ERIC WHITE Plaintiff And: MIAO MEITING Defendant, 2019 NLSC 34

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : White v. Meiting , 2019 NLSC 34 Date : February 11, 2019 Docket : 201501G6181 Between: ERIC WHITE Plaintiff And: MIAO MEITING Defendant Before: Justice Robert P. Stack Place of Hearing: St. John’s, Newfoundland and Labrador Date(

s) of Hearing: January 25, 2019

Summary: The Applicant, the Plaintiff in this matter, sought an advance payment of special damages pursuant to Rule 44A of the Rules of the Supreme Court, 1986 or interim compensation pursuant to

section 26.2 of the Automobile Insurance Act . The application was dismissed with costs in the cause. First, the Court held that because the extent of liability for the special damages claimed has not been admitted by the Respondent, an order under Rule 44A was not available to the Applicant. Furthermore, the amounts claimed by him either were not special damages or were not proven. Second, the Court confirmed that eligibility for interim compensation under

section 26.2 is limited to claimants with a direct contractual right of compensation from the insurer. The Applicant seeks the recovery of damages from an insured who, in turn, has a right of indemnity from an insurer. An interim remedy under

section 26.2 was therefore not available to the Applicant. Appearances:

Ryan M. Belbin Appearing on behalf of the Plaintiff Leanne M. O'Leary and Sarah Colborne Appearing on behalf of the Defendant Authorities Cited: CASES CONSIDERED: Gordon v. Forward, 2006 NLTD 100 ; Wade v. Bartlett , 2010 NLTD(G) 195; John Doe v. Fifield , 2008 NLTD 130 ; Lynch v. St. John's (City) , 2016 NLCA 35 . STATUTES CONSIDERED: Automobile Insurance Act , RSNL 1990, c. A-22 . RULES CONSIDERED: Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch. D .

REASONS FOR JUDGMENT Stack, J. : INTRODUCTION [ 1 ] The Applicant, the Plaintiff in this matter, seeks an advance payment of special damages pursuant to Rule 44A of the Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch. D (the Rules ) or interim compensation pursuant to

section 26.2 of the Automobile Insurance Act , RSNL 1990, c. A-22 (the Act ). [ 2 ] The facts relating to the incident in question are straightforward. On September 19, 2015, the Respondent’s vehicle was parked on Water Street, St. John’s. The Applicant was a pedestrian on the sidewalk. He decided to cross the street from a position between the Respondent’s vehicle and the one parked behind it.

While the Applicant was standing behind the Respondent’s parked vehicle waiting for a break in traffic, the Respondent reversed her vehicle and struck him. [ 3 ] The Applicant claims to have been seriously injured as a result of the accident and has commenced this action against the Respondent seeking damages. [ 4 ] Although it perhaps ought not to have been disclosed to the Court, I was made aware that since the accident, TD Insurance, on behalf of the Respondent, has made certain “without prejudice” interim payments to the Applicant. [ 5 ] Notwithstanding that the Respondent admits liability for the accident, she claims that the Applicant was contributorily negligent.

Moreover, the Respondent does not admit that the accident caused the Applicant the adverse health effects for which he seeks damages. Nor does the Respondent admit the nature or quantum of damages claimed. [ 6 ] I must determine if the Applicant is entitled to an advance payment: (

a) on account of lost income from the date of the accident to the date hereof, and (

b) as reimbursement for the lost value of certain inventory of the Applicant’s business that he claims he was forced to sell at a gross undervaluation as a result of the injuries sustained by him. issues [ 7 ] There are two issues to be decided:

(1) Has the Applicant satisfied the criteria for an advance payment of special damages relating to pre-trial loss of income and/or loss on the sale of inventory pursuant to Rule 44A of the Rules ?

