they have no real meaning to the individual. It would be wise to provide examples of how the optional coverage can work and why it should be considered by the client.
Donna Robinson
If you have questions about your insurance or Access to Benefits law, please contact one of our personal injury lawyers at (613) 728-8057. You can also contact Donna Robinson directly at (613) 288-3215 or by email at drobinson@tslawyers.ca.
Accident Benefits – Housekeeping Case Review
This recent case from the Ontario Court of Appeal will no doubt impact greatly on claims for housekeeping expenses. No longer will it be a simple case of determining the actual cost of replacing the services previously done by an injured party but will entail determining if a non-pecuniary award is in order.
The Ontario Court of appeal observed that in evaluating housekeeping losses in a personal injury claim Canadian courts “have developed an unnecessarily complex approach” since Fobel v. Dean in 1991.
Background Information:
As a result of a motor vehicle accident Mrs. McIntyre suffers from chronic pain, fibromyalgia, depression and anxiety. In addition to her work outside the home, she did the bulk of the housework at home and was described by family members as a “clean freak” or a “neat freak.” Her housekeeping duties included all the cooking, vacuuming, dishwashing, cleaning, laundry, bed-making and gardening. Her husband assisted with other tasks, such as taking out the garbage, cleaning windows and heavier chores.
After the accident, Mrs. McIntyre experienced pain daily. She had to pace herself carefully and with pain she could undertake most of her housekeeping responsibilities. For the balance of those responsibilities, she relied on assistance provided by her family.
This case was released May 29, 2009. The Ontario Court of Appeal sought to avoid confusion in future cases where different scenarios of housekeeping losses arise and felt that it would be helpful if the jury can be specifically instructed regarding the type of loss at issue and the evidence in support of that loss. To this end the court classified three different types of housekeeping losses and the types of damages that they would attract.
Work left undone:
Where the plaintiff is unable to perform some or all housekeeping tasks, and where a third party [i.e. housekeeper] does not do the work in the injured person’s stead, work will be left undone. In that situation, the injured plaintiff will experience two sorts of intangible losses compensable in an award of non-pecuniary damages.
First there is the personal loss to the plaintiff because the pre-accident housekeeping would have contributed to his or her sense of identity in the same way an income-earning plaintiff would have perceive her or his earning to be a valuable contribution to the family’s financial health.
Second, where work is left undone, the plaintiff will be forced to live with the loss of the amenity of an orderly and functioning home.
Work done by the Plaintiff with Difficulty
A plaintiff may continue to undertake housekeeping but may experience pain or difficulty in doing so. Justice Lang wrote “He or she may be required to work more hours post accident to accomplish the same amount of pre-accident housekeeping.” If a plaintiff thus works “inefficiently” her or his non-pecuniary award would be increased to reflect any increased pain and suffering. To the extent the plaintiff ’s inefficiency also results in a less clean and organized household, this is the loss of an amenity that the award for non-pecuniary damages would also take into account.
Work done by Third Parties
The law is well-established that where a plaintiff incurs a pre-trial, out- of- pocket loss by hiring a replacement homemaker, the plaintiff may claim the reasonable replacement costs of the homemaker as special damages.
In this case Mrs. McIntyre was awarded $60, 000 for damages for “past housekeeping inefficiency” and for past and future “lost housekeeping capacity.”
Donna Robinson
If you have questions about personal injury or accessing acceident benefits, please contact one of our personal injury lawyers at (613) 728-8057. You can also contact Donna Robinson directly at (613) 288-3215 or by email at drobinson@ tslawyers.ca.
Citation: McIntyre v. Docherty, 2009 ONCA 448
This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions.
Taxation of Damages – What a Difference It Can Make
At the conclusion of a long litigation matter, two questions sure to arise – how much was awarded and whether or not that award is taxable. Everyone agrees that a tax-free award is most desirable to the plaintiff . Whether or not a particular award
of damages is to be received on a tax-free basis depends upon the characteristics of the action, the pleadings, the methodology used by the trial judge and the actual calculation of the damages.
Lawyers and their clients would be well advised to consider the tax implications of the damages sought from the outset. In some instances, the nature of the action clearly determines whether the damages will be taxable by rule of law.
