The Court of Appeal for Ontario recently ruled in favour of Northbridge Insurance in an auto liability claim that featured a dispute over how much of the plaintiff’s accident benefits should go to the liability insurer.
Kossay El-Khodr was rear-ended while driving a tow truck. He sued and was awarded $2.85 million in 2015. At the same time, El-Khodr made an accident benefits claim with RSA, his accident benefits insurer.
In Ontario, an injured plaintiff is not supposed to get both first-party accident benefits from their own insurer and a damage award for the same loss by suing the at-fault motorist. This is considered “double recovery,” which the courts generally try to avoid. So when a plaintiff makes both an accident benefits and tort claim, accident benefits awarded are normally deducted from the tort award.
But there is a debate about whether to take an “apples” or “silo” approach to determining and calculating and deductions. This has resulted in several different disputes arising both from the accident that injured El-Khodr and from other motor vehicle personal injury lawsuits in Ontario.
Northbridge wrote liability insurance for the defendant who was sued by El-Khodr. To prevent double recovery, a court ordered some of the accident benefits from RSA to be assigned to Northbridge. Northbridge and El-Khodr disagreed on how much, exactly, El-Khodr must pay Northbridge from El-Khodr’s accident benefits in order to prevent double recovery.
In 2017, the Court of Appeal for Ontario ruled that a “silo” approach should be followed. In El-Khodr’s case, this means the jury awards for future medication and assistance devices – plus professional services – must be assigned to Northbridge as the tort insurer. Under a silo approach, which the appeal court has ruled is now law in Ontario, a court is not necessarily matching identical heads of damage when deducting accident benefits from tort awards.
Originally, in 2015, after El-Khodr was awarded $2.85 million, a judge ruled that any money El-Khodr got from RSA for housekeeping benefits be assigned to Northbridge until the amount received equaled the amount of the jury award. At the same time, the judge ruled that Northbridge could not be assigned accident benefits relating to future professional services and medications and assistive devices.
In the 2015 ruling, overturned in 2017, Justice Giovanna Toscano Roccamo used the “apples” approach, meaning that the tort insurer could only deduct future no-fault benefits if the jury’s award “mirrors” the no-fault benefit.
In 2017, the appeal court ruled that El-Khodr must instead assign benefits for medication and assistive devices (up to a total of $82,429) and certain professional services (up to a total of $424,550) to Northbridge. That uses the silo approach, where broad heads of damage are matched.
Meanwhile, before the 2017 appeal ruling was released, El-Khodr entered into a settlement with RSA and Northbridge. A dispute over that settlement culminated in a 2020 Ontario Superior Court of Justice ruling in favour of Northbridge, a decision upheld by the Court of Appeal for Ontario in a ruling released June 21, 2021.
In that settlement, RSA, Northbridge and El-Khodr agreed that El-Khodr would pay $385,000 to a law firm to be held in trust. If Northbridge were to win the appeal (which it did in 2017), the $385,000 would be paid from the law firm trust to Northbridge. If Northbridge were to lose the appeal, then the $385,000 would be returned to El-Khodr.
In Kossay El-Khodr v. Northbridge Commercial Insurance Company, released 2020 by the Ontario Superior Court of Justice, judge Heather Williams ordered the $385,000 be paid by the law firm trust to Northbridge.
That ruling was upheld in the appeal court ruling released June 21, 2021.
On appeal, El-Khodr argued that no one had anticipated the 2017 ruling. Among other things, he argued that in order for the settlement to be triggered, all of his future medical and rehabilitation benefits would have to have been assigned to Northbridge.
El-Khodr further argued that the phrase “medical and rehabilitation benefits” can only refer to that entire category of benefits, and that it would be unfair for Northbridge to receive the entire $385,000 settlement amount when the Court of Appeal granted assignment for some but not all medical and rehabilitation benefits.
Specifically, El-Khodr argued that the 2017 appeal court ruling did not result in Northbridge being assigned a “rent subsidy,” estimated at about $50,000, that El-Khodr is claiming from RSA for accident benefits.
El-Khodr was awarded and paid $82,429 for future medication and assistive devices and $424,550 for professional services in 2015, before the settlement was reached. Those amounts exceed the $385,000 settlement amount.
In her 2020 ruling, Justice Williams found that El-Khodr knew when he signed the minutes of settlement that the winner of the 2017 appeal would receive the entire $385,000 of the settlement. The Court of Appeal for Ontario agreed.
When it assigned the medication and assistive devices and professional services benefits to Northbridge up to the amount of the jury award in 2017, the Court of Appeal for Ontario recognized that a plaintiff has been fully compensated for their loss when a jury award has been paid, Justice Julie Thorburn wrote for the Court of Appeal for Ontario in its June 21, 2021 ruling.
In its 2021 ruling, the appeal court agreed that a plaintiff will be over-compensated if there is assignment of accident benefit payments for losses that were also paid out by the liability insurer as a result of a jury award.