Barrister Issue 139 - Winter 2023 - No-Fault & The Insurance Industry in North America by ACTLA

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Barrister WINTER 2023

ISSUE #139

No Fault & the Insurance Industry in North America

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FEATURES ACTLA Government Relations Update By Keith McLaughlin (New West Public Affairs)

ACTLA Submission to the Auto Insurance Rate Board

Alberta's Minor Injury Regulation: A Primer

ACTLA Editorial: Auto Insurance in Alberta & The Real Impact on People's Lives (2016)

By Thomas Kananayakal

COLUMNS Letter from the Executive Director

Letter from the Board Chair

Letter from Member Services

Seminars Committee Update

Letter from the Editor

JSS Barristers Case Law Review

By Lyn Bromilow

The Horrors of No Fault Insurance in British Columbia By Elisabeth A. Sadowski

Case Law Corner: The 6% Cap on Disbursements in British Columbia

The Motor Accident Injuries System in New South Wales

A Failed Experiment: Analysis & Evaluation of No-Fault Laws (2000)

By Priscilla Cicek

By Tom Concannon

By Consumer Watchdog

RESEARCH MEMORANDUM

Review of Insurance Schemes Operating in Four Jurisdictions Outside Alberta: Saskatchewan, New Jersey, New South Wales and the Australian Capital Territory By Linda Jensen, Bottom Line Research

The The Barrister Barrister

THE BARRISTER EDITORIAL BOARD

Nash Calvert Editor in Chief

Amani Abdu

Committee Member

Peter Trieu

Committee Member

Justin Monahan Committee Member

Thomas J. Kannanayakal Committee Member

The contents of The Barrister are for informational purposes only and do not constitute legal opinions by the Alberta Civil Trial Lawyers Association, its members or contributing authors, and should not be relied upon as such. Statements and opinions expressed by the editors and contributing authors are not necessarily those of ACTLA. The official position or views of the Alberta Civil Trial Lawyers Association will be stated as such. Copyright © 2022 by the publisher, ACTLA. All rights reserved. Reproduction of any material herein without permission of the publisher is prohibited. All advertising enquiries should be directed to the Editor-in-Chief at communications@actla.com Publication Mail Agreement No. 40064387 Return undeliverable Canadian addresses to: Alberta Civil Trial Lawyers Association 777-10339 124 Street, Edmonton, AB, T5N 3W1

The Barrister is published quarterly by the Alberta Civil Trial Lawyers Association 777-10339 124 Street, Edmonton, AB, T5N 3W1 T: 780.429.1133 | 1.800.665.7248 | www.actla.com

Fall 2023

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ACTLA Mission Statement: Advocating for a strong civil justice system that protects the rights of all Albertans.

2023-24 BOARD MEMBERS

PAST CHAIRS

Chair: Owen Lewis Past Chair: Angela Saccomani, KC Vice Chair: Mike McVey Secretary: Jillian Gamez Treasurer: Laura Comfort

Angela Saccomani, KC - 2022-23 Maia Tomljanovic 2021-22 Jackie Halpern, KC, 2020 - 21 Shelagh McGregor, 2019-20 Mark Feehan, 2018-19 Michael Hoosein, 2017-18 Maureen McCartney-Cameron, 2016-17 Nore Aldein (Norm) Assiff, 2015-16 Craig G. Gillespie, 2014-15 Donna C. Purcell KC, 2013-14 George Somkuti, 2012-13 Constantine Pefanis, 2011-12 James M. Kalyta, 2010-11 James D. Cuming, 2009-10 Richard J. Mallett, 2008-09 Arthur A.E. Wilson KC, 2007-08 Walter W. Kubitz KC, 2006-07 William H. Hendsbee, KC, 2005-06 Kathleen A. Ryan KC, 2004-05 Ronald J. Everard KC, 2002-04 Stephanie J. Thomas, 2000-02 James A.T. Swanson, 1998-2000 Gary J. Bigg, 1996-98 Stephen English KC, 1994-96 Anne Ferguson Switzer, KC, 1992-94 Terry M. McGregor, 1990-92 J. Royal Nickerson KC, 1988-90 Derek Spitz KC, 1986-88

Members-at-Large: Jackie Halpern, KC Joseph A. Nagy Peter Cline Geographical District Representatives: North West: Leah Paslawski North East: Waverly Mussle Edmonton: Amani Abdu Calgary: Sarah Coderre Central: Ronke Omorodion South East: R. Travis Bissett ACTLA STAFF Executive Director Joy Jeong | executivedirector@actla.com Communications and Events Services Administrator & Editor-In-Chief, The Barrister Nash Calvert | communications@actla.com Finance & Member Services Administrator Lochlin Zhao | membership@actla.com

Fall 2023

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CONTRIBUTE TODAY The Barrister is delivered quarterly to hundreds of law firms across Alberta. Whether you are an experienced trial lawyer, a law student, or an expert witness, contact communications@actla.com to contribute an article and get published.

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RETURNITY YEG

Are you a new parent, or soon to be new parent, in the legal profession in Edmonton? Join Returnity Yeg, a "Baby & Me" group in Edmonton!

Jillian Gamez and Sasha Lallouz, lawyers in private practice in Edmonton, met at a local Baby & Me group at Nest Integrative Wellness while on maternity leave in 2023. In addition to all things new parent related, they found themselves chatting about returning to lawyering in private practice as parents, and juggling their new bundles of joy into their daily routine when back at the office. After learning about Calgary's Returnity YYC Baby & Me group, a group for lawyers in Calgary with over 40 participants, Jill and Sasha decided to pilot Edmonton's Returnity chapter. Returnity Yeg will be starting in early February 2024. The group will meet monthly until June 2024. The monthly meetings will incorporate a speaker or activity and an open discussion period. Babies are welcome! If you are a lawyer in Edmonton who will be on parental leave during that time, and are interested in joining Returnity Yeg, please email returnityyeg@gmail.com by January 26 to indicate your interest and receive further information. As this is a pilot program, Returnity Yeg is considering the possibility of accommodating zoom attendance for flexibility and to include lawyers outside of Edmonton in northern Alberta. For sponsorship inquiries to assist with costs, such as meeting space rental and speakers, please email returnityyeg@gmail.com for more information. We thank you in advance for your interest.

Fall 2023

Letter from the

EXECUTIVE DIRECTOR D

ear ACTLA Members,

I am currently writing this at the end of 2023, however you are likely reading this in early 2024. With the end of another calendar year, I am filled with gratitude when I look back on the last 365 days. Throughout 2023, our organization was able to accomplish so many great things. From putting on our most successful events since the COVID-19 Pandemic, to seeing our advocacy efforts from the past several years pay off in the newest government announcements on insurance policy. While the past year did not come without bumps along the road, I would not have it any other way.

Looking forward to the new year, our work is far from over. Our organization will be continuing to fight against No-Fault Insurance, and advocate on behalf of the profession and injured Albertans. We are grateful to those members who continue to support our efforts, whether it be through meeting with their MLAs, sharing information Joy Jeong, Executive Director with their networks, or donating ACTLA to the cause. You can expect to receive updates from our organization in the new year on what exactly we will be doing for the FAIR Alberta Campaign, as well as what support will be needed from our membership. Our events are not slowing down either. Planning for our spring and fall seminars is well underway, and we are excited to continue offering high quality in person events. We hope to continue seeing more of our members attend these events in person. Additionally, we have some great webinars lined up for the new year, and will continue to strive for high quality virtual content as well. ACTLA’s membership is growing, and we are welcoming more new young lawyers and students to membership. We ask our members to continue sharing ACTLA with their network, and encourage their colleagues and connections to join. There is strength in numbers, and we want to broaden ACTLA’s reach and share the benefits of membership. Overall 2023 was a year of tremendous growth and work from ACTLA, and I am looking forward to an even greater 2024. Thank you again to all those members who continue to stay committed to ACTLA and our mission. I look forward to connecting with you all this new year. Sincerely, Joy Jeong Executive Director 8

The Barrister

Letter from the

BOARD CHAIR

nother edition of the Barrister while anticipated changes to Alberta's auto insurance continue to loom large, sparking a wave of uncertainty among Albertans, industry stakeholders, and ACTLA members. At the heart of this deliberation is the Government’s consideration of adopting a no-fault or hybrid no-fault insurance system. The Government has selected Oliver Wyman to conduct research on various jurisdictions, such as New Jersey, New South Wales, Saskatchewan, and British Columbia, all of which have pure or hybrid no-fault systems. The stated goal is to reduce premiums for Alberta consumers. While proponents argue that a no-fault system streamlines the claims process and reduces litigation, we are keenly aware of its negative impacts on injured Albertans. Eroding or eliminating the right to sue the responsible party for an innocent victim’s Owen Lewis, Board Chair damages for pain and suffering is not supported by the vast majority of Albertans and ACTLA seems antithetical to the principals of a UCP Government. A no-fault system affects all injured parties, but disproportionately affects women, children, and those with severe injuries limiting their ability to receive fair compensation for damages sustained. Moreover, a no-fault system will create a situation where vulnerable parties, such as pedestrians and cyclists, face increased challenges in obtaining compensation for injuries sustained in accidents involving motor vehicles. The lack of fault determination could make it harder for these injured individuals to hold accountable those responsible for their injuries, potentially leaving them without adequate support. One needs only to look to the horror stories in British Columbia to get a taste of the negative impacts of no-fault insurance. Further, while there is the stated promise of lower premiums with no-fault insurance, over time this is shown not to be the case. New Jersey’s insurance premiums are the seventh highest in the United States and premiums increased a whopping 34% in 2023. The hybrid no-fault system in New South Wales also brought the promise of lower premiums, but New South Wales currently has the highest auto insurance premiums in Australia. Additionally, the economic implications of no-fault would place a heavier burden on public resources. If individuals are unable to seek full compensation through insurance claims, they will turn to public healthcare and social support systems, placing strain on public finances. This is in addition to the significant job losses which would occur by transitioning to a no-fault system. At best, a new level of government bureaucracy would replace private business. The hybrid no-fault proposals brought forward by the IBC would similarly negatively impact injured Albertans by removing their ability to sue for general damages. The constant threat of an expanded definition of “minor injury” far beyond that which was originally contemplated and that which is fair to injured Albertans, also remains. ACTLA remains committed to advocating for injured Albertans and consumers in general. What has been proven whenever industry friendly reforms are implemented is that the industry experiences windfall profits and very little, if any, savings trickle down to consumers by way of lower premiums. Each member of ACTLA is encouraged to speak out against proposed changes which would see a no-fault or hybrid no-fault system introduced in Alberta. The time for action is now. Sincerely, Owen Lewis Board Chair Fall 2023

Letter from

MEMBERSHIP SERVICES

ear Barrister Readers,

As we approach the close of 2023, it is with great pleasure and pride that I reflect upon the remarkable journey we have experienced at the Alberta Civil Trial Lawyers Association (ACTLA) over the past year. Since joining the esteemed ranks of ACTLA in May 2023, I have witnessed tremendous growth, collaboration, and success that I am excited to share with you. One of the most noteworthy achievements this year has been the exceptional surge in our membership. Since May, we have witnessed a staggering increase of over 30% in our membership base. This unprecedented growth is a testament to the collective efforts and dedication of our team, as well as the value and relevance that ACTLA continues to bring to the legal community in Alberta. To achieve this milestone, we initiated a series of membership drive initiatives, working closely with Nash, our Communications and Event Coordinator. Through personalized outreach efforts, including emails and letter invitations, we reached out to more than 1,200 firms across Alberta. These initiatives not only contributed significantly to the substantial increase in our membership but also strengthened our connections within the legal community.

Lochlin Zhao Membership & Finance Coordinator, ACTLA

In addition to membership growth, I am pleased to report that, as the Finance Administrator, ACTLA stands in a robust financial position. Our prudent financial management, transparent practices, and commitment to fiscal responsibility are reflected in our financials. These documents provide a comprehensive overview of our financial standing, detailing the allocation of resources, revenue streams, and expenditures. Looking ahead, we are optimistic about the continued growth and success of ACTLA. The groundwork laid in 2023 has positioned us for sustained expansion, and we anticipate that our membership will continue to flourish in the coming years. As we celebrate the achievements of 2023, I extend my heartfelt gratitude to the entire ACTLA team for their unwavering dedication and hard work. It is the collaborative spirit and commitment of each member that have propelled us to new heights. I look forward to a prosperous and fulfilling 2024, filled with exciting opportunities and accomplishments for the Alberta Civil Trial Lawyers Association. Thank you for your leadership and support. Sincerely, Lochlin Zhao Finance and Membership Services

The Barrister

Seminars Committee

YEARLY UPDATE As we enter the new year and turn towards 2023, it is important to take the time to reflect on our past year. In 2023, the ACTLA Seminars Committee (including Jillian Gamez, Travis Bissett, Sarah Codere, and Ronke Omorodion) spent considerable time working to expand the scope and quality of the seminars and webinars that our members have come to expect from ACTLA following the COVID pandemic. Beginning in February with our best-attended webinar, the 2022 Case Law Review webinar hosted by Laura Comfort of Cuming & Gillespie, we worked directly with our sponsors to bring new content with direct relevance to the most common questions posed by you and your practices, including: • • • • •

Mild-Traumatic Brain Injuries & Post Concussion Syndrome: perspectives, Pitfalls and Perils, with Dr. Rehan Dost; The All Things Expert Half-Day Webinar The Junior Lawyers Half-Day Webinar; Functional Capacity Evaluations & Cost of Future Care Assessments with Gillian Bagg; and Ethical Traps in Litigation & ALIA 101.

These webinars were the beginnings of a shift towards embracing formatting and content that sets ACTLA apart from other organizations, a shift that we have embraced fully for 2024. The Plaintiff’s Only and Masterclass seminars will return, now part of what we hope will become a standard schedule for ACTLA, with the introduction of Experts’ Week, taking the place of the All Things Expert half-day. Experts Week will feature daily lunch n’ learn webinars each covering a different experts’ practice. If you have topic suggestions or areas of focus you would like to see covered, please contact communications@actla.com and share your ideas! Mark your calendars with the following dates: • Case Law Review Webinar – February 15 • Junior Lawyers Half-Day Webinar – March 21 • Plaintiff’s Only In-Person Seminar Series – May 28 (Edmonton) and May 30 (Calgary) • Masterclass 2024 In-Person Seminar Series – September 24 (Edmonton) and September 26 (Calgary) The ACTLA Seminars committee has also been joined by Sarah Fox and Rita Okolie from Rodin Law, and we have partnered further with our sponsors and partner organizations to expand our topics based on feedback from each of our seminars. Thank you for your continued support of ACTLA, and we look forward to seeing you at our events in 2024! Sincerely, Nash Calvert Communications & Event Services Coordinator

Fall 2023

UPCOMING ACTLA EVENTS TO REGISTER, VISIT WWW.ACTLA.COM

With 2023 left behind, it is time again for another Case Law Review Webinar! Hosted by Laura Comfort of Cuming & Gillespie, this hour-long webinar promises to get you up to date on the most pertinent case law updates from 2023 all within 90 minutes.

ACTLA's Junior Lawyers Half-Day Webinar returns for 2024. Featuring topics of particular interest to new lawyers with less than 5 years at the Bar, the Junior Lawyers Webinar is designed to help hone your skills across a variety of subjects.

Plaintiff's Only returns for 2024's Spring Conference! This year promises to expand on the theme and provide even more high-quality speakers on topics of particular relevance to lawyers who act for the plaintiff. Keep an eye on the ACTLA Newsletter and Social Media pages to be alerted as new speakers are announced!

Save the Date! ACTLA Masterclass 2024 will be held in September in both Edmonton and Calgary, and will feature even more high-profile speakers from across North America. Keep an eye on the ACTLA Newsletter and Social Media pages to be alerted as new speakers are announced!

DAVID P. STARK B.Ed., LLB., FCIP Barrister, Solicitor, Mediator, Arbitrator, Conflict Resolution Trainer Member of the Canadian Academy of Distinguished Neutrals and Member of the BC Mediation Roster Society Member of the Law Society of Alberta

Contact Information

146 Wedgewood Dr SW Calgary, AB T3C 3G8 403.969.7967

starkd@shaw.ca

www.starkmediation.ca

Letter from the

EDITOR

I wrote it last edition and now I'll write it again - this is the largest edition of The Barrister I have overseen, and perhaps the largest ACTLA has ever made. We know that in the coming months the Alberta Government will be discussing insurance reforms, with a particular focus on making premiums more affordable for everyday Albertans. We also know that this means the Insurance Board of Canada (IBC) will continue to advocate for a No-Fault or Hybrid No-Fault Insurance system. ACTLA has been hard at work preparing to advocate against such a system in the coming months, as we have in the past. We are more prepared than ever to defend against the IBC's proposals and work to find solutions that protect access to justice for Albertans, in no small part due to the hours of research and time put into developing resources that show the realities of no-fault systems around the world. Resources that I am proud to now pass on to you.

Nash Calvert Editor-in-Chief, The Barrister Communications & Event Services Admin, ACTLA

Our edition begins with New West Public Affairs' and FAIR AB campaign manager Keith McLaughlin, who has prepared a brief overview of why no-fault insurance is bad for Alberta. We have also included a summary of ACTLA's submission to the Alberta Automobile Insurance Rate Board from this past July for anyone who may have missed it. Finally, our newest Editorial Committee member, Thomas Kannanayakal, has prepared a primer on Alberta's Minor Injury Regulation, and we have chosen to republish an editorial from 2016 by former ACTLA Projects Coordinator Lyn Bromilow. These three articles together should be able to give context to ACTLA's stance and the history of this fight. The rest of this edition is intended to give you, the reader, insight into the effects of no-fault insurance schemes that are already in place, specifically targeting the jurisdictions that the IBC references in their recommendations. We have fielded articles from our counterparts in British Columbia and New South Wales to provide a first-hand accounts of what it is like to work within those jurisdictions' individual no-fault schemes, with some additional notes on the British Columbian system in this edition's Case Law Corner. Additionally, we have included a Consumer Watchdog report first published at the turn of the century, which describes the failure of no-fault systems in the United States to effectively reduce premiums for individuals. Bottom Line Research has kindly provided a research memo (commissioned by ACTLA) to further explore the data on no-fault insurance's failures in the jurisdictions of Saskatchewan, New Jersey, and New South Wales. Together, these articles explore the breadth of jurisdictions referenced most often by the IBC when proposing no-fault to the Alberta government. It is my hope that, using the information within this edition, you the reader will be equipped to help ACTLA campaign to ensure that these systems do not make their way to our province. Within these pages lies the proof that no-fault insurance overwhelmingly results in more expensive premiums, lower disbursements, and increased salaries and bonuses for the executives at insurance companies. There will be calls to meet with your MLA's to make sure that the government knows, unequivocally, that a move to this system is a move that does not benefit Albertans. I hope that this resource serves you, and all Albertans, well in those discussions. Regards, Nash Calvert Editor-in-Chief, The Barrister 14

The Barrister

Why No-Fault Auto Insurance is Wrong for Alberta By Keith McLaughlin New West Public Affairs

The debate over no-fault auto insurance is again intensifying in

ance companies in cost control rather than benefiting consumers.

Alberta. Proponents as usual argue a switch to no-fault could

Instead of better treatment for Albertans involved in automobile

streamline the claims process and reduce premiums. However, a

accidents or reduced premiums, no-fault insurance will lead to

close examination reveals several critical flaws in no-fault auto

increased profits for insurers at the expense of consumers who

insurance systems that show it is not the right fit for Alberta.

end up paying more for less coverage.

Here are several of the top reasons why no-fault auto insurance is Diminished Accountability for Insurance Companies

not right for Alberta.

One of the cornerstones of justice is the right to challenge unfair No Reduction in Premiums

decisions in court. No-fault insurance eliminates this, disallowing

No-fault auto insurance is most often touted as the solution to

policyholders from suing at-fault drivers’ insurance companies.

high premium costs. Beginning in the 1970s this model was

This lack of legal recourse results in diminished accountability

adopted across the U.S. with the promise of cost reduction. How-

for insurers in a no-fault system. Maintaining access to justice

ever, the experience has shown that that private, no-fault systems

and the ability to seek fair treatment in court is essential.

often lead to some of the highest auto insurance costs. In Alberta, where cost-saving is a priority, this system promises no real relief

Inadequate Treatment for Injured Albertans

in premium expenses.

No-fault insurance adopts a one-size-fits-all approach to injury treatment, which many medical professionals oppose. This model

A System that Favors Bad Drivers

limits the scope and quality of medical care, with injury benefits

No-fault insurance blurs the line between responsible and irre-

kept low by insurance companies. Consequently, victims might

sponsible driving. By treating at-fault and not-at-fault drivers

end up bearing more costs to support their recovery personally or

equally, it removes accountability for those who cause and are at-fault for accidents. There’s a fundamental unfairness in a system and lack of personal responsibility in a system where those who cause accidents aren’t held liable. This lack of accountability could potentially lead to less cautious driving behavior as there are fewer consequences for negligence. Insurance Companies Benefit, Not Consumers The design of no-fault insurance is more focused on aiding insurFall 2023

MICHEL V. LAVOIE M.D., F.R.C.S. (C)

Certified Independent Medical Examiner

Orthopedic Surgeon Suite 109, 11910-111 Avenue Edmonton, AB 780-483-8311 Fax: 780-930-2121 mvlavoiemd@shawbiz.ca

it is passed on to Alberta’s already strained healthcare and social

out of the courts and potentially create a new bureaucracy akin

assistance systems.

to the Workers Compensation Board (WCB) but instead run by private insurers. This shift would not be welcomed by Albertans

Insurance Industry Profits through No-Fault

who do not want another WCB-like entity governed by private

The insurance industry has been notably profitable, especially

insurers.

highlighted by their substantial savings during the pandemic. Despite these profits, insurance companies continue to advocate

Just Not Right for Alberta

for no-fault systems, furthering their financial gain at the cost of

No-fault auto insurance might seem like a convenient solution

consumer interests.

for policymakers but its implementation in Alberta would lead to higher premiums, less accountability, and inadequate support

Corporate Welfare at Its Worst

for accident victims. A system that ultimately benefits insurance

The push for no-fault insurance comes at a time when auto insur-

companies at the expense of consumers and undermines the

ance companies in Alberta are already profitable, yet continue to

principles of justice should be opposed in a province that values

increase rates. Advocating for a system that further benefits this

personal responsibility and civil rights.

profitable industry represents a form of corporate welfare that doesn’t align with the interests of Albertans.

As Alberta looks towards reforming its auto insurance sector, it’s crucial that any changes made are in the best interests of Alber-

New Layers of Bureaucracy

tans, prioritizing affordability, consumer choice, accountability

Switching to a no-fault system would move insurance disputes

and quality treatment for injury victims.

The Barrister

Submission to the Alberta Automobile Insurance Rate Board 2023 Annual Review July 27, 2023

Alberta Civil Trial Lawyers Association 777, 10339 - 124th Street, Edmonton, Alberta T5N3W1 1-800-665-7248 admin@actla.com Fall 2023

The following submission was presented to the Alberta Insurance Rate Board (AIRB) on behalf of the association by Board Chair, Owen Lewis, in mid-August. Utilizing the actuarial data from Craig Allen, and in collaboration with Keith from New West Public Affairs, ACTLA put together a comprehensive presentation outlining the increased profits of the insurance industry and demonstrating the need for regulation in the auto insurance industry. Based on our findings, ACTLA made the following conclusions: 1. The seven percent profit target for insurance companies is appropriate if calculated with inclusion of investment income; 2. The effects of Direct Compensation for Property Damage warrant further review; and 3. Recognition of Oliver Wyman's "New Normal" in the consideration of any proposed rate increase. Our full presentation and written submissions are now available online on the AIRB website, and the executive summary of our submission can be read below. Thank you to Owen, Keith, and Craig for their exceptional and important work. If you have any questions regarding the FAIR Alberta campaign or the contents of ACTLA's submission to the AIRB, please contact executivedirector@actla.com. The Alberta Civil Trial Lawyers Association (ACTLA) appreciates the opportunity to participate in the Alberta Automobile Insurance Rate Board’s (AIRB) 2023 Annual review process. ACTLA comprises legal professionals and represents thousands of Albertans across the province. As civil trial lawyers, we are committed to advancing a strong justice system that protects the civil rights of Albertans. We advocate and work with government in a range of areas including auto insurance, administration of justice issues, and other topics such as legal aid funding. ACTLA has retained Mr. Craig A. Allen, an independent consulting actuary with extensive experience in the Canadian insurance industry, to conduct a review of the draft Oliver Wyman report and associated historical data. Our submission is comprised of Mr. Allen’s technical analysis and this summarizing foreword which provides additional commentary on Mr. Allen’s findings from an ACTLA perspective. Affordability is a key issue facing Alberta families. Albertans have seen dramatic increases to their auto insurance premiums since 2018. Along with inflation and rising energy costs, large premium increases for auto insurance have been a major strain on many Albertans who continue to struggle with the ongoing affordability crisis. At the same time as Albertans struggle to afford premium increases, from our analysis, auto insurance companies operating in Alberta continue to experience healthy profits in excess of AIRB benchmarks. For the past three years in testimony to the AIRB, ACTLA has correctly predicted what has occurred in the auto insurance market and advised the rate board not to permit insurance rate increases. We have advised in previous submissions that the effect of increased premiums in the face of leveling bodily injury claims and other costs, and significantly reduced total claim costs due to COVID-19 would either lead to decreased premiums for consumers, or excess profits for insurance companies. Experience 18

throughout the last number of annual and semi-annual reviews has shown the insurance industry is experiencing significant profits in the Alberta auto insurance market while most cost-drivers for the industry continue on a downward trajectory. ACTLA believes the seven percent profit target for auto insurance companies is an appropriate benchmark. It should also be noted that profit on premiums is not the primary way insurance companies make money. Insurers hold large sums of capital from which they generate interest and investment income. The seven percent profit benchmark should account for this reality in its calculation. Since 2020, the auto insurance industry in Alberta has experienced billions in profits in excess of the seven per cent provision. In today’s climate of rising costs for everything, it is not acceptable for Albertans to be paying higher premiums while insurance companies regularly exceed the profit benchmarks established by the regulator. With supporting actuarial data included in Mr. Allen’s appended findings, ACTLA wishes to highlight the following findings for the AIRB regarding the most recent review of industry experience from Oliver Wyman: •

Bodily injury claim costs continue their trend of stabilization and decline From 2015 to 2019, the loss and Loss Adjustment Expense (LAE) cost per vehicle for third party liability bodily injury coverage and all coverages combined remained relatively stable, considering general inflation. However, starting in 2020, the loss and LAE cost for "moving" coverages experienced a significant decline due to the reduced vehicle traffic resulting from the COVID-19 pandemic. Additionally, with the implementation of Bill 41, the loss and LAE cost per vehicle for bodily injury coverage decreased, starting from accident year 2021. As a result, this has contributed to a further reduction in the rate of increase in bodily injury claims costs.

The Barrister

•

The insurance industry continues to experience significant profits Our analysis indicates industry is expected to achieve pre-tax profits of around $800 million each in both 2022 and 2023, which is higher than the analysis provided by Oliver Wyman. Higher profits under the Allen estimates are due to differing projections for the value of bodily injury and direct compensation claims. These projected profits of 17.6 percent and 16.3 percent respectively surpass the benchmark profit margin of seven percent. To align with the benchmark, a reduction in premiums is anticipated for 2023.

•

Driving patterns have changed effecting accident frequency Until now, there has been understandable concern that the frequency of claims could return to pre-pandemic levels as the population resumes activities interrupted by pandemic-related closures. Our review indicates that changes in working and driving practices are permanent. Any projections which now continue to anticipate a full recovery to pre-pandemic claim frequency should be dismissed.

•

The observed effect of Direct Compensation for Property Damage raises significant and concerning questions In 2022, a notable increase in the frequency of third-party property damage coverage, including Alberta's newly implemented direct compensation system for not-at-fault accidents, has been observed. This increase has surpassed the frequency for collision coverage, which raises questions since both coverages are expected to mirror the overall rate of auto accidents in Alberta. As more than 70% of vehicles in Alberta carry optional collision coverage, the divergence in frequency rates is puzzling. Despite the fact that the average premium rate per vehicle for collision coverage has remained unchanged since 2019, the before-tax profit margin has risen significantly from 10 percent to 29 percent. In contrast, average premium rates for basic coverages such as bodily injury, property damage - direct compensation, accident benefits, and underinsured motorists have seen a steep 20 percent increase since 2019. Interestingly, this increase is much higher than that for collision coverage, while the pre-tax profit margin has only increased moderately from -4% to 15%. These developments warrant further examination and analysis to understand the factors contributing to these trends.

In summary, the most recent Oliver Wyman report continues to demonstrate that claim costs are stable, and in some cases, declining. Combined with the effects of increases in premiums paid by consumers, the enduring impact of COVID-19 on driving patterns, industry savings associated with Bill 41 and other Government of Alberta policies, that the auto insurance industry in Alberta continues to experience profits well in excess of the AIRB benchmark. In consideration of the above-described trends, ACTLA recommends the following: •

The seven percent profit target for insurance companies is appropriate if calculated with inclusion of investment income on capital The return on the investment on capital is not included in the seven percent profit on premium calculation. It is our position that this investment return should be included in any assessment of insurance company profits.

•

Review the effects of Direct Compensation for Property Damage One of the primary responsibilities of the AIRB is to safeguard the interests of consumers and to prevent unfair pricing practices. The observed effects of the Direct Compensation for Property Damage model are concerning from a consumer perspective and warrant further investigation from the regulator.

•

Recognition of Oliver Wyman’s New Normal The AIRB consider the assessment of Oliver Wyman’s “New Normal” in the consideration of any proposed rate increases.

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Alberta's Minor Injury Regulation: A Primer By Thomas Kannanayakal

he Minor Injury Regulation (the “MIR”) was introduced in 2004 by the Government of Alberta1 to set an upper limit (the cap) for compensation payable to motor vehicle accident (“MVA”) claimants whose injuries were deemed less severe or minor. When the regulation was introduced in 2004, the MIR imposed a cap of $4,000 on non-pecuniary general damages (monetary compensation for pain and suffering) for injuries defined as “minor” under the regulation.2 The regulation requires an annual adjustment to the cap amount per the annual change in the Alberta Consumer Price Index.3 The minor injury caps for automobile accidents in Alberta for 2023 (from January 1, 2023, to December 31, 2023) and 2024 (January 1, 2024, to December 31, 2024) are $5,817 and $6,061, respectively.4

considered WAD for the purpose of the regulation.8 From June 1, 2018, onwards, unless there is damage to bone, teeth, or articular disc, injuries to the temporomandibular joint (“TMJ”) are considered minor injuries under the regulation.9

INJURIES COVERED UNDER MIR

HOW DOES MIR AFFECT THE MVA CLAIMANTS?

