Skip to main content

Future Income Loss Awards Immune From Creditors via Bankruptcy Protection

Written by admin on . Posted in Uncategorized. 120 Comments on Future Income Loss Awards Immune From Creditors via Bankruptcy Protection

Reasons for judgement were released today by the BC  Supreme Court, Victoria Registry, addressing whether a Plaintiff’s funds for ‘future income loss’ in a personal injury lawsuit, where the Plaintiff has made an assignment into bankruptcy, are ‘property’ that creditors can access.  In short the answer was no.
In today’s case (Kuta (Re)) the Plaintiff was injured in a 2008 collision.  In 2010 the Plaintiff made an assignment into bankruptcy.  Following his discharge he settled his personal injury claim which included $248,000 for ‘future wage loss’.    Appriximatley $200,000 would have satisfied all of the claims of the Plaintiff’s creditors.  The Court was asked whether the creditors can go after these funds.  In finding they were immune Master Bouck provided the following reasons:

[16]         Central to the court’s analysis in Bell (Re) is the characterization of future income loss as the loss or impairment of property, being the capacity to earn income. The court declined to adopt the contrary analysis made by the Ontario Court of Justice in Lang v. McKenna, 1994 CarswellOnt 295 (Ct. J. (Gen. Div.)). In Lang, the court found that monies paid to an individual while he is incapacitated from earning a living for himself and his family do not form part of the bankrupt’s estate.

[17]         Bell (Re) has been followed in at least two other reported cases: Mostajo (Re), 2006 CarswellOnt 6421 (S.C.J.), and MacLeod (Re), 2008 CanLII 32835 (Ont. S.C.J. (Bank. & Ins. Div.)).

[18]         In contrast, the court’s characterization of a future income loss as found in Lang has been followed in Re Anderson, 2004 ABQB 349, Conforti (Re), 2012 ONSC 199, and Re Snow, (ONSC, unreported). In Gurniak v. Royal Bank of Canada, 2011 CarswellSask 507 (Q.B.), the court found it “debatable” as to whether a future income loss award falls within s. 68 but declined to include any such award in the bankrupt’s estate: para. 49.

[19]         In Conforti (Re), the court addresses whether an award for “loss of competitive advantage” is the property or income of a bankrupt. While the semantics differ, the loss which the court was asked to characterize is “distinct but related to” a future income loss award: para. 36. In a most thorough analysis of both the case law to date as well as the statutory provisions which apply, the court decided that:

a. the concept of a capital loss as discussed in Andrews should not be imported into the bankruptcy context. This is particularly so given the subsequent Supreme Court of Canada ruling in Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701 (following Marzetti v. Marzetti, [1994] 2 S.C.R. 765, a decision regarding the application of s. 68 but one which is not mentioned in Bell (Re)). Wallace determined that s. 68 applies to an award for damages for wrongful dismissal. The Court found that a broad and purposive approach is necessary when determining whether a particular receipt is income for the purposes of s. 68: Conforti (Re) at paras. 12-13. Thus, the broadest definition of income ought to be made by the court before any monies received by the bankrupt are deemed to fall within s. 67;

b. In any event, “it is abundantly clear” on a reading of Andrews that the description by the Court of the “capitalized loss” was intended to avoid income tax consequences on the award at that time. That does not mean that “capital” loss translates to “property” under s. 67 in the bankruptcy context: para. 20; and

c. the essential nature of the monies paid for the future loss of income must be considered. The monies are intended to compensate an individual for lost income due to a reduced capacity to earn that income, or to replace income that will never be made as a result of the tortious act. As such, the monies are “akin to income” and fall within the definition of s. 68(2) (a) of the Act: paras. 25-28. As Wallace decided, a damages award that is “filling the pocket that would otherwise have been filled by salary or wages” is not property available to a bankrupt’s creditors: Wallace, para. 69. See also Julyan (Re), 2009 SKQB 321 (Registrar) where workers’ compensation income loss replacement monies were found to fall within s. 68.

