The Court of Appeal clarified the evidentiary use of accident benefits settlements at trial in Girao v Cunningham, 2020 ONCA 260.
It is necessary to briefly explore the types of benefits available through an Accident Benefits Claim and how these overlap with damages available in a car accident lawsuit to fully understand the Girao decision.
Overlapping Compensation from Accident Benefits Claim and MVA Lawsuits
After a car accident, individuals may apply for accident benefits from their own auto insurance company as well as pursue a tort lawsuit against the at-fault driver who caused the accident.
An individual may receive the following types of accident benefits: medical rehabilitation, attendant care, housekeeping and home maintenance benefits (if catastrophically impaired), and income replacement benefits.
Likewise, an individual may commence a lawsuit against the at-fault driver for costs of future medical care, attendant care, housekeeping and home maintenance expenses, and a loss of income as a result of injuries sustained in the accident.
As such, individuals involved in a car accident caused by the fault of another driver will invariably commence two claims:
1. For Accident Benefits against their own auto insurer for benefits such as medical benefits, income replacement benefits, and housekeeping (if catastrophically impaired). This is not a lawsuit but is a claim made to one’s own auto-insurer. In the event that there is a dispute over the payment of a benefit, the claimant may apply to the Licence Appeal Tribunal to address the dispute. For a better understanding of the types of accident benefits available to a claimant, see Hillier & Hillier’s article: “A Guide to Your Accident Benefits Claim.”
2. A Tort Lawsuit against the at-fault driver. This is a lawsuit that is filed with the Ontario Superior Court in which the Plaintiff is advancing claims for general damages, a loss of income, and other pecuniary damages such as housekeeping expenses. For a better understanding of the types of damages available in a lawsuit, see Hillier & Hillier’s article: “what types of compensation can you receive from a motor vehicle accident lawsuit.”
In many cases, claimants will have already settled their accident benefits claims prior to the trial of the lawsuit and will have received a lump sum payment for certain benefits.
There is an overlap as to the benefits an individual may receive from their own insurer through accident benefits claim and the damages being claimed from a defendant. This overlap may result in “double-recovery” where a claimant receives benefits from their own accident benefits insurer, and then receives similar types of compensation from the at-fault driver.
Section 267.8 of the Insurance Act prevents this double recovery by allowing the at-fault driver (Tort Defendant) to deduct accident benefits received by the claimant from damage awards for similar types of compensation. For example, benefits received for income replacement assistance are to be deducted from damage awards for income loss. In jury trials, the deduction is made by a judge after a jury awards damages.
How Are Deductions for Accident Benefits Received Made in a Tort Lawsuit?
The Ontario Court of Appeal clarified the deduction process in Cadieux v. Cloutier, 2018 ONCA 903. The Court adopted a “silo approach” in which total accident benefits paid to a claim would be deducted from corresponding “silos” of damages awarded in the tort lawsuit. This previous approach was more favourable to plaintiffs as it required required strict temporal and qualitative matching before a deduction could be applied. This resulted in less frequent deductions and thus a larger tort award. The silos under the new approach are as follows:
Silo of Tort Award | Corresponding Silo of Accident Benefits to be Deducted from Tort Award |
Income Loss (past and future) | Income replacement benefits, non-earner benefits (confirmed in Kolapully v. Myles, 2024 ONCA 350), caregiver benefits |
Future medical care/health care | Medical rehab benefits, attendant care benefits, benefits for goods and services of a medical nature, rehabilitation expenses, services provided by an attendant or long-term facility or nursing home. |
Pecuniary losses | Lost educational expenses, home maintenance and housekeeping benefits |
The Court further confirmed that the total amount paid for each accident benefit, and not just future amounts, are to be deducted from the corresponding silo of damages awarded by the jury. As such, Plaintiff’s counsel should present “gross” claims for past and future benefits received.
The Cadieux decision also confirmed the following order in applying the deduction:
First, reduce the jury award for damages by the amount attributable to the plaintiff’s contributory negligence, if any.
Second, deduct the total amount of accident benefits paid and settlement amounts from the corresponding silo of damages awarded by the jury.
In cases with multiple defendants and where one defendant has settled out of the action before trial, the amount the non-settling defendant will be able to deduct will be proportionate to that defendant’s share of liability. For example, in Cadieux, the plaintiff, settling defendant, and non-settling defendant were each found to be equally at fault or contributory negligent. After deducting 1/3 from the jury award for the Plaintiff’s contributory negligence, the non-settling defendant argued that he should be entitled to deduct the full amount of the total accident benefits paid to the Plaintiff from the jury award for damages. The Court rejected this argument and permitted the non-settling Defendant to deduct only 50% of the total accident benefits paid, consistent with this Defendant’s portion of liability (each Defendant bearing equal shares of liability).