Under the current MIR (from November 1, 2020), a minor injury is defined as any clinically associated sequelae of a sprain (injury to one or more tendons or ligaments), strain (injury to one or more muscles), or whiplash‑associated disorder (“WAD”) that does not result in a serious physical or psychological impairment.5 The regulation defines a “serious impairment” as an impairment of a physical or cognitive function that results in a substantial inability to perform the essential tasks (despite reasonable efforts to accommodate the claimant’s impairment) of the claimant’s regular employment, training, education, or normal daily activities.6 WAD results from sudden acceleration-deceleration movements where the head and neck are injured.7 However, under MIR, if a claimant experiences WAD that includes neurological damage or damage to the spine, such injuries are not 1 Minor Injury Regulation, Alta Reg 123/2004. 2 November 2023 bulletin by the Superintendent of Insurance < https://open.alberta.ca/ dataset/9e781ed4-de90-47b5-b57f-4ab96bdc7325/resource/e77bb3cf-5032-4d99-ab2eefdbbf9d1279/download/tbf-superintendent-of-insurance-2023-09-bulletin.pdf>. 3 Ibid. 4 Ibid. 5 Sections 1(1), 1(4), and 1(5) of Minor Injury Regulation, Alta Reg 123/2004. 6 Section 1(1)(j) of Minor Injury Regulation, Alta Reg 123/2004 7 Khushnum Pastakia and Saravana Kumar, “Acute whiplash associated disorders (WAD).” Open Access Emerg Med. 2011; 3: 29–32. < https://www.ncbi.nlm.nih.gov/pmc/ articles/PMC4753964/>.

The injuries sustained by a claimant fall under the regulation only if the sprain, strain, WAD injury, or TMJ injuries do not result in a serious impairment.10 That is, injuries that impair the claimant’s ability to perform everyday tasks at work or home, chronic injuries deemed permanent and life-altering, or jaw injuries (TMJ) resulting in damage to bone or articular disc fall outside of this regulation even if the injuries are considered as sprain, strain, WAD injury, or TMJ injury.

In MVA claims, the claimants can claim monetary compensation for the pain and suffering resulting from their injuries. This type of compensation is usually referred to as non-pecuniary general damages. The MIR sets an upper limit for general damages. The insurance companies, which typically defend the defendants in a personal injury lawsuit, may limit the general damages payable to the MVA injury claimants under MIR. If the injuries have caused serious impairment to the claimants, the claimants must prove that and show that their injuries do not fall under the MIR. If the claimants and defendants disagree on whether the MIR applies in their scenario, the parties may have to mediate, arbitrate, or proceed to trial to resolve the issue. The onus is on the claimant to show that MIR does not apply to their claim. Therefore, MIR could increase the risk of under-compensation of unsophisticated MVA injury claimants not represented by a competent legal professional. 8 Section 1(1) of Minor Injury Regulation, Alta Reg 123/2004. 9 Sections 2 and 3 of Minor Injury Regulation, Alta Reg 123/2004. 10 Section 4 of Minor Injury Regulation, Alta Reg 123/2004.

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these reports are prepared to rely on definitions and tests of disability that do not coordinate with the definitions set out by our Legislature in the Regulations. The financial consequences are significant” (para 106).

IMPORTANCE OF CRITICAL REVIEW OF MEDICAL EXAMINATION REPORTS Insurance companies rely on medical reports of injury claimants to determine damages. When the medical examiners make an equivocal opinion, do not clearly represent the claimant’s conditions, or make an error in their report, it makes the claimant’s position difficult. As a result, claimants were often forced to litigate their claims before courts. The law on the MIR continues to evolve from the courts’ intervention. In McLean v Parmar,11 one of the three medical experts concluded that the claimant’s injuries were minor, and the other two did not comment on whether the claimant’s injuries were minor. In McLean, the starting point of the court’s analysis was that the claimant’s injuries were minor because of the evidence provided by a “certified examiner” under s. 12 of the MIR. Despite the medical expert’s evidence, the court concluded that MIR did not apply to the claimant’s injury in McLean due to the seriousness of the injuries. Therefore, the court concluded that the cap on the general damage set by the regulation did not apply in the scenario. In Jones v Stepanenko12, the court expressed its displeasure on the evidence provided by a medical expert: “I would urge [the medical expert], and other doctors certified to do the Certified Medical Examinations under the [MIR], to have the law explained to them on this point. These medical legal reports are relied upon by insureds and injured parties and they need to be as accurate an opinion as possible. It is not appropriate in the legal setting for which 11

2015 ABQB 62 [McLean]. 12 2016 ABQB 295.

In Jackson v Cooper,13 the insurance company refused to accept the claimant’s injuries were serious. The court concluded that the claimant suffered serious impairment because of his injuries, and the claimant’s injuries do not fall under MIR. The court in Jackson used the five-step analysis articulated in Sparrowhawk v Zapoltinsky,14 to determine if there has been a serious impairment under the MIR: 1.

Is a physical or cognitive function impaired?

Is the sprain, strain, or WAD injury “the primary factor contributing to the impairment”?

Does the impairment cause substantial inability to perform: • Essential work tasks, • Essential facets of training or education, or • “Normal activities of the claimant’s daily living”

Has the impairment has been “ongoing since the accident”? and

Is the impairment not expected to “improve substantially”? (para 96)

Counsels representing the claimants should review their clients’ condition against the test articulated in Sparrowhawk. Although it may be an unintended 13 14

2022 ABKB 609 [Jackson]. 2012 ABQB 34 [Sparrowhawk].

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consequence, the MIR could contribute to the underpayment of general damages to the claimants if they do not recognize that their injuries were miscategorized as minor due to their lack of awareness of the regulation, defective medical report, or poor representation.

MIR, s. 5(1) deems an injury as minor if the injured party does not undergo diagnosis and treatment according to the DTPR. It may be helpful to examine the implications of that presumption in what may be a relevant, albeit hypothetical, scenario. The definition of sprains and strains apparently captures injury to a person’s heart. A person whose heart is injured in an motor vehicle accident would arguably be required to follow the diagnosis and treatment regime in the DTPR, whether medically appropriate or not, or risk significant restriction of the injured person’s rights in tort. That may be an absurd result, depending on the proper construction of the MIR and DTPR minor injury scheme (paragraphs 188 and 189). [emphasis added]

THE CONCERNS REGARDING MIR

The MIR was introduced to improve the efficiency of the insurance industry.15 The regulation aimed to ensure that claimants receive compensation for their treatment and recovery while lowering the rising costs associated with insurance premiums due to payouts. However, it is not clear whether the consumer has benefited from the regulation.16 On the contrary, MIR placed an additional burden on claimants, who now must demonstrate that MIR does not apply to their claims even when their injuries are not captured by the regulation. Even the courts noted some of the challenges faced by the claimants under MIR. In Sparrowhawk, the court observed that: If the MIR and DTPR are too vague for meaningful application, that vagueness has serious potential consequences to the public interest. The MIR restricts recovery in tort for injuries that flow from motor vehicle accidents. The DTPR sets limits on the treatment of motor vehicle accident injuries. 15 Christopher Bruce and Jason Strauss, “Premiums, Profits, and Costs of Business in Alberta’s Automobile Insurance Industry, 1996-2006.” Economica report (2008) prepared for Canadian Bar Association; Morrow v. Zhang, 2009 ABCA 215 at paras 8-23; “Alberta government tables auto insurance bill, committee recommends adopting no-fault insurance,” Calgary, CTV News, October 29, 2020. 16 Ibid.

The lack of clarity in the MIR could also disproportionately affect the vulnerable individuals in our society who may not have the knowledge or energy to overcome the hurdles resulting from the legislation. In Stevenson v Thompson17 and Camacho v Lacroix,18 the defendants argued that MIR should apply in their scenarios despite detailed medical evidence on the severity of the plaintiff’s injuries. The court rejected the defendants’ argument in the above-noted cases. Due to the lack of clear guidance in the legislation, the plaintiffs were left to rely on the case law. Although it is not uncommon in our legal system for the parties to rely on the case law to shed light on legislation, the level of reliance on the case law on the MIR that is supposed to simplify the process seems to be counterproductive. In Camacho, the plaintiff argued that Alberta courts have held that the MIR does not apply to chronic pain cases. However, the court rejected the plaintiff’s argument and stated, “With respect, that is an overinterpretation of the decisions. The cases simply say that the MIR does not apply to chronic pain consequent to a WAD injury that is itself excluded from the MIR, pursuant to its definitions. Whether the intention and effect of the MIR is to capture chronic pain cases that lack an objectively observable medical foundation is a question for another day.” (Camacho at para 92) [emphasis added]

SUMMARY AND CONCLUSION

The MIR limits the amount payable for general damages for minor injuries. The regulation applies to sprains, strains and WAD injuries that do not cause serious impairment. For accidents after June 1, 2018, TMJ injury—not involving bone, teeth, or articular disc damage—is considered a sprain, strain, or WAD injury under MIR. The MIR does not apply if sprains, strains, or WAD injuries prevent the claimant from performing the essential tasks of the claimant’s regular employment, training, education, or normal daily activities. It is prudent to wait a few months to understand the impact of the injuries before classifying them. Even if a certified medical examiner, under Section 12 of the MIR, determines that the injury is minor, the claimant may contest that finding. The MIR only applies to the general damages; the claimant can still claim addi17 18

2017 ABQB 451. 2023 ABKB 610 [Camacho].

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EDITOR'S NOTE:

ACTLA's work to protect the rights of Albertans and ensure FAIR Insurance regulations in Alberta has been ongoing for many years. The following editorial was originally published in the Fall 2016 edition of The Barrister, by ACTLA Projects Coordinator Lyn Bromilow, and was chosen for re-publication to illustrate the cyclical nature of this no-fault insurance argument, and the importance of continuing to advocate for consumer protections in our province.

ACTLA Editorial:

Auto Insurance in Alberta & The Real Impact on People's Lives

By Lyn Bromilow ACTLA Projects Coordinator Originally Published Fall 2016

Insurers must certainly earn a reasonable profit so that they can continue to provide the product that is required by law. But those profits must not be achieved at the expense of punishing Albertans who through no fault of their own, need those benefits they have paid for.

he Government of Alberta is conducting a review of various automobile insurance regulations, as they are required to do on a regular basis. And while Government is diligent in their process, what is often missed is the human component of these reviews. Automobile liability insurance is mandatory if an Albertan wants to drive a car. As most people know, insurance is delivered in Alberta by private insurers, unlike government insurance schemes in several other Canadian jurisdictions. Accordingly, many insurers and certainly their lobby group, the Insurance Bureau of Canada (IBC), have long relationships with the office of the Superintendent of Insurance. Alberta is the second largest private auto insurance jurisdiction in Canada, following only Ontario. This makes Alberta a very important jurisdiction for auto insurers. Different sources have reported that in 2015 the IBC had a lobbying budget of $32 million. If this number is accurate, it is significant. Certainly, lobbying efforts would extend throughout Canada and would cover a number of issues including disaster relief, flood mitigation and other property issues. But one must wonder how much of that $32 million is spent trying to convince

Alberta government decision makers, that changes to auto insurance must be made in order to reduce costs, and thereby protect or increase insurer profits. Once again, insurers are claiming that costs are escalating and are blaming a specific set of injuries. Sound familiar? It was around 2000 to 2004 that the insurance industry aggressively lobbied government to cap non-pecuniary damages (pain and suffering) for so-called ‘minor’ injuries. Those injuries, despite a complex definition, were essentially soft tissue injuries. It is those injuries that were targeted because those were the injuries which were most often claimed by Albertans injured in car crashes. Remember, seat belts became compulsory in Alberta in 1987 and it took several years for a high compliance rate to be achieved. So by the late 1990’s, fewer Albertans were crashing through windshields or being thrown out of vehicles. Then came airbags, so now Albertans were not being slammed into dashboards or steering wheels. All good things, right? But all of these improvements to safety resulted in something else. Increased soft tissue injuries. Forces sustained in crashes were still absorbed by occupants, but now those forces had greater impact on the muscles, The Barrister

tendons, ligaments and other tissues of the neck, shoulders and back. Also around the same time – 2000 to 2002, insurers were suffering substantial reductions in investment income, historically a key component of insurer profi tability. The industry reacted by raising rates, tightening up underwriting, all leading to a ‘hard’ market. Young inexperienced drivers were facing huge premiums. Experienced drivers who were uninsured for a period of time, perhaps out of the country serving in the military, were considered high risk and faced high premiums. Some drivers with poor records had difficulty obtaining insurance at all. With such high rates, the incidence of uninsured drivers increased. None of this was particularly new. Automobile insurance profitability is subject to a well documented cycle of peaks and valleys. 2000 to 2002 was one of those valleys and insurers were looking for a way to level the landscape. By the end of 2002 the cycle was turning, and in 2003 the insurance industry had returned to significant profitability. However, the insurance industry had achieved success in convincing the Alberta Government that ‘something must be

done’ and the Government launched its review and overhaul of auto insurance in late 2002. Despite the insurance industry’s return to profitability in 2003 and even greater profitability in 2004, the Government proceeded with reforms that ultimately provided the insurers what they wanted: lower costs and greater profits. So back to the human component. Why is liability automobile insurance mandatory? It’s to protect innocent people from the wrongdoing of others. Some would argue that insurance does this by fixing cars, paying for lost wages or covering medical expenses. This is true in the general sense, but of course there are often disagreements regarding the value of cars, or the amount of wages lost, or the type and frequency of medical expenses incurred. But what about when someone hurts? What about enduring painful treatments to try and get better? What about depression or anxiety brought on by the harm that’s been suffered? What about giving up that golf game, because it hurts too much afterwards? What about passing up an opportunity to throw a baseball with your child because the next two or three days will be spent in pain? What about lost sleep? These are all intangible injuries, but they are every bit as real as a broken bone. These are examples of the ‘pain and suffering’ suffered by many Albertans who are unlucky enough to be the victims of negligent drivers. These are the injuries that are diffi cult to quantify because every

Albertan is different and injuries will vary so much from person to person. How do you compare a 20-year old athletic male with a 60-year old sedentary female? The insurance industry has the answer. Cap them all. That’s what they attempted to do when they lobbied the Government of Alberta so aggressively, leading up to the reforms of 2004. They achieved a good degree of success, capping so-called ‘minor injuries’ and enjoyed record profits for the next number of years. But as health care costs continued to increase and more Albertans began to question whether or not their particular injuries should be suffered in silence, those record profits began to slip. In conjunction, premiums for liability insurance were relatively static. Some years saw a decrease in premiums, some years an increase, and some years, no change at all. This means that Albertans enjoy lower premiums today than they did over 10 years ago, when considering inflation and today’s dollar. Meanwhile, those pesky victims are still looking for fair compensation for their pain and suffering. The fair compensation they are entitled to. The fair compensation that recognizes they have been harmed. Once again the insurance industry is aggressively lobbying the Alberta Government to cap pain and suffering on a wider range of injuries, claiming that their costs are rising from these specific injuries. Injuries that include pain that

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can last not only years, but a lifetime. Injuries that include trauma to the jaw that can lead to clicking, misaligned teeth, headaches and even surgery. Injuries that include emotional trauma or PTSD. The Government of Canada recognizes the serious nature of PTSD suffered by soldiers. Yet the insurance industry says car crash victims have ‘won the lottery’ and are only looking for more money. Insurance came about in order to share the financial burden and risk when losses were suffered. Today, there is a lot of focus on eliminating that risk to improve profit, rather than fairly compensate those who have paid into the pool to share that risk. Insurers must certainly earn a reasonable profit so that they can continue to provide the product that is required by law. But those profits must not be achieved at the expense of punishing Albertans who through no fault of their own, need those benefits they have paid for. Albertans should expect to pay a reasonable price for this safety net, and the private insurance industry should expect to earn a reasonable profit to provide it. The lives of so many unsuspecting Albertans should not be negatively impacted by the desires of insurance companies and their shareholders to achieve ever greater profits.

The Horrors of No Fault Insurance in British Columbia By Elisabeth A. Sadowski Brain & Injury Law | Trial Lawyers Association of British Columbia

ver the past five years, the BC government has introduced various pieces of legislation such as the no fault insurance scheme which have eroded the rights of British Columbians. As a plaintiff personal injury lawyer, I have represented clients from across BC who have been seriously injured as a result of motor vehicle accidents (occurring prior to May 2021), assaults, slips & falls, and occupiers’ negligence claims. In 2023, serving as President of the Trial Lawyers Association of British Columbia (TLABC), I have been part of the struggle to protect the rights of British Columbians from the effect of no fault insurance.

“Minor Injury” Caps Unlike Alberta, BC has a government-run monopoly auto insurance company called the Insurance Corporation of British Columbia (ICBC). The government insists that it was forced to bring in reforms to address ICBC’s increasing debt. Although “minor injury” caps, like those in Alberta, have been introduced, the government’s long-held intention appears to be to legislate no fault insurance regardless of earlier reforms. David Eby, the BC Attorney General at the time and current BC Premier, is said to have planned the implementation of no fault legislation in BC as far back as November 2018.1 Just one year after announcing “minor injury” caps (up to $5,500), he stated the government would be creating a definition for minor injuries that would likely include sprains, aches and pains, mild whiplash, cuts and bruises, anxiety, and stress. He indicated that concussions, broken bones, and other serious injuries would not be classified as “minor.” On May 2, 2018, Eby issued a press release that expanded the definition of “minor injury”: “We anticipate that the regulations will include temporomandibular joint disorder (TMJ) – pain in your jaw joint and in the muscles that control jaw movement – as well 1 Vancouver Sun, “From no-fault hater to no-fault lover: The inside story on David Eby’s decision to revamp ICBC” https://vancouversun.com/news/politics/from-no-fault-hater-to-nofault-lover-the-inside-story-on-david-ebys-decision-to-revamp-icbc

as the more minor whiplash associated disorders (WAD) 1 and 2 in the definition. The most serious of whiplashassociated disorders will not be included in the definition, nor will third-degree sprains, strains, broken bones, or brain injuries.”2 He also said that mental health conditions lasting longer than 12 months would not be considered “minor.” Six months later, on November 9, 2018, the Insurance (Vehicle) Act, R.S.B.C., c. 231 (the “Insurance (Vehicle) Act”)3 was amended and Insurance (Vehicle) Act, Minor Injury Regulation, B.C. Reg. 234/2018 (the “Minor Injury Regulation”)4 was introduced. The legislation resulted in a further broadening of the “minor injury” definition to also include brain injuries (i.e., concussion) and imposed the “serious impairment” criteria that mirrors the definition of “incapacity” for psychological/ psychiatric and brain injury conditions. By the Attorney General’s own admission, the “minor injury” definition went from “sprains and aches,” excluding brain injuries/concussions, to injuries “whether or not chronic” that now also included psychological/psychiatric and brain injuries. As it stands in BC, “minor injury” caps are still applicable for injured British Columbians who were involved in motor vehicle accidents from April 1, 2019 to May 1, 2021, after which time the no fault insurance took over.

No Fault The hypocrisy of the “minor injury” caps must be highlighted as it proved to be a smokescreen for what was to come – the 2 “Further transparency on regulations planned for ICBC reforms,” Ministry of Attorney General, May 2, 2018 https://archive.news.gov.bc.ca/releases/news_releases_2017-2021/2018AG0028-000810.htm 3 Insurance (Vehicle) Act, [RSBC 1996] CHAPTER 231, www.bclaws.ca/civix/document/ id/complete/statreg/96231_01 4 Insurance (Vehicle) Act, Minor Injury Regulation, B.C. Reg. 234/2018 http://www. bclaws.ca/civix/document/id/crbc/crbc/234_2018

The Barrister

eventual full implementation of no fault insurance. On February 6, 2020, then-Premier of BC, John Horgan, alongside Attorney General Eby, announced plans to implement no fault insurance in BC.5 At the same time, ICBC auto insurance premiums were cut by 20% for British Columbians.6 As a simple definition, no fault insurance restricts the rights of British Columbians to sue for damages if they have been injured in a motor vehicle accident in BC unless the defendant is criminally charged and convicted. The no fault system resembles workers’ compensation claims, in that the body “WorkSafe BC” (like ICBC in its current form) directs the claimant’s medical care with little recourse for the injured individual. British Columbians are eligible to receive a lump sum for compensation if ICBC determines that the claimant has sustained a permanent impairment as a result of a “catastrophic injury”. A value-chart then applies. No fault applies to claims for British Columbians who are injured in motor vehicle accidents from May 1, 2021 onward. Thus, British Columbians are no longer entitled to awards or settlements for pain and suffering, future income capacity, or other damages that might be capped and limited (such as treatment costs, income replacement, etc.). When no fault was announced, the BC government also announced up to $7.5 million in medical and rehabilitation benefits compared to the $300,000 that existed at the time.7 These changes were ultimately put into place at the same time as no fault on May 1, 2021. However, these changes, which were allegedly intended to support more British Columbians, in fact caused fewer injured people to have access to care.8 A new report by the Insurance Bureau of Canada (“IBC”) investigated the first year of ICBC’s new “enhanced care model”, which was summarized by Insurance Business: According to the report, ICBC’s operating expenses exceeded what it had provided in injury claims by $173 million. The insurer’s operating expenses in 2021/22 stood at $1.62 billion, but it paid $1.48 billion in injury claims during the same period. By comparison, ICBC paid out $2.11 billion in injury claims in 2020/21, before the no-fault regime was implemented. ICBC’s year-end financials indicated that the switch to a pure no-fault system allowed it to reduce what it provides to accident victims by 30%. But it was also noted that the number of collisions during the same period were 5 Vancouver Sun, "B.C. to cut ICBC rates 20 per cent and switch to 'no-fault' insurance" https://vancouversun.com/news/local-news/live-b-c-to-switch-to-no-fault-auto-insurancetrim-rates-20-per-cent-in-2021 6 Vancouver Sun, "B.C. to cut ICBC rates 20 per cent and switch to 'no-fault' insurance" https://vancouversun.com/news/local-news/live-b-c-to-switch-to-no-fault-auto-insurancetrim-rates-20-per-cent-in-2021 7 Global News, “B.C. government axing lawyer, legal costs to create no-fault style insurance at ICBC” https://globalnews.ca/news/6516071/icbc-changes/ 8 Insurance Business Magazine, “ICBC's no-fault regime led to "dramatic reduction" in recovery benefits – IBC” https://www.insurancebusinessmag.com/ca/news/auto-motor/icbcs-nofault-regime-led-to-dramatic-reduction-in-recovery-benefits--ibc-426430.aspx

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significantly up; there was a 15% increase in collisions from 2020’s 225,000 to 2021’s 260,000. “The purpose of auto insurance is to ensure that people get the benefits they need to recover from injuries sustained in an accident,” said IBC Pacific and Western Vice-President Aaron Sutherland. “ICBC’s dramatic reduction in claims costs calls that key tenet of insurance into question.” Despite the increased number of motor vehicle accidents, benefits to British Columbians have decreased. Sutherland echoes this point, “We think this shows that, rather than looking inward to find savings ICBC is balancing its books on the back of accident victims.”

concurring on this ground but further noting that the appeal would also be dismissed on the constitutional law ground. She noted, “…one of the effects of s.5 is to force plaintiffs in motor vehicle accident cases to decide they simply cannot afford to proceed with their claims, or parts of their claims…I conclude it is inconsistent with the ‘basic judicial function’ of superior courts and infringes their core jurisdiction.”10 Then, as recently as November 2023, the BC government brought in an Order in Council that amended the Disbursements and Expert Evidence Regulation under the Evidence Act in direct response to the judgment by the BC Court of Appeal.11 The amendments essentially reinstated the “6% cap”. Presently, the Trial Lawyers Association of BC is reviewing its options.

“...the fear that the most vulnerable are being increasingly victimized is proving true...” Anecdotally, a number of rehabilitation clinics are seeing a rapid decline in their clients. Many clients are simply “giving up” on treatment due to the complications and complexities of securing funding for their care on their own while managing their ongoing injuries. Some find it difficult to reach their insurance adjuster, and some report that their adjusters have failed to renew their treatments, and so on.

Additional Efforts by Government beyond “Minor Injury” Caps and No Fault Despite the presumable significant cost savings with no fault, the government has continued their efforts against injured British Columbians. For example, an amendment to section 5 of the Evidence Act, Disbursements and Expert Evidence Regulation, essentially “capped” disbursements to 6% of a settlement or judgment amount.9 In other words, a plaintiff, unaware of how much their claim might be worth, would be limited to spending $6,000 if they eventually received a settlement or judgment of $100,000. As most personal injury lawyers know, the cost of expert reports, clinical records, court reporters, and other expenses can add up and easily exceed a few thousand dollars. The Trial Lawyers Association of BC ultimately challenged the government on this legislation and on July 8, 2022, Justice Smith of the Supreme Court of BC struck down the regulation that limited a successful plaintiff’s disbursement recovery to 6% of the settlement or judgment. Justice Smith concluded that the regulation was both invalid and unconstitutional. An appeal was brought by the government in the BC Court of Appeal and Justices Harris and Voith noted that they would dismiss the appeal on the administrative law ground with Justice Newbury 9 Evidence Act, R.S.B.C. 1996, c. 124, ss.12.1 and 12.2, Disbursements and Expert Evidence Regulation [BC Reg. 31/2021), https://www.bclaws.gov.bc.ca/civix/document/id/ complete/statreg/210_2020

The Aftermath From the perspective of plaintiff personal injury lawyers, who are inundated daily with calls and emails from injured British Columbians, after more than 2½ years, most people are still unclear about the implications of no fault insurance and how it can affect individuals and families. Internal studies by the Trial Lawyers Association of BC show that British Columbians do not fully understand “minor injury” caps or no fault insurance unless they have been injured in a motor vehicle accident. Unfortunately, the number of people who are injured is growing exponentially. And the fear that the most vulnerable are being increasingly victimized is proving true – individuals with serious brain injuries without advocates, as well as immigrants, senior citizens, and young people with undefined futures are all scrambling to navigate the legal system with few available options and a lack of fair compensation by the tortfeasor. The same is true for self-employed business owners who may have an inconsistent income or high-income earners who have a ceiling on their benefits if totally disabled. Thousands of British Columbians are falling through the cracks, and as advocates, we feel helpless in our efforts to support them. Many plaintiff personal injury lawyers are busy with existing file loads under the old system, which could continue for three years or more. We try our best to listen to those who contact us about claims under the no fault regime, even if we cannot represent them. As advocates, we feel it is incumbent on us to educate individuals about the changes in this currently broken system. The next election in BC has yet to be called, though some 10 British Columbia (Attorney General) v. Le, 2023 BCCA 200 https://www.canlii.org/en/ bc/bcca/doc/2023/2023bcca200/2023bcca200.pdf 11 Evidence Act, R.S.B.C. 1996, c. 124, ss.12.1 and 12.2, Disbursements and Expert Evidence Regulation (OIC 468/2020) https://bclaws.gov.bc.ca/civix/document/id/oic/ oic_cur/0628_2023

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speculate it will happen next spring. (The BC government has stated it will happen close to the October 2024 deadline.) The NDP, which is currently in power, is aware of the no fault horror stories, but still supports the system. The other two parties, the BC United (formerly the BC Liberals) and the Conservative Party of BC have both stated that they will reverse the no fault system and bring in a broader definition of the “minor injury” caps.

Final Thoughts Where does Alberta go from here? I would encourage Alberta litigators to educate clients, colleagues, staff, and members of their healthcare network about the horrors of no fault. In every community, the brain injury groups, cycling groups, and other likeminded groups will undoubtedly be affected by no fault reforms. Education and awareness is the first step to navigating this important issue and understanding what the true impact might be on Albertans and civil justice more broadly. The Trial Lawyers Association of BC has and continues to apply a multi-pronged approach with a pending constitutional challenge, regular meetings with MLAs from the main political parties, and media engagement to encourage British Columbians to speak up about their own horror stories. If no fault insurance is the ultimate reality, there are virtually no options available to protect individuals. We have encouraged people to be proactive as best they can under the current regime, for example, high-income earners can look into additional (self-insured) disability insurance since the coverage from ICBC are generally inadequate (and for wage loss benefits depends on a total disability, nothing less). However, often it is too late for those who have already been injured in motor vehicle accidents. We have heard of some cases where individuals have no choice but to sell their homes and make drastic changes in their lives if they are left without adequate income replacement. There are clearly countless shortfalls to the no fault regime, and it has only been 2 ½ years… I would stress that this is not the end of BC’s fight against no fault by any means. British Columbians are not going down without a fight, and we encourage Albertans to do the same!

(The Personal opinions set out in this article are the Author's, and not those of the TLABC.)

Elisabeth is an associate lawyer at Collette Parsons Corrin LLP – Brain & Injury Law – whose main areas of practice are plaintiff personal injury and medical malpractice. Prior to joining Brain & Injury Law, Elisabeth practised at a prominent midsize firm and a plaintiff-only injury firm, both in downtown Vancouver. Elisabeth’s familial background in medicine (a neurologist father and orthopaedic surgeon brother) and her own experience in surviving a car accident (and subsequent legal process) inspired her to become a lawyer. As a result of her experience, she is uniquely able to empathize and support her clients. In her role as counsel, Elisabeth has appeared as an advocate before all levels of court in British Columbia (the Provincial and Supreme Courts of British Columbia, and the British Columbia Court of Appeal). Born and raised in Vancouver, Elisabeth strongly believes in giving back to both her local and legal communities. She has served on a number of executives and boards including her current role with Parkinson Society British Columbia. This year (2022-23), Elisabeth is the president of the Trial Lawyers Association of British Columbia. In the past, she has served on the Canadian Bar Association BC Branch (“CBABC”) Young Lawyers Advisory Committee, the executives of the BC Women Lawyers Forum (vice-chair of marketing and communications) and civil litigation (member at large) sections for the CBABC. Fall 2023

Case Law Corner The 6% Cap On Disbursements in British Columbia

By Priscilla Cicek

There are more changes in British Columbia being legislated.

capped disbursements relating to personal injury actions arising from motor vehicle collisions in British Columbia has finally been released and published today on the BCSC website and has been deemed “of no force or effect”. The simple conclusion: I declare that s. 5 of the disbursements and expert evidence regulation is inconsistent with the enabling statute, s. 12.1 of the Evidence Act, and contrary to s. 96 of the Constitution Act, 1867. It is therefore of no force or effect.

