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Anson vs Keroway Dec 18 1997

Indexed as:

Anson v. Karoway


Stella Anson, plaintiff, and

Phillip Karoway, defendant, and

Insurance Corporation of British Columbia, third party


[1997] B.C.J. No. 2871

54 B.C.L.R. (3d) 281

3 C.C.L.I. (3d) 168

76 A.C.W.S. (3d) 81

Vancouver Registry No. C932079

 British Columbia Supreme Court

 Vancouver, British Columbia


Burnyeat J.

Heard: December 12, 1997.

 Judgment: filed December 18, 1997.

(11 pp.)

Insurance — Automobile insurance, compulsory government schemes — Bodily injury and death benefits — Reimbursement for services and supplies essential for treatment or rehabilitation.

This was an application by the public insurer to reduce an award of future care costs in a negligence action. The respondent plaintiff, Anson, was injured by the defendant, Karoway, in an automobile accident. At trial, Anson was awarded in excess of $1.17 million, including $266,845 for future care costs. The public insurer contended that Anson was entitled to a maximum of $150,000 to cover physical therapy. The public insurer had already paid $45,280 in benefits. It argued that the balance, $104,720, was deductible from the future care costs award. Anson opposed a deduction. She argued that the public insurer terminated the benefits prior to trial. She also indicated that she was willing to sign a release guaranteeing that she would not call upon the public insurer to make further payments of physical therapy benefits in the future.

HELD: The application was allowed, in part. The future care cost award was reduced by $7,500. Anson was not expected to require more than $1,500 per year of her entitlement to physical therapy benefits from the public insurer. Her therapy was expected to last no longer than five years. Anson was ordered to release the public insurer from further obligations related to additional physical therapy. The public insurer was not entitled to unilaterally terminate contractually provided physical therapy benefits.

Statutes, Regulations and Rules Cited:

Insurance (Motor Vehicle) Act, ss. 25(4), 25(5), 25(6), 25.5. Insurance (Motor Vehicle) Regulations, ss. 80, 84, 86, 87.


Y. Gertsoyg and I.R. Sissett, for the plaintiff.

P.J. Armstrong, for the third party.

1     BURNYEAT J.:– In the context of settling the form of an order arising out of a Judgment in favour of the plaintiff for damages caused by the negligence of the defendant, the third party applies for an order that the sum of $107,201.29 be deducted from the future care costs awarded at trial. This deduction is sought pursuant to s. 25 of the Insurance (Motor Vehicle) Act. Out of the total Judgment of $1,170,567.39, $266,845 was awarded for future care costs.


25 (4)                    In an action in respect of bodily injury or death caused by a motor vehicle or trailer or its ownership, use or operation, the amount of benefits paid, or to which the claimant is or would have been entitled, must not be referred to or disclosed to the court or jury until the court has assessed the award of damages and costs.

(5)          After assessing the award of damages and costs under subsection (4), the amount of benefits referred to in that subsection must be disclosed to the court, and taken into account, or, if the amount of benefits has not been ascertained, the court must estimate it and take the estimate into account, and the person is entitled to enter judgment for the balance only.

(6)          If, for the purpose of this section…it is necessary to estimate the value of future payments that the corporation or other insurer is authorized or required to make under a plan or contract, the value must be estimated according to the value on the date of the estimate of a deferred benefit, calculated for the period for which the future payments are authorized or required to be made.

2     The third party says that $150,000 is the statutory maximum available to any insured for Part 7 benefits and, as the third party has already paid $45,280.74 to the plaintiff, the plaintiff is only entitled to a further $104,719.26. Accordingly, they say that $104,719.26 should be subtracted from the future care costs of $266,845 awarded.


3     The plaintiff says that there should be no deduction from the future care costs awarded because of the third party’s “clear and unequivocal termination” of all Part 7 benefits as set out in a February 27,1997 letter forwarded by the third party to the solicitors for the plaintiff which stated in part:

I confirm that all Part 7 benefits have been terminated for your client. We believe that your client’s present problems, and indeed, the problems that she has had over the last few years, are in no way related to the accident of March 25, 1992. We believe that the testimony during the recent trial clearly confirms this. We have paid almost $43,000 in various therapies for your client over the last number of years, which appear to have had little or no positive effect. We believe that the reason for this is that the root of your client’s problems has never been properly addressed, as the focus seems to have been on blaming the motor vehicle accident for all of her problems.