Since a judge, and not a jury, will deduct amounts received from an accident benefits settlement as a matter of law, the next question is whether a jury should even hear evidence about the settlement of an accident benefits (AB) claim and the amounts received.
The Concern of Presenting AB Settlements to a Jury
From the perspective of the plaintiff/claimant, there is a concern that a jury may make “informal” deductions from a damage award to account for the receipt of accident benefits, even though the judge will make all necessary deductions to account for an AB settlement. This will result in the plaintiff being undercompensated. There is also a concern that a jury will engage in other types of prejudicial and impermissible reasoning without the proper evidentiary foundation. They may think a Plaintiff is not motivated to return to work after receiving an AB settlement without a proper evidentiary foundation, which may distract from the real issue in the case: the Plaintiff’s disability and resulting inability to work.
However, in certain cases it will be proper to lead evidence about certain benefits being received by an accident benefits settlement.
Giaro v. Cunningham: The Court of Appeal Clarifies the Evidentiary Use of AB Settlements at Trial
The Court of Appeal, in Giaro v. Cunningham (2020 ONCA 260) has clarified when details of an accident benefits settlement may be admissible. The following are the main takeaways from that decision:
Details of the accident benefits settlement is evidence and must follow the usual test for admissibility of evidence. To be admissible, the details of the settlement must be relevant and the probative value must outweigh the prejudicial impact of admitting details of the settlement into evidence (para 132).
Details of the total amount of the accident benefits settlement will rarely be relevant and will usually be more prejudicial than probative, particularly in a jury trial, even when the defence alleges the plaintiff is malingering or lacks the motivation to work (para 135).
Evidence regarding some of the individual benefits received in a SABS settlement would be relevant if there is an allegation that the Plaintiff’s abuse or misuse of a benefit will have an impact on the calculation of damages. For example, if the defendant pleads that the plaintiff failed to use settlement proceeds to mitigate related future losses, then evidence about the settlement and specific benefit will be relevant to whether the defendant or plaintiff is liable for such future losses (para 133). This may occur where a plaintiff uses AB settlement monies to renovate a home rather than obtain treatment that may reduce the impact of his/her injuries and thus future damages. However, the pleadings must put such an issue in dispute with appropriate particulars and there must be an air of reality to the issue to be assessed on a voir dire (para 133). For example, expert evidence may be required to establish that had settlement funds been used to obtain certain treatments, then such treatments may have improved the plaintiff’s condition/injuries and thus reduced future losses. It is not enough to simply allege a “failure to mitigate” to make the use of certain accident benefits obtained in a settlement relevant in the tort action.
The trial judge should be cautious when the defence seeks to admit details of an accident benefits settlement to argue that the Plaintiff’s receipt of such benefits has caused a lack of motivation to work. Such an argument is generally too speculative to be relevant and is unfair to the Plaintiff, but may be admissible in certain circumstances where it is supported by sufficient evidence (again to be tested on a voir dire). However, routine admission of accident benefits settlements may result in Plaintiffs keeping their accident benefits claims open, rather than settling these, to prevent the defence from using the settlement as a weapon at trial. This runs contrary to the general principle of our law that settlements should be encouraged, not discouraged (para 136).
Where evidence of the SABS settlement is in evidence before the jury, the jury instructions should carefully explain how the motor vehicle accident compensation system in Ontario functions, and the role of the trial judge in deducting accident benefits settlements from any jury award. The jury should be instructed not to reduce the award of damages because it believes that the accident benefits settlement have compensated the plaintiff adequately for the accident.
There is a major concern in jury trials that the admission in to evidence of details of accident benefits settlements will result in the jury applying some informal discounting when awarding damages. A jury may discount aspects of the claim to account for the accident benefits settlement. This will result in undercompensating the Plaintiff. The trial judge will be responsible for reducing the jury award by the amount of accident benefits received to ensure there is no double recovery. As such, details of the accident benefits settlement should rarely be admitted, except in rare circumstances where the Plaintiff has misused a benefit and thereby failed to mitigate future losses and damages. Plaintiff's counsel must be cognizant of how the defence may attempt to introduce the details of an accident benefits settlement at trial and be ready to object to the introduction of such evidence where it lacks relevance or its prejudicial impact outweighs its probative value.
If you have been injured as a result of another's negligence, call Hillier & Hillier at 905 453 8636 for a free consultation.