To provide you with a brief history for a better comprehension, I will enumerate my article to market on the history here: The government attempted to cap disbursements to 6% of the amount awarded as compensation. Eg: If a case was awarded 100,000 in damages, the insurer, according to the Rules and Regulations, would only need to reimburse a Plaintiff 6% of the value of the case – which would total $6,000 in this example.

[Editor's Note: An additional article expanding on this can be found via the link in the footnotes]1

The relevant Section from the Disbursements and Expert Evidence Regulations is noted:

The question remains, will this decision be appealed? And if not, how will this impact the legal industry as it relates to tort claims and ICBC? Will the government back peddle with their no-fault legislation? All this remains to be seen.

LIMITS ON AMOUNT OF DISBURSEMENTS 5 (1)In this section: “disbursement limit” means, in relation to a vehicle injury proceeding,

UPDATE – Nov 2023

(a) the amount that is 6% of the total award of damages assessed by the court in the vehicle injury proceeding or, if an offer to settle the vehicle injury proceeding is accepted, 6% of the amount offered, or

Instead of appealing the Court decision, the Government has decided to introduce Legislation (just weeks ago – late November) Order in Council #628 and essentially brings into force CAPS on disbursements through legislated changes.2

(b) if the court dismisses the vehicle injury proceeding or, at the conclusion of the vehicle injury proceeding, does not make an award of damages, the amount determined by the court;

In order to fully understand Order in Council #628, you also need to review the Disbursements and Expert Evidence Regulations which I have also attached same here under Section 5 which is the relevant section that is being amended by Order in Council #628.

The Trial Lawyers appealed this and as you will see below, the Court deemed the Regulation as unconstitutional and of “no force or effect.” The anticipated decision from the BCSC in regards to the 30

(b) in subsection (1) in the definition of “excluded disbursements” by repealing paragraph (d) and substituting 1 2

https://caselawcorner.com/capped-disbursements-of-no-force-or-effect/ https://www.bclaws.gov.bc.ca/civix/document/id/oic/oic_cur/0628_2023

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the following: (d) disbursements for expert evidence, or an expert report, on the issue of liability; (e) disbursements that all parties to the vehicle injury proceeding have consented to allow as excluded disbursements; (f) disbursements that the court has ordered to be excluded disbursements on application made under subsection (6). , Subsection 3 is repealed. The following is now added: (d) by adding the following subsections: (4) The limits set out in subsection (2) do not apply to a vehicle injury proceeding if the trial date set out in the notice of trial filed in relation to the vehicle injury proceeding is no more than 3 months after the coming into force of this subsection. (5) If the trial date set out in the notice of trial filed in relation to a vehicle injury proceeding is more than 3 months after the coming into force of subsection (4), the limits set out in subsection (2) do not apply to disbursements incurred by a party if the court is satisfied that the party necessarily or properly incurred those disbursements before the coming into force of subsection (4). (6) On application by a party to a vehicle injury proceeding, the court may, if satisfied that the conditions set out in subsection (8) are met, order that the disbursements itemized in the order are excluded disbursements. (7) If disbursements to be incurred for expert evidence or expert reports are the subject of an application under subsection (6) and the applicant is also making an application under section 12.1 (5) of the Act, the applicant must make both applications at the same time. Approval is required for “disbursements” prior to them being incurred. Failing which, a Chambers application that requires conditions to be met must be scheduled: The Conditions that must be established to seek an Order allowing reimbursement: (8) The following are the conditions for the purposes of subsection (6): (a) the application is made before the disbursements are incurred; Fall 2023

(i) evidence that there is a reasonable risk that the total amount of disbursements the party intends to incur to resolve the vehicle injury proceeding will exceed the disbursement limit,

(b) were the disbursements not excluded, the party making the application would suffer prejudice disproportionate to the benefit of not increasing the complexity and cost of the vehicle injury proceeding.

(ii) evidence that the disbursements that are the subject of the application are necessary to justly resolve the vehicle injury proceeding in light of the complexity of the vehicle injury proceeding or the importance of the issues in dispute, and

The claims excluded from this legislation are matters that will be proceeding to a trial within 3 months from the date this Order is legislated. If a Chambers application is necessary, the following will need to be included in your materials:

(iii) evidence that the party would be unable, without undue hardship, to incur the disbursements that are the subject of the application were those disbursements not excluded.

(9) In an application under subsection (6), a party must include the following: (a) the nature and the evidentiary value of each disbursement that is the subject of the application;

(10) For certainty, this section applies to all vehicle injury proceedings, whether or not the proceeding was commenced before the coming into force of this subsection

(b) evidence of the prejudice the party would suffer were the disbursements that are the subject of the application not excluded, which must include

Case Law Corner is the personal blog of Priscilla Cicek. Any views or opinions represented in this blog are personal and belong solely to the blog owner and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. All content provided is for informational purposes only. The writer makes no representations as to the accuracy and completeness on any information. Legal advice should always be sought.

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The Motor Accident Injuries System in New South Wales By Tim Concannon, Partner Carroll & O'Dea Lawyers

INTRODUCTION The various states of Australia have very different regimes for dealing with claims by persons injured in motor accidents. In New South Wales we have what is known as a “hybrid” compensation scheme. For accidents from 1 April 2023, this provides “no-fault” cover by private insurers for loss of earnings and medical treatment/care expenses for up to 12 months after the accident. For accidents prior to 1 April 2023, this no-fault coverage was only for 26 weeks. Common law damages are still available in New South Wales but only if you can establish fault on the part of the insured driver AND that you have sustained more than a “threshold” injury.

“Soft tissue back or neck injuries are now deprived of the right to bring a common law damages claim.” "This is particularly unfair on manual workers who may have sustained a disc injury which does not amount to radiculopathy and who are prevented from pursuing their chosen field of manual employment for the rest of their lives." THE REGIME PRIOR TO DECEMBER 2017 For motor accidents prior to 1 December 2017, the scheme was largely fault-based. There was a limited amount of no-fault coverage for children and for those suffering injuries as a result of “blameless” accidents (such as cases involving mechanical failure or those caused by unforeseen medical conditions). There was also some no-fault cover available to cover medical treatment and loss of wages up to $5,000 during the first 6 months after the motor accident and those catastrophically injured had, and still have, a separate scheme which covers medical treatment and care/modification expenses on a lifetime basis regardless of fault. Access to common law damages was unrestricted to those who could establish fault but there were thresholds and caps which applied to some heads of damage. For instance, damages for non-economic loss (general damages or pain and suffering) was, and still is, only available to those who can establish that they suffer from a whole person impairment within the meaning of AMA 4 which is at or above 11%.

ACCIDENTS ON AND AFTER 1 DECEMBER 2017 A fundamentally different regime applies to motor accidents occurring in New South Wales on or after 1 December 2017. If death or injury now results from a motor accident occurring in New South Wales, then statutory benefits (including income replacement payments and treatment expenses) are payable for a minimum period of 12 months unless the person involved in the motor accident committed a “serious driving offence”. This period for statutory benefits was 26 weeks for accidents prior to 1 April 2023. The concept of blameless accidents continues under the 2017 regime but they are now known as no-fault motor accidents. If the injured person was not wholly or mostly at fault for the accident, and they can establish that their injuries are more than threshold injuries, they are entitled to statutory benefits after 12 months. The injured person is also entitled to commence a common Fall 2023

law damages claim which is limited to loss of past and future earnings/earning capacity and non-economic loss (if the person's whole person impairment exceeds 10%). A person who was not wholly or mostly at fault for the motor accident and who has sustained a “non-threshold” injury is entitled to a lifetime of payment of his/her reasonable and necessary medical treatment expenses regardless of what happens with their damages claim. Weekly benefits are paid during any period of incapacity for up to 5 years. Accordingly, one can see that this concept of a threshold injury is the cornerstone of the motor accident regime in New South Wales post-December 2017. A threshold injury is defined by Section 1.6 of the Motor Accident Injuries Act 2017 as a soft tissue injury or a psychiatric injury that is not a recognised psychiatric illness. The term “soft tissue” injury excludes an injury to nerves or a complete or partial rupture of tendons, ligaments, menisci or cartilage. An injury to a spinal nerve root is deemed to be a soft tissue injury unless it manifests in neurological signs which satisfy “radiculopathy” as defined in the Motor Accident Guidelines. In the writer’s experience, the requirements of radiculopathy are not readily satisfied, even in the case of a disc injury. In the case of a psychiatric injury, a diagnosis of an adjustment disorder or an acute stress disorder results in a finding of a threshold injury. In the case of the statutory benefits no-fault regime, the assumption by the legislators and the regulator was that injured persons should, for the most part, be able to navigate the system themselves without legal involvement. If they require assistance when dealing with the insurer, then they are entitled to guidance from the organisation known as “CTP Assist,” which forms part of the regulator (SIRA), or from the independent organisation known as the “Independent Review Office” (IRO).

THE BENEFITS OF THE 2017 REGIME The 2017 regime does have certain advantages compared to the pre-2017 regime. In particular, the injured person obtains early access to income replacement benefits and to payment of their medical treatment and care expenses as required. Further, the open-ended nature of the lifetime medical treatment and care coverage does ensure that injured persons are not significantly out of pocket for a large medical expense which may not have been predicted at the time of early resolution of a damages claim. The figures support the Government's assertion that more money out of the premium dollar does end up in the hands of the injured person, on average, compared to the old system.

34 34

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THE DOWNSIDE OF THE 2017 SYSTEM A key reason for the 2017 reforms was to reduce premiums by significantly reducing the ability of injured persons who suffer whiplash injury to pursue damages claims. This has largely been achieved via the threshold injury test. Soft tissue back or neck injuries are now deprived of the right to bring a common law damages claim. This is particularly unfair on manual workers who may have sustained a disc injury which does not amount to radiculopathy and who are prevented from pursuing their chosen field of manual employment for the rest of their lives. Such a person is only entitled to weekly benefits and medical treatment expenses for a maximum period of 12 months. These injured persons are effectively subsidising the cost of allowing limited no-fault benefits for those who have caused motor accidents and who, like them, are entitled to statutory benefits for up to 12 months. The other aspect of the 2017 regime which is manifestly unfair is the limited capacity of injured persons to obtain legal advice within the statutory benefits part of the regime. Regrettably, there are numerous parts of the 2017 legislation which are complex and which require detailed knowledge of the legislation, and preferably legal experience. As matters stand, there are a number of disputes within the statutory benefits system for which no legal costs are payable at all. Even those statutory benefits disputes for which there are some legal costs payable are subject to a low cap which is currently up to the maximum sum of $1,800. The low size of this cap effectively means that lawyers either are not prepared to act in such statutory benefits disputes or are required to subsidise the system by providing free legal advice. Because "threshold injuries" are capped at $1,800, and because the finding of a non-threshold injury is the key to receiving ongoing coverage, whether a plaintiff has suffered a "threshold injury" is an important initial issue under the 2017 regime. Plaintiffs may struggle access to justice under this system, as legal counsel perceive significant risk in taking on a case which may have such a low cap It is true that "CTP Assist" assists some injured persons with navigating the statutory benefits system but they are not allowed to provide legal advice and they are not permitted to lodge any dispute on behalf of the injured person with the Personal Injury Commission (PIC), which is the primary body responsible for determining motor accident disputes in NSW. Another aspect of the current system which is controversial is the inability of an injured person to capitalise his or her future right to medical treatment expenses or care into a lump sum. There are strong arguments on both sides in this area. I can understand the desirability of an injured person not being out of pocket for future, and unexpected, medical treatment or care expenses with an early damages settlement. On the other hand, my experience is that there are psychological benefits typically associated with an overall settlement of an injured person’s claim and I also firmly believe that there are significant philosophical reasons to support the autonomy of decision-making which results from injured persons resolving their total damages entitlements for one lump sum. The dispute resolution system for treatment disputes is problematic in that there is no swift means of determining such disputes other than requesting an internal review by the insurer. What usually happens is that many injured claimants just pay for the treatment themselves or choose not to undergo the recommended treatment. The only other option is to lodge a treatment dispute with the PIC (usually without legal assistance) and await an assessment by an independent PIC medical assessor, which generally takes many months. Tim Concannon is one of Australia’s leading experts in personal injury law. Tim is an accredited Law Society of New South Wales specialist in Personal Injury Law and is a much sought-after presenter to others within the legal profession. His detailed technical knowledge of personal injury law is coupled with his capacity to develop an easy rapport with both clients and fellow legal practitioners alike. Joining Carroll & O’Dea in 1994, Tim has had a long-term and significant interest in the underappreciated plight of people suffering from a traumatic brain injury. He was a board member of the Brain Injury Association of NSW and, in this capacity, sought to promote public awareness of the impact of brain injury both on the individual and on friends and family. Tim was an assessor of the Claims Assessment and Resolution Service (CARS) and then the Dispute Resolution Service (DRS) of SIRA between 2004 and 2021. Tim has also been a member of the Injury Compensation Committee of the Law Society since 2008 and has played a leading role in drafting submissions to government agencies relevant to areas of personal injury law. On behalf of the Society he devotes a great deal of time to consultation sessions with these same government agencies. He has also appeared on behalf of the Law Society at a number of government inquiries into the functioning of the workers compensation and motor accident injury schemes. Fall 2023

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A Failed Experiment: Analysis & Evaluation of NoFault Laws

First Published 2000

“Whatever the Advantages of no-fault, a reduction in court cases and court costs would not appear to be one of them." As of 1995, ten states had mandatory no-fault laws.1 Another eleven states and the District of Columbia had hybrid no-fault systems, under which tort lawsuits and compensation are not restricted.2 Three of these states, Pennsylvania, New Jersey, and Kentucky, presently provide motorists with circumscribed choices for the kind of coverage they may purchase. Since 1989, four states have repealed their mandatory no-fault laws.3 This is a detailed look at how no fault laws have worked in practice. Data from no fault states shows that no fault increases premiums while restricting consumers’ rights.

NO-FAULT INCREASES INSURANCE PREMIUMS The contemporary policy debate surrounding auto insurance reform has centered upon the pocketbook issue of price. Thus, the question of whether no-fault raises or lowers the cost of auto insurance is of major importance in the debate over auto insurance reform. The following tables summarize data drawn from annual reports published by the National Association of Insurance Commissioners (NAIC), including State Average Expenditures & Premiums for Personal Automobile Insurance in 1995 (January 1997). The NAIC report utilizes premium data reported to it by state insurance regulatory agencies. For purposes of this analysis, the NAIC data for “average liability premium,” which includes no-fault insurance premiums, is examined because it is the portion of the insurance policy directly affected by distinctions between Personal Responsibility Systems and no-fault systems.

1. No-fault states have the highest average automobile liability insurance premiums. Of the ten states where auto insurance was most expensive in 1989, eight were no-fault states. Since then, three of those states — Pennsylvania, New Jersey and Connecticut — have repealed their mandatory no-fault systems. (However, no-fault remains optional in Pennsylvania and New Jersey). In 1995, six of the top ten most expensive states (including D.C.) had no-fault systems.4 See Table 1. Note that in 1995, New York — the model state for the “verbal threshold” no-fault proposals promoted by the insurance industry earlier in this decade — was the 5th most expensive state in the nation (up from sixth place in 1994).

2. No-fault states are consistently among the most expensive states in the nation. For each year between 1987 and 1995, a majority of the states with the highest average auto insurance premium were no-fault states. Note that as several states repealed their no-fault laws, the number of no-fault jurisdictions within the top ten declined. See Table 2. 3. Premiums in mandatory no-fault states rose nearly 25% greater than in non-no-fault states. The average auto insurance premium in states with mandatory no-fault systems grew an average of 45.6% between 1989-95, a growth rate nearly 25% greater than in Personal Responsibility System states. The latter saw an average 36.8% increase over the same period. California, which implemented insurance industry reform during this period (discussed infra), is included for purposes of comparison. See Table 3.

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Of the fifteen states with the greatest increases in the nation in auto liability premiums between 1989 and 1995, nine states had some form of no-fault — either mandatory or hybrid systems. See Table 4. 4. Repealing no-fault lowers auto insurance premiums. Four states significantly altered their no-fault systems between 1989 and 1995: Georgia, Connecticut, Pennsylvania and New Jersey. Georgia eliminated its no-fault system effective October 1991, established stringent regulation of rates and mandated a 15% rollback. The average auto insurance premium in Georgia fell 12.5% the next year. The state, once the 16th most expensive in the nation, ranked 37th in 1995. Table 5 summarizes the changes in Georgia’s average liability premium, its national rank and the annual change. Connecticut repealed its no-fault system effective January 1994. After six annual increases of 8% or more, the average auto liability premium dropped 9.7% during 1994. The state, which for the four years prior to repeal was one of the three most expensive states in the nation, now ranks 6th. Table 6 summarizes the changes in Connecticut’s average automobile liability premium, its national rank and the annual change. Pennsylvania repealed its mandatory no-fault law effective July 1990. The legislation made no-fault coverage optional. Motorists who chose to operate under the tort-based Personal Responsibility System were provided a 10% rollback, while those choosing no-fault were offered a 22% rollback. Insurers were required to fully inform motorists of their options and obtain a written election of the no-fault coverage; motorists who failed to make an election were initially assigned by default to the Personal Responsibility System. Despite the substantially greater refund offered under no-fault, an estimated 60% of motorists returned to the Personal Responsibility System. The reform legislation also included health care cost containment provisions and protections against arbitrary cancellations or surcharges.6 Pennsylvania, which had the 6th highest average auto liability insurance premium in 1989, dropped off the top ten chart as a result of repeal of its mandatory no-fault system. It ranked 19th in 1995. Table 7 summarizes the changes in Pennsylvania’s average liability premium, its national rank and the annual change. New Jersey repealed its mandatory no-fault law in 1989, but instituted an optional system in which all motorists are enrolled in no-fault unless they choose the Personal Responsibility System. New Jersey’s new system does not contain the requirement that motorists be fully informed of the opportunity to choose between no-fault and the 42

Table 1: States with Highest Average Auto Liability Premiums RANK

1989

1995

New Jersey****

$650

Hawaii*

$737

California

$519

New Jersey****

$662

Connecticut*

$473

Massachusetts*

$640

Hawaii*

$468

Rhode Island

$619

Dist. of Columbia** $466

New York*

$607

Pennsylvania****

$439

Connecticut*****

$603

Maryland**

$429

Delaware**

$565

Massachusetts*

$427

Dist. of Columbia** $548

Florida*

$421

Louisiana

$547

Rhode Island

$408

Nevada

$531

* Mandatory No-fault State ** Mixed or Hybrid No-fault State ***No-fault made optional 1990 ****No-fault made optional 1991 *****No-fault repealed 1993, effective 1994.

Table 2: Number of No-fault States Among Top 10 Most Expensive States, 1987-1995 YEAR

RANK

1987

1988

1989

1990

1991

1992

1993

1994

1995

Table 3: Comparison of Growth of Average Auto Liability Premiums, 1989-19955 % CHANGE 1989-95 Average of All Mandatory No-fault States

45.6

Averatge of All Hybrid No-fault States

37.1

Personal Responsibility States

36.8

California

-0.1

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Personal Responsibility System, nor does it require an express waiver of tort law rights.

Table 4: States With Highest Growth in Average Auto Liability Premiums, 1989-1995 1989-1995

GROWTH

South Dakota**

78.6%

Nebraska

68.2%

Texas**

67.4%

Kentucky**

65.8%

West Virginia

62.9%

Utah*

61.4%

Hawaii*

57.5%

New York*

56.8%

New Mexico

53.3%

Rhode Island

51.8%

Wyoming

50.9%

Massachusetts*

49.9%

Delaware**

49.1%

Oklahoma

49.0%

Colorado*

49.0%

New Jersey, which had the most expensive average automobile liability insurance premium in the nation for four years in a row, ranked second highest in the nation in 1995. Table 8 summarizes the changes in New Jersey’s average liability premium, its national rank and the annual change. Why no-fault raises premiums. The NAIC data demonstrate that no-fault systems — including mandatory no-fault laws — are more expensive than personal responsibility systems based on tort liability. No-fault’s restrictions on tort-based compensation for non-economic damages do not offset the higher costs of no-fault.7 There are several reasons for this experience: 1.

* Mandatory No-fault State ** Mixed or Hybrid No-fault State

Table 5: Georgia: Average Liability Premium, Rank, and % Change YEAR

AVERAGE PREMIUM

RANK

% CHANGE FROM PREVIOUS YEAR

1989

$324.93

17th

7.3%

1990

$337.89

19th

4.0%

1991

$341.73

23rd

1.1%

1992

$299.15

32nd

-12.5%

1993

$305.12

33rd

2.0%

1194

$309.34

36th

1.4%

1995

$315.56

37th

2.0%

Under no-fault, both the innocent victim and the motorist who caused the accident are compensated with medical, wage loss and other benefits — regardless of who is at fault. Paying the claims of both parties is inherently more expensive than under the Personal Responsibility System, in which the liability policy of the at-fault driver covers the innocent driver only. This conclusion is affirmed by many insurance industry experts, including advocates of no-fault, who acknowledge that nofault was not conceived as a cost-saving measure but rather as a more efficient method of providing unlimited accident benefits and avoiding lengthy legal disputes over issues of fault.8 The nation’s largest auto insurance company, State Farm, has stated:

THE ADOPTION OF NO-FAULT REPARATION SYSTEMS MAY OR MAY NOT LEAD TO A REDUCTION IN THE COST OF AUTO INSURANCE. THE ADVANTAGE OF NO-FAULT LIES IN A REDISTRIBUTION OF INSURANCE BENEFITS BASED ON NEED RATHER THAN FAULT, NOT ITS POTENTIAL COST SAVING.”9

Table 6: Connecticut: Average Auto Liability Premium, Rank, and % Change YEAR

AVERAGE PREMIUM

RANK

% CHANGE FROM PREVIOUS YEAR

1989

$473.31

3rd

10.6%

1990

$522.10

3rd

10.3%

1991

$569.26

3rd

9.0%

1992

$614.73

3rd

8.0%

1993

665.25

2nd

8.2%

1994

$600.93

5th

-9.7%

1995

$603.11

6th

0.4%

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Under no-fault, insurance companies are required to provide benefits to policyholders on a first-party basis. Thus, no-fault claimants do not face the kinds of corroborative pleading, evidentiary and procedural hurdles that exist under the Personal Responsibility System. As a result, no-fault offers policyholders greater opportunity to maximize their claims. For example, the availability of medical care up to the limits of the no-fault policy encourages greater utilization of health care services. The more generous the no-fault benefits, the greater the incentive to take advantage of them.10 For the 43

same reason, no-fault creates a fertile environment for inflated or fraudulent claims. For example, individuals who are not covered by other forms of health insurance, or who are hurt at work but seek greater benefits than their workers’ compensation coverage provides, may file claims under the no-fault system for injuries or illnesses not caused by the operation of a motor vehicle. 3.

Overall, no-fault does not reduce litigation costs. Litigation over property damage — for which the vast majority of car accident claims are filed — continues under no-fault, because no-fault systems typically retain the liability system for property claims. Litigation over whether a particular plaintiff has met the threshold after which lawsuits can be brought is common in traditional no-fault states (those with thresholds). Finally, there is anecdotal evidence that suits by motorists against their own insurance company for failure to pay no-fault benefits have skyrocketed. Liability insurance and other coverages remain necessary for many motorists in no-fault jurisdictions. Depending upon the generosity of the available nofault benefits, motorists must still purchase additional first party coverage to protect themselves against serious accidents caused by uninsured, underinsured or unregistered motorists.11 Further, some motorists must also purchase additional liability coverage in the event they cause an accident that results in damages to another motorist in excess of the no-fault benefits available to that driver. Absent such insurance, the at-fault motorist risks a potentially devastating civil judgment against his or her home or other assets.12 Finally, under no-fault systems, motorists must still purchase property damage liability protection, since no-fault typically covers only bodily injury.

YEAR

AVERAGE PREMIUM

RANK

% CHANGE FROM PREVIOUS YEAR

1989

$438.89

6th

7.4%

1990

$432.72

11th

-1.4%

1991

$413.05

15th

9.0%

1992

$433.06

15th

4.8%

1993

$433.93

19th

0.2%

1994

$447.02

18th

3.0%

1995

$444.29

19th

-0.6%

Table 8: New Jersey: Average Liability Premium, Rank, and % Change YEAR

AVERAGE PREMIUM

RANK

% CHANGE FROM PREVIOUS YEAR

1989

$649.73

1st

4.2%

1990

$706.56

1st

8.7%

1991

$583.32

2nd

-17.4%

1992

$649.60

2nd

11.4%

1993

$650.86

4th

0.2%

1994

$639.52

3rd

-1.7%

1995

$662.04

2nd

3.5%

No-Fault Eliminates the Right to Full Compensation As originally envisioned, no-fault systems would provide consumers with full compensation for medical expenses and wage losses arising from a motor vehicle accident. In exchange, motorists would sacrifice their common law right to sue to obtain compensation for pain and suffering for minor injuries. Victims of serious and/or permanent injuries, however, would be permitted to sue for such compensation.16

As discussed in greater detail below, there is significant evidence that the threat of liability acts as a deterrent to dangerous driving. The absence of fault leads to higher accident rates and correspondingly higher losses that must eventually be recouped through rate increases.

Much has been made of alleged abuses in claims for “pain and suffering” compensation, to the point where no-fault advocates rarely acknowledge the legitimacy of any such compensation, or, if they do, consider the trade-off worthwhile.17 But by taking away the right of injured motorists to seek compensation for their pain and suffering, no-fault depersonalizes the human being, treating injured people as the equivalent of damaged property.

No-Fault Contradicts Basic American Principles of Individual Responsibility and Accountability No-fault systems explicitly contradict the fundamental principle of American justice that wrongdoers are held responsible for the harm they cause.13 By eliminating “fault,” no-fault effectively treats good drivers and bad drivers the same.14 This is not merely a philosophical concern; a substantial body of evidence shows that no-fault leads to more accidents because it weakens the deterrent effect of the tort law.15 44

Table 7: Pennsylvania: Average Liability Premium, Rank, and % Change

Moreover, recent proposals reflect a profound revision of the no-fault quid pro quo as the insurance industry attempts to formulate a less expensive form of no-fault. Instead of unlimited compensation for economic losses, motorists would be required to trade their right to non-economic compensation for economic benefits that even some supporters of no-fault consider grossly inadequate.18

The Barrister

No-Fault Places Policyholders at a Disadvantage By depriving consumers of the leverage of adequate legal remedies, no-fault proposals inevitably place consumers at a disadvantage. The elimination of compensation for accident victims’ pain and suffering reduces the incentive for scrupulous lawyers to accept auto accident cases because the lawyers’ fees would then have to be paid out of the victims’ recovery of actual medical expenses and lost wages. Moreover, by discouraging lawyers from representing accident victims, the ban on pain and suffering compensation will indirectly limit a policyholder’s ability to insist upon full payment of economic compensation, such as wage loss or medical bills. Without the ready availability of legal representation to plaintiffs, insurers will have less reason to eschew abusive settlement practices, such as “low-balling.”19 No-Fault Does Not Reduce Disputes and Litigation Benefit levels, as well as threshold levels, obviously have a direct relationship to litigation in no-fault states. Jurisdictions in which the no-fault benefits are limited, depriving motorists of adequate compensation, or in which the threshold for pain and suffering claims is easily breached, are likely to experience higher levels of litigation.20 No-fault systems present unique inducements to litigation beyond excess-of-benefits liability claims against third parties. Disputes over whether a particular claimant’s damages exceed the litigation threshold are the source of voluminous litigation in states with the less-quantifiable verbal threshold.21 Moreover, there are reports of more frequent suits brought by policyholders against their own insurance companies for failure to pay no-fault benefits in good faith.22 Finally, litigation over property damage-the single largest source of claims in most jurisdictions-will continue under no-fault because the liability system is retained for property claims. An analysis published in the Insurance Counsel Journal, a publication for insurance defense attorneys, concluded: “[W]hatever the advantages of no-fault, a reduction in court cases and court costs would not appear to be one of them.”23 1.

See supra note 16.

See supra note 15.

As it has each year since 1991, Hawaii remained the most expensive in the nation

Figures are an average of each state’s average auto liability insurance premium. Table excludes states which repealed their mandatory no-fault systems during this period (Connecticut, Georgia, New Jersey and Pennsylvania).

All is Quiet in Pennsylvania Auto (Except Ferocious Competition), Auto Insurance Report, Nov. 17, 1997, at 1-2.

Manifestly, severe limitations on claims and/or compensation might so reduce payouts that insurers could reduce rates and still maintain their desired level of profitability. For example, S. 837, the present federal “choice” no-fault legislation, not only eliminates the requirement that insurance companies pay for non-economic losses, but makes other potential sources of compensation – workers compensation, state-required non-occupational disability insurance, and occupational disability insurance covering professional drivers of motor vehicles who are independent contractors – the primary source for payment of claims. Ã‚Â§6(b)(2). Other no-fault proposals would reduce benefits to as little as $15,000 in medical coverage. Such policies might cost insurers less – but would offer little or nothing of value to many motorists. Considerations of product value are a likely reason why no-fault proposals are disfavored by the public, notwithstanding promised price reductions.

The Deputy Insurance Commissioner of Michigan stated that the state’s unlimited benefits no-fault law “. . . was never designed primarily as a savings measure. All of the arguments focused on paying people better and faster and enhancing rehabilitation by giving people money immediately.” Morton C. Paulson, The Compelling Case For No-Fault Insurance, Changing Times, July 1989 (quoting Jean Carlson, Michigan Deputy Insurance Commissioner). A director of Independent Mutual Agents in New York went out of his way to diminish the importance that consumers should place on getting lowered, or even stabilized, premiums under no-fault. He said, “the no-fault concept was erroneously sold to the public by the legislature, and by a certain segment of the insurance industry, on the basis of cost savings alone.” Agents Blame Inflation For High Rates; Seek Amendments To N.Y. No-Fault Law, The National Underwriter. Testifying before the California Legislature, an official from New York State’s Department of Insurance stated: “… [W]e do not believe that the major impetus for enacting a nofault law should be the expectation of premium reductions (though they may occur). . .” Testimony of Richard C. Hsia, Deputy Superintendent of Insurance, New York State Dept. of Insurance, before Assembly Committee on Finance, Insurance and Public Investment, California Legislature, May 24-25, 1993, at 11. After the passage of Proposition 103, insurers operating in California proposed no-fault legislation with benefits of $15,000, which would be split between bodily injury and extremely limited wage loss protection. The plan was described as “no frills no-fault.” S.B. 941, (March 8, 1991). See Kenneth Reich, Wilson Will Back No-fault Initiative, Los Angeles Times, June 13, 1991 at 3. However, industry officials admitted that even this radical departure from no-fault’s original promise of unlimited coverage would not necessarily lower premiums. According to a California insurance lobbyist, “[t]he new no-fault will not lower rates. Nofault will control rates. We have never said it will lower rates.” ACIC Points Out Nader, Harvey Inconsistencies, Underwriter’s Report, October 3, 1991, at 5.