[20]         The bankrupt further submits that the analysis and conclusions in Bell (Re) have been overtaken by developments of the law in British Columbia on the characterization of a future income loss in the personal injury context. Specifically, the Court of Appeal has determined that a future loss of income award is not necessarily determined on a loss of capital asset approach. That same loss can be assessed on the “real or substantial possibility” that a future event will occur leading to loss of income: Perren v. Lalari, [2010] B.C.J. No. 455 (C.A.) at para. 7. Thus, the bankrupt submits, the importation of the “capital asset” concept from personal injury law into the bankruptcy context is no longer valid even if Bell (Re) was correctly decided at the time.

[21]         Furthermore, the objectives of the Act itself, being to balance the rights of the creditors and the integrity of the bankruptcy system with the bankrupt’s entitlement to make a fresh start in the financial world, must be considered. It is submitted that the Settlement monies for future income loss is not a financial windfall such as an inheritance. Rather, the monies represent the means of putting an individual back in the financial place that he would have been had the tortious act not occurred. It is submitted that a manifestly unjust result would occur if the bankrupt was compelled to pay current creditors with monies intended to compensate the bankrupt for future circumstances: see Lang at paras. 41-42.

[22]         In summary, the bankrupt says that the capital asset cases ought not to be followed, given developments in the law since Bell (Re). And further, that Marzetti, a case not cited in Bell (Re), is the guiding and binding judicial authority. As such, a lump sum future income loss payment must be “income” under s. 68 as the monies are intended to replace an individual’s lost income stream. By their very nature, these monies can never be considered property under s. 67 of the Act.

[23]         The preceding summary does not do justice to the complete submissions of the bankrupt. It does provide some basis for my decision to go against Bell (Re). In my respectful view, Conforti (Re) accurately reflects the proper approach to be taken by the court when asked to characterize “income” (or “property”, for that matter) under the Act. I also reiterate that Conforti (Re) references and follows Marzetti, a case which does not appear to have been considered in Bell (Re) despite the relevancy of the case to the question before the court.

[24]         In the result, I find that the monies which are intended to compensate Mr. Kuta for future loss of income do not vest in the trustee under s. 67 of the Act.

Medical Marijuana Cream Claim Fails at Trial

Written by admin on . Posted in Uncategorized.

To date I am aware of two cases in British Columbia that have awarded damages for the costs of medical marijuana to treat personal injuries (these can be accessed here and here).  Earlier this week reasons were released by the BC Supreme Court considering whether to award damages for the cost of medical marijuana cream to a Plaintiff who suffered from chronic pain following a vehicle collision.  In rejecting this aspect of the claim Madam Justice Duncan provided the following reasons:
[75]         In his May 2012, report Dr. Hershler noted that with 4.5 years having passed since the accident it was unlikely the plaintiff’s condition would improve. He classified the plaintiff as having a permanent partial disability with respect to his low back, which was likely to be symptomatic indefinitely. He recommended pulse signal therapy. He is one of only two service providers for this treatment. In a follow-up report dated October 11, 2012, he also recommended medical marijuana compounded in a topical cream. Dr. Hershler is aware of directives from the Canadian Medical Association and Health Canada about exercising restraint in prescribing medical marijuana. He views these directives to be aimed at smoked cannabis of a particular strain, not those he suggests as a cream or oral supplement. He agreed he is keen to use those types of applications of medical marijuana in the field to assist in the gathering of evidence about its efficacy and modality in pain management…
[98]         I agree with the defendant that Dr. Hershler’s opinion should be given little weight. I find he seized on the May 2008 MRI as the source of the plaintiff’s discomfort whereas the other experts, both Dr. Helper for the plaintiff and Dr. Paquette for the defence, had a very different view of the plaintiff’s MRI history. Similarly, I place no weight on Dr. Hershler’s recommendations for pulsed signal therapy or medical marijuana cream. The former is a service for which he is one of the only providers and the latter is a treatment in its very early experimental stage with minimal empirical evidence to suggest it will assist the plaintiff, if it is even permissible under Health Canada’s medical marijuana exceptions.
 

$75,000 Non-Pecuniary Assessment For Chronic and Disabling Neck and Back Injury

Written by admin on . Posted in ICBC Chronic Pain Cases, Uncategorized.

Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, assessing damages for chronic and largely disabling neck and back injuries.
In this week’s case (Mandra v. Lu) the Plaintiff was involved in a collision that the Defendant was found fully liable for.  The Plaintiff suffered chronic neck and back injuries as a result which disabled him from is occupation as a millwright and challenged him in lighter vocational options.  In assessing non-pecuniary damages at $75,000 Madam Justice Duncan provided the following reasons:

[121]     Mr. Mandra was 53 years of age when the accident occurred. He was transformed from a happy, healthy and hardworking man to one who lives in constant chronic pain. His lower, mid and upper back hurt on an ongoing basis. He has neck pain, headaches and pain in his legs. He is nervous, forgetful, miserable and depressed. Treatment and medication have not helped and there is no prognosis for improvement except as described by Dr. Helper and only in relation to his lumbar pain. Compendiously his pain is severe and chronic and disables him from the type of work he used to do. He was formerly employed as a millwright, a heavy duty job, but now has a hard time sitting or standing for prolonged periods and lacks the necessary physicality to work as he once did. The injuries render him unemployable in his past career as a millwright and only very marginally employable in lighter occupations, particularly given his challenges with English. The injuries have affected his social life and his relationship with his wife. He is not as active as he once was. He has suffered psychologically.

[122]     Balancing all these factors, I award the plaintiff $75,000 for non-pecuniary damages.

Addiction and Pain Management Programs Not Mandatory ICBC Benefits

Written by admin on . Posted in ICBC No-Fault (Part 7) Benefits, Uncategorized. 58 Comments on Addiction and Pain Management Programs Not Mandatory ICBC Benefits

Reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, finding that an addiction program and a multi-disciplinary pain management program are not mandatory ICBC No Fault benefits.
In today’s case (MacDonald v. ICBC) the Plaintiff was inured in three separate motor vehicle collisions.  She was insured with ICBC.  She suffered a variety of injuries which resulted in chronic pain and addiction issues.  Among the recommended treatments for the Plaintiff were an inpatient residential addiction treatment program along with a multi-disciplinary pain management program.
ICBC refused to fund these under the Plaintiff’s policy of insurance arguing that neither of these programs were ‘mandatory’ benefits covered under section 88(1) of the Insurance (Vehicle) Regulation.  Madam Justice Fitzpatrick agreed finding components of the programs (such as physiotherapy) may be covered individually and further that the programs may be covered as ‘permissive’ ICBC benefits, they could not be compelled under section 88.  In reaching this conclusion the Court reasoned as follows:
[83]         The mandatory provisions in s. 88(1) stand in contrast to those in s. 88(2) where ICBC may provide funds to an insured at its discretion and where ICBC’s medical advisor advises that funded benefits under this section are likely to promote the rehabilitation of the insured who was injured in an accident…

[95]         I am reluctantly driven to the conclusion that Ms. MacDonald’s position is not supportable. As ICBC argues, I think correctly, the Raguin decision has confirmed that the proper interpretation of the section is a more restrictive one in the sense that it is driven by the specific enumerated services that are described in s. 88(1). In accordance with that approach, I see no basis upon which services could be seen to be included as long as they are overseen or supervised by a medical doctor. Services provided by others do not become “medical services” simply because a medical doctor directs them or oversees or supervises them.

[96]         From a public policy perspective, this strict interpretation of the enumerated services presents some difficulties. It is unlikely that the Legislature intended to adopt a rehabilitation-in-pieces approach to legislation that exists to promote reasonable and necessary benefit coverage to injured persons. However, in the absence of clear guidance in the Regulation that s. 88(1) is capable of supporting multi-disciplinary programs, these programs cannot be read-in to include other services not specifically enumerated, such as the court did in Raguin.

[97]         Even accepting Ms. MacDonald’s proposition regarding medical supervision, there is no evidence that in fact, the services at Heartwood and the “other services” at Orion Health either were or would be under the supervision of a medical doctor (although I appreciate that Dr. Mead continued to treat Ms. MacDonald for pain and addiction issues throughout her stay at Heartwood).

