General Accident Assurance Company of Canada v. Dugas-Mattatall

General Accident Assurance Company of Canada v. Dugas-Mattatall Court Court of Appeal Date 1994-06-03 Citation 1994 NSCA 135 Docket CA 102073 Judge/Registrar/Adjudicator Clarke, Lorne O. (Honourable Chief Justice); Freeman, Gerald B. (Honourable Justice) (CA); Jones, Malachi C. (Honourable Justice) (CA) Document Type Decision Decision Content C.A. No. 102073 NOVA SCOTIA COURT OF APPEAL Cite as: General Accident Assurance Company of Canada v. Dugas-Mattatall, 1994 NSCA 135 Clarke, C.J.N.S.; Jones and Freeman, JJ.A. BETWEEN: THE GENERAL ACCIDENT ASSURANCE ) COMPANY OF CANADA ) W. Dale Dunlop ) for the Appellant Appellant ) ) ) - and - ) ) ) Glenn Anderson ) for the Respondent ) CARMEN DUGAS-MATTATALL ) ) Respondent ) ) ) Appeal Heard: ) June 3, 1994 ) ) Judgment Delivered: ) June 15, 1994 ) ) ) THE COURT: Appeal dismissed with costs per reasons for judgment of Freeman, J.A.; Clarke, C.J.N.S., and Jones, J.A. concurring. FREEMAN, J.A.: Following a motor vehicle accident which left her permanently disabled from employment within the meaning of ss.140-146 of the Insurance Act, R.S.N.S. 1989 c. 231, the respondent entered into a settlement with the insurer of the tortfeasor's vehicle. The appellant seeks relief from its duty as her insurer to continue paying her $140.00 a week loss of income accident benefits under the "Schedule B" coverage provided by her own insurance policy with the appellant. It argues that the respondent's entitlement to Schedule B benefits terminated with the settlement and that, if it did not, it should be reduced by $112.80 per week, the amount the respondent receives from Canada Pension Plan Disability benefits. After paying the $140.00 weekly Section B loss of income benefit from the date of the accident, January 3, 1988, the appellant unilaterally discontinued payments on April 13, 1992. The matter was heard in chambers on an agreed statement of facts by Justice Richard of the Supreme Court of Nova Scotia as a special case for adjudication pursuant to Civil Procedure Rule 27.01. This appeal is from his judgment that the appellant continue to pay the $140.00 weekly benefit from the date of the accident "for the duration of her inability to perform the essential duties of any occupation or employment for which she is reasonably suited. . . ." The appellant raises this basic issue: Is an insurer obligated to pay Section B benefits to an insured after that insured has settled the claim with the third party tortfeasor? The appellant states in its factum: This case involves an interpretation of the legislation that created a partial no--fault system of benefits in this province in 1982 and 1983. Section 140(1) of the Insurance Act establishes a mandatory scheme of benefits to be contained in every policy of automobile insurance issued in the Province. The benefits are set out in Schedule B to Part IV of the Insurance Act. Since their inception these benefits have been commonly referred to as Schedule B or Section B benefits. Schedule B is reproduced in its entirety as Tab 8 of the Book of Authorities. Schedule B begins: The Insurer agrees to pay to or with respect to each injured person as defined in this section who sustains bodily injury or death by an accident arising out of the use or operation of an automobile: . . . Justice Richard cited this excerpt from Schedule B: Part II--Loss of Income Subject to the provisions of this Part, a weekly payment for the loss of income from employment for the period during which the insured person suffers substantial inability to perform the essential duties of his occupation or employment, provided, (a) such person was employed at the date of the accident; (b) within 30 days from the date of the accident and as a result of the accident the insured person suffers substantial inability to perform the essential duties of his occupation or employment for a period of not less than seven days; (c) no payments shall be made for any period in excess of 104 weeks except that if, at the end of the 104 week period, it has been established that such injury continuously prevents such person from engaging in any occupation or employment for which he is reasonably suited by education, training or experience, the insurer agrees to make such weekly payments for the duration of such inability to perform the essential duties. Amount of Weekly Payment--The amount of a weekly payment shall be the lesser of, (a) $140 per week; or (b) 80 per cent of the insured person's gross weekly income from employment, less any payments for loss of income from employment received by or available to such person under, (i) the laws of any jurisdiction, (ii) wage or salary continuation plans available to the person by reason of his employment, and (iii) subsection 2A (relating only to accidents occurring in Quebec), but no deduction shall be made for