State Farm Insurance Companies, No-fault Press Reference Manual, at (G-402 1992).

10.

Referring to amendments to Massachusetts’ no-fault law, an industry expert noted that the “actual additional costs [of] raising the [no-fault benefit] limit were roughly double what the [insurance] commissioner assumed….What lawmakers failed to foresee were the behavioral changes of participants in the system which the auto reform precipitated.” National Underwriter, December 23, 1991, at 4. Former Georgia Commissioner of Insurance Tim Ryles told the U.S. Congress: “[N] o matter what proponents tell you about insurance fraud, no-fault will not do anything to control it. On the contrary, no-fault is to insurance fraud what octane level is to gasoline: the more no-fault you have, the greater the fraud.” Hearings of the Committee on Commerce, Science and Transportation, U.S. Senate, July 17, 1997 (Testimony of Tim Ryles at 2).

11.

Obviously, to the extent no-fault drives up prices, the problem of under- and uninsured motorists is exacerbated.

12.

An analysis by industry actuaries, noting that failure to purchase additional liability coverage “could have disastrous implications for consumers…,” explained:

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Consumers would be faced with the prospect of having no defense or indemnity protection for suits that might be brought against them for non-economic loss and/ or for economic losses that exceed [the no-fault benefits] as defined by the statute. Regardless of whether or not such a claim would have any merit, the consumer (policyholder) would have to personally incur the cost of defending such actions and paying any settlement and judgment (if they are only carrying the basic personal injury protection policy). Even when New York enacted its no-fault law, liability insurance continued to be a mandatory requirement. Donald McGrath, Gordon Lahti, Harry Lindstrom, The Automobile Insurance Crisis: A Different Perspective, Underwriter’s Report, October 3, 1991, at 30. 13.

No-fault also conflicts with a central tenet of American democracy: that any individual may have access to the judicial system-the one branch of government in which a citizen is accorded stature equal to that of any corporation, no matter how powerful-to hold wrongdoers fully accountable for the harm they cause. American courts have generally upheld most legislated restrictions on common law tort rights, including no-fault laws. See generally JOOST, supra note 13, at Ã‚Â§ 2:21.

14.

This philosophical objection should not be discounted as an explanation for the popular aversion to no-fault. Irresponsible behavior that leads to death and injuries may nevertheless fall outside the scope or prosecutorial resources of the criminal justice system. Addressing such matters is a singular purpose of the civil justice system, the viability of which distinguishes civilized society from lawless rule or even anarchy. Arbitrary restrictions on the right of accident victims to hold wrongdoers accountable subvert this important function of the judicial branch, contribute to public frustration, and undermine confidence in our democratic institutions. That no-fault eliminates the distinction between good and bad drivers is not meant to suggest that insurance companies do not discriminate between such drivers for the purpose of determining product prices through “rating plans.” See discussion infra Part III.D. Carriers routinely assess fault for purposes of setting premiums. The constraints, if any, upon the ability of insurance companies to unilaterally assign fault for rating purposes are a function of state regulatory requirements and vary widely.

15.

See, e.g., Frank A. Sloan, Effects of Tort Liability and Insurance on Heavy Drinking and Drinking and Driving, 38 J.L. & ECON. 49 (1995); Frank A. Sloan, Tort Liability Versus Other Approaches for Deterring Careless Driving, 14 INT’L REV. L. & ECON., 53, 60, 66, 69 (1994). In their 1987 book, The Economic Structure of Tort Law, conservative theorists William M. Landes and Richard A. Posner found that systems based on tort liability lead to lower accident rates. They argue that if the incentive to take care is reduced by limiting the liability of a potential wrongdoer, people will be less careful, and the cumulatively significant result will be more fatal accidents. See WILLIAM A. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF TORT LAW (1987); see also Gary T. Schwartz, Reality in the Economic Analysis of Tort Law: Does Tort Law Really Deter? 42 UCLA L. REV. 377 (1994).

16.

See KEETON & O’CONNELL, supra note 9 and accompanying text.

17.

For a typical example of a derisive view of compensation for pain and suffering, see John E. Calfee & Clifford Winston, The Consumer Welfare Effects of Liability for Pain and Suffering: An Exploratory Analysis, BROOKINGS PAPERS: MICROECONOMICS 133 (1993). “Awards for pain and suffering may be imposing a substantial deadweight cost on consumers.” Id. at 134. For a thorough critique of the conventional wisdom, see Steven P. Croley & Jon D. Hanson, The Nonpecuniary Costs of Accidents: Pain-and-Suffering Damages in Tort Law, 108 HARV. L. REV. 1787 (1995).

18.

As noted, the industry has promoted “no frills” no-fault proposals with highly limited benefits in order to offer an alternative to insurance industry reform proposals that offer lower premiums. See supra note 60. Dr. Robert Hunter, former Insurance Commissioner of Texas and founder of the National Insurance Consumers Organization, (NICO), is a nationally respected advocate of no-fault systems that provide unlimited benefits. He described “no frills” no-fault legislation offering $15,000 in no-fault benefits as “a poor trade-off for consumers and a catastrophe for the seriously injured.” Letter from J. Robert Hunter, President, NICO, to the Honorable Bill Lockyer, Chair, California Senate Judiciary Committee 3-4 (May 28, 1991) (on file with author).

19.

Many no-fault proposals explicitly deprive policyholders of traditional state consumer protection laws that permit insurers to be sued and face heavy penalties should they fail to settle claims in good faith. For example, Senate Resolution 625, the federal “choice” no-fault legislation, abolishes the ability of juries to punish an insurance company with a punitive damage award for failure to pay claims in good faith. S. Res. 625, 105th Cong. Ã‚Â§ 5(b)(4)(B)(i) (1997). Since insurers have an inherent financial incentive to deny claims, the threat of a financial penalty is often the only leverage a policyholder can wield to force an insurance company to comply with its legal obligations. While no-fault proposals often contain provisions requiring insurance companies to pay claims promptly or face interest penalties, this is an illusory protection. See id. The proposals typically allow an insurance company to refuse to pay benefits that are in “reasonable dispute,” with the insurance company authorized to determine in the first instance whether a dispute is “reasonable.” Id. Ã‚Â§ 5(b)(4)(B).

20.

Of course, under some “pure” no-fault proposals, motorists would be prohibited from recourse to the courts once no-fault benefits expire, even if the claimant is left with unpaid economic losses. Note that such proposals would force the most seriously injured to seek recourse to taxpayer-subsidized programs, such as welfare.

21.

A study of auto accident litigation in Michigan determined that 22% (241) of the 1119 reported cases concerned the bodily injury threshold requirement, where the question was whether the claimant’s injuries were serious enough to permit a suit against a negligent third party. See George T. Sinas, No-Fault: A Perspective From Michigan, June 30, 1990, at 15 (unpublished study on file with author). Referencing New York’s similar “serious and permanent” verbal threshold for recovery of pain and suffering in assessing no-fault legislation in California, three insurance industry actuaries noted that “[t]his area of the law remains very unsettled in New York and there appears to be a reluctance on the part of the judiciary to deny claimants access to the courts . . . . We have no reason to believe that the situation would be any different in California . . . we anticipate that there will be a great deal of litigation over this issue alone.” McGrath et al., supra note 64, at 30.

22.

This is reflected in Michigan lawsuit filings. During the period 1977-89, of the 1119 appellate opinions in Michigan addressing no-fault, 73% (826) were first party cases in which insureds were suing their own insurance company to obtain no-fault benefits. See Sinas, supra note 73. Michigan lawmaker told Maine legislators considering no fault legislation to beware of the argument that no-fault would reduce the number of lawsuits: ” What we did not count on when we enacted our no-fault legislation was a drastic increase in first-party litigation. You are seeking to enact no-fault legislation to contain costs, to provide prompt and adequate coverage and to reduce the need for litigation. Auto no-fault does not result in a reduction of litigation. The number of first party auto no-fault lawsuits filed in Michigan is nearly three times as great as the number of third party suits. Most of our insureds who file suits find themselves not suing a liable negligent driver, [the third party] but, rather, suing their own insurer for their own first party benefits. This has resulted in driving up administrative costs and has considerably lengthened the time it takes for insureds to receive benefits. Auto no-fault does not reduce the number of suits filed or the cost of litigation. Auto Insurance Reform: Hearing on S. 140 Before the House Comm. on Econ. Dev. and Energy, Educ., Ins. and Labor (undated statement of Michigan Representative Nelson W. Saunders) (on file with author).

23.

Norman K. Risjord, Does No-fault Reduce Litigation, INS. COUNS. J., Jan. 1986, at 389, 392.

The Barrister

TABLE OF CONTENTS QUESTION PRESENTED:........................................................................................................... 49 CONCLUSIONS:.......................................................................................................................... 49 DISCUSSION:............................................................................................................................... 51 a) Saskatchewan........................................................................................................................ 51 i.

General Framework........................................................................................................... 51

ii. No-fault Coverage............................................................................................................. 51 iii.

Tort coverage................................................................................................................. 55

iv.

Premiums and Statistics.................................................................................................. 58

b) New Jersey........................................................................................................................... 59 i.

Structure of the Insurance Scheme...................................................................................... 60

ii. Premiums and Statistics...................................................................................................... 61 c) New South Wales.................................................................................................................. 62 i.

Threshold Injuries.............................................................................................................. 63

ii. Statutory Benefits.............................................................................................................. 63 iii.

Damage Awards............................................................................................................. 65

iv.

Lifetime Care & Support Scheme.................................................................................... 65

v. Premiums and Statistics...................................................................................................... 66 d) Australian Capital Territory.................................................................................................... 68 i.

Defined Benefits................................................................................................................ 68

ii. Motor Accident Claims...................................................................................................... 70

iii.

Lifetime Care and Support Scheme................................................................................. 61

iv.

Premiums and Statistics.................................................................................................. 72

The Barrister

QUESTION PRESENTED:

The Alberta Civil Trial Lawyers Association (“ACTLA”) is engaged in a consultation process with the Government of Alberta in relation to changes that the Government is considering making to private passenger automobile legislation in the province. You have requested our assistance to help gather information that may support and inform ACTLA’s submissions to Government as part of that process. During the fall of 2023, the Government announced a first phase of changes to the system that do not include reforms related to bodily injury or the Minor Injury Regulation. Those changes were targeted at areas of the system including auto repair costs and reforms to promote more transparency in the industry. ACTLA’s engagement is focused on the second stage of changes, which are expected to be announced during the first quarter of 2024. In this phase, it appears among other things that the Government is contemplating adoption of a no-fault or hybrid no-fault system. Submissions have been made to the Government by other parties recommending a nofault or hybrid approach, including by the Insurance Bureau of Canada (“IBC”)1, and by the Automobile Insurance Advisory Committee reporting to the Minister of Finance2. These recommendations, as well as announcements and press releases from the Alberta Government in relation to the changes being considered, indicate that the Government is looking at automobile insurance regimes currently operating in several other jurisdictions and considering them as potential models for changes that are contemplated in phase two of Alberta’s reform. You have asked that we conduct research into the automobile insurance schemes in those model jurisdictions being considered by the Alberta government, in order to understand what those schemes are, how they work, and what advantages or challenges they may present for consumers in those jurisdictions. The particular jurisdictions you have asked us to look at are: •

Saskatchewan

•

New Jersey

•

New South Wales

•

Australian Capital Authority

CONCLUSIONS: We have reviewed legislation, public information packages, media reports, actuarial and statistical data, and commentary concerning the automobile insurance schemes operating in each of the four jurisdictions you have identified. Our review indicates that in all of these jurisdictions, the scheme in place offers some limited form of access to ordinary courts, although the mechanisms governing that access are formulated in somewhat dif1 Insurance Bureau of Canada, “Enhancing Care and Expanding Choice” July 2023, https://www.albertaautoinsurancefacts.ca/wp-content/uploads/2023/07/Alberta-Auto-Insurance-Reform-Report_Jul-27-2023.pdf. 2 Report on Fundamental Reform of the Alberta Automobile Insurance Compensation System, September 2020, by the Automobile Insurance Advisory Committee for the Minister of Finance of the Government of Alberta.

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ferent ways. In all jurisdictions, there is either a basic package of insurance or certain defined benefits as a standardized offering, and the ability to claim damages over and above that basic package is conditioned on either payment of higher premiums, or a finding that the claimant suffers from injuries of a certain threshold of seriousness. In Saskatchewan, all automobile insurance policies are provided by SGI, which is a Crown corporation. In all other jurisdictions, insurance is provided through private insurers. To summarize the essential structure of each scheme: Saskatchewan

Consumers must choose either the no-fault option or the tort option. The two are mutually exclusive. Beneficiaries under the no-fault option may sue for economic damages exceeding their policy coverage, but may not sue for non-economic damages. Under the tort option, beneficiaries receive a more limited basic package of benefits and may sue for both economic and non-economic damages exceeding the policy limits.

New Jersey

Consumers have a choice between a Standard and a Basic policy. The choice made affects the cost of the insurance, the types of options that an insured may have to choose from within the policy, and the amounts of insurance benefits that may be claimed. By default, both the Standard and Basic policies are subject to a “Limited Right to Sue” option, which restricts beneficiaries from suing for pain and suffering unless their injuries fall within a specified list of permanent impairments. However, under the Standard policy, the consumer may choose the “No limitation on lawsuit” option, and then is entitled to sue for any additional damages.

New South Wales

All vehicle owners must purchase compulsory third party (“CTP”) insurance when registering their vehicle. The CTP policy prescribes certain statutory benefits payable to injured parties for economic and non-economic losses for one year for at-fault drivers and persons with minor “threshold” injuries, and up to two years for others. Persons suffering more than a 10% permanent impairment may make a claim to the Personal Injury Commission for damages extending beyond the two-year period. Commencement of proceedings in the ordinary courts is only permitted for claims that are exempt from assessment by the Commission, either because they so qualify under conditions set out in the Regulations, or because the Commission has issued a certificate to that effect.

Australian Capital Territory

All vehicle owners must purchase CTP insurance when registering their vehicle. The scheme provides benefits for up to five years for treatment and care, lost income, and quality of life benefits based on permanent incapacity, to anyone injured in a motor vehicle accident regardless of fault. If a claimant’s WPI is assessed at 10% or more, the claimant may also bring a motor accident claim in the ordinary courts.

Concerning the impact on costs of insurance, rankings for Saskatchewan, New Jersey, and New South Wales place them among the higher cost jurisdictions for automobile insurance in their respective countries. In the Australian Capital Territory, the current CTP scheme has only been in effect since 2020, and consequently we were not able to locate much data providing indications of its cost effectiveness.

The Barrister

DISCUSSION: A: SASKATCHEWAN Automobile insurance in Saskatchewan is provided by Saskatchewan Government Insurance (“SGI”), a Crown corporation created in 19443 and operating today pursuant to the framework set out in The Saskatchewan Government Insurance Act, 1980, SS 1979-80, c S-19.1. SGI operates two branches of insurance services: the Saskatchewan Auto Fund, which is the province’s mandatory automobile insurance program, and SGI Canada, which offers property and casualty insurance in five Canadian provinces.4 SGI is the exclusive provider of automobile insurance in the province. As a crown corporation, SGI is also subject to The Crown Corporations Act, 1993, SS 1993, c C-50.101, which designates the Crown Investments Corporation (“CIC”) as the holding company for all subsidiary crown corporations in Saskatchewan. As part of its mandate, CIC is responsible to the Lieutenant Governor for review and evaluation of the objectives, goals, revenues, expenses, expenditures, investments and operating results of subsidiary crown corporations, including SGI.5 SGI is also bound to provide annual reports and financial statements to the Executive Council of the provincial government, and is subject to annual audits.6 SGI’s website reports that the Saskatchewan Auto Fund is financially self-sustaining, operating on a break-even basis over time. It does not receive money from, nor pay dividends to, the government.7

General Framework

The benefits scheme for auto insurance provided by SGI is set out in The Automobile Accident Insurance Act, RSS 1978, c A-35 (“AAIA”). It is a hybrid scheme that offers Saskatchewan residents two options: • •

No-fault coverage, which is the default option that consumers receive automatically if no election is made. The scheme for this coverage is set out in Part VIII of the AAIA. Tort coverage, which the consumer must specifically elect by filing a declaration form to that effect with the insurer8. The scheme for this coverage is set out in Part II of the AAIA.

Premiums are the same for both types of coverage; however claimants receive different levels of coverage under each plan. In 2018, a CBC article reported that approximately 99 percent of Saskatchewan residents opted for no-fault insurance.9 The automobile insurance scheme in effect in Saskatchewan today developed through several iterations. Prior to 1995, all automobile insurance in the province was tort-based. However, in that year, a pure no-fault system was introduced based on strong recommendations from SGI that spiralling injury claim costs and inadequacies of the tort system could be improved upon through a no-fault scheme. On January 1, 2003, the auto insurance scheme was again modified to provide a limited tort option alongside the nofault coverage, resulting in the current hybrid scheme.10

ii. No-fault Coverage Rules governing no-fault coverage are set out in Part IV, Division 3.2 and Part VIII of the AAIA. Section 101(1.1) states that Part VIII “applies to any person who sustained bodily injury caused by a motor vehicle arising out of an accident […] and who has not provided the insurer with a tort election […]”. 3 See The Government of Saskatchewan Insurance Act, SS 1944(2), c 13. 4 SGI website: https://sgi.sk.ca/ourbusiness. 5 The Crown Corporations Act, 1993, SS 1993, c C-50.101, ss. 5(1) and (2). 6 Ibid, ss 33-34; The Saskatchewan Government Insurance Act, 1980, SS 1979-80, c S-19.1, ss 19-20. 7 SGI website: https://sgi.sk.ca/governance. 8 The Automobile Accident Insurance Act, RSS 1978, c A-35 (“AAIA”), s 40.2. 9 Alicia Bridges, “How does ‘no fault’ insurance affect your compensation after a crash?”, CBC News, April 18, 2018, https://www.cbc.ca/news/canada/saskatchewan/ sgi-no-fault-tort-insurance-difference-saskatchewan-1.4623986. 10 Saskatchewan Institute of Public Policy, “SIPP Briefing Note: Choice in Automobile Insurance: Tort versus No-fault Coverage”, December 2002, https://ourspace.uregina.ca/ server/api/core/bitstreams/aa5a878f-0069-4bf6-98f0-e77051c6d0f3/content.

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Section 102 confirms that the no-fault and tort coverage options are mutually exclusive. The provision states that “a person entitled to benefits under the no-fault provisions of the Act is not entitled to benefits pursuant to Part II [tort coverage] other than a death benefit pursuant to Part II relating to the death of an insured.” Beneficiaries under the no-fault option are permitted to sue an at-fault driver for economic losses that exceed the coverage under their policy (AAIA, s. 41.15). However, they may neither sue nor be sued for non-economic losses (ie pain and suffering) respecting injuries arising out of or stemming from bodily injury, except in the following limited circumstances: • where the at-fault driver is convicted of impaired driving; • where the at-fault driver is convicted of criminal negligence; • where the at-fault driver is convicted of using a vehicle to intentionally cause or attempt to cause bodily injury to another person; • where the at-fault driver dies and was impaired by alcohol or drugs. (AAIA, ss. 40(a.1) and 41.16(2)(a) and (b)) 11 In addition, a beneficiary under a no-fault insurance policy may bring a claim for pain and suffering damages against certain types of businesses, in relation to their business activities, if their acts or omissions caused, contributed to, or exacerbated the beneficiary’s loss. Eligible third parties are limited to: • vehicle manufacturers • makers or suppliers of motor vehicle parts; • vehicle sellers; • garages, repair shops or service stations; • licensed drinking establishments.12 The no-fault regime provides coverage to an injured insured regardless of who is responsible for the accident (s. 106). For insureds who are resident in Saskatchewan, coverage applies to accidents occurring anywhere in Canada or the United States, or on a vessel travelling between ports of those countries (s. 108). However, exceptions apply, and for example benefits may be denied in whole or in part, where: •

n insured commits suicide or attempts to commit suicide with a A motor vehicle (s. 107);

•

he insured is an occupant of a stolen vehicle involved in an acT cident and is convicted of stealing or possession of the vehicle (s. 107.1);

•

he insured is responsible for the collision and found to be imT paired by alcohol or drugs or convicted of an offence involving criminal negligence or used the vehicle to deliberately harm someone (s. 174(3)).

11 SGI, “Your Guide to No-Fault Coverage: Personal Auto Injury Insurance”, 2023, at p 3, https://sgi. sk.ca/documents/37148/138043/guide_nofault.pdf/58fc8fc0-1e37-4be5-948a-1868c8a5d153. 12 AAIA, s. 41.16(2)(c) and (5).

The Barrister

A. Benefits Payable The no-fault policy provides coverage for: • • • • • •

Income replacement; Medical and rehabilitation expenses; Travel and personal expenses; Living Assistance; Permanent Impairment; Death Benefits.

In its information brochure “Your Guide to No Fault Coverage”13, SGI provides the following table setting out the maximum coverage amounts that are available to beneficiaries under its no-fault plan:

Concerning income replacement benefits, the following additional information helps to understand the scope of benefits available under the no-fault plan: •

For first 180 days after the accident: benefits are 90% of net pre-accident income (subject to annual maximum income of $108,253);

•

After 180 days: benefits are the greater of (i) income benefits received for the first 180 days (ii) average annual income in the two years prior to the collision, or (iii) minimum wage;

13 “Your Guide to No-Fault Coverage: Personal Auto Injury Insurance”, 2023, at p 19, https://sgi.sk.ca/documents/37148/138043/guide_nofault.pdf/58fc8fc0-1e37-4be5-948a1868c8a5d153.

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• •

Benefits are payable bi-weekly, commencing after a 7-day waiting period following the collision (waived in cases of catastrophic injury); Beneficiaries receiving a full income benefit for 24 consecutive months or more may receive a lump-sum pension benefit based on 10% of their total income benefits, payable either after income benefits cease or when the beneficiary turns 65.

Concerning compensation for bodily injury, as indicated in the above table, the maximum lump sum amount payable for noncatastrophic permanent impairment is $224,073; in the case of a beneficiary suffering catastrophic injuries, the maximum lump sum amount payable is $273,673. Catastrophic injuries are defined to include: • • • • •

paraplegia or quadriplegia; amputation resulting in two or more permanent impairments; total loss of functional vision or impairments of 80% or more of the entire visual system; a functional alteration of the brain resulting in a combined impairment of 50% or more; combined impairments resulting in a total impairment of 80% or more.14

The framework governing determination of the degree of permanent impairment for bodily injuries is detailed in Appendix B: Schedule of Permanent Impairments of The Personal Injury Benefits Regulations, c. A-35 Reg 3. Benefits payable for a given impairment or injury are calculated by multiplying the percentage impairment (eg humeral fracture with angulation of >15 degrees = 5%) by the maximum permanent impairment amounts discussed above. No-fault coverage also provides death benefits as follows: • • • •

spouse – 45% of the deceased’s net income to a maximum gross salary of $108,253 per year; education and training allowance of up to $53,777 for dependent spouse; dependent child – 5% of the deceased’s net income per dependent child or disabled adult; $35,850 for loss of a child;

•

$17,925 per parent and non-dependent child for those with no spouse or dependents up to the maximum of $80,667.

B. Claims Process and Appeals No-fault claims are received and processed in first instance by a personal injury representative, who collects and reviews salary, medical and other information, and then determines the amount of coverage a beneficiary is entitled to.15 The decision as to benefit entitlement must be provided to the claimant in writing (s. 189). A claimant who is dissatisfied with the decision concerning their benefit entitlement may challenge the decision in one of the following ways: •

Seek mediation by filing notice within 90 days of the insurer’s decision (s. 190);

•

Appeal the decision to either the Court of King’s Bench or the Automobile Injury Appeal Commission within 90 days of either the insurer’s decision or the written statement provided by the mediator at the close of mediation (s. 191).

A claimant may choose to attend mediation first and then pursue an appeal if unsatisfied with the mediation; or the claimant may skip mediation and proceed directly to an appeal. The claimant must choose between an appeal to the Court of King’s Bench or to the Automobile Injury Appeal Commission, and may not bring an appeal before both (s. 191(2)). 14 The Personal Injury Benefits Regulations, Chapter A-35 Reg 3, s. 2(1)(c). 15 SGI, “Your Guide to No-Fault Coverage: Personal Auto Injury Insurance”, 2023, at p 4, https://sgi.sk.ca/documents/37148/138043/guide_nofault.pdf/58fc8fc0-1e37-4be5-948a1868c8a5d153.

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With leave of a judge of the Court of Appeal, the insurer or the claimant may appeal a decision of the Court of Queen’s Bench or appeal commission to the Court of Appeal on a question of law only, within 30 days of the date of the decision (s. 194).

iii. Tort Coverage Individuals who choose SGI’s tort coverage option receive a basic coverage package that provides them with benefits regardless of who is at fault for a collision, and are also entitled to sue an at-fault driver for additional losses that exceed the basic package, including both economic and non-economic losses (AAIA, s. 41(2)). As mentioned earlier, a CBC article in 2018 reported that approximately 99 percent of Saskatchewan residents opted for no-fault insurance.16 Some or all of the benefits under the basic package will be denied if the claimant: • • •

was impaired by alcohol or drugs at the time of the collision; deliberately used their vehicle to harm another person or property; was travelling in a vehicle that was racing or in a speed test;

•

was travelling in a vehicle attempting to evade a law enforcement officer;

•

was driving an unregistered vehicle or while not qualified or authorized to drive;

•

was convicted of a first offence for criminal negligence (permanent impairment benefits will not be paid) or a subsequent offence for criminal negligence in the last five years (income benefits will also not be paid); is entitled to Workers’ Compensation benefits; is convicted of stealing a vehicle or possession of a stolen vehicle involved in a collision.

• •

Linda Jensen, LL.B., B.C.L., LL.M.

A. Suing and Being Sued

PHONE: ( 403) 6 8 8 - 2 11 9

Individuals subscribing to the tort coverage plan are entitled to sue an at-fault driver for both economic and non-economic (pain and suffering) damages, as well as expenses, that exceed the amount of their benefits under the basic package. Note that, in comparison, beneficiaries opting for no-fault coverage may only sue for economic damages that exceed their policy benefits, and may not sue for pain and suffering.

linda@bottomlineresearch.ca

RESEARCH AND COMMUNICATIONS

Any settlement or court award that a beneficiary under the tort coverage plan receives for non-economic damages is subject to a $5000 deductible. SGI indicates that the purpose of the deductible is to discourage small claims and keep premiums low.17 In addition, tort settlements and awards are reduced by the amount of any permanent impairment benefits the beneficiary received under the basic package. Ordinary tort principles, such as contributory

16 Alicia Bridges, “How does ‘no fault’ insurance affect your compensation after a crash?”, CBC News, April 18, 2018, https://www.cbc.ca/news/canada/saskatchewan/ sgi-no-fault-tort-insurance-difference-saskatchewan-1.4623986. 17 SGI, “Your Guide to Tort Coverage: Personal Auto Injury Insurance”, 2023, https://sgi.sk.ca/documents/37148/138043/guide_tort.pdf/93ba9131-aae6-4397-8635583e0c928289, at p 4.

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negligence or mitigation, may also apply to reduce the claimant’s award.18 Individuals who have elected the tort coverage option may sue any at-fault driver, regardless of whether the other driver has no-fault or tort coverage, although in the case of a defendant subscribed to the no-fault option, the claim will be against SGI, not the insured directly. They may not sue where they themselves were the party responsible for the collision, or where there is no one at fault (eg, single-vehicle accidents or collisions with wildlife). Individuals who have elected the tort coverage option may also be sued, if they are at fault for a collision, for economic damages that exceed any injured party’s coverage under their insurance policy, regardless of whether the injured party has chosen tort coverage or no-fault coverage. In addition, an insured who has chosen the tort coverage option may also be sued by other tort coverage beneficiaries for non-economic damages that exceed the injured party’s basic coverage. They cannot be sued for non-economic damages by persons who chose the no-fault option. If an at-fault tort coverage subscriber is successfully sued or agrees to a damage settlement, SGI provides liability coverage for the first $200,000 of the damage award (AAIA, s. 42(2)).

B. Benefits Payable The tort coverage policy provides a basic package of benefits covering: • • • • •

Income replacement; Medical and rehabilitation expenses; Travel and personal expenses; Living Assistance; Permanent Impairment;

•

Death Benefits.

In its information brochure “Your Guide to Tort Coverage” (2023)19, SGI provides the following table setting out the maximum coverage amounts that are available to beneficiaries under the basic package of the tort coverage plan:

18 19

Ibid, at p 6. Ibid at p 19.

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As the table shows, income benefits in the amount of $520 per week are payable to a totally disabled claimant who was employed prior to the accident, and in the amount of $260 per week for a partially disabled claimant. If after two years, a claimant remains fully disabled, the amount of $520, indexed for inflation, is payable for life. Payments to a partially disabled claimant continue until he/she is able to return to full employment duties, or after two years, whichever comes first (AAIA, ss 22 and 22.1).

Concerning bodily injuries, as indicated in the above table, the maximum lump sum amount payable for non-catastrophic permanent

impairment is $15,301; in the case of a beneficiary suffering catastrophic injuries, the maximum lump sum amount payable is $198,914. The same definition of “catastrophic injury” applies for purposes of both no-fault and tort coverage plans, and the framework governing determination of the degree of permanent impairment for bodily injuries in both cases is Appendix B: Schedule of Permanent Impairments of The Personal Injury Benefits Regulations, c. A-35 Reg 3.

