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Monday Morning Case Bites for August 23, 2021

Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.

Edited by Steven Graham

Catala v Intact Insurance Company – 2021 ABQB 655
Advance Payment

The Plaintiff applied for an advance payment in a personal injury action, pursuant to s.5.6(3) of the Fair Practices Regulation under the Insurance Act.  

Section 5.6 provides: 

5.6(1) In this section, “claimant” means a plaintiff who is or alleges to be entitled to recover losses or damages from an insured who is covered by a motor vehicle liability policy. 

(2)  A claimant may apply to the Court for a payment from the insured’s insurer under section 581(1) of the Act. 

(3)  The Court may make an order under section 581 of the Act, on any conditions it considers appropriate, requiring the insurer to make a payment to a claimant who applies to the Court under subsection (2) of this section where the Court is satisfied that 

(a)   as a result of the injuries of the claimant, the claimant is unable to pay for the necessities of life, or 

(b)   the payment is otherwise appropriate. 

(4)  The Court may make the order in advance of giving judgment in an action involving the claimant and the insured. 

(5)  Section 581(3) and (4) of the Act apply in respect of any payment made pursuant to an order referred to in this section. 

The Court noted that Section 581 of the Insurance Act confirms that payments made are without prejudice to the rights of the insurer and payment operates as a release to the extent of the payment.  

The Court reiterated the binding law on advance payments: 

[4]                           The law is set out in Shannon v 1610635 Alberta Inc, 2014 ABCA 393. At paragraph 37, Côté, JA held: 

[37]           Without repeating explanations and qualifications found above, here is a brief recap of the tests. 

1.An order for an advance payment requires two things:

(a)        the defendant is probably liable to the plaintiff for the amount requested (or more); and 

(b)        without that payment, the plaintiff is likely to go without necessities (or things broadly analogous), or unlikely to be able to prosecute his or her claim for damages. 

2.If #1 is satisfied, the court should weigh approximately the plaintiff’s likely loss without an advance payment against the defendant’s likelihood of overpaying (looking at probabilities and money amounts in both cases).

3.The court should flexibly consider imposing terms and conditions on one of the parties, to mitigate the risk to one or both parties.

The Court further cited the recent decision of Patel v Certas Direct Insurance Company (2020 ABQB 426) for the following principles: 

[7]               In Patel v Certas Direct Insurance Company, 2020 ABQB 426, Lema, J. held at paragraph 9: 

[9]  In Sweetland v MacInnis, I summarized some of the interpretive principles developed and applied by the Alberta courts on such applications: 

  • [advance] payments are appropriate where the defendant is at least “probably liable” to the claimant and where, due to the his or her injuries, the claimant is unable to pay for the necessities or life or the payment is otherwise appropriate; 
  • necessities of life” and otherwise appropriate” should be given a liberal interpretation so that the intention of the mechanism (to ensure injured persons are able to support themselves and otherwise bridge the period between an accident and trial or other resolution) is not defeated;
  • the court may impose terms on the payment (e.g. obligation to repay if payment proves to be an overpayment, security to anchor that obligation, payment rhythm (lump-sum, periodic, some combination), and a time limit on periodic payments);
  • via such terms, the court can try to manage the risk that the defendant will ultimately be found not liable for the claimant’s injuries or, if liable, for an amount less than the advance payment;
  • nothing in s. 581 IA or s. 5.6 FPR limits the number of applications a claimant can make in a given case (where, for example, circumstances change) or imposes a cap on how much (collectively) an insurer can be directed to advance; and
  • while practicality may dictate otherwise, nothing obliges a claimant to first request advance payment from an insurer i.e. before applying under these provisions.

In this case, while liability had been denied by the insurer, the Court noted that liability did not appear to be in serious dispute, particularly as the Plaintiff’s supporting affidavit attested to a rear-end collision to which the Defendant did not provide alternate view of the facts. The Court considered the dispute to be more over causation than fault. 

The advance payment was sought to cover dental treatment which was not caused by the subject accident, but was a precursor to obtaining the treatment recommended for the 2018 accident. The Court noted that the cost of the treatment was less than $10,000 and would not be something easily accommodated by the everyday person. The Court determined there was a nexus between the dental work and the treatment required by the subject accident, and that the applicant had shown hardship that the treatment could not be reasonably afforded.  

Accordingly, the Court awarded a $10,000 advance be paid. The Court declined to impose conditions on the payment requested by the Respondent, noting that if the Plaintiff failed to use the advance to pay for treatment, it would be considered particularly in regard to mitigation at the trial of the action. The Court did impose that if the Plaintiff’s ultimate recovery was not at least $10,000, any surplus would have to be repaid to the Respondent.