FSCO, D'Ettorre and Coachman Insurance Company

Appeal P09-00029

Coachman Insurance Company (Appellant)
Alex D'Ettorre (Respondent)
Published: July 28, 2010
Hearing Date: January 18, 2010

Nature of Appeal:
Coachman Insurance Company (CIC) appeals the Arbitrator's order that The Nordic Insurance Company of Canada (The Nordic) is not precluded from proceeding in the name of Mr. Alex D'Ettorre.

Background:
Mr. D'Ettorre was injured in a motor vehicle accident on November 7, 2001 in a collision between his pickup truck and a trackor-trailor. CIC insured him, and The Nordic insured the trackor-trailer. Mr. D'Ettorre received income replacement benefits under the SABS 1996 from Coachman until it ceased payment in October 2005. Mr. D'Ettorre sought their reinstatement in mediation and then in arbitration. Mr. D'Ettorre also commenced a third-party tort claim against The Nordic's insureds.

On August 22, 2008, Mr. D'Ettorre settled his tort action, entered into minutes of settlement with The Nordic and signed a release. The release included an assignment to the Nordic of his SABS claim against Coachman. The Nordic recieved a concent judgment dated September 5, 2008, which repeated the terms of the settlement and the assignment and dismissed the action.

The Nordic purported to pursue the arbitration proceeding in Mr. D'Ettorre's name pursuant to the assignment, despite the provision in s. 65(1) of the SABS that the assignment of the right to pursue an arbitration proceeding is void. Coachman moved to prevent The Nordic from proceeding, on the basis that there had been no trial but merely a consent order, so the purported assignment was void.

The Arbitrator held that the consent judgement consituted an assignment pursuant to s. 267.8(12) and that Coachman's motion was an invalid collateral attack on the order, and that Nordic could continue with the arbitration. Coach then filed an appeal.

Analysis:
For the reasons that follow, I find there was no assignment pursuant to s. 267.8(12) of the Act that allows The Nordic to pursue arbitration in Mr. D'Ettorre's name and that the motion by Coachman was not a collateral attacj on the consent order.

The legislative context of the SABS and the Act does not provide that a consent order constitutes a judicially authorized assignment for the purposes of the exception to the assignment ban. Coachman’s motion to defend its rights was therefore not a collateral attack on the order.

I agree with Smith J.’s analysis in Stokes v. Desjardins groupe d’assurances générales. Stokes dealt with subs. (9) of s. 267.8, which requires the plaintiff to hold collateral funds received after the trial of the tort action in trust for the tort insurer. The parties in the tort action in Stokes reached an agreement and settled without a trial. The plaintiff then started a first-party
action, and the tort insurer sought to apply subs. (9), meaning that any funds Mr. Stokes obtained in his first-party action would have to be held for Group Desjardins. However, Smith J. held that subs. (9) only applies where a plaintiff recovers damages after a trial of the action.

The requirement for there to be a trial of the tort action in which the court awards damages is identical in subs. (12). An assessment of damages by a court means that the parties do not know beforehand what damages will be awarded, so even in an ex parte hearing the plaintiff has to prove them. That is not what happened here, as the parties agreed to the damages and settled on them before going to court. By its very nature, a settlement is different from a full assessment of damages, as noted in Stokes.

It is also not necessary to interpret the consent order as an order made after the trial of the action as part of the goal of preventing double recovery.

The Arbitrator therefore erred in finding that the consent order qualified as an order made under section 267.8 of the Act and thus qualified as an exception to the general ban on assignment under s. 65 of the SABS. The appeal is allowed, and the order is amended to show that The Nordic is precluded from proceeding in Mr. D’Ettorre’s name.

Expenses:
If the parties are unable to agree about expenses of this appeal, an expense hearing to determine the parties’ legal fees and disbursements may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.