Tort coverage also provides death benefits as follows: • • • • •

spouse – 45% of the deceased’s net income to a maximum gross salary of $108,253 per year dependent child – 5% of the deceased’s net income per dependent child $15,301 to estate of those with no spouse or dependants $7,651 funeral benefit20

C. Claims Process and Appeals Claims under the tort option are received and processed in first instance by an injury adjuster, who collects and reviews salary, medical and other information, and then determines the amount of coverage a beneficiary is entitled to under the basic package.21 The decision as to benefit entitlement must be provided to the claimant in writing (s. 189). 20 SGI, “Guide to Choosing Personal Auto Injury Insurance 2023”, at p 7 https://sgi.sk.ca/documents/37148/138043/guide_to_choosing.pdf/44c2bd6b-10a8-43ab-b55b72df161e8a33 21 SGI, “Your Guide to Tort Coverage: Personal Auto Injury Insurance”, 2023, https://sgi.sk.ca/documents/37148/138043/guide_tort.pdf/93ba9131-aae6-4397-8635-583e0c928289, at p 3.

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A beneficiary who is not satisfied with the adjuster’s decision, either concerning responsibility for the accident or benefit entitlements under the basic package, may bring an action in the Court of King’s Bench to resolve the dispute (AAIA, s. 62).

iv. Premiums and Statistics In its 2022-2023 Annual Report, the Saskatchewan Auto Fund claims to have the lowest automobile insurance premiums of any Canadian jurisdiction.22 The Report states: The Auto Fund completes regular cross-Canada rate comparisons to determine how much a vehicle owner would pay for auto insurance in other Canadian provinces given their current vehicle, driving record and claim history. The Auto Fund aims to maintain among the lowest average personal auto insurance rates in Canada, without compromising other important targets, such as the Minimum Capital Test. The Auto Fund achieved the lowest average personal auto rates in the 2022-23 comparison, which included all Canadian provinces except Quebec.23 However, a recent article from February 2023 in Insurance Business Magazine ranking average annual auto insurance premiums listed Saskatchewan as the province with the third highest rates, after British Columbia and Ontario. The ranking was compiled based on analysis of rates from several price comparison websites and by checking quotes from several major auto insurers. 24 In an article reporting rates current as of March 2020, the IBC Canada Drives website ranked Saskatchewan as the province with the fourth highest average automobile insurance premiums, after British Columbia, Ontario and Alberta. Rankings were produced by dividing total premiums per province by total personal vehicles per province.25 SGI’s website indicates that auto insurance rates have increased three times in the last 10 years26: The Auto Fund’s Annual Report also indicated that a number of factors, including claim costs, contributed to a reduction in the Fund’s

22 Saskatchewan Auto Fund Annual Report, 2022-2023, at p 2, https://sgi.sk.ca/documents/37148/2136437/4717+-+SGI+Auto+Fund+Annual+Report+2022-23_WEB_SECURED. pdf/a98fd240-782c-edf8-cb60-644dce480b97?t=1689959617833. 23 Ibid at p 10. 24 Mark Rosanes, “How to get cheap car insurance in Canada”, February 14, 2023, https://www.insurancebusinessmag.com/ca/guides/how-to-get-cheap-car-insurance-in-canada-407120.aspx#Which%20provinces%20have%20the%20cheapest%20car%20insurance%20in%20Canada? 25 Canada Drives, “What’s the Average Car Insurance Cost for Canadians?”, https://www.canadadrives.ca/blog/news/car-insurance-across-canada-whats-the-difference 26 SGI: Auto insurance rates, https://sgi.sk.ca/rates.

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rate stabilization reserve: Overall, 2022-23 proved to be a challenging year for the Auto Fund, with claim costs impacting our finances most significantly. After a few years of reduced travel, there were more customers driving, leading to more collisions. Inflation increased the cost of auto and injury claims, while supply chain issues increased vehicle repair cycle times, resulting in higher rental vehicle costs. There was also an increase in storm claims for hail and flood damage. Collectively, this resulted in an underwriting loss of $452.4 million. The Auto Fund also experienced a downturn in investment income and administrative costs were higher due to the Corporate Transformation program. All factors combined resulted in a reduction to the Rate Stabilization Reserve of $270.8 million.27 The Auto Fund Annual Report noted increases in damage claim frequency and severity during the prior year: Current year damage claims, excluding catastrophe claims [storm claims], are 23.4% higher than the prior year, due to increased claim frequency and severity. With drivers continuing to return to the roads after the slowdown during the pandemic, claim frequency increased. This increase in the number of claims also came during a period that included high levels of inflation and supply chain problems pushing up the average cost per claim. […] Overall, damage frequency has increased from 122.2 claims per 1,000 insured years in 2022 to 133.3 in 2023, while the average cost per damage claim has increased from $5,479 per claim to $6,447 per claim. Current year injury claims are 2.7% higher than the prior year due to increased claim severity in 2023. The average cost per injury claim has increased by 11.3%. The injury claim frequency during the fiscal year dropped from 4.6 claims per 1,000 insured years in 2022 to 4.2 claims per 1,000 insured years in 2023.28 B: NEW JERSEY

New Jersey is one of several US states that have introduced some form of no-fault or no-fault hybrid automobile insurance. The Insurance Information Institute explains the meaning of “no-fault”, in its strictest sense, as referring to “state laws that both provide for the payment of no-fault first-party benefits and restrict the right to sue, the so-called “limited tort” option”. First-party benefits are commonly referred to as personal injury protection (“PIP”), and are mandatory coverage in true no-fault states.29 The Insurance Information Institute also explains that in US no-fault jurisdictions, the ability to sue for compensation beyond policy limits is permitted only in cases that meet certain stipulated conditions. These conditions are known as either “verbal thresholds” (where the condition is based on a verbal description or category of injury) or a monetary threshold (eg the cost of medical bills). Jurisdictions that provide motorists with a choice between pure no-fault and a tort option are referred to as “choice no-fault” states.30 New Jersey is a choice no-fault state with a verbal threshold governing the right to sue under the no-fault option. The scheme 27 28 29 30

Auto Fund Annual Report, supra note 24, at p 2. Ibid, at p 16. Insurance Information Institute, “Background on: No-fault auto insurance”, November 6, 2018, https://www.iii.org/article/background-on-no-fault-auto-insurance . Ibid.

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originated with the New Jersey Automobile Reparation Reform Act (No-Fault Act)31, which came into force on January 1, 1973. It appears that funding insurance plans required by the scheme created challenges for insurers, some of whom elected to leave the New Jersey automobile market. A number of reforms and modifications were introduced over the years in attempts to address those and other concerns.32 Automobile insurance in New Jersey continues to be provided by private insurers.

Structure of the Insurance Scheme

Any dollar amounts indicated below are in US dollars. Auto insurance consumers in New Jersey may choose between two options: a Standard policy, and a Basic policy. There are also options within each type of policy. The choice between a Standard and Basic policy affects the cost of the insurance, the types of options that an insured has to choose from (e.g., comprehensive, collision, or uninsured/underinsured motorist coverage), and the amounts of insurance benefits that may be claimed. The Basic policy costs less, but provides more limited coverage and options. The New Jersey Auto Insurance Buyer’s Guide provides the following summary of coverage options available under the two policy types33:

Note that under either plan, PIP coverage up to a maximum of $250,000 is provided for all medically necessary treatment of any of the following injuries: •

permanent or significant brain injury, spinal cord injury, or disfigurement;

31 32 33

NJ. Stat. Ann.§§ 39:6A-l to 39:6A-35 (West 1990). Megan K. Gajewski, “Automobile Insurance Reform in New Jersey: Could a Pure No-Fault System Provide a Solution” (1995) 25:3 Seton Hall L Rev 1219, at p 1237-1246. New Jersey Automobile Insurance Buyer’s Guide, 2023, https://www.nj.gov/dobi/division_consumers/pdf/autoguide2023.pdf.

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•

medically necessary treatment of other permanent or significant injuries rendered at a trauma center or acute care hospital immediately following the accident and until the patient is stable, no longer requires critical care and can be safely discharged or transferred to another facility in the judgment of the attending physician.34

For purposes of the foregoing, “significant disfigurement” means the result and/or manifestation of a serious traumatic injury that is observable as a permanent and substantial defect in the appearance and functional ability of the person injured. “Significant disfigurement” is a serious outward change that substantially detracts from the appearance and functional ability of the person injured.35 Concerning the right to sue for personal injuries beyond the policy limits, the default under both the Standard and Basic policy is a “Limited Right to Sue” option, which restricts beneficiaries from suing for pain and suffering unless their injuries fall within a specified list of permanent impairments (the “verbal thresholds”). The impairments entitling a beneficiary to sue are: • • • •

loss of body part; significant disfigurement or significant scarring; a displaced fracture; loss of a fetus;

•

permanent injury (any injury shall be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment based on objective medical proof); death.

•

In order to satisfy one of the verbal thresholds, the beneficiary must provide sworn medical proof attesting to their condition: In order to satisfy the tort option provisions of this subsection, the plaintiff shall, within 60 days following the date of the answer to the complaint by the defendant, provide the defendant with a certification from the licensed treating physician or a board-certified licensed physician to whom the plaintiff was referred by the treating physician. The certification shall state, under penalty of perjury, that the plaintiff has sustained an injury described above. The certification shall be based on and refer to objective clinical evidence, which may include medical testing, except that any such testing shall be performed in accordance with medical protocols pursuant to subsection a. of section 4 of P.L. 1972, c.70 (C.39:6A-4) and the use of valid diagnostic tests administered in accordance with section 12 of P.L. 1998, c. 21(C.39:6A-4.7). Such testing may not be experimental in nature or dependent entirely upon subjective patient response. The court may grant no more than one additional period not to exceed 60 days to file the certification pursuant to this subsection upon a finding of good cause.36 Under the Standard policy, an insured may elect to pay a higher premium and choose the “No Limitation on Lawsuit” option, which allows him/her to sue an at-fault driver for pain and suffering resulting from any injury. Under the Basic policy, this option is not available, and the insured has a right to sue only upon satisfying one of the verbal thresholds.

ii. Premiums and Statistics Data collected by the National Association of Insurance Commissioners (“NAIC”) ranked New Jersey in 2020 as the 7th most expensive state for average insurance premiums in the US.37 Historical rankings for years prior to 2020 consistently placed New Jersey in the top 10 most expensive states for automobile insurance. The NAIC rankings were as follows38:

34 35 36 37 38

N.J. Admin. Code § 11:3-14.3(b). N.J. Admin. Code § 11:3-14.3(c). N.J. Stat. § 39:6A-8. Insurance Information Institute website, “Facts + Statistics: Auto insurance”, https://www.iii.org/fact-statistic/facts-statistics-auto-insurance. Insurance Information Institute website, Archived Tables - Top 10 Most Expensive and Least Expensive States For Auto Insurance, https://www.iii.org/table-archive/20997.

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Year 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

New Jersey Average Insurance Cost Ranking 7th most expensive 6th most expensive 6th most expensive 4th most expensive 1st most expensive 1st most expensive 1st most expensive 1st most expensive 1st most expensive 1st most expensive 1st most expensive 2nd most expensive 3rd most expensive 2nd most expensive

A new law that took effect at the beginning of 2023, which increased certain minimum coverage amounts under the Standard policy, caused a further increase in premiums for drivers who have opted for that policy39.

C: NEW SOUTH WALES

Automobile insurance in New South Wales operates under the supervision of the State Insurance Regulatory Authority (“SIRA”),

a statutory body created in 2015 by the State Insurance and Care Governance Act 2015, No 19. SIRA replaced the Motor Accidents Authority (“MAA”), which had been the previous manager of NSW’s compulsory third party (“CTP”) personal injury insurance scheme. The most recent iteration of NSW’s CTP scheme is set out in the Motor Accident Injuries Act 2017, No 10 (“MAIA”). It is promoted as being designed to provide early support and recovery for persons injured in road accidents.40 The CTP scheme requires all vehicle owners to buy a CTP personal injury insurance policy, known as a “Green Slip”, before registering a vehicle. The CTP Green Slip policy covers the owner of the vehicle and any other person who at any time drives the vehicle (whether or not with the consent of the owner) against liability in respect of the death of or injury to a person caused by the fault of the owner or driver of the vehicle (MAIA, s. 2.3), but does not cover the cost of damage to vehicles or property. It prescribes certain statutory benefits payable to injured parties for economic and non-economic losses for up to two years. Mechanisms also allow for persons suffering more than a 10% impairment to make a claim for damages extending beyond the two-year period. Although the CTP scheme is overseen by SIRA, insurance is provided by private insurers. The objective of limiting compensation for non-economic loss is expressly stated at s. s 1.3(3)(b) the MAIA: 1.3 […] (3) It must be acknowledged in the application and administration of this Act— […] 39 Ken Burns, “New Jersey law will raise auto insurance rates in 2023”, WHYY PBS website, December 31, 2022, https://whyy.org/articles/new-jersey-car-insurance-ratehike-2023/. 40 SIRA website, “Why reform was needed”, https://www.sira.nsw.gov.au/fraud-and-regulation/reforms/ctp-green-slip-reforms/why-reform-was-needed.

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(b) that the law (both the enacted law and the common law) relating to the assessment of damages in claims made under this Act should be interpreted and applied in a way that acknowledges the clear legislative intention to restrict access to non-economic loss compensation to serious injuries, (MAIA, s 1.3(3)(b)).

Threshold Injuries

The extent of statutory benefits available under the CTP Green Slip is influenced by whether a claimant’s injury is classified as a “threshold injury”. Threshold injuries are defined in the MAIA as comprising soft tissue injuries or less serious psychological injuries: 1.6 Meaning of “threshold injury” (1) For the purposes of this Act, a threshold injury is, subject to this section, one or more of the following— (a) a soft tissue injury, (b) a psychological or psychiatric injury that is not a recognised psychiatric illness. (2) A soft tissue injury is (subject to this section) an injury to tissue that connects, supports or surrounds other structures or organs of the body (such as muscles, tendons, ligaments, menisci, cartilage, fascia, fibrous tissues, fat, blood vessels and synovial membranes), but not an injury to nerves or a complete or partial rupture of tendons, ligaments, menisci or cartilage. Examples of injures which would be considered threshold are whiplash injuries, and psychological or psychiatric injuries, such as feelings of sadness, anxiety, fear, anger or guilt as well as adjustment disorder and acute stress disorder. Injuries such as fractures, nerve injuries, or complete or partial rupture of a tendon, cartilage, meniscus or ligament, are not considered threshold injuries. 41 The determination of whether an injury is a “threshold injury” is made by the insurer, based on medical information, including an initial certificate of fitness provided by the claimant’s treating medical practitioner. Among other things, the certificate identifies the type of injuries, the treatment plan, and how the injuries affect the claimant’s ability to do normal activities including work. Subsequent certificates of fitness may be provided by a treating physiotherapist or a treating psychologist.42 The insurer must determine whether the claimant’s injury is a threshold injury within 9 months of the filing of a claim for benefits (MAIA, s 6.19(2)). Claimants with threshold injuries may obtain statutory benefits for a maximum of 52 weeks following the accident, as discussed below.

ii. Statutory Benefits Any amounts indicated below are in Australian dollars. Green Slip coverage allows all injured people to claim benefits for up to 52 weeks, regardless of whether they are at-fault or not. After 52 weeks, benefits cease for drivers who were mostly at-fault for the accident, and for claimants with threshold injuries. An insurer must give the claimant notice within 4 weeks after the claim for statutory benefits stating whether or not the insurer agrees to payment of the benefits during the first 52 weeks, and must give notice within 9 months of whether it agrees to payment of statutory benefits beyond the first 52 weeks (MAIA, s. 6.19(1) and (2)). A claimant who disagrees with a decision made by the insurer concerning eligibility for benefits may request an internal review by the insurer. If the claimant is not satisfied with the insurer’s review decision, or if the insurer fails to provide a review decision, the claimant can seek a merit review which is conducted by a review officer of the Personal Injury Commission. Both the claimant and the insurer 41 SIRA website, “Threshold Injuries: Information for GPs in the NSW CTP scheme”, https://www.sira.nsw.gov.au/resources-library/motor-accident-resources/publications/for-professionals/threshold-injury-information-for-general-practitioners-working-in-the-NSW-CTP-scheme. 42 SIRA website, “For motor accidents” https://www.sira.nsw.gov.au/for-service-providers/cofcoc#For_motor_accidents.

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may seek further review from a panel of review officers at the Commission if they are dissatisfied with the original review officer’s decision (MAIA, ss7.9 and 7.10). The maximum statutory benefits available to a claimant are as follows. Weekly income benefits (MAIA, ss 3.6-3.12) • first 13 weeks after accident – weekly payment of 95% of the difference between the person’s pre-accident weekly earnings (to a maximum of $3,853) and the person’s post-accident earning capacity (if any) or post-accident earnings, whichever is the greater; • 14–78 after accident - (a) in the case of total loss of earnings—80%, or (b) in the case of partial loss of earnings—85%, of the difference between the person’s pre-accident weekly earnings (to a maximum of $3,853) and the person’s post-accident earning capacity (if any) or post-accident earnings, whichever is the greater, after the first entitlement period; • payments cease after 52 weeks to injured persons most at fault or with threshold injuries; • for all other claimants payments cease at: (a) 104 weeks, unless the person’s injury is the subject of a pending claim for damages (discussed below), (b) 156 weeks if the person’s injury is the subject of such a pending claim and the degree of any permanent impairment of the injured person as a result of the injury is not greater than 10%, (c) 260 weeks if the person’s injury is the subject of such a pending claim and the degree of permanent impairment of the injured person as a result of the injury is greater than 10%. Treatment and care (ss 3.24-3.33) • Benefits for treatment and care cover: o the reasonable cost of treatment and care; o reasonable and necessary travel and accommodation expenses incurred by the injured person in order to obtain treatment and care for which statutory benefits are payable; o if the injured person is under the age of 18 years or otherwise requires assistance to travel for treatment and care, reasonable and necessary travel and accommodation expenses incurred by a parent or other carer of the injured person in order to accompany the injured person while treatment and care for which statutory benefits are payable is being provided; o reasonable expenses in employing a person to provide domestic services to the claimant’s dependants, if the dependants are not able to perform the services themselves due to age or incapacity; • Benefits cease after 52 weeks to injured adult persons most at fault for the accident or to injured persons with threshold injuries. 64

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iii. Damage Awards Injured persons who are not at fault and who have more than threshold injuries can seek both economic and non-economic damages beyond the two-year statutory benefit period by making a damages claim. This is initiated by giving notice in the required form to the insurer (Motor Accident Guidelines, ss. 4.122-4.124). The insurer then makes a determination of whether it admits liability for payment of the additional damages, and if it does, must make an offer of settlement to the claimant (MAIA, s 6.20). The insurer is entitled to conduct an investigation, and the claimant may be required to undergo medical assessments requested by the insurer (MAIA, s. 6.27). A claim for damages cannot be settled unless the claimant has legal representation or the settlement is approved by the Personal Injury Commission, who must be satisfied that the settlement complies with the requirements of the MAIA and the Motor Accident Guidelines (MAIA, s 6.23). The maximum amount of damages that may be awarded for non-economic loss is $521,000 (MAIA, s. 4.13). A claimant is not entitled to either economic or non-economic damages unless his/her degree of permanent impairment is greater than 10%. If there is a dispute about the degree of permanent impairment and the parties are unable to reach a settlement, either party can refer the dispute to the Personal Injury Commission for assessment, which may include assessment by a medical officer. The Commission then makes a determination of the insurer's liability for the claim and the amount of damages, which is intended to reflect the amount of damages that a court would be likely to award (MAIA, ss 7.36(1)(b)). Commencement of proceedings in the ordinary courts is only permitted for claims that are deemed to be exempt from assessment by the Commission, either because they so qualify under conditions set out in the regulations, or because the Commission has issued a certificate to that effect (MAIA, ss 6.31 and 7.34.). Pursuant to s. 7.6 of the Motor Accident Injuries Regulation 2017, following kinds of claims are exempt from assessment: (a) a claim in respect of which the claimant is a person under legal incapacity; (b) a claim involving an action under the Compensation to Relatives Act 1897 brought on behalf of a person under legal incapacity; (c) a claim made against a person other than an insurer; (d) a claim in connection with which the insurer has, by notice in writing to the claimant, alleged that the claimant has engaged in conduct in contravention of section 6.41 (Fraud on motor accidents injuries scheme) of the Act; (e) a claim in respect of which the insurer has, by notice in writing to the claimant and to the owner or driver of the motor vehicle to which a third-party policy relates, declined to indemnify the owner or driver under the third-party policy.

iv. Lifetime Care & Support Scheme In cases involving catastrophic injuries, NSW provides a separate system of benefits under the Lifetime Care & Support (“LTCS”) scheme. Benefits under this scheme are paid by SIRA, rather than by private insurers (Motor Accidents (Lifetime Care and Support) Act 2006 No 16, s. 11A [“LTCS Act”]). Participation in the scheme can be interim or long-term, but the scheme is only available for people who have suffered the following injuries: • • • • •

Spinal cord injury resulting in permanent neurological deficit; Brain injury, where Post Traumatic Amnesia is greater than 1 week; Amputations; Burns (full thickness burns greater than 40% of total body surface area, or greater than 30% if the injured person is under 16 years of age); and Permanent blindness in both eyes.

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(Lifetime Care and Support Guidelines, Part I, s. 6 [“LTCS Guidelines”]) However, a person is not eligible to be a participant in the scheme if the person has been awarded damages pursuant to a final judgment entered by a court or a binding settlement for future economic loss in respect of the treatment and care needs arising from the injury (LTCS Act, s. 7(3)). LTCS provides support for “reasonable and necessary” treatment, rehabilitation and care, which may include: • • • • • • • • • •

medical treatment (for example, medication, surgery, scans, specialist appointments, X-rays); dental treatment; rehabilitation (for example, physiotherapy, occupational therapy or speech pathology); ambulance journeys; attendant care services and respite; domestic assistance (for example, help with cleaning, laundry or shopping); aids and appliances (for example, wheelchairs, hoists, continence equipment); prostheses; educational and vocational training; home and vehicle modifications;

•

workplace and educational facility modifications.

Determination of what is “reasonable and necessary” is made by the LTCS Authority, pursuant to a very detailed process and considerations set out in the LTCS Guidelines (in particular Part 6).

v. Premiums and Statistics In addition to premiums that are calculated based on the usual factors like location, vehicle type, driver age, and driving record,

the CTP scheme also charges a fund levy, which is used to finance things like the cost of public hospitals, ambulance services, administrative costs of running the Green Slip scheme, benefits provided to participants under the LTCS scheme, and future treatment and care for other seriously injured persons. CTP Green Slip premiums are set by each insurer, based on how they independently choose to apply the factors taken into account. The amount of the levy is also variable, depending on the vehicle type and location. 43 However, SIRA maintains oversight of the premiums set by insurers pursuant to a transitional excess profit and losses (TEPL) mechanism. Relying on that mechanism, SIRA has clawed back profits on insurance premiums collected by insurers. See e.g: •

“SIRA claws back $183.1 million in excess insurer profit”, 19 December 2023, https://www.sira.nsw.gov.au/news/ sira-claws-back-$183.1-million-in-excess-insurer-profit

•

“SIRA claws back $178.7 million in excess insurer profit”, December 21, 2022, https://www.sira.nsw.gov.au/news/ sira-claws-back-$178.7-million-in-excess-insurer-profit

•

“Cheaper Green Slips are now guaranteed”, https://www.sira.nsw.gov.au/news/cheaper-green-slips-are-now-guaranteed

An article by Compare the Market, a price comparison website, found New South Wales to have significantly higher auto insurance premiums than any other Australian state or territory, based on data collected in 2021. The ranking found average monthly rates in

43 Mark Rosanes, Insurance Business Magazine, “What NSW drivers need to know about green slip insurance”, June 28, 2022, https://www.insurancebusinessmag.com/au/news/ auto-motor/what-nsw-drivers-need-to-know-about-green-slip-insurance-411107.aspx.

The Barrister

New South Wales to be $120.00, versus $103.20 in the next highest state, which was South Australia.44 In 2020, SIRA conducted a survey of customer experience of the CTP insurance claims process. Key insights from the survey were that length of time in a compensation program, presence of mental health issues, and level of pain tended to impact a participant’s experience of the claims process: Overall, certain groups of people tended to report poorer experience and outcomes – regardless of injury severity or scheme. This includes people who are in the schemes for longer, have symptoms of probable serious mental illness, or are experiencing moderate to severe pain. People who had been in the compensation system for longer periods were more likely to report poor customer experience, a lesser sense of justice in the compensation process, lower trust in the scheme to get them better, and had poorer outcomes. This finding reinforced the importance of providing tailored early intervention to promote safe return to work and activities. Similarly, the study reinforced the importance of early identification of poor mental health and providing easy access to treatment sooner. Mental health was reported as an issue across both schemes with one quarter of people with a CTP claim (25%) and one in five (19%) people with a workers compensation claim assessed as having a probable serious mental illness. People with poor mental health were more likely to report poorer results, including in relation to customer experience, trust, return to work and activities, and self-reported health and social outcomes. Pain affected many people who participated in the survey and their outcomes. One in five (22%) people with a CTP claim reported moderate to extreme pain and discomfort […]. People experiencing higher degrees of pain were more likely to have had a poor customer experience, have lower trust in the scheme, reduced perceptions of justice in the scheme, and there was a decreased likelihood of them having returned to work or other activities. The early identification of ongoing pain and early access to treatment could help to reduce pain and promote recovery and outcomes. […] This study has identified areas that SIRA and insurers can focus on to improve customer experience and outcomes. On the customer service front, the lowest scoring Customer Service Conduct Principle for both schemes related to insurers resolving a person’s concerns quickly. This presents a tangible focus for insurers moving forward. In terms of health outcomes, the early identification of probable mental illness and pain, as well as opportunities for safe return to work and activities, will facilitate improved recovery and experience.45 [emphasis added] A CTP Scheme Performance Report published June 30, 2023 evaluated the how CTP Green Slip scheme is performing against the objectives outlined in the MAIA. Key insights of the report include:

•

Since the commencement of the scheme on December 1, 2017, premiums in the market (including levies and GST) decreased from an average of $635 to $488; However, the average premium increased from June 2022 to June 2023 by 17 or 3.6 percent, driven predominantly by further increases in levies, and an increase in benefits payable as a result of legislative amendments that increasing the maximum benefit period for basic claims from 6 months to 1 year;

•

That increase was despite two clawbacks of insurer profits totalling $270 million.46

•

Actuarial reports are available and provide useful data concerning the type and number of claims and amounts paid per claim. For example, the “2017 CTP Scheme Quarterly Actuarial Monitoring” report dated June 30, 2023 prepared by Ernst & Young provides the following information: 44 Compare the Market, “What is the average cost of car insurance in Australia?” 45 SIRA website, “Summary of the SIRA customer experience and health outcomes study”, https://www.sira.nsw.gov.au/resources-library/workers-compensation-resources/publications/workers-and-claims/summary-of-the-sira-customer-experience-and-health-outcomes-study; see also the full report, “SIRA Regulatory Measurement of Customer Experience and Outcomes Study”, November 2020, at https://www.sira.nsw.gov.au/__data/assets/pdf_file/0008/968030/SIRA-regulatory-measurement-of-customer-experience-and-outcomes-study.pdf 46 SIRA, “2017 CTP Scheme Performance Report to 30 June 2023”, at p 1, https://www.sira.nsw.gov.au/__data/assets/pdf_file/0008/1217339/SIRA-2017-CTP-Performance-Report-2023.pdf.

Fall 2023

• • • •

Of approximately 3000 claims per quarter, 800 are not-at-fault, non-threshold claims; 500 are at-fault claims; and 1200-1400 are not-at-fault threshold claims (see p. 6); At-fault and not-at-fault threshold claims tend to remain active for roughly 3-4 months post-accident; the number remaining active at 12-18 months post-accident is close to zero (see p. 6); Average at-fault claim payment range is $16,000-$25,000; average not-at-fault threshold claim payment range is $5,000-$10,000 – but these numbers are expected to increase because of recent legislative change increasing the maximum benefit period for these types of claims from 6 months to 1 year (see s. 7); the expected average amount of damages for claims involving Whole Person Impairment (WPI) is $150,000 for WPI of less than 10%, and $500,000 for WPI of greater than 10% (see p. 7).47

D: AUSTRALIAN CAPITAL TERRITORY Automobile insurance in the Australian Capital Territory is governed by the Motor Accident Injuries Act 2019 (“MAIA”), which sets out a compulsory third party insurance scheme that all vehicle owners must purchase before registering a vehicle. The scheme provides defined benefits for treatment and care, lost income, and quality of life benefits based on permanent incapacity, to anyone injured in a motor vehicle accident for up to five years, regardless of fault. It does not cover damage to vehicles or property. The scheme is under the oversight of the Motor Accidents Injury Commission (“MAIC”), who characterizes the MAI insurance as a “hybrid defined benefits common law scheme, with people who are more seriously injured being able to receive common law compensation.”48 All insurance policies are provided by private insurers.

47 SIRA website, “2017 CTP Scheme Quarterly Actuarial Monitoring” report dated June 30, 2023, https://www.sira.nsw.gov.au/__data/assets/pdf_file/0008/1208195/ CTP-Scheme-2017-Quarterly-Actuarial-Monitoring-30-June-2023-data-EY-Report.pdf. 48 MAIC website, https://www.treasury.act.gov.au/maic/your-mai-insurance.

The Barrister

Defined Benefits

Any amounts indicated below are in Australian dollars. Income replacement Income replacement benefits are available to anyone injured in a motor vehicle accident who on the date of the accident was at least 15 years old and in paid work or capable of being in paid work (MAIA, s. 89(1)). Benefits are available for up to five years or age of retirement, whichever comes first, as long as the person is unable to return to pre-accident working capacity (MAIA, s. 101). The amount of the weekly benefit is as follows (MAIA, ss 96-97): •

First 13 weeks after the accident: o o

•

100% of the difference between pre and post-accident income (if pre-accident income was less than $800); or 95% of the difference between pre and post-accident income (if pre-accident income was greater than $800), with pre-accident income being capped at $2250;

14 weeks to 5 years after the accident: o

As above, except that for pre-accident incomes between $800 and the $2250 maximum, benefits are 80% of the difference between pre and post accident income.

The above amounts are reduced by the amount of any benefits received from workers compensation (MAIA, s. 98).