(2) Has the Applicant satisfied the criteria for interim compensation relating to pre-trial loss of income and/or loss on the sale of inventory pursuant to

section 26.2 of the Act ? has The Applicant satisfied the criteria for an advance payment of damages pursuant to Rule 44A of the Rules ? [ 8 ] From time to time, a person with a claim against an insured under a contract evidenced by a motor vehicle liability policy will seek an advance payment either in respect of out-of-pocket or other expenses that can be measured exactly (pecuniary, or special, damages) or some other category of damages that cannot be assessed exactly (non-pecuniary, or general, damages). [ 9 ] Any such advance payments by an insurer are made without prejudice as provided by sections 26(1) and (4) of the Act :

Advance payments and release 26.

(1) Where an insurer makes a payment on behalf of an insured under a contract evidenced by a motor vehicle liability policy to a person who is or alleges to be entitled to recover from the insured covered by the policy, the payment constitutes, to the extent of the payment, a release by the person or his or her personal representative of a claim that the person or his or her personal representative or a person claiming through or under him or her or under the Fatal Accidents Act may have against the insured and the insurer. …

(4) The intention of this

section is to permit payments to a claimant without prejudice to the defendant or his or her insurer, either as an admission of liability or otherwise , and the fact of a payment shall not be disclosed to the judge or jury until after judgment but before formal entry of the judgment. [Emphasis added.] [ 10 ] In 2006, the Court was given the express ability to order an advance payment of special damages by virtue of Rule 44A of the Rules . Rule 44A states: 44A.01 Advance payment of damages Before damages are assessed, a judge may order the defendant to make an advance payment to the plaintiff on account of special damages if the court is satisfied that (

a) the defendant against whom the order is sought has admitted liability for all or part of the special damages claimed; or (

b) the plaintiff has obtained judgment against the defendant with damages to be assessed, and, following notice of the plaintiff's application for advance payment given in accordance with rule 44A.07, the defendant has not filed any reply taking issue with the special damages, or sought any part thereof, for which the advance payment is sought. 44A.02 Application In any application for an advance payment of special damages, the plaintiff must specify, supported by affidavit evidence, the amount and nature of the special damages for which payment is sought. 44A.03 Determination of amount In determining the amount of an advance payment, the judge may take in to account any circumstances that the judge considers relevant, including (

a) the amount of special damages already incurred or likely to be incurred before damages are assessed; (

b) any counterclaim by the defendant; (

c) the extent, if any, to which the plaintiff may be found at trial to be contributorily negligent; (

d) the extent, if any, to which the plaintiff may be found at trial not to have mitigated the amount of special damages; and (

e) the needs and resources of the plaintiff and the means of the defendant, including the availability to the defendant of insurance to indemnify the defendant in respect of the plaintiff's claim. 44A.04 Payment The judge may order that payment under rule 44A.01 may be made by lump sum, by instalment, or by both.

44A.05 Advance payment not a full determination An order for an advance payment of special damages is not a final determination of the extent of the plaintiff's claim in respect of the type or types of special damages for which the advance payment was sought, but the receipt by the plaintiff of an advance payment shall be considered to be a release of the defendant to the extent of such payment. 44A.06 Multiple applications A plaintiff may make more than one application pursuant to this rule. 44A.07 Notice to defendant Where a plaintiff obtains a judgment by default against a defendant with damages to be assessed, the plaintiff shall, notwithstanding rule 16.07, serve the defendant with notice of an application for an advance payment under this rule. 44A.08 Rule not exhaustive Nothing in this rule affects or precludes the right of a plaintiff to seek an advance payment of damages pursuant to the Automobile Insurance Act or otherwise at common law. [ 11 ] Rule 44A.01 states the circumstances under which this Court may order a defendant to make an advance payment to a plaintiff.