any increase in such payment due to a cost of living adjustment subsequent to the insured person's substantial inability to perform the essential duties of his occupation or employment. The Act requires that Schedule B be included in every automobile insurance policy. The Schedule B duty of an insurer such as the appellant is therefore both statutory and contractual. The cost of the Schedule B risk to the insurer is presumably included in the premium charged insured persons. The agreed statement of facts established that the respondent was an insured under the policy and met the qualifying provisions of Schedule B Part II--Loss of Income. Her disability from engaging in any work for which she was reasonably suited exceeded 104 weeks and was expected to be permanent. She had been employed at the time of the accident, January 3, 1988, earning a salary of $20,750.00 per year or $399.03 per week. Effective May, 1988, she began receiving Canada Pension Plan Disability Benefits of $488.83 per month or $112.80 per week. The appellant's position that a settlement brings its Schedule B obligations to an end is not supported by the statute nor any of the cases cited by the appellant. The appellant does however cite a further section of the Insurance Act, s. 146 (2), which is a key to understanding the legislative intent: Entitlement Constitutes Release of Claim 146(2) Where a claimant is entitled to the benefit of insurance within the scope of Section 140, this, to the extent of payments made or available to the claimant thereunder, constitutes a release by the claimant of any claim against the person liable to the claimant or the insurer of the person liable to the claimant. The cases cited by the appellant are intended to suggest the existence of administrative difficulties arising from this section by illustrating a lack of uniformity in the approach taken by trial courts in giving effect to the releases to which third parties or their insurers are entitled with respect to future Schedule B benefits. Those cases, which were not appealed, were predicated upon the continuing availability of future Schedule B loss of income benefits. These issues do not arise in the present case because the s. 146 release with respect to future Schedule B benefits was presumably dealt with between the third party insurer and the respondent at the time of the settlement. Administrative problems do not exist for the Section B insurer, whose duty is merely to continue discharging an obligation imposed by statute and confirmed by contract: it must continue to pay the benefits to which the respondent is entitled for the duration of her period of eligibility. Section 146 does not relieve Schedule B insurers of their statutory duty to pay the benefit to their insured on a no fault basis and none of the cases cited by the appellant suggest that it does. If Schedule B benefits are not factored into a settlement made by the third party or his insurer with the disabled victim, it is to the disadvantage of the third party insurer and to the advantage of the disabled victim It is of no concern to the Schedule B insurer. In MacKay v. Rovers (1987), 79 N.S.R. (2d) 237 it was held that a third party insurer was entitled to a release with respect to Schedule B medical benefits which were shown to be available to a plaintiff who had not applied for them and never received them. Neither that case nor the legislation authorize a Schedule B insurer to refuse or terminate benefits for an insured person entitled to receive them. In the present case the fact situation differs from Rovers in that the Schedule B insured was not only receiving Schedule B benefits at the time of settling with the third party, but she was entitled to receive them, they were available to her, for the duration of her disability which was expected to be permanent. In whatever way the s. 146 release was factored into the settlement between the third party insurer and the respondent, or even if the third party insurer did not take advantage of it, the appellant was not justified in terminating Schedule B benefits because of the settlement. I cannot agree with the appellant that "there are virtually insurmountable problems associated with trying to deal with the question of the prospectivity of future Section B benefits." Nor can I accept its solution, for which it has cited no authority: The much more logical and practical result is to hold that Section B benefits end at the date of trial or settlement and to calculate damages against the tortfeasor as has always been done, saving and excepting the deduction of Section B benefits paid to the date of the trial or settlement. The appellant argues further that "policy considerations" militate against continuing the liability of Section B insurers beyond the settlement or trial award. Policy considerations were no doubt debated by the legislature when the limited no