A. Treatment and Care Benefits Defined benefits may include the cost of any of the following types of treatment and care which are reasonable and necessary, except where items are excluded by regulation: (i) medical treatment (including mental health treatment and pharmaceutical treatment); (ii) dental treatment; (iii) rehabilitation; (iv) ambulance transportation; (v) respite care; (vi) attendant care services; (vii) aids and appliances; (viii) prostheses; (ix) education and vocational training; (x) home and transport modification; (xi) workplace and educational facility modifications; and (xii) any other kinds of treatment, care, support or services prescribed by regulation. (MAIA, s. 110) The determination of whether expenses for treatment and care are “reasonable and necessary” is made by the insurer (MAIA, s. 120), who may require the claimant to attend a health care practitioner for a medical assessment. The Motor Accident Injury (WPI Assessment) Guidelines 2019 (“MAI Guidelines”) provide the framework for assessing the level of permanent impairment of an injured person, as well as the treatment and care that is considered reasonable and necessary, and the maximum amount of defined benefits payable for stated treatment and care (MAIA, s. 131).

Fall 2023

B: Quality of Life Benefits Claimants who sustain injuries resulting in a permanent incapacity or whole body impairment (“WPI”) greater than 5% may claim quality of life benefits (MAIA, s. 132). Where the claimant was a child on the date of the accident and is still receiving treatment 4.5 years later, that person’s WPI is taken to be 10%. That is also the case for an injured person participating in a Lifetime Care and Support Scheme (“LTCS”, discussed below) in relation to his/her injuries (MAIA, s. 133(1)). For all other claimants, WPI is assessed by an authorized IME provider who carries out an assessment in accordance with the MAI Guidelines, paid for by the insurer. However, if the insurer believes the claimant has not suffered a permanent injury, it may decline to make the referral, and the claimant must pursue the assessment at his/her own expense. If the result of the assessment shows a WPI greater than 0%, the insurer is required to reimburse the claimant for the cost (MAIA, s. 139). Once the injured person’s WPI is determined by the medical examiner, the quality of life benefit is determined pursuant to the Quality of Life Tables. According to the October 23, 2023 Table, the maximum benefit for a WPI of 100% is $364,680. WPIs less than 5% are not entitled to benefits. Entitlement to quality of life benefits may be limited or denied in some circumstances, such as where the claimant is convicted of a criminal offence related to the accident, where the claimant was uninsured or injuries were self-inflicted, or where the claimant is receiving workers compensation benefits (MAIA, s. 132(2)). Following completion of the medical examiner’s WPI report, the insurer is required to make an offer to the claimant proposing a settlement amount. If the claimant accepts the offer, the insurer must provide the payment, and the claimant has no further quality of life claim. If the claimant does not agree with the WPI assessment and/or the settlement offer, he/she may so notify the insurer and make arrangements for a second WPI assessment. If the second assessment concludes that the claimant’s WPI is higher than found by the first assessment, the insurer may ask the first assessor to review the second report. If, upon review, the initial assessor increases his/her assessment, the insurer is bound by the increased assessment (MAIA, s. 159), and makes a final settlement offer to the claimant. If the claimant’s WPI is assessed at 9% or less, the claimant who does not agree with the assessment may apply to the ACT Civil and Administrative Tribunal (“ACAT”) for a review (MAIA, ss. 192-193). The claimant does not have recourse to the ordinary courts.

ii. Motor Accident Claims If a claimant’s WPI is assessed at 10% or more, the claimant may refuse or accept a settlement offer received from the insurer, and in either case, may also bring a motor accident claim in the ordinary courts (MAIA, ss 239 and 257ff). Amounts that may be awarded in a motor accident claim are subject to certain constraints: •

• • • • •

Damages that may be awarded for quality of life are based on the WPI report, plus any additional amount that is not more than 20% of the amount arising from the WPI assessment, if the court considers that the WPI report that the claimant relies on for the motor accident claim did not take into account a particular injury, or a particular effect on the claimant’s quality of life; The claimant will not be awarded quality of life damages that overlap with quality of life benefits already received; Damages for loss of earnings may not be awarded in relation to the first year after the motor accident; The claimant will not be double-compensated for benefits received from workers compensation; Damages are not be awarded to claimants participating in the LTCS scheme; and Ordinary civil law principles such as contributory negligence and mitigation may apply to reduce damages. (MAIA, ss 248)

The Barrister

iii. Lifetime Care and Support Scheme The Australian Capital Territory also provides a separate scheme under the Lifetime Care and Support (Catastrophic Injuries) Act 2014 (“LTCS Act”) which is applicable to persons who have sustained catastrophic injuries as a result of motor vehicle accidents. The scheme is funded by a levy applied to all MAI insurance policies. For the period up to June 2023, the levy was $60.40 for a 12 month policy.49 Persons who have suffered the following catastrophic injuries are eligible to seek benefits under the LTCS scheme: • • • • •

traumatic brain injury; spinal cord injury; amputations; burns; permanent blindness in both eyes (LTCS Guidelines, s. 2).

Eligibility is determined by the LTCS Commissioner, after considering relevant medical information. An applicant who is found to be eligible will be an interim participant for the first two years (LTCS Act, s. 20), in order to allow for the possibility of recovery and ongoing improvement in the injured person’s condition. Before the end of the two year period, eligibility will be reassessed to determine if the person should become a lifetime participant (LTCS Guidelines, Part 1, s. 7). The LTCS scheme pays for “reasonable and necessary” treatment, rehabilitation, care and support services, which may include: • • • • • • • • • • • •

medical treatment (including pharmaceutical treatment; dental treatment; rehabilitation; ambulance transportation; respite care; attendant care services; aids and appliances; prostheses; educational and vocational training; home and transport modification; workplace and educational facility modifications; and any other kinds of treatment, care,support or services prescribed by regulation (LCTS Guidelines, Part 6, s. 1).

In determining if treatment or care is “reasonable and necessary”, the LTCS Commissioner will consider: • • • • •

Benefit to the participant; Appropriateness of the service or request; Appropriateness of the provider; Relationship of the service or request to the injury sustained in the accident; and Cost effectiveness considerations. (LCTS Guidelines, Part 6, s. 1)

The LTCS scheme is required to pay for all “reasonable and necessary” treatment and care that is not excluded by regulation (LTCS Act, ss. 9 and 30(1)). 49

Australian Capital Territory Treasury website, “How is the scheme funded”, https://www.treasury.act.gov.au/ltcss/ltcs-scheme/how-is-the-scheme-funded.

Fall 2023

iv. Premiums and Statistics Although MAI premiums are subject to government regulation, they are set by and paid to private insurers. The MAI scheme is a ‘community rated’ scheme, where motorists in each vehicle class pay the same premium regardless of their individual circumstances and risk of being involved in an accident.50 Quarterly reports are available and provide data about claims and outcomes under the MAI scheme. For example, the report dated September 30, 2023, which reflects statistics from the implementation of the scheme in February 2020 through to 30 September 2023, offers the following information: • •

Approximately 1642 applications for defined benefits have been filed since the start of the scheme - of those, 97.2% were accepted (at p 1); Of the applications rejected, most (24 of 36) were because claims had already been made through the workers compensation scheme (at p 1);

• • •

80 WPI assessments have been made to date – of those, 47 resulted in a WPI of 5% or higher (at p 2); 144 internal reviews by the insurer have been requested (at p 3); 33 external reviews by ACAT have been requested (at p 3);

• •

12 claims have been launched before the courts (at p 3); Out of all monies paid out to date, 49.5% were for treatment and care benefits, 36.4% were for income replacement, 5.4% were for common law claims, 14% were for death benefits, 0.8% was for quality of life payments, and 6.4% was for other expenses (legal, investigative, etc) (at p 4).51

The Special Minister of State responsible for the MAI scheme is currently involved in a consultation process for a three-year review of the MAI Act. The period for submissions has now closed. The consultation report has not yet been released. The Australian Lawyers Alliance (ALA) made a submission to the consultation process.52 The ALA position was that “there are important reforms needed to the MAI Act and all related legislative instruments, as we are concerned that the MAI Scheme is largely not upholding the objectives underlying the MAI Scheme. This is having a negative impact on injured motorists and their support networks in the ACT” (at p 5). ALA’s submissions highlighted concerns in the following areas: • • •

• •

significant power imbalances contained in the MAI Act, including during determination of whether treatment is “reasonable and necessary” and whether an injury is “stable” or has reached “maximum medical improvement” and limited opportunity for claimants to be assisted by counsel in matters under the defined benefits scheme; drafting issues in the MAI Act, which affect its application and how its provisions interact with other pieces of legislation; concerns about the Whole Person Impairment (WPI) assessment framework, including the fundamental objection that WPI is an ineffective way to calculate the pain, suffering, and impact on lifestyle; and artificial separation of physical and psychological injuries, or primary and secondary psychological injuries, is not in claimants’ best interests; the uncertainty for injured motorists regarding how the MAI Scheme interacts with workers compensation entitlements; and the resolution of common law claims.

- END -

50 Australian Capital Territory Treasury website, “How MAI insurers set their premiums”, https://www.treasury.act.gov.au/maic/your-mai-insurance/how-mai-insurance-premiumsare-set. 51 Australian Capital Territory Treasury website, “Motor Accident Injuries Scheme — Quarterly Report” July 1 to September 30, 2023, https://www.treasury.act.gov.au/__data/ assets/pdf_file/0012/2312103/MAI-Scheme-Quarterly-Report-30-Sep-2023.pdf. 52 Australian Lawyers Alliance, “Three-Year Review of the Motor Accident Injuries Act 2019 (ACT), Submission to the Insurance Branch, Economic and Financial Group, Treasury (ACT Government)”, October 5, 2023, https://www.lawyersalliance.com.au/documents/item/2574.

The Barrister

DISCLAIMER: No part of this database, and the contents therein, may be reproduced without the prior written consent of JSS Barristers. JSS Barristers and all individuals involved in the preparation and publication of JSS Barristers Rules make no representations as to the accuracy of the contents of this database. This database, and the contents herein, are provided solely for information and do not constitute legal or professional advice from JSS Barristers or its lawyers.

COUCH V OLATIREGUN, 2023 ABKB 402 (SULLIVAN J) Rules 1.2 (Purpose and Intention of These Rules), 10.29 (General Rule for Payment of Litigation Costs), 10.31 (Courtordered Costs Award), 10.33 (Court Considerations in Making Costs Award) and 10.42 (Actions Within the Provincial Court Jurisdiction) This was a Costs Decision arising from an Action in which the Plaintiff alleged he suffered severe injuries from a low-velocity motor vehicle accident. The Court found the injuries to be minor. The Plaintiff in the underlying Action sought general damages of $125,000 and special damages of $100,000 but was only awarded $4,722 for his injuries. The Plaintiff’s counsel made a Costs submission without notice to the self-represented Defendant and sought Costs in the amount of $12,378, a value close to three times the damages Award and representing 75% of the maximum Costs available under Column 1 of Schedule C. The Plaintiff’s counsel submitted that the Plaintiff minimized Costs in the following ways: (1) he only sought Costs for a single counsel when the Plaintiff was represented by two counsel at Trial; and (2) he entered relevant medical records as evidence without witness testimony and bypassed the Judicial Dispute Resolution Process (JDR). The Plaintiff’s counsel also argued that the Defendant unnecessarily prolonged and complicated the process by not cooperating in the Plaintiff’s efforts to bypass Mediation and set Trial. Referencing Rules 10.29 and 10.31, Sullivan J. noted the general rule that a successful party is entitled to Costs against the unsuccessful party subject to the Court’s general discretion, in light of the factors listed in Rule 10.33 that go into the determination of a reasonable and appropriate Costs Award. Sullivan J. first went through the considerations in Rule 10.33(1) and found that: (1) the Plaintiff was successful in the underlying Action; (2) the final damages Award represented just over 2% of the initial damages claim; (3) the issues involved in the underlying Action, namely assigning liability and assessing damages, were not novel and were not likely to have far-reaching implications on future motor vehicle accidents; (4) this was a relatively simple Action wherein the Trial lasted two half-days out of the five days initially allotted; (5) apportionment of liability was irrelevant; (6) while the Plaintiff’s counsel shortened the Action by entering relevant medical records as evidence without witness testimony and by bypassing the JDR, the Defendant also shortened the proceedings as he did not appear at Trial; and (7) there were no known offers to settle that could have saved the Court time and resources. Sullivan J. then turned to the considerations in Rule 10.33(2). While noting that some factors were inapplicable, Sullivan J. found the following: (1) the self-represented Defendant conducted himself reasonably and to the best of his ability without lengthening or delaying the Action unnecessarily; (2) the Defendant did not deny or refuse to admit anything that should have been admitted; (3) there were no unnecessary Applications, proceedings, or steps taken in the Action; (4) neither party engaged in misconduct; and (5) there was no evidence suggesting that a settlement offer was made. Lastly, Sullivan J. tackled the significant discrepancy between the amount of damages claimed by the Plaintiff and the amount that he was awarded. Sullivan J. cited Rule 10.42, which restricts Costs to not more than 75% of Column 1 where an Action is brought in the Court of King’s Bench, but where the amount sued for is within the jurisdiction of the Provincial Court. Although the Costs sought by the Plaintiff’s counsel did not exceed the 75% cap, Sullivan J. stated that the 75% limit is a high-water mark rather than an absolute entitlement. In addition, Sullivan J. noted that there was no reasonable basis for the Plaintiff to claim exorbitant damages and pursue an Action in the Court of King’s Bench for a minor vehicle accident. Given the above, Sullivan J. found justification for departing from the general approach to awarding Costs at a level approximating 40-50% of actual Costs, and held that an adjustment was in line with both the principles of efficiency and fairness under Rule 1.2 and the principle that Costs Awards should be proportional to the interests involved in an Action. In the result, Sullivan J. awarded the Plaintiff $1,300 for Costs including disbursements.

The Barrister

BABIUK V HEAP, 2023 ABKB 410 (MANDZIUK J) Rules 1.2 (Purpose and Intention of These Rules), 4.31 (Application to Deal with Delay) and 4.33 (Dismissal for Long Delay) The Defendants, represented by the Administrator of the Motor Vehicle Accident Claims Act, RSA 2000, c M-22, applied to dismiss the Action pursuant to Rules 4.31 and 4.33 for long delay. The underlying Action was commenced in 2005. After surveying the steps which had taken place in the litigation, Mandziuk J. noted that there had been very few meaningful steps taken in this Action in the last 17 ½ years, that those steps taken had primarily been driven by the Administrator, and that a number of steps remained to be taken before the matter could proceed to Trial. Mandziuk J. also noted that Rules 4.31 and 4.33 should be read and applied in the context of Rule 1.2, the core of which is efficiency. As such, litigants are mandated to litigate in a manner that is timely, cost-effective, and transparent, with a focus on the issues and on well-timed resolution. Mandziuk J. then turned to the Application under Rule 4.33. Rule 4.33 requires a significant advance of the Action within a three-year period. For the purposes of Rule 4.33, the three-year period is measured from the date of the last uncontroversial significant advance to the date the Rule 4.33 Application is filed. Mandziuk J. held that an Order regarding Costs, filed January 31, 2018, was arguably the last uncontroversial significant advance. The Plaintiff argued that there were significant advance s that occurred after January 31, 2018, including: (1) the Plaintiff retained new counsel; (2) the parties attempted to engage in settlement discussions; and (3) there was some discussion of alternative dispute resolution and the Plaintiff requested a Litigation Plan, which the Administrator declined to prepare. Mandziuk J. disagreed and found none of these steps constituted a significant advance in the Action. Mandziuk J. held that discussions and negotiations, while they were to be encouraged, did not advance an Action in an essential way if they were unsuccessful and did not narrow the issues relating to facts or procedure. Although there was an offer to schedule mediation or Judicial Dispute Resolution, no dates or media tor were suggested. In addition, Mandziuk J. observed that the Plaintiff did not know where her file was for 19 months while the file was in custodianship with the Law Society of Alberta. Mandziuk J. noted that difficulty retaining counsel was not an excusable delay, and the Law Society’s custodianship was not the administrative delay contemplated by the Rule. Mandziuk J. then turned to the Application under Rule 4.31. Citing the legal test in Humphreys v Trebilcock, 2017 ABCA 116, Mandziuk J. summarized the analysis to be applied under Rule 4.31 and noted that determining whether delay was inordinate and inexcusable was not a formulaic exercise, but a holistic analysis considering the “Action as a whole”. Mandziuk J. found that the Plaintiff had not advanced the Action to the necessary point, and that the delay was considerably in excess of what is reasonable in the context of a straightforward case. Among other things, Mandziuk J. highlighted the ten-year period of inactivity after another person had been iden tified as a party to the Action (the claim against that person was dismissed due to limitation period expiry), the prolonged delay in answering Undertakings (four years), the 12-year delay in examining one of the Defendants, and the fact that the other Defendant had never been examined at all. The delay was found to be inexcusable as the Plaintiff failed to provide evidence to establish a compelling explanation or excuse. The inordinate and inexcusable delay gave rise to a presumption of significant prejudice, which the Plaintiff failed to rebut. Mandziuk J. also found there had been actual prejudice to the Administrator. Finally, Mandziuk J. held that while the Plaintiff deserved sympathy, there was no compelling reason that would persuade the Court not to exercise its discretion to dismiss the Action. Ultimately, Mandziuk J. dismissed the Plaintiff’s Action pursuant to Rules 4.31 and 4.33

Fall 2023

HUNT V RIEHL, 2023 ABKB 440 (LOPARCO J) Rules 1.2 (Purpose and Intention of these Rules), 3.36 (Judgment in Default of Defence and Noting in Default), 4.33 (Dismissal for Long Delay), 9.15 (Setting Aside, Varying and Discharging Judgments and Orders) and 11.5 (Service on Individuals) The Appellant and Respondents were joint venture partners in the development of three jointly owned properties. The Respondents sought and were granted relief by Originating Application. In the Originating Application hearing, which the Appellant attended, leave was granted to file a Statement of Claim for further relief and damages. A Statement of Claim was delivered by courier, but the delivery receipt included only a horizontal line above the recipient signature line. The Appellant was also sent a copy of the Statement of Claim by email. The Respondents obtained a Noting in Default against the Appellant, based in part an Affidavit of Service exhibiting the deficient delivery receipt. The Noting in Default was sent to the Appellant by email. The Respondents served a Garnishee Summons against the Appellant’s employer in respect of the previous Originating Application but took no steps further to the Noting in Default for over two years. In 2022, the Respondents filed an Application for Default Judgment, pursuant to Rule 3.36. The Appellant then cross-applied to set aside the Noting in Default, pursuant to Rule 9.15. The Court held that there are two tests for setting aside a Noting in Default and Default Judgment pursuant to Rule 9.15: (1) where there is a non-trivial flaw in the process preceding the Noting in Default or Default Judgment, the Defendant, acting promptly, has a right to have the Noting in Default or Default Judgment set aside; and (2) where the process preceding the Noting in Default or Default Judgment is regular, the Noting in Default or Default Judgment may be set aside in light of the availability of an arguable defence, absence of intent to allow Judgment to go by default, availability of a reasonable excuse for failing to defend, and prompt action by the party seeking to set aside once the Noting in Default is known. The Court found that service of the Statement of Claim was ineffective since the courier receipt was insufficient to confirm personal service on the Appellant. The personal service requirement for commencement documents, pursuant to Rule 11.5, was not satisfied. The earliest evidence of the Statement of Claim being brought to the Appellant’s attention was the Respondents’ email attaching the Statement of Claim. The email was sent fewer than 20 days from the date of the Noting in Default, contrary to Rule 3.36. Accordingly, there was a non-trivial flaw, engaging the first above-noted category. The Court went on to consider whether the Appellant had acted sufficiently promptly to avail of his right to set aside the Noting in Default. The Court distinguished the facts of Anstar Enterprises Ltd v Transamerica Life Canada, 2009 ABCA 196 (“Anstar”), which similarly involved a lengthy delay by the party seeking Default Judgment. Unlike in that case, the Court found that the Respondents had obtained a Noting in Default promptly, waiting only to seek Default Judgment. Further, unlike in Anstar, the filing of the Application for Default Judgment was within the three-year drop-dead rule prescribed by Rule 4.33. The Court noted that in the case before it, the Respondents had good reason to delay seeking Default Judgment until their losses had fully crystallized. Meanwhile, the Respondents gave the Appellant actual notice of the Noting in Default, which the Appellant ignored for over two years. Noting the duty on litigants to act with reasonable dispatch, as reflected in Rule 1.2, the Court held the Appellant had not acted promptly. Last, the Court applied an overall fairness review, as prescribed in SFM v MRM, 2020 ABQB 302, comparing the relative prejudice to each party that would result from granting or not granting the Appeal. The Court noted the Appellant’s failure to act after having been made aware of the Noting in Default and other procedural steps, despite having attended Court previously and having had the means and opportunity to obtain legal advice. The Court also noted substantial steps taken by the Respondents to deal with the circumstances described in the Statement of Claim, including reasonable mitigative efforts. The Court concluded that fairness considerations dictated that the Appeal should be refused. In the result, the Appeal was refused and the Default Judgment, upheld.

The Barrister

KUDZIN V APM CONSTRUCTION SERVICES INC, 2023 ABKB 425 (MARION J) Rules 1.5 (Rule Contravention, Non-Compliance and Irregularities), 3.65 (Permission of Court to Amendment before or after Close of Pleadings), 5.31 (Use of Transcript and Answers to Written Questions), 6.11 (Evidence at Application Hearings), 6.8 (Questioning Witness Before Hearing), 7.3 (Summary Judgment), 13.12 (Pleadings: Denial of Facts) and 13.18 (Types of Affidavit) Pursuant to Rule 7.3(1)(b), the Applicants sought to summarily dismiss eleven of thirteen Actions arising from an explosion. The Court noted the applicable principles for Summary Judgment as set out in the jurisprudence but ultimately determined that it was not possible to fairly resolve the claims against the Applicants on a summary basis, based on the issues it had identified in the facts, the record, and the law. The Court considered whether some of the Respondents (the “Neighbor Respondents”) could rely on various elements of their compendium of evidence which included: excerpts from the Part 5 Questioning transcripts of one of the Applicants (the “Applicants’ Questioning”); excerpts from the Part 5 Questioning transcripts of several individual witnesses as parties, and employees or ex-employees of various corporate Defendants (the “Other Defendants’ Questioning”); and certain records produced by parties in the Actions but not exhibited to any Affidavit filed in the Actions (the “Selected Records”). The Court also considered whether the Applicants could rely on various elements of their compendium of evidence which included: excerpts from the Part 5 Questioning of another Defendant (the “Middlemiss Defendant Questioning”); numerous records produced by another Defendant who had filed a Third Party Claim against the Applicants (the “APM Defendant Records”). The Court also considered whether the Applicants could rely on excerpts from the Part 5 Questioning of two other Defendants (the “J. Arbeau and Arends Defendant Questioning”). The Court reviewed Rule 5.31 and Rule 6.11 when considering whether the Neighbour Respondents could rely on the Applicants’ Questioning, noting that Rule 6.11 provides that that written answers in Part 5 Questioning which may be used in in accordance with Rule 5.31 is evidence that a Court may consider when making a decision about an Application. The Court determined that the Applicants’ Questioning was properly useable by the Neighbour Respondents because (1) one of the Applicants was both a party and corporate representative to other Applicant, (2) the Applicants were adverse in interest, and (3) the Neighbour Respondents sought to use that evidence against the Applicants. Among other things, the Court considered whether the Neighbour Respondents could rely on Rule 6.11(c) to use the Other Defendants’ Questioning in conjunction with Rule 5.31. The Court reviewed the jurisprudence and noted that Rule 6.11 restricts the evidence a Court may consider on an Application, noting that the Court “may consider only” the listed forms of evidence; does not distinguish between different types of Applications; and expressly provides that Part 5 Questioning can be used if it is evidence that “may be used” under Rule 5.31. The Court found that absent an agreement, a party cannot admit Part 5 Questioning evidence for a party adverse in interest (party B) against another party in the action (party C), whether in Trial or in an Application (including summary process) regardless of whether party C is adverse or not. The Court set out that there may be exceptions, such as if a witness is no longer available, but no exceptions had been suggested. The Court noted that Rule 6.8 allows for the Questioning of a person for the purpose of obtaining a transcript of that person’s evidence for use at the hearing of an Application, and the transcript of that Questioning is filed and available to be used on the Application under Rule 6.11(1)(b). The Court further noted that Rule 6.8 may be used to question parties or individuals, including employees or former employees of parties. The Court set out that its interpretation of Rules 6.11(1)(c) and 5.31 was consistent with the obligations of parties to put their best foot forward. The Court acknowledged that it may make sense for Rule 6.11(1)(c) to be reconsidered in the future or for parties to agree to a more flexible use of transcripts, but that unlike in Ontario, it could not characterize the attempt to use the Other Defendants’ Questioning as a procedural non-compliance that was correctible under Rule 1.5. The Court set out that Rule 1.5 should not be used to amend the Rules or override mandatory or limiting provisions under Rule 6.11. Accordingly, the Court found that the Neighbour Respondents were not entitled to rely on the Other Defendants’ Questioning pursuant to Rule 6.11(c) in the way that they had attempted. The Court later noted that for the same reasons, the Applicants could not rely on the J. Arbeau and Arends Defendant Questioning and the Middlemiss Defendant Questioning. The Court found that the Other Defendants’ Questioning was not admissible as a principled exception to hearsay and noted that the Respondents had not adduced an Affidavit, and had instead attempted to rely on facts in the Other Defendants’ Questioning as hearsay pursuant to Rule 13.18. The Court further found that the Other Defendants’ Questioning did not fit into the types of evidence the Court may review on an Application under Rule 6.11(1). In determining whether the Selected Records could be used, the Court reviewed Rule 6.11(d) and Rule 5.15. The Court accordingly set Fall 2023

out that Rule 5.15 created certain presumed admissions about records so that parties do not need to unnecessarily waste time proving the authenticity of records, or prove that they were sent and received as indicated. The Court found that Rule 6.11(1)(d) then provides a method by which the Court may admit, in an Application, the records that are subject to those admissions. Further, the Court specified that an “admissible record” set out in Rule 6.11(1)(d) must still be admitted into evidence. The Court set out that if the exceptions do not apply, the presumptions are not rebutted, and the records are otherwise admissible; the records, subject to Rule 5.15(2), are admissible records that may be relied on by parties and considered by the Court on an Application pursuant to Rule 6.11(1)(d). The Court specified that records admitted pursuant to Rule 6.11(1) (d) at best: can only be admitted as authentic records that are true copies of the original; are what they purport to be; which were transmit ted and received as they purport or appear to have been but could not be admitted for the truth of their contents. The Court found that the Selected Records and the APM Defendant Records were accordingly admissible only for the purposes of proving that they were authentic records sent and received on or about the time they appeared to have been transmitted and were not admissible for proof of the truth of their contents. The Court considered whether the Applicants had proven there was no merit to claims of vicarious liability on their Application made pursuant to Rule 7.3, and found that because the Applicants had put into issue their own alleged lack of vicarious liability Pursuant to Rule 13.12, the Pleadings were deemed to be denied by all Respondents and therefore vicarious liability was squarely in issue. The Court therefore dismissed the Applicants’ claim for Summary Dismissal. The Court also noted that some claims were likely filed before there was complete discovery and that that Rule 3.65(1), subject to Rule 3.65(5), enabled the Court to give permission to amend a Pleading before or after the close of Pleadings.

ROYAL & SUN ALLIANCE INSURANCE COMPANY OF CANADA V CO-OPERATORS GENERAL INSURANCE COMPANY, 2023 ABKB 426 (MARION J) Rules 3.2 (How to Start an Action), 3.14 (Originating Application Evidence), 3.72 (Consolidation or Separation of Claims and Actions) and 6.11 (Evidence at Application Hearings) This was an Originating Application by the Applicants, Royal & Sun Alliance Insurance Company of Canada (“RSA”) and APM Construction Services Inc (“APM”), seeking a declaration that the Respondent, Co-operators General Insurance Company (“Co-operators”), owed APM a duty to defend and owed RSA a duty to contribute to APM’s defence (the “Duty to Defend Application”). The underlying Action involved several separate claims arising out of a gas line explosion (the “Canmore Actions”). The Respondent cross-applied (the “Cross-Ap plication”) to adjourn the Duty to Defend Application and to have it joined with the Canmore Actions pursuant to Rule 3.72. In addition, the Respondent sought consequential relief about the use of evidence from the Canmore Actions in the Duty to Defend Application. By way of background, an entity named DCR provided a document entitled “Confirmation of Insurance” (“COI”) to APM, which appeared to have been issued by DCR’s insurer, Co-operators. On the face of the COI, APM was referenced as an “Additional Insured” in respect of DCR’s commercial general liability insurance policy it held from Co-operators. APM also had a commercial general liability insurance policy with RSA for the relevant period. Marion J. first addressed the admissibility of evidence from the Canmore Actions that the Respondent sought to use in response to the Duty to Defend Application. Marion J. recognized that the Duty to Defend Application involved both an Originating Application and an Application within the Canmore Actions, and that the two processes would require different evidence. Citing Rules 3.14(1) and 6.11, Marion J. found the records produced in the Canmore Actions, which were exhibited in the Respondent’s Affidavit, could be used in relation to the Rule 3.72 Application, but only for the purposes of proving the records are authentic and were sent and received as indicated. Marion J. further found that the Respondent could not use the Part 5 Questioning transcripts under Rules 3.14 or 6.11. With respect to whether the Duty to Defend Application could be determined summarily, Marion J. noted that Rule 3.2 directs that a Statement of Claim must be used to start an Action, unless “there is no substantial factual dispute”, among other factors. Further, Courts had significant discretion as to whether and how Originating Applications should proceed. Marion J. noted that duty to defend Applications are often commenced by Originating Application as they typically do not contain factual disputes. However, where additional factors arise that make a summary determination more difficult, the Rules are not inflexible and the Court holds discretion to determine if the summary process is appropriate based on the circumstances of the case. 78

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Marion J. determined that it was not appropriate to summarily grant the Duty to Defend Application based on the following: first, there was a factual dispute between the parties as to whether APM ever became an Additional Insured, or whether it remained an Additional Insured at the time of the explosion; second, the legal effect of the COI remained a genuine issue for Trial; third, there were no other factors that would support granting the Duty to Defend Application summarily. On the second point, Marion J. further explained that the cases involving COIs adding additional insureds were generally decided after lengthy Trials and held important precedential value in the construction insurance industry. With respect to whether the Duty to Defend Application should be heard concurrently with the underlying Canmore Actions, Marion J. cited Rule 3.72 and some of the factors listed in Mikisew Cree First Nation v Canada, 1998 ABQB 675 that influence a Court’s discretion to consolidate Actions, and found that: (1) there were common disputes that would result in a significant overlap in the evidence and witness es in the proceedings; (2) the determination of the Canmore Actions would have a direct and significant impact on some of the issues involved in the Duty to Defend Application; (3) there was no evidence of any prejudice to RSA or APM; and (4) there was no evidence of any prejudice to the other parties to the Canmore Actions. In the result, Marion J. found it appropriate to join the Duty to Defend Application to the Canmore Actions and have it heard concurrently.