In the matter before me, only Rule 44A.01(

a) can apply because the Applicant has not obtained judgment against the Respondent. [ 12 ] Rule 44A.01(

a) authorizes a judge to order a defendant to make an advance payment to the plaintiff on account of special damages if the Court is satisfied that “the defendant against whom the order is sought has admitted liability for all or part of the special damages claimed….” Rule 44A was considered is Gordon v. Forward, 2006 NLTD 100 , where Thompson, J. commented at paragraph 10 that “… Rule 44A.01 contemplates the exercise of jurisdiction only where liability has been admitted or judgment has been obtained.” Under Rule 44A.01(a), therefore, a defendant’s admission of liability is required before the Court can order an advance payment of damages. [ 13 ] An advance payment by an insurer pursuant to

section 26 of the Act does not constitute an admission of liability for the purposes of Rule 44A. Consequently, the Applicant’s receipt of voluntary payments pursuant to

section 26 of the Act , in and of itself, does not entitle him to an advance payment under Rule 44A. [ 14 ] I agree with the Respondent that the requirement in Rule 44A.01(

a) that liability be admitted means that I must consider, in addition to whether a defendant has accepted liability for the occurrence of an accident, whether other matters, such as contributory negligence, causation and proof of damages, remain at issue in relation to the special damages claimed. [ 15 ] In Gordon , liability, causation and proof of damages were all live issues for trial, just as contributory negligence, causation and proof of damages are at issue in this case.

At paragraph 15, Thompson, J. stated: This case needs to have receipt of the evidence at trial and have that evidence subject to full cross-examination and evaluation. To the extent that liability is determined at trial, the defendants are entitled in this case to question and test the evidentiary basis for the disability alleged, its cause and its consequences. [ 16 ] In Wade v.

Bartlett, 2010 NLTD(G) 195, Orsborn, C.J.T.D. (as he then was), considered a plaintiff’s application for an advance payment of an anticipated compensatory award arising from a motor vehicle accident in which the defendant admitted liability. Liability for the extent of damages remained in dispute between the parties. The plaintiff in Wade applied for an advance payment of $30,000 based on approximations of lost income, medical expenses and general damages. The application was dismissed: (

i) because Rule 44A only applies to special damages and does not extend to an advance payment of general damages or payment of future damages yet to be assessed; and (ii) because Rule 44A requires the same standard of proof required of the plaintiff in proving his or her claim for special damages at trial. [ 17 ] Specifically, with respect to Rule 44A , but also with application to the Act , Orsborn, J. stated, at paragraph 38: This provision allows for, in effect, a periodic assessment of a plaintiff’s special damages where liability for those damages is not in issue .

The provision is procedural, simply providing a mechanism by which a plaintiff can have her or his special damages assessed and paid from time to time before the full assessment of damages at trial. The intent of the rule, similar to the purpose underlying the provisions of the Automobile Insurance Act , is to provide a mechanism through which financial hardship to an injured person can be alleviated and 'out-of-pocket' losses reimbursed on a timely basis without having to wait for trial.

Rule 44A does not and cannot alter the substantive law with respect to a plaintiff's entitlement to damages; specifically, it does not lessen the standard of proof that a plaintiff must meet before being entitled to an award of damages. The rule does not lessen the obligation to establish by evidence that a claimed loss would not have been incurred but for the injury, nor does it lessen the obligation to specifically plead and prove the special damages claimed. [Emphasis added.]

[18] In this case, although the Respondent admits liability for the accident, she claims that the Applicant was contributory negligentand challenges both the cause and the extent of the damages claimed by the Applicant. Counsel for the Respondent submits that she isentitled to question and test the evidentiary basis for the extent of the injuries alleged, their causes and their consequences. Consequently, she submits, as in Gordon, the issues of causation and proof of damages are significant issues for the trial of this matter. [19] I agree with the Respondent.

Because contributory negligence, causation and the extent and proof of damages all remain liveissues for trial, this is not an appropriate case for an advance payment pursuant to Rule 44A. [20] As to the issue of medical causation for the extent of the injuries caused by the accident, the Applicant relies upon certainmedical reports submitted for consideration by the Court. These reports are, of course, hearsay. For the purposes of the Application, ontheir face, they do not establish causation for the medical conditions that the Applicant claims were caused in whole or in part by theaccident.