In other cases, there may be the possibility of framing the cause of action for tax purposes; whether the damages are deemed income and, if so, are they capital gains or income.
Damages Related to Personal Injury or Death
Th e characterization of damages awarded in the context of an injured individual is key to determining whether the award may be received on a tax-free basis. Damages awarded in respect to a personal injury or death are to be
received by the injured party, or by the dependant of a deceased party, on a tax-free basis as long as the damages are special damages, general damages or pre-judgment damages.
Special damages in the context of personal injury relate to compensation such as out-of-pocket expenses (for medical and/or hospital expenses) and accrued or future loss of earning. However, an amount which can reasonably be considered to be income from employment rather than an award of damages will not be excluded from income.
General damages in the context of personal injury relate to compensation for pain and suff ering, loss of amenities of life, loss of earning capacity, the shortened expectation of life and the loss of financial support caused by the death of the
supporting individual (a parent for example).
Furthermore, damages that are awarded to be paid over a period of time by periodic installments are also to be received on a taxfree basis by the injured party; notwithstanding that it appears to be an annuity. The CRA confi rmed in its IT Bulletin 365 that damages for personal injury or death that are ordered to be paid in periodic payments are not, despite such periodic payments, considered to be an annuity contract and the periodic payments themselves are not considered to be annuity payments.
An annuity contract purchased by a taxpayer or a taxpayer’s representative with proceeds of a lump sum award received for damages for personal injury or death will be considered an annuity contract and will likely be taxable, with
some limited exceptions.
Business Related Damages
Determining the characterization of damages awarded on business matters and the resulting tax treatment can be difficult. The general principle is that damages in lieu of receipts that would have been taxable as income remain taxable.
Determining whether those damages are deemed income or nontaxable receipts depends on the nature of the legal right at issue.
One must carefully review the facts and determine the purpose of the remedy; i.e., for what do the damages compensate?
If the damages awarded are for loss of income, then the general principle is that they will be considered business income and therefore taxable.
If the damages awarded relate to the loss of an income-producing asset, it will be considered to be a capital receipt and non-taxable. As one can imagine, the difference between loss of income and the loss of an income producing asset can be nuanced and there exists no bright-line test to diff erentiate the two; it is always a question of fact. Essentially, if the damages received are for the failure to receive a sum of money that would have been income had it been received, the
damages are likely deemed income receipt and taxable. Also, if the damages awarded are essentially a surrogatum for future profits surrendered, the damages will likely be treated as revenue receipts, not a capital receipt, and be taxable.
Employment Related Damages
In most instances, employment related damages are awarded as compensation for a loss of employment and are specifically dealt within the Income Tax Act as “retiring allowances.” Under the Income Tax Act, retiring allowances
are fully taxable as income.
As a result, damages for wrongful dismissal, damages for compensation for lost earnings or damages on account of a contractually agreed settlement (such as a signing bonus) will all be taxable in the hand of the recipient. Damages awarded by the Workers’ Compensation Board for illness, injury or death ought to be included as income but the recipient is entitled to a deduction which essentially off sets the inclusion by excluding the damages award.
Also, damages awarded in context of a human rights violation, personal injuries (e.g. defamation or harassment) or tortuous conduct by an employer are usually viewed as general damages unrelated to the loss of employment and are therefore non-taxable. Once again, the determination is a factual one.
Conclusion
Th e taxation of damages awarded will inevitably aff ect the ultimate cost of recovery or indemnity. In some instances, the Income Tax Act will clearly dictate whether the damages are taxable. In other cases, a proper determination can only be made sometime aft er the commencement of the litigation process.
Ultimately, the only certainty is that some damages are taxable while others are not, that the analysis is a factual one and that the framing of the cause of action and the pleadings may formulate the determination.
Tierney Stauff er LLP, you can be sure that lawyers litigate with their clients’ best interest in mind and that always includes making informed decisions with respect to taxation.
Sébastien Desmarais
If you have any questions concerning the taxation of damages, please do not hesitate to contact me directly at 613.288.3220
Sébastien Desmarais
Associate
sdesmarais@tslawyers.ca
This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship.
Deadline and Limitation Periods
A limitation period is the period of time between the accident and when an action must be started or a notice given. These limitation periods are extremely important since, if you do not meet the timelines, then your right to recover damages might be lost.