This letter was forwarded after the trial but before Judgment was rendered. Alternatively, the plaintiff says that, if there is to be any deduction from the award for future care costs, that deduction should be minimal.


4     Prior to the decision in Schmitt v. Thomson (1996), 18 B.C.L.R. (3d) 153 (B.C.C.A.), it was generally considered to be the law in British Columbia that, absent any committment by I.C.B.C. to pay future benefits to a plaintiff under Part 7 of the Regulations under the Act, the court would not allow any deduction from a future care award: Jang v. Jang (1991), 54 B.C.L.R. (2d) 121; Nelson v. Nelson (1994), 89 B.C.L.R. (2d) 208 (B.C.S.C.); D’Onofrio v. Ralko (1991), 62 B.C.L.R. (2d) 247 (B.C.S.C.).

5     In delivering judgment on behalf of the five members of the court in the Schmitt decision, Hollinrake J.A. states that a committment from I.C.B.C. cannot be required and that the court is “obliged” to undertake the exercise of ascertaining the amount to be subtracted:

… regardless of the difficulties which may be encountered in that exercise. (at p.163)

6     In reviewing the Schmitt decision, it is clear that the following matters can be taken into account by the court when making the assessment of the balance which should be deducted:

(a)           The evidence which was before the court upon which the estimate of future benefits was based.

(b)          The uncertainties as to the payment of future benefits which are created by the Regulations. In this regard, it is clear that the Regulations under the Act allow the third party to review the benefits payable on a yearly basis and allow it to terminate the benefits “on the advice of the corporation’s medical advisor.” In this regard, Hollinrake J.A. concluded: “It may well be in any given case that the s. 24(5) [now s. 25.5] estimate, when measured against the findings of fact in the tort action, will be nominal be reason of the uncertainty of payment, or more correctly speaking, entitlement to payment, of future benefits created by the Regulations”. (at p.163)

(c)           New evidence may be adduced on the issue.

(d)          The period of time for which the trial judge found that future care costs would be required is not necessarily the same period of time for which Part 7 benefits will be made available to the insured.

7     While there is nothing in the Act or Regulations which permit the court to require an undertaking that all future Part 7 benefits will be paid before permitting the third party to invoke the provisions of s. 25(5) of the Act, Hollinrake J.A. concluded that there was “… nothing to stand in the way of a Corporation waiving for a specific period of time its discretion under s. 87 of the Regulations to review benefits payable every 12 months under Regulations 80, 84 or 86.” There is nothing before the court to indicate that the third party has waived in this case its discretion under s. 87 of the Regulations.

8     Other decisions which have referred to the Schmitt decision have established further criteria for the court in making the determination of the balance to be subtracted:

(a)           The deduction should only be made where benefits available under the Regulations “match” the damages awarded in the judgment: McCloskey v. Lymn [1996] B.C.J. No. 3098 (B.C.S.C.).

(b)          The onus lies on the third party to show the “match” between benefits payable under the Act and the tort claim award and to demonstrate the appropriate allocated amount of any proposed deduction: Buksh v. Franco [1996] B.C.J. No. 1604 (B.C.S.C.).

(c)           The “disparity” of medical evidence at trial can create greater uncertainty as to whether there will be continuing payment in the future under Part 7: Buksh v. Franco [1996] B.C.J. No. 1604 (B.C.S.C.).

9     The third party asks that the sum $107,302.29 be deducted from the future care costs awarded at trial so that the sum of $266,845 is reduced to $159,643.71. It is clear that, whatever amount is to be deducted from the future care costs awarded, it should not be the sum which will be paid over a number of years pursuant to the Part 7 benefits available to the plaintiff. Just as the $266,845 represents the present value of the amount which will be required to care for the plaintiff in the future, $107,201.29 is the maximum total which might be paid over a number of years but not the present value of what will be paid. Accordingly, any unfunded portion of Part 7 benefits should be reduced to a yearly average and the present value of that average then calculated using the present value formula which was used when the $266,845 figure was calculated. In this regard, see Livingstone v. Arlitt [1988] B.C.J. No. 1923 (B.C.S.C.).

10     Similarly, once there has been a determination of the appropriate amount to be deducted, it is then necessary to adjust the income tax gross-up provided in the Judgment in order to reflect any reduction in the amount awarded for future care costs.