[98]         The difficulty is that the argument for both Heartwood and Orion Health is an all or nothing proposition. Both are, as described above, multi-disciplinary treatment programs that bring in various disciplines in order to offer a team approach to dealing with a host of problems, such as Ms. MacDonald has. I have no hesitation in finding that some of the services, such as provided by a medical doctor, were or would be covered under s. 88(1) but it is equally apparent that some are not. In my view, this leads to the conclusion that the treatment programs, as a whole, are not covered under s. 88(1).

Privacy A Rare Protection For Personal Injury Plaintiffs

Written by admin on . Posted in ICBC Privacy Issues, Uncategorized. 50 Comments on Privacy A Rare Protection For Personal Injury Plaintiffs

When a personal injury claim proceeds to trial oftentimes publicly available reasons for judgement are published which are accessible by all.  These frequently reveal details about a Plaintiff’s health, limitations, injuries and other personal details.  Reasons for judgement were released discussing if a Plaintiff should be granted anonymity in published reasons for judgement.  In short, the Court held that absent exceptional circumstances, such privacy protections should not be granted.
In the recent case (Davidge v. Fairholm) the Plaintiff, who was injured in a collision, asked for anonymity on the basis that “ publishing the plaintiff’s name might hurt him in his employment, as his employer might treat him differently after learning about his medical issues.  This is because the plaintiff works in employment that involves some physical stress on his body”.  ICBC objected to the reqest for privacy.  In denying the Plaintiff’s request Madam Justice Griffin provided the following reasons:

[12]         The law is clear that anonymizing a judgment by substituting initials for a litigant’s name should only occur in rare circumstances, such as where it is necessary to protect a vulnerable litigant or a vulnerable person who can be identified through the litigant.

[13]         I find that there is nothing exceptional about this case which requires a publication ban on the name of the plaintiff.  There is no more of an invasion of privacy in this case than in an ordinary case and the plaintiff is not a vulnerable person.

[14]         I also note that if publication bans were a matter of course in personal injury trials this could negatively impact the administration of justice.  There are sound reasons for publishing the names of litigants.  One benefit of the open court principle is that it brings home to a person who testifies the importance of telling the truth and increases the potential consequences of failing to do so.  This is one reason the Third Party’s opposition to such an application is an important factor to weigh.

[15]         The application to anonymize the judgment is therefore refused.

BC Court of Appeal – Interest Disbursements Not Recoverable in Injury Litigation

Written by admin on . Posted in Uncategorized.

Important reasons for judgement were released today by the BC Court of Appeal (MacKenzie v. Rogalasky) addressing an unsettled area of law, whether interest charges on disbursements incurred during the prosecution of an injury lawsuit could be recovered.  In short BC’s highest court ruled they cannot.
In reaching this conclusion the Court provided the following reasons:

[78]         In my opinion, the various iterations of the rule set out above permitting recovery of expenses focuses most naturally on the exigencies inherent in the particular litigation rather than capturing expenses arising from the financial circumstances or other choices of a party. Embedded in the rule is the requirement for a causal connection between the issues in the case and the expense incurred to prove or disprove them.

[79]         The rule, in its current form, permits the recovery of “disbursements … incurred in the conduct of the proceeding”. In my view, quite apart from the language “incurred in the conduct of the proceeding” the term “disbursement”, when used in the context of a costs rule that relates to the taxation of costs in particular litigation, does contain limits that narrow its potential broad applicability. It appears to me that the purpose of permitting the recovery of disbursements in the context of a costs regime is to permit the recovery of those expenses that arise inherently and directly from the issues in the case which relate, as the appellants suggest, to the direction, management, or control of litigation and which pay for materials and services used to prove a claim or defence. These expenses arise directly from the nature and conduct of the allegations in a proceeding. By contrast, interest expenses do not arise from the nature of the allegations or the conduct of proceedings, they arise from unrelated causes including the financial circumstances of a party. In my view, as such, they do not fall within the meaning of the word “disbursements” in the context of a costs rule.

