SABS benefits may be garnisheed in event of credit default, Ontario court rules

Ontario’s Superior Court of Justice has ruled that statutory accident benefits may be garnisheed in the event that an insured defaults against a creditor.
Vlado Serbinek was insured by Markel Insurance Company of Canada when he was injured in a motor vehicle accident. As a result, he may become entitled to payment of Statutory Accident Benefit Schedule (SABS) benefits, including income replacement benefits, as well as benefits for medical expenses incurred.
After Serbinek’s injury, Lease Truck Inc., a creditor, obtained a default judgement against Serbinek for approximately Cdn$118,000. Lease Truck then served a notice of garnishment to Markel.
Markel brought the issue to court to gain clarification as to whether or not any or all SABS benefits are subject to garnishment.
Ontario Superior Court Justice John Cavarzan pointed to section 7(1.1) of the Wages Act which reads: “Payments from an insurance or indemnity scheme that are intended to replace income lost because of disability shall be deemed to be wages, whether the scheme is administered by the employer or another person.”
Section 7(2) of the same act then exempts 80% of a person’s wages from seizure or garnishment.
“The garnishee [Markel] in this case is obliged to pay to the creditor [Lease Truck Inc.] SABS money which may be payable to the debtor [Serbinek] until the amount claimed in the Notice of Garnishment has been satisfied, subject to the requirement that 80% of any income replacement benefits be paid by [Markel] directly to [Serbinek],” Cavarzan wrote.