If an insurer neglects to account for future payment of benefits in a settlement, the insurer could continue to be repsonsible for payment of those benefits.
The plaintiff argued successfully that s. 267.8(9) of the Insurance Act, R.S.O 1990, c.I.8, ('the Act') did not apply to future collateral benefits received after a settlement agreement rather than after a trial of the action.
Stokes v. Desjardins Groupe D'Assurances Generales, [2009] O.J. No. 3608, July 17, 2009, Ontario Superior Court of Justice, R.J. Smith J.
The applicant / plaintiff, Stokes, was injured in an accident when the motorcycle he was riding collided with a motor vehicle. He settled his tort action against the other driver's insurer without going to trial. The settlement agreement did not allocate any particular part of the $370,000 to past or future income loss, although some amount was intended under these heads of damages.
There was no mention in the agreement of collateral statutory benefits that Stokes could receive from his insurer in the future. This possibility should have been contemplated by the settling insurer, Desjardins, who should have included a release or the assignment of those benefits to be held in trust for them in the agreement.
Desjardins submitted the relevant section of the Act should be read that payments should be held in trust where they are received after a trial or settlement of the action. The court found the language of the Act unambiguous stating that if the legislature had intended for the benefits to be held in trust following a settlement agreement, the Act would say so.
This case was originally summarized by Neil J. MacDonald and originally edited by David W. Pilley.
Cases like these give the law a bad name