[80]         It will be apparent that the conclusion I have reached does not depend on limiting the applicability of the word “disbursements” by reference to the phrase “incurred in the conduct of the proceeding”. I consider that the meaning of the words “disbursement” or “expense” has always excluded out-of-pocket interest expenses. The addition of the phrase “incurred in the conduct of the proceeding” in the rule in 1990 did not narrow or change the meaning of the word “disbursement” or otherwise limit its application. Rather, the phrase reinforces and confirms what has always been the case. To be recoverable a disbursement must arise directly from the exigencies of the proceeding and relate directly to the management and proof of allegations, facts and issues in litigation, not from other sources. In my view, that is what is captured by the phrase “the conduct of the proceeding”.

[81]         In my opinion, this interpretation of the rule flows naturally from the purposes of a costs regime and the guidance provided on that subject by the Supreme Court of Canada, most particularly in Walker. Several points emerge which assist in interpreting the rule. The first is that a costs regime serves multiple functions, only one of which is indemnification. Even in respect of that function, the costs regime provides only partial, and not full, indemnity to a successful party. Accordingly, one is not compelled to conclude that interest expenses must be recoverable because the purpose of the rule is to make a successful party whole. To the contrary, partial indemnification underlies both the recovery of costs on a tariff and disbursements (because the reasonable amount awarded may not fully indemnify the cost of necessary or proper disbursements).

[82]         Second, within the context of partial indemnification, costs awards should be predictable and consistent across similar cases. Only if this is the case can parties accurately assess the risks of engaging in litigation and make rational decisions about settling or prosecuting the case. Recognizing interest expenses as recoverable disbursements is inconsistent with this objective because exposure to costs and disbursements would not depend on the nature of the case itself, but on the particular circumstances of a party. These circumstances may well involve the relationship between the party and counsel and be matters the opposing party has no right to know.

[83]         Third, although costs regimes may affect access to justice, the Supreme Court has made it clear that costs are not the means of securing access to justice, except in exceptional circumstances. Of this more below.

[84]         Finally, costs awards relate to the particular case and are made as between the successful and the unsuccessful parties. On the facts of these appeals, it seems reasonable to infer that recognizing interest as an expense would lead to a transfer of resources between classes of parties in which unsuccessful defendants are exposed to the risks of paying high interest rates designed to pay for the cost of lending money, not just to the successful party in the case but other plaintiffs who receive financing but may not recover moneys to pay for their loans…

[93]         I conclude that an out-of-pocket interest expense incurred to finance disbursements is not a recoverable disbursement under Rule 14-1(5). I acknowledge that this result is likely inconsistent with the position in New Brunswick and possibly Ontario. To the extent that this is the case, I am respectfully, and for the reasons set out above, unable to agree with the conclusion those courts reached.

The Big 2000!

Written by admin on . Posted in Uncategorized.

 
2000 Article Badge Larger
 
While writing my last post I realized this site has passed the 2,000 article benchmark.  Thank you to all my readers who make this ongoing effort worthwhile!
 
 

Clinical Record Disclosure Thwarts Adverse Inference Request

Written by admin on . Posted in Uncategorized.

Reasons for judgement were released recently by the BC Supreme Court, Vancouver Registry, placing great weight on clinical record disclosure in denying a request for an adverse inference.
In the recent case (Beggs v. Stone) the Plaintiff was involved in a 2009 collision caused by the Defendant.  The Plaintiff suffered a variety of soft tissue injuries with accompanying psychological difficulties which rendered her disabled.  In the course of the trial the Plaintiff did not call a variety of treating physicians including one who treated her before and shortly after the collision and treating psychologists.  In declining to draw an adverse inference Mr. Justice Smith placed ‘particular emphasis‘ on the fact that fulsome disclosure of these treating physicians records was made.  In finding no inference should be made the Court provided the following reasons:

[22]         Counsel for the defence seeks an adverse inference from the plaintiff’s failure to call the family physician who treated her before and in the year following the accident and more particularly the psychologists who treated her both here and in Winnipeg after the accident. The factors for drawing an adverse inference are set out in Buksh v. Miles, 2008 BCCA 318, at para. 35. These include the evidence before the court, the explanations for not calling the witness, the nature of the evidence that could be provided, the extent of disclosure of the witness’s clinical notes and the circumstances of the trial.

