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Loss Transfer / Priority Disputes

What goes up must come down, but what goes around does not always come around.

 Mar 2, 2018 9:00 AM
by Kevin Mitchell

When you represent an institutional client in priority or loss transfer disputes, is your client leaving money on the table? They probably are without realizing it. In priority, your client can claim as indemnity pretty much everything it paid out. For example, see the April 6, 2005 award of Guy Jones in Wawanesa v. Kingsway where he found surveillance, among other things, to be recoverable despite it not being mentioned anywhere in the SABS. It was not appealed. On the other hand, in loss transfer your client is arguably entitled to something less, in the nature of ‘benefits’ per s. 275 of the Insurance Act. Our Court of Appeal, in the September 11, 2012 loss transfer decision in Wawanesa v. Axa, 2012 ONCA 592, split 2-1 in favour of insurer examination expenses not being recoverable from a respondent. Leave to appeal was not sought. Blair, J.A., dissented but, in my opinion, made the better reasoned choice. This forum does not lend itself to why that is the case, however. Perhaps, as it is sometimes said, the dissent will someday become the majority. I recommend lawyers get into the habit of providing their applicant clients’ electronic payment summaries to respondents very early in both types of disputes, despite Requests for Indemnification existing in loss transfer. The nature of the electronic document translates a greater certainty to respondents of what has actually been paid out. Producing it early will assist a respondent dovetailing your Statutory Accident Benefits file to the amounts noted and can root out documentary deficiencies early on. Upon the summary, you would redact IE expenses, in loss transfer, and the fee accounts your client has paid to you and not much more. There will be some items over which a respondent balks as ‘loss control efforts’ or the like but, with the very high onus upon the respondent to impugn the payment, the applicant is sitting in the driver’s seat. I know of two cases that have discussed this test in priority disputes. I am of the mind more awards have been rendered in loss transfer upon which the following cases are predicated. The two cases are: the December 19, 2014 award of Bruce Robinson in Aviva v. Wawanesa and the December 7, 2017 award of Philippa Samworth in Economical v. Echelon. Neither were appealed.


Further, I subscribe to the theory that a successful litigant is entitled to costs, including repayment of portions of interim accounts rendered by the private arbitrator, relating to the prosecution/defence of the priority or loss transfer dispute. I also espouse a successful applicant to be entitled to interest upon its recovered indemnity, which can be quite substantial. Nearly $200,000.00 in interest alone was recently collected in a long standing priority dispute. To deny costs and suggest ‘it will all come out in the wash long term’ is to permit spurious claims or defences to be de rigueur and only serves to drive up costs at an industry level. Inspiring you to keep a tally when you let someone off the hook surely won’t work out for you or your client in the end. Costs make litigants and their lawyers accountable. Just ask anyone who practices before the Licence Appeals Tribunal (AABS) how they feel about compensatory costs being unavailable to either side. Early costs cases such as the March 8, 2012 award of Ken Bialkowski in Wawanesa v. Markel (loss transfer - in favour of the applicant) and the May 21, 2013 award of Vance Cooper in Security National v. Wawanesa (priority – in favour of the respondent) have lead to more and more jurisprudence in this area, in particular, the in-depth award of Scott Densem from August 22, 2014 in Economical v. Aviva, Her Majesty the Queen (MVACF), et al. None of the three awards were appealed.

Kevin is a Partner of Samis+Company. Throughout his career, he has practiced almost exclusively in the area of accident benefit and bodily injury matters arising from motor vehicle accidents. He has also defended various non-motor vehicle bodily injury claims. Kevin carries on a robust practice involving privately arbitrated disputes between insurers in both priority and loss transfer matters. 

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