After a car accident there are a few limitation periods to keep in mind. For instance, with respect to making a claim against your own accident benefits insurer, you should put them on notice within seven days. With respect to completing the accident benefits application, this must be done within 30 days. In order for you to sue your own insurance company for accident benefits, this must be done within two years of the denial of benefits.
The ultimate limitation period for suing the at-fault driver is two years from the date of the accident.
With respect to Municipalities, there are some very short limitation periods which apply. Specifically, a slip and fall on a sidewalk owned by a Municipality obligates one to put the Municipality on notice of the accident within 10 days.
The important thing to note, given the many different deadlines is that you should contact a lawyer immediately upon being involved in an accident to determine which limitation period applies.
If you have any questions concerning personal injury, or for your free initial consultation, please contact our Personal Injury Team at 613.728.8057 or by email at info@tslawyers.ca.
How to Handle a Fall on a Municipal Sidewalk
Slipping and falling on a municipal sidewalk can cause serious injuries, but it is often hard to know what options you have available after such an experience.
If you have been injured in a slip and fall on a municipal sidewalk, the Municipal Act requires you to provide the clerk of the municipality with written notice of your claim and the injuries that you have sustained. The written notice must be served on the clerk, or sent to the clerk by registered mail, within 10 days after the occurrence of the injury.
If a sidewalk is maintained by more than one municipality, the clerks of each responsible municipality must be notified. If you fail to provide notice as required by the Act, you may be barred from bringing an action for compensation for your injuries, although there are certain exceptions to this rule.
The Municipal Act also states that a municipality is not liable for injuries caused by snow or ice on a sidewalk, except in cases of gross negligence. Whether or not a municipality has been grossly negligent will depend on the individual circumstances of each case, so you should consult a personal injury lawyer as soon as possible to obtain advice regarding your case.
Sabina Veltri
If you have any questions concerning personal injury law please do not hesitate to contact me directly 613.288.3203 or by email at sveltri@tslawyers.ca
Sabina Veltri
Associate
Tierney Stauffer LLP
This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship.
Common Questions & Answers: What to do if You Have Been Injured in an Accident
1. If you have been injured in an accident, when should you retain a lawyer?
Motor Vehicle Accidents:
If you have been injured in a motor vehicle accident and your injuries appear to be serious and permanent, you should contact a lawyer immediately.
Other Accidents:
If you have been injured in a fall or by some other means, you should contact a lawyer immediately as a short limitation period or deadline may be applicable to the case depending on how or where the injury occurred. If the law firm that you have contacted specializes in personal injury, there will be no charge for the initial interview. The Personal Injury Group at Tierney Stauffer LLP has over 25 years of experience and would be happy to provide you with an initial free consultation to discuss your case.
2. When should you contact your insurance company?
If you have been injured in a motor vehicle accident, it is very important that you contact your own insurance company as soon as you are able in order to apply for no-fault benefits. In order to contact your insurance company, you should telephone your insurance broker who will direct the claim to the appropriate person at the insurance company.
If it is a serious accident, the adjuster for the at-fault driver of the other vehicle will undoubtedly try to contact you. There is no legal obligation for you to speak with a representative from the at-fault driver’s insurance company.
3. Who can make a claim?
If you have been in a motor vehicle accident or have suffered an injury from any other accident, you can make a claim as can members of your family including spouses, children, grandchildren, parents, grandparents, brothers and sisters.
4. What is the legal process?
The legal process commences with an interview with a lawyer, after which the lawyer will attempt to settle your claim with an adjuster from the insurance company. If the lawyer is unable to settle the claim, he or she will then commence a lawsuit on your behalf. Ninety-nine percent of these claims will settle before trial. The legal stages that you will have to attend will be mediation, examinations for discovery, a judicial settlement conference and, if the matter does not settle, a trial.
5. How long does the process take?
Typically, an experienced personal injury lawyer will not attempt to settle the case until he or she has a final medical report or until he or she is satisfied that the medical experts have ensured that the diagnosis and prognosis is correct and final. It is only at that time that the personal injury lawyer can assess a claim properly. Depending on the nature of the injuries, it may take up to two years before the claim can be asessed. Following that, most cases are settled out of court. However, if the matter has to go through the entire court process to trial it will, in all likelihood, take another two years depending on the backlog of cases in the judicial system and the jurisdiction in which the case is being pursued.