11     Counsel on behalf of the plaintiff says that their client is prepared to provide an irrevocable and absolute Release of the third party so that the third party will not be called upon to make any Part 7 payments to the plaintiff in the future. There appears to be nothing in the Insurance (Motor Vehicle) Act or the Regulations which would prohibit either the third party or an insured making such an arrangement. Accordingly, if such a Release is executed and tendered on the third party, no deduction is to be made from the award for future care. The plaintiff will have until 4:00 p.m. on January 30, 1998 to provide such a Release to the third party. If such a Release is not provided or if I am incorrect in deciding that a Release can be tendered on the third party, then what follows sets out what I believe to be an appropriate amount to be deducted in the circumstances of this case.

12     It is not possible for me to find that the February 27, 1997 letter is conclusive proof that no future Part 7 benefits will be paid by the third party or that the third party is now estopped from requesting that an amount be deducted from the award for future care costs. Firstly, that letter was sent before Judgment was rendered. The third party should always have the ability to choose what it will be doing regarding Part 7 benefits after the Judgment in the tort action has been rendered. Secondly, the right to Part 7 benefits is contractual and cannot be unilaterally terminated by the third party. Accordingly, despite having received that letter, the plaintiff would always be in a position to commence actions in the future to seek the enforcement of the requirement of the third party to pay appropriate Part 7 benefits. The plaintiff cites the decision of Mr. Justice Houghton in Pranjic v. Guenette, [1993] B.C.J. No. 2400, (November 17, 1993) Kamloops Registry No. 17034, in support of the proposition that, once a denial of future Part 7 benefits has been received, the third party is no longer in a position to request a reduction. The Pranjic decision is distinguishable from the situation in this case in that the denial of future Part 7 benefits there was forwarded after the Judgment had been rendered. I also do not interpret the Pranjic decision to say that, if a denial of payments has been received, it automatically follows that no deduction should be made for Part 7 benefits. Rather, it is merely a factor to be taken into account in determining the likelihood that Part 7 benefits will be paid in the future.

13     In this case, the February 27, 1997 letter as well as the position taken throughout by the third party as to the cause of the problems of the plaintiff contribute to a clear likelihood that not all Part 7 benefits will be paid in the future. As was concluded by Hollinrake J.A. in the Schmitt decision, I also conclude that the Regulations themselves create great uncertainty as to the payment of future benefits. Firstly, the Regulations allow a yearly review of the benefits payable and an ability to terminate the benefits “on the advice of the Corporation’s medical advisor.” Secondly, the maximum which can be paid pursuant to the Regulations may vary in the future. While the maximum available is presently $150,000, the financial situation of the third party may well induce the third party in the future to reduce the maximum available. Thirdly, the third party has not shown on a balance of probabilities that the Part 7 benefits would be paid out during the same time period that I found that future care costs would be required. Fourthly, because there is a statutory maximum of $150,000, it may well be that the cost of providing future care will not be available from the third party even if the third party were to agree that the plaintiff was still otherwise eligible for Part 7 benefits.

14     The third party has not sought to adduce new evidence regarding this issue of likely Part 7 benefits payable in the future. At the same time, the third party has not attempted to show that there is a “match” between the benefits payable under Part 7 of the Regulations and the various amounts contained within the general awards for future care costs. The only information before me is that a total of $42,798.71 was paid out by the third party in the five years between the date of the accident and the date of the trial. The average yearly amount of $8,559.74 cannot be equally applied over the period of time between the accident and the trial as much of this total relates to one time charges not likely to be incurred in the future on a yearly basis.

15     Taking all of the matters noted above into account, I am satisfied that, on a balance of probabilities, the third party has only shown that no more than $1,500 per year for a maximum of five years will be made available by the third party to the plaintiff pursuant to her Part 7 entitlement as an insured. Accordingly, the current value of those sums should be subtracted from the $266,845 awarded.


16     If the Release is provided by the plaintiff to the third party, then there will be an order dismissing the application of the third party to subtract the sum of $107,201.29 from the award for future care costs and with costs to the plaintiff on a party and party (Scale 3) basis. If the Release is not provided by January 30, 1998, then the petitioner will be entitled to an order that the current value of $1,500 per year for five years will be subtracted from the $266,845 awarded. In view of the mixed success, both parties will bear their own costs if the Release is not provided.