ASTOLFI V STONE CREEK RESORTS INC, 2023 ABKB 416 (MARION J) Rules 3.61 (Request for Particulars), 3.65 (Permission of Court to Amendment Before or After Close of Pleadings), 3.66 (Costs), 3.68 (Court Options to Deal with Significant Deficiencies) and 6.14 (Appeal from Applications Judge’s Judgment or Order) The Defendant appealed the Decision of an Applications Judge granting the Plaintiff per mission to amend his Statement of Claim in the underlying wrongful dismissal Action. The Court dismissed the Appeal, allowing the amendments, with the exception of some that were not permitted. Pursuant to Rule 6.14(4), the Court noted what is included in the record of proceedings on an Appeal of an Applications Judge’s Judgment or Order. The Court also set out that the test for additional evidence set out in Rule 6.14 (3) was a “very lax test”, noting that the test for whether additional evidence is relevant and material is whether the new evidence might reasonably be expected to significantly help determine one or more issues raised on the Appeal. The Court found that the supplemental evidence and transcripts of Questioning were properly before it as evidence that was relevant and material to the Appeal. The Court reviewed the jurisprudence and principles surrounding the exercise of discretion in permitting an amendment to a Pleading in relation to Rule 3.65, noting that: there is a strong presumption in favour of allowing amendments to Pleadings after the close of Pleadings; the Applicant need not show any particular reason for needing the amendment; that Courts should exercise their discretion to allow the amendment unless the non-moving party demonstrates an exception or compelling reason not to; the Court must consider the impact the proposed amendment will have on the non-moving party’s litigation interests and the public interest in the resolution of litigation as quickly as reasonably possible without the expenditure of more public and private resources than is reasonably necessary. The Court noted that the compelling reasons or grounds not to permit amendments that have been recognized over time include whether the: (1) proposed amendment will significantly harm a legitimate litigation interest of the non-moving party; (2) proposed amendment advances a claim that cannot possibly succeed or is hopeless because it would have been struck if it were in the original Pleading, which specifically include considerations under Rule 3.68(2)(a)-(e); (3) proposed amendment is not supported by a required threshold level of evidence, based on the nature of the proposed amendment; (4) proposed amendment seeks to add a new party or a new cause of action after the expiry of a limitation period and is statute-barred or subject to a “rock-solid” limitations defence, unless permitted by statute; (5) proposed amendment or the failure to plead earlier, involves bad faith; and (6) proposed amendment will contravene the public interest in promoting expeditious and economic dispute resolution. The Court found that the amendments did not: fail to disclose a cause of action or that there was a compelling reason to refuse the amendments for failing to disclose a cause of action; the amendments were barred by either the Limitations Act, RSA 2000, c L-12 or the Worker’s Compensation Act, RSA 2000, c W-15 and that the amendments were not against the public interest, noting that they did not solely cause delay. 80

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The Court set out that the evidentiary thresh old for amending Pleadings after the close of Pleadings depends on the nature or classification of the proposed amendment. Specifically, the Court noted three categories: (1) amendments which require no or minimal evidence which include those that are trivial, inconsequential, ancillary, or merely clarify wording and also those which add new causes of action based on the facts that are already pleaded; (2) most other significant amendments that require only modest evidence and have a low evidentiary threshold, including any admissible evidence but may also include hearsay and potentially even opposing party Pleadings; and (3) some amendments which have a significant ly elevated evidentiary threshold that require significant evidence establishing a “good ground” or “exceptional circumstances” including those that seek to new causes of action based on fraud, high handedness, or malicious conduct but the elevated threshold does not apply where the amendments add particulars for an existing cause of action. The Court determined that (1) certain aspects of the amendments relating to Alberta Occupational Health & Safety were not relevant and were accordingly struck, (2) certain aspects of the amendments relating to wrongdoing in litigation conduct and were partially struck; (3) there was sufficient evidence surrounding the particulars of allegations relating to how the Defendant had made misrepresentations to the various administrative tribunals, noting that any concerns about particularization could be addressed in a Request for Particulars or an Order under Rule 3.61; (4) the amendments relating to physical injury were not duplicative and unnecessary; (5) the amendments relating to what the Plaintiff would do if he obtained a punitive damage Award was irrelevant, prejudicial, and accordingly struck; and (6) that it was not satisfied that amendments relating to certain July 2018 communications were covered by settlement privilege. The Court considered what an appropriate Costs Award would be in accordance with Rule 3.66, noting that Rule 3.66 had dual competing purposes. The Court set out that Rule 3.66(1) encourages litigants to get their Pleadings right the first time and to hold the amending party responsible for Costs resulting from the amendment, while Rule 3.66(2) was intended to ensure that Respondents in amendment Applications do not unreasonably object to amendments. The Court noted that if the Defendant sought to serve a Request for Particulars in accordance with Rule 3.61 and was required to do so within one month of its decision.

OLKOWSKI V NANO-GREEN BIOREFINERIES INC, 2023 ABKB 441 (GRAESSER J) Rules 3.68 (Court Options to Deal with Significant Deficiencies), 5.33 (Confidentiality and Use of Information), 10.31 (Court-ordered Costs Award), 10.52 (Declaration of Civil Contempt) and 10.53 (Punishment for Civil Contempt of Court) This was an Application by the self-represent ed Applicant, Dr. Olkowski, seeking to have the Respondents, Nano-Green Biorefineries Inc. (“Nano-Green”) and Blaine Kunkel, Nano-Green’s Chief Executive Officer, held in Contempt of Court. Dr. Olkowski claimed that the Respondents used information obtained from him and Dr. Laarveld (a former Co-Plaintiff) through record production and Questioning in making a complaint about Dr. Olkowski to the University of Saskatchewan (the “Complaint”) and presented evidence and information at the University’s Hearing Board proceeding (the “Contempt Application”). In response, Nano-Green cross applied to strike a number of paragraphs in Dr. Olkowski’s Amended Statement of Claim and to summarily dismiss some of the allegations (the “Strike Application”). In considering the Contempt Application, Graesser J. considered the law surrounding Rules 10.52 and 10.53 and confirmed that civil Contempt must be proven beyond a reasonable doubt. Graesser J. also cited Rule 5.33, which codifies the “implied undertaking” rule and provides that any information or record obtained in the course of litigation, including records produced through Affidavit of Records or information obtained during Questioning, cannot be used for any other purposes. Graesser J. noted that a novel question in this case was whether a Defendant could use information from the record production and Questioning of a former Co-Plaintiff in an Application that did not involve the Co-Plaintiff. Nano-Green and Mr. Kunkel did not provide any evidence suggesting that they obtained a Court Order exempting them from the operation of Rule 5.33, nor did they mention that they obtained consent from Dr. Laarveld to use information disclosed by him. Graesser J. drew adverse inferences from the absence of any mention of a Court Order or consent from Dr. Laarveld. Graesser J. found that the Respondents would not have known about the existence of certain records and presented them to the Hearing Board but for the Questioning and record production in this Action, and concluded that he was satisfied beyond a reasonable doubt that Mr. Kunkel and Nano Green used records and information learned in the discovery process to formulate the Complaint. Graesser J. established that the Respondents breached Rule 5.33, but Dr. Olkowski had not provided information that he had been harmed or disadvantaged in this Action, nor were the breaches flagrant or particularly egregious. Therefore, he did not impose any sanctions or consequences on the Respondents, but awarded Costs in any event of Trial, paid forthwith as per Column 1 of Schedule Fall 2023

C. With respect to the Strike Application, among other things, Nano-Green and Mr. Kunkel sought to strike paragraphs in the Amended Statement of Claim (the “Impugned Para graphs”) under Rule 3.68 for lack of jurisdiction or a cause of action. Alternatively, they sought to strike the Impugned Paragraphs that overlapped with defamation claims already advanced by Dr. Olkowski in Saskatchewan (the “Saskatchewan Action”), as well as paragraphs that related to the patent prosecution process (the “Patent Prosecution Claim”). Further, the Respondents sought Summary Dismissal of the Impugned Paragraphs relating to the defamation claims on the basis of absolute or qualified privilege. Graesser J. noted that the relief sought by Dr. Olkowski under the Patent Prosecution Claim could only be awarded in patent litigation, which could only be dealt with in the Federal Court, and struck the Impugned Paragraphs regarding the Patent Prosecution Claim. In regard to res judicata, Graesser J. noted that the doctrine applies to issues or claims that have already been resolved in other litigation. Since the Applicant had appealed the Saskatchewan Action, res judicata may apply if that Appeal is upheld. However, the Court noted that some communications between the parties leading up to or during the litigation between them might be relevant to Costs or quantum of damages, and a communication might be made with an intent to cause economic harm to someone. Therefore, Graesser J. partly dismissed the Respondents’ Strike Application, noting that any defamation issues in the Saskatchewan Action would be fully and finally dealt with in that Province, and that and the Impugned Paragraphs were relevant only as they related to matters outside of the tort of defamation. In dismissing the Respondents’ privilege claims, Graesser J. noted that qualified privilege is lost where the communication is tainted by malice or goes beyond necessity and reasonableness. The parties had conflicting evidence on this issue that could not be resolved through Affidavit evidence. While absolute privilege may apply to complaints to regulatory bodies, the availability of an absolute privilege depends on the characterization of the Interim Associate Vice-President, to whom the Complaint was addressed. Graesser J. directed that this issue be dealt with at Trial.

HUSKY OIL OPERATIONS LIMITED V TECHNIP STONE & WEBSTER PROCESS TECHNOLOGY INC, 2023 ABKB 545 (LEMA J) Rule 3.68 (Court Options to Deal with Significant Deficiencies) Technip Stone & Webster Process Technology, Inc. and Technip USA, Inc. (the “Appellant”) appealed from an Application Judge’s Decision that Husky Oil Operations Limited (the “Respondent”) was not bound by an arbitration clause in a contract because they were not a signatory to the contract. The Appellant argued that if the Respondent wanted to enforce a warranty provided in the contract (the “Contractual Warranty Right”), it necessarily meant that the matter would proceed to arbitration if a dispute arose. The Respondent argued that they were not bound by any associated conditions or limitations imposed by the contract, including the requirement to arbitrate disputes. After considering the contract in issue, Lema J. held that that the Applications Judge erred. Justice Lema concluded that because the Respondent decided to enforce the Contractual Warranty Right, it was agreeing to resolve the warranty dispute via arbitration. In other words, the Respondent became a party to the arbitration mechanism when it sought to enforce the Contractual Warranty Right. The Appellant argued that since the Respondent failed to commence arbitration proceedings in accordance with section 3(1) of the Limitations Act, RSA 2000, c L-12 (the “Limitations Act”), the Action must be dismissed pursuant to Rule 3.68. Justice Lema noted that section 3(1) of the Limitations Act sets deadlines for seeking a “remedial order” and that “at first glance”, requesting arbitration would fall outside seeking a “remedial order”. However, section 5(1) of the Arbitration Act, RSA 2000, c A-43 (the “Arbitration Act”), provides that “[t]he law with respect to limitation periods applies to an arbitration as if the arbitration were an action and a matter in dispute in the arbitrtion were a cause of action”. The Court found that section 5(1) of the Arbitration Act created a link between arbitration proceedings and the Limitations Act, and that commencing arbitration was subject to the time limits stipulated in section 3(1) of the Limitations Act. Accordingly, since the Respondent filed its Statement of Claim in 2017, the applicable limitation period for the Respondent to commence arbitration had necessarily expired. The Respondent’s arbitrable claims were struck from it’s Action against the Appellant pursuant to Rule 3.68. However, with respect to the Respondent’s negligence claim against the Appellant, Lema J. held that it was not struck as it arose under the law of negligence, was not arbitrable pursuant to the contract, and was not affected by the expiration of the arbitration deadline. 82

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PARENTEAU V SPENCER, 2023 ABCA 268 (ROWBOTHAM, HUGHES AND PENTELECHUK JJA) Rule 3.68 (Court Options to Deal with Significant Deficiencies) The Appellant appealed a Decision to strike the Appellant’s Statement of Claim pursuant to Rule 3.68 as an “abuse of the Court”. The Respondents all sought to have the Action against them struck by invoking the Apparent Vexatious Application or Proceeding (“AVAP”) procedure under Court of King’s Bench Civil Practice Note 7 (“CPN7”). The Court noted that it interpreted the underlying Decision as striking the Appellant’s Statement of Claim solely under Rule 3.68(2) (d) for constituting an abuse of process as opposed to Rule 3.68(2)(b) where the “pleading discloses no reasonable claim”. The Court found that this was consistent with recent juris prudence which noted that the CPN7 procedure should be limited to Rules 3.68(2)(c) and 3.68(2) (d). The Court set out that although no evidence may be submitted on the issue of whether a “reasonable claim” has been plead under Rule 3.68(2)(b); under Rule 3.68(2)(d), evidence may be admitted and there is no presumption that the facts plead are true. Further, the Court noted that the admission of evidence is strongly curtailed under the “summary procedures” in CPN7 based on the rational that CPN7 should only apply where the “the frivolous, vexatious, or abusive nature of the proceeding” is “apparent on the face of the pleading”. The Court additionally noted that the Appellant’s submissions in respect of the Respondents did not establish a proper claim for her negligence claim and the questions she sought to have answered had little, if anything, to do with the Respondents. The Court accordingly dismissed the Appeal as no reviewable error had been found in the Court’s decision to strike the Appellant’s Statement of Claim. The Court additionally set out several observations and concerns regarding CPN7: (1) CPN7 was implemented “to better manage litigation that, on its face, appears to be unmeritorious, has no chance of success, or is otherwise abusive and vexatious” resulting in parties being able to avoid having to file an Application to strike a Pleading under Rule 3.68 and the resulting delays in securing a chambers date, as the review is entirely in writing; (2)

Although CPN7 seeks to enforce Rule 3.68, it makes no reference to “vexatious” proceedings or Pleadings and on this basis alone, the inclusion of “vexatious” language in CPN7 is troublesome;

(3) The propriety of attaching the “vexatious” label to the overall process outlined in CPN7 is questionable as it does not follow that all Actions amounting to an abuse of process are necessarily vexatious; (4) The phrase “Apparent Vexatious Application or Proceeding” contained in CPN7 is provocative and can have long-term implications for the party whose Application or proceeding is being challenged, as the distinction between a vexatious proceeding contemplated by CPN7 and a person being declared a vexatious litigation is often not apparent to the litigant; and (5) The ordinary course is for Defendants to make Applications under Rule 3.68 which CPN7 does not supplant as many Actions and Appeals are not vexatious (as concerns about vexatious proceedings can be dealt with separately under the Judicature Act, RSA 2000, c J-2), but are completely unmeritorious and born from unfamiliarity with applicable legal principles, rules of evidence and rules of procedure.

HANDELSMAN V GHANI, 2023 ABKB 398 (EAMON J) Rule 3.74 (Adding, Removing or Substituting Parties After Close of Pleadings The Applicant applied to amend the Pleadings in this Action, including to add a party (the “Proposed Defendant”) to the lawsuit and to amend the Certification Order (as the matter had already been certified as a Class Action) accordingly. Eamon J. refused the amendments pertaining to the Proposed Defendant but allowed the other amendments, which did not relate to the Proposed Defendant. Eamon J. commented that the Court has broad discretion to amend pleadings after certification of a Class Action. Generally, amendments should be allowed no matter how careless or late, subject to the following exceptions: (a) the amendment seeks to add a new party or a new cause of action after the expiry of the limitation period unless otherwise permitted by statute; (b) the amendment is hopeless, in that an amendment if it had been in the original pleadings would have been struck; (c) the amendment would cause serious prejudice to the opposing party that is not compensable in Costs; and (d) there is an element of bad faith associated with the failure to complete the amendment in the first instance. Eamon J. cited Attila Dogan Construction and Installation Co. Inc v AMEC Americas Limited, 2014 ABCA 74 for the propositions that a party seeking substantive amendments must present some evidence in support of the Application to amend, and that the Judge Fall 2023

may engage in some limited assessment of the evidence in determining if the threshold is met. Citing Canadian Natural Resources Limited v Arcelormittal Tubular Products Roman SA, 2013 ABCA 87 and other caselaw, Eamon J. held that where fraud, highhandedness, or malicious conduct is alleged, the evidentiary test is “stiffer” and there must be “good ground” or “exceptional circumstances” with “significant evidence in support of the amendments”. Eamon J. found that the Applicant did not satisfy the evidentiary threshold required to join the Proposed Defendant in respect of claims for knowing assistance in breach of fiduciary duty. There was no evidence to suggest that the Proposed Defendant knew of impropriety in the operations or the dishonest conduct asserted by the Applicant. Eamon J. further found that the Proposed Defendant was not stonewalling the Applicant by not disclosing records, and that there was no evidence that the absence of records was a problem of the Proposed Defendant’s making. As such, there was no evidence meeting the low evidentiary standard to support the other categories of proposed amendments against the Proposed Defendant. Eamon J. allowed the other amendments. Having noted that none of the Defendants objected to the other amendments, which were technical in nature, Eamon J. held that these amendments arose from facts already pled against the existing Defendants and did not change the substance of the case. In addition, these amendments were supported sufficiently by the exhibits to the Applicant’s Affidavit to the extent evidence was required.

SMITH V TUCHSCHERER, 2023 ABCA 238 (KHULLAR CJA) Rule 4.22 (Considerations for Security for Costs Order) Mr. Tuchscherer applied for an Order requiring Mr. Smith to pay Security for Costs of the impending Appeal pursuant to Rule 4.22. Mr. Smith acknowledged that he had no assets in Alberta as his assets were in the United States, which weighed heavily in favour of requiring Security for Costs. The Court found it concerning that Mr. Smith had failed to pay two previous Costs Awards, again weighing in favour of requiring security. Further in favour of requiring security was that the underlying Appeal was not, on its face, strong. The only error articulated on the Notice of Appeal was related to a finding of fact, which was a finding that was owed deference on Appeal. Finally, in ordering Security for Costs of $7,500.00, the Court found there was no undue prejudice to Mr. Smith as there was no evidence that posting Security for Costs would prevent him from pursuing the Appeal.

AVLI BRC DEVELOPMENTS INC V BMP CONSTRUCTION MANAGEMENT LTD, 2023 ABCA 267 (SLATTER, HUGHES AND KIRKER JJA) Rules 4.29 (Costs Consequences of Formal Offer to Settle), 14.59 (Formal Offers to Settle) and 14.88 (Costs Awards) The Alberta Court of Appeal had previously dismissed the Appellant’s Appeal and held that the Respondents, as the successful party, were presumptively entitled to Costs. Two of the Respondents later sought enhanced Costs under Rule 14.88. The first Respondent argued that it was entitled to double Schedule C Costs under Rules 4.29 and 14.59. Rule 4.29 entitles a party to double Costs including disbursements if that party makes a Formal Offer that is not accepted and the outcome of the proceedings is less favourable to the opposing party than the Formal Offer. Rule 14.59 states that when a Formal Offer is made for an Appeal, Costs of the Appeal must be awarded in accordance with Rule 4.29. The Court awarded the first Respondent double Schedule C Costs. The Court noted that the four primary factors in whether double Costs are appropriate are the timing of the offer, the content of the offer, whether the offer was beyond de minimis, and whether special circumstances exist which militate against granting double Costs. The Court determined that all four factors weighed in favour of granting double Costs and noted that the Appellant did not argue otherwise despite being given an opportunity to respond. 84

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The Court awarded the second Respondent Costs calculated on Column 2 of Schedule C. Although the second Respondent argued for enhanced Costs, it based its calculations on Column 1 of Schedule C, even though the Chambers Judge had awarded Costs based on Column 2. The Court found that there was no material difference between the enhanced Costs the second Respondent appeared to claim and the amount it was entitled to under Column 2 of Schedule C.

WESTJET V ELS MARKETING INC, 2023 ABKB 408 (MCCARTHY J) Rule 4.31 (Application to Deal With Delay) WestJet and ELS were parties to claims that had been subject to case management and protracted litigation for 12 years. WestJet sought to have ELS’s Counterclaim dismissed for inordinate and inexcusable delay, pursuant to Rule 4.31. McCarthy J. considered the tests for long delay set out in Humphreys v Hanne, 2017 ABCA 116 and Transamerica Life Canada v Oakwood Associates Advisory Group Ltd., 2019 ABCA 276. McCarthy J. concluded that, on the facts, there had undoubtedly been delay by ELS in pursuing its Counterclaim, stating: “Both WestJet’s Statement of Claim and ELS’s Statement of Defence and Counterclaim in this Action were filed more than 13 years ago. I have been case managing this Action for approximately 12 of those years. The Court of Appeal’s decision to reinstate ELS’ counterclaim following its partial dismissal was made the better part of nine years ago. The Consent Order permitting amendments to ELS’ counterclaim was entered into more than three and a half years ago.” McCarthy J. then turned to consider whether that delay had been inordinate, including consideration of the time elapsed, the resolution of the primary claim, and the various steps taken. McCarthy J. acknowledged that, unlike many cases, this was not a case where the claim had largely been dormant. However, McCarthy J. found that little of the activity on the claim had done anything to advance the matter, and that activity was insufficient to forestall a finding of inordinate delay. McCarthy J. then proceeded to consider whether the delay was inexcusable, noting that the burden to prove inordinate delay was excusable lies with the non-moving party. The Court held that it was incumbent on ELS to move the claim forward, and it failed to do so. As such, ELS failed to show a credible excuse for delay, and the delay was found to be inexcusable. With a finding of inordinate and inexcusable delay, a presumption of significant prejudice was applied. ELS had the opportunity to rebut that presumption. The Court did not accept ELS’ arguments regarding prejudice, and found it had not rebutted this presumption. McCarthy J. acknowledged that Rule 4.31 provided discretion as to whether the claim was dismissed, but found no reason not to dismiss the claim. ELS’ claim was therefore dismissed.

PROTECTION OF THE HOLY VIRGIN MARY ORTHODOX CONVENT AT BLUFFTON V OUSTINOW ESTATE, 2023 ABKB 462 (ROSS J) Rule 4.31 (Application to Deal with Delay) On June 11, 2021, the Applicant, Oustinow Estate, filed an Application to dismiss the Respondent’s Action for delay. The Statement of Claim was initially filed on February 18, 2011, wherein the Respondent sought a constructive trust or, alternatively, damages, on a property (the “Property”) that Metropolitan Oustinow (“Oustinow”) owned at the time of his death. The Property was left to a United States convent pursuant to Oustinow’s will. The Respondent alleged that he had been promised the land by Oustinow prior to his death. Justice Ross determined that the appropriate framework to apply Fall 2023

was the six-part test set out in Humphreys v Trebilcock, 2017 ABCA 116, but noted that this was not the only way to analyze delay pursuant to the Alberta Court of Appeal’s comments in Transamerica Life Canada v Oakwood Associates Advisory Group Ltd, 2019 ABC 276. The Court had no issue finding that the first part of the test, whether there had been delay, was met, as the Action had been ongoing for ten years and the Pleadings were still not resolved. However, while there had been delay, the delay was not inordinate or excusable. Justice Ross found that large portions of the delay were attributable to the Applicant, including two years and nine months to find a replacement litigation representative, one year and one month to file a Statement of Defence, and an extended period wherein the Applicant failed to provide dates for Questioning. Further, the parties later agreed to adjourn Questioning to pursue settlement discussions, which took approximately two years. Justice Ross, in deeming that the delay was not inordinate or excusable, also noted that the Plaintiff had taken litigation steps by filing an Affidavit of Records and by entering into a litigation plan in 2018, and that the matter was more complex than the Applicant suggested as it involved actions taken by the Respondent over many years in purported reliance on Oustinow’s promise. Justice Ross held that since the delay was not inordinate or excusable, the presumption of prejudice did not apply, and the onus was on the Applicant to prove significant prejudice arising from the delay, which “is the most important factor of the analysis.” The Applicant alleged prejudice in four different manners: 1) reputational; 2) inability to distribute the estate; 3) loss of evidence; and 4) as a result of an adverse possession Action brought by the Respondent. The Court rejected each argument, finding that: 1) the Defendant would have taken appropriate steps to move the Action along if there was significant reputation al prejudice; 2) there was no evidence that any party was impacted from the delay in finalizing the estate; 3) there was no evidence that the Applicant had lost documents or witnesses due to the delay; and 4) there was no evidence of the Respondent’s continued occupation of the lands but, even if that existed, the Court did not accept that that alleged prejudice arose from any delay in pursuing the within Action. The Application was dismissed.

HERITAGE PROPERTY CORPORATION V TRIOVEST INC, 2023 ABKB 513 (WHITLING J) Rules 4.31 (Application to Deal with Delay), 6.14 (Appeal from Application Judge’s Judgment or Order) and 7.3 (Summary Dismissal) The Plaintiffs brought a claim for breach of contract against the Defendants. The Plaintiffs’ claim was summarily dismissed by Applications Judge Robertson (the “Order”). The Plaintiffs appealed the Order pursuant to Rule 6.14. The Defendants applied to dismiss the Plaintiff’s Appeal for delay under Rule 4.31. The Court considered Rule 4.31, noting the Defendant’s arguments that the Rule empowers the court to “dismiss all or any part of a claim”, and that Appeals pursuant to Rule 6.14(1) are subject to short timelines and must be pursued diligently. The Plaintiffs cited some authorities addressing delays in the context of Appeals before the Court of Appeal. The Court acknowledged that even though the authorities cited by the Plaintiffs were not directly applicable to the present situation, the general principle that litigants are expected to diligently pursue Appeals applies. It was recognized that a comparatively shorter period of delay may establish “inordinate and inexcusable delay” in the advancement of an Appeal under Rule 6.14(1), as opposed to the dismissal of an entire Action. Nevertheless, the Court found that the delay in advancing this Appeal did not reach the threshold of being considered inordinate and inexcusable. The initial six-month delay was consented to by the Defendants under HERITAGE PROPERTY CORPORATION V TRIOVEST INC, 2023 ABKB 513 (WHITLING J) Rules 4.31 (Application to Deal with Delay), 6.14 (Appeal from Application Judge’s Judgment or Order) and 7.3 (Summary Dismissal) Page 29 accept that that alleged prejudice arose from any delay in pursuing the within Action. The Application was dismissed. Rule 4.31(3). The subsequent delays could be attributed to various factors largely beyond the control of the Plaintiffs. These include the impact of the COVID-19 pandemic, the serious illness of the Plaintiffs’ former counsel, and the Court’s scheduling backlog. The Court observed that according to Rule 4.31(1)(b), the Defendants were obligated to demonstrate the existence of “significant prejudice” resulting from the delay. However, the presumption put forth by the Defendants regarding any prejudice related to the witnesses was refuted, given that the crucial matters in the Appeal hinged on the written evidence. Consequently, the Defendants’ request to dismiss the Appeal on grounds of delay was rejected. The Court proceeded to evaluate whether the Plaintiff’s Appeal from the Order should be dismissed summarily. In doing 86

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so, the Court applied the test in Weir-Jones Technical Services Inc v Purolator Courier Ltd., 2019 ABCA 49, and observed that the issues in this Appeal could be resolved on a summary basis, given that they primarily hinged on the language of the purchase and sale agreement and written evidence. The Court applied the relevant legal principles concerning breach of contract and determined that it was appropriate to resolve the dispute between the parties summarily and in favor of the Defendants. The Court noted that the Defendants had established the necessary facts on a balance of probabilities and had discharged their burden of demonstrating that there was no merit to the Plaintiffs’ claims. Although the Plaintiffs presented substantial evidence, they failed to demonstrate the existence of a genuine issue that necessitated a Trial.

VANMAELE ESTATE (RE), 2023 ABKB 456 (LOPARCO J) Rule 4.33 (Dismissal for Long Delay) The Applicant, a beneficiary of the estate in issue, applied to strike a motion brought by an executor and beneficiary of the estate (the “Respondent”) under the Dependants Relief Act, RSA 2000, c D-10.5 (the “DRA Claim”), for long delay pursuant to Rule 4.33 (the “Application”). At a Case Management Conference (“CMC”), one of the estate executors requested that the Case Management Justice (“CMJ”) determine whether the Respondent was a dependant. The matter was scheduled to be heard on December 7, 2016. At that time, the CMJ declined to determine the issue on Affidavit evidence alone and proposed a Judicial Dispute Resolution (“JDR”) take place to settle the claim. The matter was adjourned sine die to schedule a JDR, which never took place because the Respondent declined to participate. The Application was initially filed on December 19, 2019, and was heard on June 24 and July 2, 2020. At that time, Bokenfohr J. queried whether the Respondent was incapacitated during the three-year period, and ordered that he undergo a capacity assessment as a result of the decision in AF v Alberta, 2020 ABQB 268 (“AF”), which made it a live issue as to whether this would extend the limitation period. The Respondent refused to attend the assessment. At the subsequent CMC, Bokenfohr J. held that there was no issue with the Respondent’s ability to represent himself, and the Application was re-scheduled for March 1, 2023. The Court held that the period for determining whether an uncontroversial significant advance had taken place was December 7, 2016, the date the matter was originally set to determine whether the Respondent was dependant, until December 18, 2019, the date the Applicant filed the Application (the “Relevant Period”). Justice Loparco found there had been no significant advance in the DRA Claim during the Relevant Period. That, however, did not decide the issue, and the Court moved on to consider whether there were any other reasons for the delay, namely whether there was an agreement that suspended Rule 4.33, whether the Respondent was incapacitated during the Relevant Period, and whether any steps taken in a related Action constituted a significant step in the DRA Claim. The Court found there was no agreement that suspended the Rule and there was no evidence that proved the Respondent’s disability on a balance of probabilities as required by the decision in AF. The Court then moved on to consider the factors in Angevine v Blue Range Resource Corp., 2007 ABQB 443, to determine whether the Application to pass accounts that was heard in 2018 by Renke J. was “inextricably linked” to the DRA Claim, thereby suspending the passage of time. The Court found that Renke J.’s decision resolved several issues pertinent to the DRA Claim, namely the determination of the Respondent’s compensation and the validity of the lease agreement between the Respondent and the deceased. Justice Loparco held that Renke J.’s decision related to assets and income, which was relevant to the Respondent’s entitlement as a dependant, and it thereby increased the quality of the information such that the parties and the Court would be better situated to rationally assess the merits of the DRA Claim. The Court also opined that the Respondent had experienced complex medical issues that may entitle him to a dependency claim and that any doubt as to whether there was a significant advance in the Action “ought to be resolved in his favour.” Accordingly, the 2018 Application to pass accounts constituted a significant step in the DRA Claim that suspended the passage the time. The Application was dismissed.