fault scheme represented by Schedule B was introduced. They do not arise in the present case. The resulting legislation is clear, the obligation of the Schedule B insurer is clear, and the duty of the courts is to enforce it is equally clear, regardless of considerations of policy. The first question posed to Justice Richard was the following: Was the obligation of the defendant General Accident (Section B insurer) to pay loss of income accident benefits to the Plaintiff terminated by the settlement between the Plaintiff and the Carter [third person] insurer? Justice Richard responded: It is clear to me that this question must be answered in the negative. There is no question that the plaintiff fits within the parameters set out in Part II (c) and, barring some dramatic medical breakthrough, will continue to so qualify. This conclusion is supported, either directly or implicitly by this court on other occasions--see Brown v. Matheson (1990) 97 N.S.R. (2d) 428, Fulton v. East Coast Oilfield et al. (1991), 108 N.,S.R. (2d) 18, Morrow v. Barnhill (Ritchie) Contracting Limited et al. (19787), 82 N.S.R. (2d) 141 and Armstrong v. Baker and McCrindle (1992), 111 N.S.R. (2d) 239. I am satisfied the chambers judge committed no reversible error in so holding. The second ground of appeal was framed by the following question: In the event that the Chambers Judge determines that the defendant General Accident shall pay to the plaintiff loss of income accident benefits, are there any appropriate deductions authorized by statute? Specifically, the appellant says the respondent's Canada Pension benefits of $112.80 per week should be deducted from the $140.00 per week Schedule B benefits. The respondent states in her factum: Part II--Loss of Income provisions provide: Amount of Weekly Payment--The amount of a weekly payment shall be the lesser of, (a) 140 per week; or (b) 80 per cent of the insured person's gross weekly income from employment, less any payments for loss of income from employment received by or available to such person under, (i) The laws of any jurisdiction, (ii) wage or salary continuation plans available to the person by reason of his employment , and (iii) subsection 2A, (not relevant, regarding accidents occurring in Quebec) . . . Following the above formula, the respondent is entitled to loss of income accident benefits in the amount of the lesser of: (a) $140.00 per week, or (b) Salary $399.03 X 80% = $319.22 less deduction of $112.80, balance $206.42. The lesser of the above is $140.00 per week. The appellant suggests that the Canada Pension Plan Disability Benefits are to be deducted from $140.00 per week. This is inconsistent with the formula contained in the Section B provisions and is not supported by any authority. I agree. The appellant suggested in argument that under paragraph (b)(i) above the third party settlement should be considered "payments for loss of income from employment received by or available to such person under (i) The laws of any jurisdiction." The effect of the s. 146 release is to make that a theoretical impossibility. The third party was responsible for indemnifying the respondent for the entire amount of her lost future income, less an allowance for no fault benefits. Therefore the portion of the loss covered by Schedule B benefits is not included in the compensation paid by the third party insurer. Schedule B benefits are deductible from third party compensation, not the other way around. The appellant cites s. 5 of the Part II--Loss of Income provision of Schedule B relating to allowances for insurance other than Schedule B or third party insurance, but the agreed statement of facts does not suggest the existence of any such insurance in the present case. Justice Richard dealt with the second question under appeal as follows: The only "appropriate deductions authorized by statute" in this case is the Canada Pension Plan Disability Benefits of $112.80 per week as set out in paragraph 9 of the Agreed Satement of Facts. I find that this deduction was properly accounted for when the parties agreed to payments of $140 per week (Amount of Weekly Payment (a)) rather than under the formula set out in b(i)(ii) and (iii) of Part II. The calculation was made on the basis of the plaintiff's weekly salary of $399.03 as set out in paragraph 8 of the Statement of Agreed Facts. It was stated in paragraph 6 that the "settlement sum was not actually or notionally attributed to the claim for loss of income." Any income arising from that settlement sum cannot be said to be in the nature of income replacement. Therefore, the answer to this question in the context of the above comments must be no. I have not been satisfied that the chambers judge was wrong in law or in fact in so holding. I would dismiss the appeal with costs which I would fix at $2,500 plus disbursements. J.A. Concurred in: Clarke, C.J.N.S. Jones, J.A.