Cobb v. Long Estate, 2015 ONSC 6799

Released November 13, 2015 | Full Decision [CanLII]

Note:  not yet available on CanLII

There are 3 good reasons to do careful mathematics before resolving a case, drafting an offer to settle or going to trial: deduction of collateral benefits; the statutory deductible for General and FLA damages; and the applicable pre-judgment interest rate.

In Cobb, a $220,000 jury verdict, broken down below, was virtually obliterated by deductions for past and future income replacement benefits and general damages. However, the “good news” in the decision, was the retention of the $30,000 deductible for General Damages and a creative exercise of judicial discretion increasing the Pre-Judgment interest rate from .5% to 3%.

Head of Damage Amount Result
General Damages $50,000 $30,000 deductible
Past Loss of Income $50,000 Conceded deduction for $29,300 in IRB’s paid
Future Loss of Income $100,000 $130,000 deductible for future IRB’s
Past Housekeeping Loss $5,000 No deduction
Future Housekeeping Loss $10,000 No deduction
FLA $5,000 No analysis required due to deductible
Total $220,000


SABS Benefits – Unfortunately, it was Apples to Apples.

At trial, $50,000 was awarded for past income loss which was to be offset by $29,300 in IRB’s already paid. This was conceded.  $100,000 for future income was awarded and the Defendant sought a deduction.

The SABS were resolved for the global amount of $152,000.00 on June 29, 2010. A Settlement Disclosure Notice and Release were executed.  The Settlement Disclosure Notice mirrored the offer accepted by the Defendant and allocated $130,000 for income replacement benefits, $20,000 for medical benefits and $2000 for costs.  The document was signed by both parties.

The release specified $152,000.00 payable and pertained to “all claims for damages including, but not limited to, aggravated, exemplary and punitive damages or damages for allegedly bad faith arising as a consequence of the accident and/or the handling of my claims by or on behalf of York fire…”  There was no mention of payment for bad faith in final offer or Settlement Disclosure Notice.

The Plaintiff argued after the conclusion of the trial, based on the broader wording of the Release, that the SABS were global, could include monies for the bad faith allegation as well as medical and income replacement benefits thus preventing a “line for line match up”. (The “apples to apples” comparison.) The tort defendant would be denied the benefit of any deduction for future income loss and the Plaintiff would retain the $100,000 awarded by the jury. .

Based on the clarity of the negotiations and Settlement Disclosure Notice, the Court rejected this argument and ordered a  deduction $130,000 deduction for future income loss

The Statutory Deductible

Only $5000 was awarded for the FLA claim so the statutory deductible was not even considered.

However, the deductible for general damages was considered carefully.  The Plaintiff argued for the $30,000 deductible and the Defendant argued in favour of the Section 5(1) of the Regulation under the Insurance Act which provides that until December 31, 2015, the deductible is $36,540.

The Court relied on the reasoning in El-Khodr, finding the change was substantive and should not be applied retrospectively. The Court accepted the argument that insurers had been setting premiums based on the deductible of $30,000, not $36,540 and would reap a windfall having collected higher premiums for seven years based on a $30,000 deductible.  The Court agreed the Insurer should not reap the benefit of the more favourable deductible when paying out damages.  The statutory deductible was maintained at $30,000.

Rate of Pre-Judgment Interest

The Court examined the amended pre-judgment interest rate which fell from 5% to .5% for non- pecuniary losses. PJI was no longer to be calculated in accordance with Rule 53.10 in automobile cases but  in accordance with s. 127(1) of the Courts of Justice Act.

The Court relied again on El-Khodr (under appeal) to say the change was not retrospective.  Due to a pending retirement,  Justice Belch could not reserve until the release of the Court of Appeal’s decision in El-Khodr.  Instead, discretion conferred under section 130(1)(b) of the Courts of Justice Act provided the Court with the authority to exercise its discretion to pay interest at a higher or lower rate than provided in either section 128 or 129.

Justice Belch awarded a rate of 3% for the following reasons:

  • The Plaintiff had been without compensation for 7 years;
  • There were no interim payments from the Defendant;
  • The factors set out in section 130(2) of the Courts of Justice Act;
  • A four week trial; and
  • Pre-judgment interest is to compensate for the loss of use of money.

Full Decision [CanLII]

Written by

Sue joined Legate and Associates in 2011 after working in a general litigation practice. Sue works closely with the firm’s accident benefit department and her client’s rehabilitation teams to ensure that insurance benefits are provided when required and disputes are addressed promptly.

Sue has a love for music and is the choir director at Knox-St. Andrews Church. She is involved with Courthouse Rocks – a fundraiser for London Lawyers Feed the Hungry. She was the former secretary of the Middlesex Law Association. Her community volunteer activities have included performing/accompanying at community events, sitting on school council, coaching soccer, and judging moots at Western University and local high schools. She resides on a working farm and is involved with the local agricultural community. In addition to the practice of law, Sue is a “green thumb”, a sought after local performer and a busy Dance Mom.