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STYLECRAFT DEVELOPMENTS (1984) LTD V CARSCALLEN LLP, 2023 ABKB 504 (BOURQUE J) Rule 4.33 (Dismissal for Long Delay) The Defendants were former counsel to the Plaintiff, who had sued for professional negligence after the Plaintiff’s claim was dismissed. The Defendants applied to dismiss the Plain tiff’s claim for long delay pursuant to Rule 4.33. Applications Judge Farrington granted that Application, and the Plaintiff appealed. On Appeal, Justice Bourque considered whether the matter had been significantly advanced by the conduct of the parties, the provision of a Witness List, and/or the formation of a Litigation Plan. The Court highlighted that Rule 4.33 deals only with timing, not merits. A decision to dismiss for delay has nothing to do with the strength of the claim. The question is whether, during the alleged period of delay, there was a step that moved the Action forward in an essential way, measured as a step which increases the likelihood that the claim will be resolved. Justice Bourque summarized the considerations the Court must make to complete a functional “significant advancement” analysis: (a) whether formal steps were taken; (b) whether issues were narrowed; (c) whether steps were taken to complete document or information discovery; (d) whether positions were clarified; (e) the nature, value, quality, genuineness, and timing of purported development; (f) the history and nature of the litigation; and (g) the outcome of the purported advancement. In light of these considerations, Justice Bourque found that communications between the parties suggesting mediators for an ADR, exchanging a Witness List, and entering a Litigation Plan cannot count as significantly advancing the matter. Rather, Justice Bourque stated that these steps were “extremely minimal in nature, did not include the disclosure of meaningful information, and did not move the parties towards resolution.” Something more was required to be completed pursuant to the communications or Litigation Plan for it to count as a significant step. The Appeal was therefore dismissed.

BARON REAL ESTATE INVESTMENTS LTD V TRI-ARROW INDUSTRIAL RECOVERY INC, 2023 ABKB 531 (APPLICATIONS JUDGE SUMMERS) Rule 4.33 (Dismissal for Long Delay) All except one Defendant applied for dismissal of the claims against them pursuant to Rule 4.33. Applications Judge Summers defined the sole issue as whether the Plaintiff’s service of a Supplemental Affidavit of Records constituted a “significant advance of the Action” as required under Rule 4.33. There was a preliminary disagreement between the parties regarding the burden of proof on an Application under Rule 4.33. The Applicants took the position that the onus always rests with the Plaintiff, who must demonstrate a significant advance in an Action. The Court disagreed, and held that absent some contrary intention being indicated in a statute or Rule, the burden of proof always lies with the Applicant to prove its Application on a balance of probabilities. In this case, that meant showing that there was no significant advance of the Action in the relevant time period. In regard to the substance of the Application, the Applicants characterized the contents of the Supplemental Affidavit of Records as “insignificant” and not bearing on the facts in dispute between the parties. Having examined the nature, extent, and potential importance of the records disclosed in the Supplemental Affidavit of Records relative to the Pleadings, the Court disagreed, and held that its service constituted a genuine step taken by the Plaintiff to advance the Action. Applications Judge Summers therefore dismissed the Application

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KELANA HOLDINGS LTD V 393510 ALBERTA LTD, 2023 ABKB 486 (SILVER J) Rules 5.33 (Confidentiality and Use of Information) and 10.52 (Declaration of Civil Contempt) The Applicant sought an Order declaring the Respondents in civil Contempt for failing to deliver property under seizure pursuant to the Civil Enforcement Act, RSA 2000, c C-15. Silver J. cited Whitford v Red Pheasant First Nation, 2022 FC 436 for the proposition that an undertaking that is given to the Court with regards to property is an “enforceable obligation” made to the parties in the Action and to the Court. As such, undertakings have the effect of a Court Order, which, if not honoured, may be enforced including by motion to compel, motion to strike, and ultimately by proceedings for Contempt. Silver J. commented that civil Contempt under Rule 10.52(3)(b) can flow from any provincial statute that provides for such a finding. Many provincial statutes base civil Contempt on conduct that fails to comply with notices issued under the statutory authority. The other typical form of civil Contempt found under provincial legislation relates to non-compliance of Orders or directives similar to Rule 10.52(3)(a)(i) and (iii-iv). Silver J. noted that there was no decision in Alberta that substantively spoke of the proof requirements of civil Contempt under provincial statutes where civil Contempt is occurring outside of Court. As such, Silver J. held that in terms of such conduct, an Applicant must prove beyond a reasonable doubt the three elements of civil Contempt as outlined in Carey v Laikon, 2015 SCC 17 (“Carey”) (the “Three Elements”), namely: (1) an Order stating clearly and unequivocally what must be done; (2) actual notice of the terms of the duty to deliver; and (3) intentional failure to comply with the duty to deliver the property under seizure.

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Silver J. commented that a failure to comply with the terms of an undertaking given to the Court may refer to the implied undertaking rule found under Rule 5.33, which protects and enforces the confidentiality of information and records disclosed during litigation. As such, a breach of the Rule has found to be analogous to a breach of a Court Order, and the Three Elements for civil contempt from Carey applies to Rule 10.52(3)(a)(vi). Silver J. held that the Applicant did not prove beyond a reasonable doubt that the Three Elements were met. Specifically, the seizure documents failed to list the quantity and descriptions of the items under seizure. As such, they did not fully provide the Respondent with actual notice. Furthermore, some of the property was in fact delivered and removed for sale. Silver J. also had a reasonable doubt as to whether the Respondent intentionally failed to comply with the duty to deliver the property under seizure. As such, Silver J. dismissed the Application.

RAYNER V MIZIER, 2023 ABKB 521 (APPLICATIONS JUDGE SCHLOSSER) Rules 6.11 (Evidence at Application Hearings) and 7.3 (Summary Judgment) The Applicant applied for Summary Judgment under Rule 7.3 in relation to a loan that the Applicant purportedly advanced to the Respondent. The Respondent argued that the loan was advanced to a corporation and not to him personally. In support, the Respondent produced a promissory note indicating that a company was the borrower. The Applicant produced a different promissory note allegedly signed by both parties indicating that the loan was issued to the Respondent personally, which the Respondent denied signing. In accordance with Rule 6.11, both parties tendered expert opinion evidence on the issue of whether the signature was in fact the Respondent’s. The Court could not determine summarily who borrowed the funds because credibility was central to resolving that question. However, the Court granted Summary Judgment for unjust enrichment as the Respondent received the loan through a bank draft payable to him personally and deposited the funds into his personal account.

CHALLIS V MAVERICK OILFIELD SERVICES LTD., 2023 ABKB 514 (ARMSTRONG J) Rules 6.14 (Appeal from Application Judge’s Judgment or Order), 7.2 (Application for Judgment) and 7.3 (Summary Judgment) The Respondent Plaintiff had advanced a claim against the Appellant Defendant company and sought Summary Judgment for payment of severance and payment of the deferred portion of his bonus. The Applications Judge only granted Summary Judgment for the deferred portion of the Plaintiff’s bonus. The Defendant appealed. The Respondent Plaintiff did not file a Notice of Appeal but argued that he was not required to file one, since an Appeal from an Applications Judge was a hearing de novo. In dismissing this argument, the Court noted that the term de novo was used in relation to the applicable standard of review rather than the mechanics of Appeals from Applications Judges. An Appeal of an Applications Judge’s Decision is not a “new hearing of the matter, conducted as though the original hearing had not taken place”, as Rule 6.14(3) makes it clear that such an Appeal is an Appeal on the record. Additional evidence must be relevant and material before it can be adduced on Appeal, and the Appellant must provide a transcript of the proceedings for the purpose of Appeal. The Court noted that the standard of review for an Appeal under Rule 6.14 is correctness and no deference is owed. Additionally, the Court cited Weir-Jones Technical Services Incorporated v Purolator Courier Ltd., 2019 ABCA 49 for the test for Summary Judgment under Rules 7.2 and 7.3. The Court concluded that this was an appropriate case for Summary Judgment. There was a factual dispute regarding the terms of the deferral agreement; however, this dispute could be resolved on the record before the Court by considering the treatment of the other bonus recipients, the correspondence between the parties, and the minimum protections provided by the Employment Standards Code, RSA 2000, c E-9. The Court found no genuine issue requiring a Trial and dismissed the Appeal. 90

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KAUP V LANDREX HUNTER RIDGE INC, 2023 ABKB 542 (HARRIS J) Rule 6.14 (Appeal from Application Judge’s Judgment or Order) The Plaintiffs appealed the Decision of an Applications Judge. The Applications Judge concluded that both the Statement of Claim and the Defendants’ counterclaim could be determined summarily, dismissing the Plaintiffs’ claim while granting the Defendants’ counterclaim.

The Court noted that under Rule 6.14, an Appeal of an Applications Judge’s Decision is de novo, and that the standard of review was correctness on all issues. The Court further noted that, under Rule 6.14(3), an Appeal from an Applications Judge’s Decision is an Appeal on the record of proceedings before the Applications Judge. However, new evidence may be admitted if the Judge hearing the Appeal considers it relevant and material. Although the test for relevance and materiality under Rule 6.14 has been described as having a low threshold, the additional evidence sought to be considered must be admissible evidence: when the Appellant sought a final disposition of a claim, the evidence must meet the standards required at Trial. The Court refused to admit a second Affidavit from the Appellant Plaintiffs into evidence as the Affidavit contained inadmissible evidence such as subjective beliefs, hearsay, and irrelevant information. Citing the test from Weir-Jones Technical Services Incorporated v Purolator Courier Ltd, 2019 ABCA 49, the Court concluded that the claims involved in this case were appropriate for summary disposition and that there was no genuine issue requiring a Trial. Therefore, the Plaintiffs’ Appeal was dismissed.

CASKEY V HILLENBRAND, 2023 ABKB 477 (APPLICATIONS JUDGE SMART) Rule 7.2 (Application for Judgment) In the context of litigation related to a failed house sale, a selection of the Defendants applied, pursuant to Rule 7.2, for Summary Dismissal of the claim against them. The claim against the relevant Defendants was in regard to their role, as counsel to the seller, in registering certain instruments on title. The Defendants argued that they acted on the instructions of the seller who, in the circumstances of this case, was acting as the agent of the buyers in dealing with the Land Titles Office. Therefore, per the Defendants, any liability was the seller’s alone. The Court held that, even if the Defendants’ arguments were accepted, a relationship was conceivably created between the Defendants and the purchasers, with corresponding duties and obligations. The Court further observed that if there was no such relationship, as the Defendants argued, then they had misrepresented their position to the Land Titles Office when registering the instruments at issue. Based on these findings, the Court was unable to conclude that the Plaintiffs’ claim had “no merit” as required for a successful Application for Summary Dismissal. The Court therefore dismissed the Application and granted Costs to the Plaintiffs.

ATB V REAL INDUSTRIES 333 CORP, 2023 ABKB 503 (HOLLINS J) Rule 7.3 (Summary Judgment) The Court granted the Plaintiff’s Rule 7.3 Application for Summary Judgment based on unjust enrichment. Hollins J. commented that the Summary Judgment test under Rule 7.3 must be considered in light of Hryniak v Mauldin, 2014 SCC 7, where the Supreme Court of Canada recommended a culture shift in civil litigation allowing for the use of summary procedures where the Court is able to reach a fair and just determination on the merits of a matter with the material before it. Hollins J. continued to comment that the Alberta test for Summary Judgment was settled in Weir-Jones Technical Services Incorporated v Purolator Courier Ltd., 2019 ABCA 49 (“Weir-Jones”). Specifically, the Court should first determine whether it is possible to make a summary determination based on the record before it and the nature of the disputes. The record before the Court must allow it to make the necessary findings of fact and apply the law to those facts. If that can be done, the Court will then move to consider whether proceeding by Summary Judgment would be the more expeditious way to achieve a just result. Fall 2023

Citing Weir-Jones, Hollins J. further commented that a dispute on material facts, issues of credibility, or the level of complexity of the case are all things that may render a matter inappropriate for determination by Summary Judgment Hollins J. cautioned against summary determination of fraudulent conduct where credibility is a live issue. However, Hollins J. did not consider that issue as the Plaintiff was not pursuing its Rule 7.3 Application based on its allegations of fraud, but unjust enrichment and knowing receipt, neither of which require a finding of fraudulent intent. Hollins J. noted that the Plaintiff brought an Action for fraud, as well as for conversion, unjust enrichment, and knowing receipt. However, Hollins J. was satisfied that the same set of facts could be used to ground a claim for equitable relief without considering whether those same facts would constitute fraud. Further, the agreed upon facts did not engage issues of credibility and provide a sufficient record on which to adjudicate the claims of unjust enrichment and knowing receipt. As such, Hollins J. held that the dispute may be fairly resolved based on the available record.

BAINS V ADAM, 2023 ABKB 491 (YAMAUCHI J) Rules 8.17 (Proving Facts) and 9.13 (Re-opening Case) Yamauchi J. denied the Plaintiff’s Application to enter opinion evidence through an Affidavit after the conclusion of the Trial. Yamauchi J. cited with approval Heritage Freehold Specialists & Co v Montreal Trust Co (1997), 208 AR 241, 52 Alta LR (3d) 354 for the proposition that to enter such evidence, a litigant should apply for leave under Rule 8.17 before the Trial as opposed to at the Trial, let alone after the Trial has been completed. Moreover, allowing the Plaintiff to enter opinion evidence through an Affidavit would contravene Rule 8.17, as the Defendants would have no opportunity to cross-examine the authors of the various exhibits. Yamauchi J. cited Aubin v Petrone, 2020 ABQB 708 for the propositions that a Court may consider a Rule 9.13 Application if it is satisfied there is a good reason to do so; and in deciding whether to exercise this discretion, a Court should keep in mind a number of factors, including: (1) the desirability of avoiding unnecessary and costly Appeals; (2) the desirability of the Appeal Court having a fully developed factual and legal record; (3) the need for finality and certainty in legal proceedings; (4) that errors to be corrected should be objectively demonstrable (such as an incorrect statement of law or interpretation of a contract which all parties agree is incorrect); (5) the Rule is not a vehicle for seeking reconsideration of a judgment call; and (6) the threshold for a Court to exercise its discretion should be high to avoid Applications which are in reality, a “second kick at the can”. Citing CZ v RB, 2019 ABCA 445, Yamauchi J. continued to comment that Rule 9.13 should be used sparingly, and that it is “not an occasion for the losing party to advance new argument which they did not think of before”. Rule 9.13 is never intended as a vehicle to shore up evidential gaps. The test for whether to admit further evidence on the Application to vary a pronounced Judgment is similar to the rules for receiving new evidence on Appeal to the Court of Appeal. Yamauchi J. held that the exhibits that the Plaintiff had available but chose not to enter as evidence at Trial were effectively new evidence. The Plaintiff failed or refused to put that evidence before the Court or call the authors of the evidence, nor did he provide “good reason” why the Court should accept such evidence post-Trial. As such, the Plaintiff’s Application to enter such evidence through an Affidavit after the conclusion of the Trial was dismissed.

RESTA V THORNTON, 2023 ABKB 498 (FUNK J) Rules 9.6 (Effective Date of Judgments and Orders) and 9.14 (Further or Other Order after Judgment or Order Entered) In this Application, the Court was asked to determine whether a nunc pro tunc (“now for then”) Order was the appropriate recourse when the Respondents were unexpectedly unable to meet a Court-ordered deadline for payment of Security for Costs and the Applicants refused to accept payment one day after the deadline. Citing CIBC v Green, 2015 SCC 60, the Court noted the general principle that Courts have inherent jurisdiction to issue Orders nunc pro tunc, which would give an Action retroactive legal effect, as though it had been performed at an earlier 92

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date. The Court also noted that pursuant to Rule 9.6, a Court Order takes effect from the date of pronouncement or, if the Court orders otherwise, the date so ordered. Further, under Rule 9.14, a Court is permitted, after a Judgment has been entered, to make a further or other Order which provides a remedy to which a party is entitled in connection with the Judgment so long as doing so does not require variance of the original Judgment. The Court highlighted the fact that the Respondents could not have anticipated that their multiple emails to Counsel for the Applicants for the Applicants’ banking information would go unanswered on the payment deadline. The Respondents had done what was necessary to complete the required step on time but were unable to complete the step for reasons beyond their control, which were unforeseen and unintentional. The Court also found that a nunc pro tunc Order would not cause prejudice to the Applicant, and would facilitate access to justice. Further, the Court noted that in the event the nunc pro tunc Order was not granted, relief from forfeiture would be available to the Respondents since the result of non-compliance (i.e., not meeting the deadline for payment) was disproportionate in light of the facts of this case. In the result, the Court granted a nunc pro tunc Order, allowing the transfer of funds forthwith and deeming that payment to have been made on the payment deadline.

ADEBISI V DENTONS CANADA LLP, 2023 ABKB 452 (RICHARDSON J) Rules 10.9 (Reasonableness of Retainer Agreements and Charges Subject to Review), 10.18 (Reference to Court), 10.23 (Costs of Review), 10.26 (Appeal to Judge) and 10.27 (Decision of Judge) The Appellant appealed the decision of a Review Officer in relation a legal bill presented by the Respondent law firm. The Court found ultimately confirmed the decision of the Review Officer, but for a calculation error, and the Appeal was accordingly dismissed. The Court noted that the standard of review to be applied to an Appeal of a Review Officer’s decision under Rule 10.26 is deferential, given the Review Officer’s specialized knowledge and experience in assessing the reasonableness of lawyer’s accounts and that they were in best position to assess and weigh evidence. The Court also noted that in accordance with Rule 10.27(1), it may interfere with a Review Officer’s decision if any of these errors are clearly made on the record of the hearing, noting that where interference is so justified, the Court on Appeal may reassess the account or return it for a new assessment, among other remedies. The Court noted that Rule 10.18(1)(a) requires that the Review Officer must refer any question arising about the terms of a retainer agreement to the Court for decision and direction. The Court additionally noted that the terms of a retainer agreement could not be decided by the Review Officer, including: questions of interpretation and implied retainer agreements and oral agreements. Among other issues, the Court considered whether the Review Officer exceeded their jurisdiction with respect to determining if the lawyer working for the Respondent had provided a legal opinion before the retainer agreement was signed which was accompanied by inflammatory language, suggesting fraud and extortion on the part of the lawyer working for the Respondent (the “Retainer Allegation”) .The Court found that the Retainer Allegation was without merit, noting that the Review Officer had applied the proper balance of probabilities standard and dismissed the Retainer Allegation as being without any evidentiary foundation. The Court found that the Review Officer did not make any credibility findings with respect to the Retainer Allegation but determined that even if the Review Officer had done so, it was within the Review Officer’s purview, provided that the credibility finding related solely to whether the lawyer acted within the scope of the retainer. The Court further considered the terms of the retainer agreement itself and noted that the Retainer Allegation: lacked any evidentiary foundation; was contrary to the express terms of the retainer agreement; and contrary to the professional obligations of counsel to not provide legal opinions without first reviewing client files. The Court accordingly found that the Review Officer’s findings was within their jurisdiction. The Court determined that the Review Officer’s decision to not award the Respondent Costs for the hearing before the Review Officer in accordance with Rule 10.23 was a finding that was open to the Review Officer to make and that there was nothing on the record that warranted disturbing this finding. The Court found that there was no error of the Review Officer’s consideration of the reason ableness of the fees but considered whether total fees charged by the Respondent were reasonable in accordance with Rule 10.9. The Court noted that Review Officers are experts in their field and are best placed to assess the reasonableness of fees under Rule 10.9, which necessarily involve an assessment of the value of the legal services provided. The Court set out that that the principles which govern the reasonableness of lawyers fee include: (1) the Court must hold the lawyer and the client to promises made in a retainer agreement regarding amounts a lawyer may charge, and a client must pay for legal services in the absence of a compelling reason not to; unless there is a contrary position in the Fall 2023

retainer agreement; (2) a client must pay for a legal service which increases the likelihood the purpose of the retainer agreement will be achieved; (3) the client is not responsible for the cost associated with unnecessary steps; a client who instructs a lawyer to take a step which increases the likelihood the objective of the retainer will be achieved but will not likely present a benefit which justifies the cost or does not increase the likelihood of success is responsible for the fees associated with this service; (4) to ensure that those obliged to pay for legal services are treated reasonably by their counsel, taking all circumstances into account; and (5) a client who contests their lawyer’s charges at the outset of the hearing must particularize their complaint; and finally, it is the lawyer who bears the burden of persuading the Review Officer that the amount charged is appropriate. In determining that Schedule C amounts were inadequate for the hearing before the Review Officer, the Court among other things noted that: (1) the Notice of Appeal was served more than one month after the Certificate of the Review Officer was issued which was contrary to the requirement the requirement that requires service of a Notice of Appeal within one month as set out in Rule 10.26; (2) the Notice of Appeal was in breach of Rule 10.26 as the record of proceedings contained significant omissions including the lack of a transcript for the underlying hearing, and did not contain a written argument

PAWLICKI V BLACK DIAMOND GROUP LIMITED, 2023 ABKB 492 (HOLLINS J) Rules 10.29 (General Rule for Payment of Litigation Costs) and 10.33 (Court Considerations in Making Costs Award) This Costs ruling arose from a Decision related to an employment matter. The Court considered the general Costs rule under Rule 10.29 that the successful Party to an Application or Action is entitled to Costs, subject to the Court’s discretion. The Court also reviewed Rules 10.33(1) and 10.33(2) and highlighted factors that a Court considers in making a Costs Award, including: the degree of success of each party, the amount claimed versus the amount recovered, the complexity of the Action, the conduct of the parties within the litigation, and settlement offers exchanged by the parties prior to the Trial. Further, the Court noted that the use of Sched ule C is not mandatory and cited the Court of Appeal Decision in McAllister v Calgary (City), 2021 ABCA 25, which endorsed “ordinary-course indemnification to successful parties, prima facie, in the range of 40-50% of actual Costs”. The Court found that the Plaintiff was substantially successful as he had won on the biggest issues and recovered about 80% of his last offer to settle made to the Defendant. At the same time, the Court held that the offers to settle exchanged between the parties prior to Trial and the Plaintiff’s allegations of litigation conduct on the part of the Defendant, did not significantly impact its Costs Decision. The Court did not award Costs to the successful Plaintiff pursuant to Schedule C, but awarded him a lump sum of $35,610, approximately 45% of the solicitor-client Costs, payable forthwith.

MAURIER V MAURIER, 2023 ABKB 539 (RENKE J) Rules 10.29 (General Rule for Payment of Litigation Costs) and 10.31 (Court-ordered Costs Award) This Decision stemmed from a Special Chambers Application in the context of a family law matter addressing, among other things, the Costs associated with the Special Chambers Application. The Court applied Rule 10.29 as a general rule, which presumes that the successful party is entitled to Costs. In this case, the Defendant was successful on the main issue, while the Plaintiff was successful on some minor issues. Although the Plaintiff raised some concerns regarding a delayed filing and certain irregularities in the materials filed by the Defendant, the Court found that they were minor and did not preclude the Defendant’s entitlement to Costs. To determine an appropriate Cost Award, the Court considered the factors listed in Rule 10.31 and conducted an inquiry into setting reason able and proper Costs. The Defendant sought enhanced Costs of $6,000, but also referred to double Costs under Column 2 of $3,370. Justice Renke referred to McAllister v Calgary (City), 2021 ABCA 25 to consider partial indemnity, but noted that he did not have a draft Bill of Costs to make this inquiry. The Court considered Schedule C, noting that a Special Chambers Application is not a “high volume-interlocutory matter” like a morning Chambers 94

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Application that is heard in 20 minutes on a crowded docket. Justice Renke observed that neither principle nor case law restrict family law matters to Column 1 of Schedule C. The Court took into account the Defendant’s success on a crucial issue and awarded double Costs due to the presentation of a settlement offer and the ample room and opportunity for pre-Application resolution. Justice Renke reduced the Costs Award by $500 due to the Defendant’s late filing and irregularities.

KLASSEN V CANADIAN NATIONAL RAILWAY COMPANY, 2023 ABCA 233 (SLATTER, ANTONIO AND WAKELING JJA) Rules 10.29 (General Rule for Payment of Litigation Costs) and 10.32 (Costs in Class Proceeding) This Costs ruling arose from the Court of Appeal having reversed a Decision of the Alberta Court of King’s Bench which set aside the certification of a class proceeding on the basis that the Pleadings did not disclose a cause of action. The Court referred to Rule 10.29(1), which sets out the general rule that a successful Party is entitled to Costs. However, when a class proceeding is involved, Costs must also be determined in light of Rule 10.32, which requires an assessment of: (a) the public interest; (b) whether the Action involved a novel point of law; (c) whether the proceeding or Action was a test case; and (d) access to justice considerations. The Court found that the issues in this class proceeding were not issues of public importance, but rather personal claims of the Representative Plaintiffs. While the claim raised by the Representative Plaintiff was novel, it could be resolved with certainty in light of the statutory regime. The Court rejected the Respondent’s argument that a Costs Award would have a negative impact on access to justice and went on to highlight the objectives of class proceedings including, among others, access to justice, efficiency and behaviour modification. Noting that the conduct of the Appellant was lawful and that the Pleadings did not disclose a cause of action, the Court found no concerns regarding behaviour modification or judicial economy and efficiency. Considering the Appellant’s claim of quadrupling the assessed legal fees, the Court confirmed that a successful party may not claim assessed Costs based on a percentage indemnity of actual fees charged without disclosing the amount charged and justifying that amount. The Court recognized the impact of the underlying litigation on the Appellant but noted that access to justice considerations and the purposes of class proceedings could moderate the quantum of a Costs Award. In the result, the Court awarded the successful Appellant Costs pursuant to Column 5 of Schedule C but refused to quadruple the amount.

GOLDSTICK V MONSMA, 2023 ABCA 257 (PENTELECHUK JA) Rule 14.5 (Appeals Only With Permission) The Applicant applied for permission to Appeal the Court’s Decision to dismiss the Applicant’s Application to extend the time to Appeal the Order of a Special Chambers Judge. Pursuant to Rule 14.5(2), the Court set out that permission to Appeal the decision of a single Judge of the Court to a Panel of the Court of Appeal may be granted if the Applicant established (a) a question of general importance; (b) a possible error of law; (c) an unreasonable exercise of discretion; or (d) a misapprehension of important facts. The Court determined that the Applicant noted the same concerns and complaints in the Application as he had in his underlying Application. The Court further noted that a desire to reargue the same matters was not sufficient to warrant granting permission to Appeal the Decision to a full Panel and that the Applicant had not filed any new evidence or evidence at all in support of his Application, despite the lack of evidence being directly in issue in the underlying Application. The Court accordingly dismissed the Application.

Fall 2023

DOUS V VISKAT TUBULAR TECHNOLOGIES INC, 2023 ABCA 216 (HO JA) Rules 14.8 (Filing A Notice of Appeal) and 14.48 (Stay Pending Appeal) The Applicant filed a Notice of Appeal of Decision dismissing an Amended Statement of Claim (the “Dismissal”) as against the Respondents. The Court of Appeal Case Management Office informed the Applicant to file an Application for extension of time to Appeal as he had filed outside of the Appeal period. Subsequently, the Chambers Judge issued a Costs Award arising from the Dismissal. The Applicant filed an Amended Civil Notice of Appeal with respect to both the Dismissal and the Costs Award under Rule 14.8. The Applicant also filed an Application to Stay the Costs Award pending the outcome of the Appeal under Rule 14.48. The Court considered the factors in Cairns v Cairns, 1931 CanLII 471 (AB CA), for an Application to extend time to file a Notice of Appeal. The Applicant submitted that the action of filing the initial Notice of Appeal mere days after the expiry period and the fact that he ordered the transcripts of the Chambers Judge decision were indicative of his bona fide intention to Appeal. Justice Ho concluded that the Applicant had established a bona fide intention to Appeal and met the relatively low threshold of having “some merit” to his Appeal. The extension of time to Appeal was granted. The Court considered the Application to stay the Costs Award under Rule 14.48 and noted that the legal test to be met for a Stay is out lined in RJR-MacDonald Inc v Canada (AG), 1994 CanLII 117 (SCC), [1994] 1 SCR 311 at 334-335. The Applicant submitted that he would suffer irreparable harm if a Stay of the Costs Award is not granted because of his poor financial circumstances. The Respondents submitted that they were legally entitled to the benefits of the Costs Award and a Stay would deprive them of the ability to enforce the Cost Awards. Justice Ho concluded that the Applicant had not demonstrated that he would suffer irreparable harm if a Stay was not granted. Additionally, Justice Ho also noted that the Applicant had not provided meaningful documentary or third-party evidence substantiating his claims about his financial position and the implications of enforcement of the Costs Award. Therefore, the Applicant’s request for a Stay of the Costs Award pending Appeal under Rule 14.48 was denied

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ACTLA Sustaining Members The Alberta Civil Trial Lawyers Association wishes to acknowledge the following members who have shown their support through becoming Sustaining Members of the Association

Daniel Alvarado

L.D. Todd Litwiniuk

Nore Aldein (Norm) Assiff

James Ludwar

Ryan Berget

Robert J. MacKay

R. Travis Bissett

Megan L. McMahon

Maurice J. Blain

Robert G. McVey KC

Tara Cassidy

Joe V. Miller KC

Hollick Chipman

Waverly Muessle

Conor J. Clark

Joe A. Nagy

Brian Conway

Dana C. Neilson

Terrence A. Cooper KC

James Royal Nickerson KC

Meghan Gellein Corrin

Michael O’Brien

Robert L. Duke KC

Branislav (Brad) Popovic

Mark E. Feehan

Donna Cheryl Purcell KC

Gary R. Frank

Greg Rodin KC

Jackie Halpern

Kathleen A. Ryan KC

Sandra L. Hawes

Ari Schacter

James A. Hea

Martin Schulz

William H. Hendsbee KC

Mark Alexander Smith

William K. Horwitz

Senia Tarrabain

Cheryl L. Hostyn

Edward Tawkin

Ross A. Kaplan KC

Urvil Thakor

Walter W. Kubitz KC

Brian E. Thompson

Mark Lawson

Timothy R. Wood

Roy E. Link

David G. Yanko

Fredric Litwiniuk

Fall 2023

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