Supreme Court to consider appeal from municipality sued under Saskatchewan no-fault auto insurance law

The Supreme Court of Canada has scheduled for next Monday an oral hearing on an application for leave to appeal a ruling that allows an auto accident victim from Saskatchewan with no-fault injury insurance to sue.

One issue in the case is the definition of “economic loss” under the province’s Automobile Accident Insurance Act (AAIA), which essentially allows auto claimants to sue if their economic losses exceed the benefits provided by Saskatchewan Government Insurance (SGI).

John Acton was injured nine years ago in a single-vehicle rollover accident east of Lloydminster, which straddles the Alberta border about halfway between Edmonton and Saskatoon.

As a result of the accident, Acton cannot work and requires rehabilitation services and living assistance. He is insured, as a no-fault beneficiary, by SGI, which also gives policyholders a choice to have tort coverage. For SGI policyholders with no-fault coverage, there are limited circumstances in which they can sue.

Acton launched a lawsuit against the Rural Municipality of Britannia No. 502, which encompasses an area northeast of Lloydminister and maintains the road Acton was driving on. Ron Handel Farm Ltd., which worked on the road on behalf of the municipality, is also a defendant.

In March 2010, Mr. Justice G.N. Allbright, of the Saskatchewan Court of Queen’s Bench, ruled that Acton cannot pursue a claim for economic loss against the defendants. The provincial appeal court overruled Judge Allbright’s decision last December.

Acton alleges the benefits he receives from SGI  “do not fully cover his actual costs for rehabilitation, living assistance and other cost-of-care items he reasonably requires.”

The no-fault portion of the AAIA “is considered to be ‘modified no-fault,’ because it is designed to provide a person injured in a motor vehicle accident with immediate access to a broad range of benefits without regard to who was at fault, while preserving the right of an injured insured to bring an action to recover damages for specific economic losses,” wrote Mr. Justice John Klebuc, chief justice of the Saskatchewan Court of Appeal.

Acton wants to sue to recover damages for the difference between what SGI contributes towards his rehabilitation and living assistance costs, and his actual costs. He also wants to recover the difference between the income replacement benefits paid by SGI and his actual yearly income loss.

Judge Klebuc noted that Ron Handel Farms and the Rural Municipality of Britannia “denied any negligence on their part and maintained that the claims advanced in the appellant’s action are not permitted.” The defendants contend that Acton’s lawsuit is barred by provincial law.

But in December 2012, the Court of Appeal ruled that Judge Allbright “erred in holding that an insured may not bring a tort action to recover damages for ‘economic loss'” under the AAIA, if the benefits paid or payable by the carrier will never the exceed carrier’s liability cap of $5 million.

“The meaning he assigned to what constitutes an ‘economic loss’ has a disproportionate negative effect on insureds who suffer catastrophic injuries,” Judge Klebuc wrote, on behalf of the Court of Appeal, of Judge Allbright’s findings.

“Such persons will have higher costs of care for the rest of their lives; much higher than persons who suffer less severe injuries.  In turn, the severity of their injuries makes it less likely that persons in this group will have other means to pay the significant costs associated with their injuries. This gives rise to the unintended result of those who have the greatest need suffering the most, physically and financially.”

Judges Marjorie Gerwing and Georgina Jackson of the Saskatchewan Court of Appeal concurred with Judge Klebuc’s decision.

In February, the Rural Municipality of Britannia filed an application with the highest court in the land for leave to appeal the Saskatchewan Court of Appeal decision. The Supreme Court of Canada has scheduled an oral hearing on June 10.