[23]         In declining to draw an adverse inference, I place particular emphasis on the fact that the clinical records of all of these professionals were disclosed to defence counsel and were reviewed by all the experts who gave their opinions in part based upon those records. The plaintiff’s pre-accident condition and post-accident progress are well documented, and there is nothing to suggest that there is anything in those records that contradicts anything that the doctors who have testified have stated.

Joint TortFeasor Payments Fully Deductible From Lessor's Vicarious Liability Obligations

Written by admin on . Posted in Uncategorized.

BC’s Motor Vehicle Act and Insurance (Vehicle) Act limit the vicarious liability of vehicle lessor’s to $1 million.  Reasons for judgement were released this week by the BC Court of Appeal clarifying this obligation when a personal injury claim is worth over $1 million and other responsible tort feasors have paid the first $1 million in damages.  In short, the BC Court of Appeal held that once payments from other tortfeasor’s are made up to $1 million lessor liability is fully extinguished.
In this week’s case (Stroszyn v. Mistui Sumitomo Insurance Company Limited) the Plaintiff was involved in a serious motor vehicle collision and settled his injury claim for $1.6 million.  ICBC, who insured the responsible driver, paid the first $1 million being the full extent of the Third Party insurance available.  The Plaintiff sought to collect the balance from the lessor, Honda Finance Inc., who was the registered owner of the Defendant’s vehicle and vicariously liable for the tort.
The BC Court of Appeal held that ICBC’s payment fully satisfied any exposure Honda had.  In reaching this conclusion and clarifying the protections given to vehicel lessor’s in BC the Court provided the following reasons:

[24]         I see no basis in law for considering only a portion of the ICBC payment to have been made on behalf of Honda. In my view, each of the insureds in this case can regard the whole of the payment made by ICBC to have been made on his, her or its behalf and to have reduced its liability to the petitioner to the full extent of the payment. In the absence of a statutory provision limiting the lessor’s liability, all three would remain jointly and severally liable for the balance of the petitioner’s damages. However, the I(V)A having limited the lessor’s liability to $1 million, it is my view that the payment of $1 million to the petitioner on behalf of all insureds, including the lessor, completely discharges the lessor’s liability and leaves the other defendants jointly and severally liable for the balance of the damages.

[25]         This must certainly be the case where the liability of Ms. Chen and Honda is entirely vicarious. Vicarious liability is discharged to the extent of any payment made in satisfaction of a plaintiff’s claim for damages. This is not a case where liability can be apportioned by degrees of blameworthiness, or severed.

BC Ethics Committee Clarifies Duties for Law Firms That Lend Clients Money

Written by admin on . Posted in Uncategorized.

When advancing a personal injury lawsuit it is common for BC lawfirms to fund the lawsuit related expenses on behalf of clients (disbursements such as court filing fees, the cost associated with ordering medical records and expert reports).  Today the BC Law Society’s Ethics Committee provided an opinion that this practice is acceptable with certain conditions, however, if a lawfirm funds expenses beyond disbursements (ie clients medical costs, client out of pocket expenses etc) they must do so on an interest free basis unless they send the clients for independent legal advice first.  Below the full Ethics Opinion  can be found on page 12 of this link .
For Disbursement funding with interest charges to be Ethical the lawyer must
1. disclose the charge in writing in a timely fashion
2. ensure the charge is fair and reasonable
3. ensure the client consents to the charge
If the funds advanced are for anything other than disbursements and interest is charged the requirements are greater and are as follows:
1. disclose the charge in writing in a timely fashion
2. ensure the charge is fair and reasonable
3. ensure the client consents to the charge after receiving independent legal advice
4. be in compliance with the BC Code rule 3.4-26.1, which prevents a lawyer from advancing funds to a client if there is a substantial risk that the lawyer’s loyalty to or representation of the client would be materially and adversely affected by te lawyer’s relationship with the client or interests in the client or the subject matter of the legal services.