6. How much will you have to pay?
Our personal injury lawyers work on a contingency or percentage basis. In other words, if we don’t win or settle your case, we don’t get paid. In all cases the initial interview is free.
7. If you are in an accident, how does a judge determine how much money you receive?
Compensation for injuries or “damages” arise from many different losses. Some obvious examples are pain and suffering for both physical and psychological injury, loss of income, medical expenses, loss of ability to work in the future, and loss of ability to compete against an uninjured person.
Basically, the approach of the courts is to put the person into the same position they would have been had they not been injured.
8. Between the time of the accident and time you receive compensation, how can you make ends meet?
If you have been injured in a motor vehicle accident, you will, in all likelihood, have an income replacement benefit paid to you by your insurance company. You may also have long-term disability benefits available to you through your employment or you may be able to apply for Workers Compensation benefits if the accident happened while you were working. There are other sources of financial assistance available. This is an area you will discuss with your personal injury lawyer at your initial interview.
9. Should you contact the police?
If you have been involved in an accident and have not contacted the police, it is imperative that you do so immediately.
If you have any questions concerning personal injury, or for your free initial consultation, please contact our Personal Injury Team at 613.728.8057 or by email at info@tslawyers.ca.
Damages for Psychiatric Damage
We have recently witnessed a change in attitude in our courts whereby they are more willing to acknowledge the impact of psychological injuries on victims of negligent behaviour. As part of this transition, the previously-dominant descriptor for psychological injury – “nervous shock” – has been replaced by the term “psychiatric damage”.
There currently exists a two-part test in Canada which must be satisfied in order to find liability for the negligent infliction of psychiatric damage: (1) the plaintiff must have suffered a “recognizable psychiatric illness”, and (2) it must be reasonably foreseeable that the plaintiff would suffer such damage.
A “recognizable psychiatric illness” may take one of several forms, and includes conditions such as schizophrenia, severe and chronic depression, and post-traumatic stress disorder. Conditions which are described in the Diagnostic and Statistical Manual of Mental Disorders IV-TR will typically be found to meet this criteria.
The courts have reviewed a number of situations in which psychological harm to certain people has been found to be reasonably foreseeable as a consequence of another’s negligence. Such people include those who witness an accident; those who arrive upon the scene of an accident soon afterward and witness its aftermath with their own senses; and those who have a certain relationship with someone injured in an accident, such as a family member or rescue worker. Ultimately, the “reasonable foreseeable” criteria will be determined on a case-by-case basis.
Recently, our courts appear to be more willing to acknowledge the serious effects of psychiatric damage, and there has been a corresponding trend of awarding higher damages for these types of injuries. Many recent cases from British Columbia have resulted in higher damage awards; the hope for Plaintiffs in Ontario is that our local courts will shortly follow suit.
**A more comprehensive analysis of this topic is available. Please contact Cale directly. Coordinates are below.**
Cale Harrison
Cale Harrison, Lawyer
Tierney Stauffer LLP
charrison@tslawyers.ca
If I’m injured in an accident and unable to work what income replacement benefits are available to me?
If you are employed you may have access to short-term and/or long term disability benefits through your employer. There are also a number of government benefits available. Employment Insurance offers 15 weeks of disability benefits if you were employed at the time of your injury.
The Canada Pension Plan also offers a disability pension to anyone who has a severe and prolonged injury or illness, that prevents them from regularly pursuing any substantially gainful employment. In order to qualify for a CPP Disability Pension the injured person must have made contributions to CPP in 4 of the 6 years before they became disabled and have enough medical evidence to prove they have a severe and prolonged injury or illness.
If you qualify for a CPP Disability Pension the amount received will roll over into a retirement pension when you reach the age of 65, so there will be no gap in your contribution history.
The Ontario government also offers benefits through the Ontario Disability Support Program. ODSP benefits also include coverage for some medical expenses such as prescriptions and special foods.
Teena Belland
Please contact my office for further information on how to apply for any of the benefits discussed above.
Teena Belland, Associate
This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions.
