Requests For Voluntary Advance Payments From Insurers
The Court of Queen's Bench has recently considered the issue of pre-trial advance payments to claimants under the Fair Practice Regulation, AR 129/2012 ("Regulation") and the Insurance Act, RSA 2000 c I-3. Stewart v Insurance Corporation of British Columbia, 2014 ABQB 578 ("Stewart") is the most recent of only two cases in Alberta to have addressed the issue of an insurer making an advance payment to a claimant.
Section 5.6(3) of the Regulation allows for a claimant to apply to the Court under section 581 of the Insurance Act for an advance payment from the defendant's insurer. The claimant is required to show that such payment is necessary to pay for the necessities of life or for other circumstances that are deemed to be appropriate. Bexson v Williams, 2014 CarswellAlta 1134 ("Bexson") is the only other case in Alberta that has addressed and applied advance payment legislation.
The Applicant in Stewart was involved in a motor vehicle collision where a vehicle crossed the centre line and collided with the Applicant's vehicle.
Master Schlosser commented there seemed little doubt about liability resting with the Defendant/Respondent. The Applicant was a successful oilfield consultant with a positive net worth who was injured in the Accident and assessed with a 16% partial whole person impairment. He argued he would not be eligible for promotions as a result of his injuries. There was no question regarding his ability to pay for the necessities of life and as such, the Applicant's claim was limited to section 5.6(3)(b), where other circumstances may deem an advance payment appropriate. The Applicant sought $1,000,0000 in pre-judgment damages for the exploration of vocational opportunities in an effort to mitigate his potential future loss of income claim which experts had suggested might be over $2 million.
Although the Applicant in Stewart was denied his application for advance payment to be used for exploration of vocational options, this denial appears to have been the result of inadequately laying out general damages and his potential loss of income claim and not as a result of the inability to claim for such payment. Master Schlosser, considering Bexson as well as cases from other jurisdictions, laid out the test for advance payment by a claimant as requiring:
- That the applicant be a 'claimant' as defined in section 5.6(1) of the regulation;
- That liability be admitted, or;
- That the applicant has demonstrated that it is probable that liability will be established on a balance of probabilities;
- That the advance sought will be less than the total judgment;
- That the applicant is unable to pay for the necessities of life, and/or;
- The advance is otherwise appropriate.
Besides indicating that the advance payments requested must fall beneath or within the final damage assessment as determined at trial, what was considered to be "otherwise appropriate" was not specifically referenced in Master Schlosser's decision. The Court did note that such payments should only be applied in circumstances that are considered 'exceptional'. In referring to the Applicant as a 'legal pioneer', Master Schlosser has paved the way for the allowance of a wider breadth of advance payments than otherwise would have been expected under the legislation. The category of "otherwise appropriate" has been stretched to potentially include pre-trial payments for vocational training and other such special damages provided the need for such an advance has been properly presented to the Court.
As a result, insurers should be aware of the potential for a claimant's advance payment claim to include other requests besides just the necessities of life or continuing treatment for injuries.