It may be that following a trial, in which the Court will properly receive the evidence and the witnesses are subject to cross-examination, a claim for damages may be made out. The Court is not in a position at this stage of the proceeding, however, to make sucha finding. [21] As to his claim for lost income, the Applicant is self-employed and trades as Beyond Design, an unincorporated business thatdecorates and stages homes and businesses.

The circumstances of the Applicant’s self-employment, being subject to fluctuations ofincome, makes his claim for loss of income from the date of the accident to the date of trial incapable of precise assessment. It is,therefore, a claim for general damages, not for special damages. Rule 44A only permits an advance payment on account of specialdamages. [22] In John Doe v. Fifield, 2008 NLTD 130, Harrington, J. (as he then was) said at paragraph 12. [12] In making the argument of the inapplicability of Rule 44A, the Defendants rely on the decision of our Court of Appealin Alexander Enterprises Ltd. v.

Dobbin (1987), (NL CA), 63 Nfld. & P.E.I.R. 1 (NLCA). A key passage of thatdecision said to be relevant here is found at paragraph 42 in a discussion about pre-trial income losses. Goodridge, C.J. wrote for aunanimous Court: The important thing about pre-trial income losses for self-employed, underemployed and unemployed persons is that, as Waddams said,"knowledge of events occurring before trial takes the place of prediction".

Clearly, however, in such cases the loss cannot be describedas special damages but rather as general damages. [23] That is not to say that a plaintiff, whether self-employed or underemployed, may not be able to point to an amount of lostincome that can be measured exactly, whether the self-employed person approaches the indicia of employment or the underemployedperson has a regular income albeit for less than full employment, such as to make the loss one quantifiable as special damages.

But at thisstage of the proceeding, the Applicant’s claim for lost income is not recoverable under Rule 44A. [24] I also add that even if the Applicant’s claim for lost income could be categorized as a claim for special damages, he has failedto prove it. There was no evidence of financial statements for the Applicant’s business. He acknowledges that he has not filed an incometax return since 2006. The Applicant could only point to certain bank records that he says represent deposits of money earned in thecourse of the business. He was not able to prove the sources of the deposits.

Nor did the Applicant present any helpful evidence as to theexpenses he incurred in order to earn the income claimed. [25] The second category of special damages that the Applicant claims is in respect of inventory that was damaged and/or was soldby him allegedly as a result of the injuries he sustained in the accident. In his Memorandum of Law, the Applicant’s counsel describedthese claims as follows: 48. The nature of the Applicant’s business is such that he has considerable inventory, which takes up ample space. Most of hisinventory is in Christmas decorations: trees, ribbons, ornaments, etc.

Given the scope of his business, these items occupied severalstorage units; at the time of the accident, the Applicant was renting a warehouse on Bradbury Place, in the City of St. John’s, as well astwo (2) storage units on Topsail Road. As a direct result of the accident and his inability to work to his pre-injury capacity, he wentsignificantly into arrears on both accounts. His Bradbury Place landlord could not afford for the Applicant to remain at this location onthe promise to pay at some point in the future, and the Applicant was accordingly evicted after becoming three (3) months in arrears. 49.

The insurer for the Respondent provided an interim payment of $11,000.00 to hire a moving company to take these items to a newwarehouse on Hamlyn Road. The Applicant submits that the work performed by the lowest-bidding moving company was inadequate, asthe company did not accurately estimate the amount of time required for such a major job.

The company ceased its work once it hadspent the money provided by the Respondent’s insurer, not when the work was completed; moreover, the fact that the company rushedthrough the work resulted in significant damage to a number of items of inventory (in particular, many glass objects were entirelydestroyed). 50. The Applicant had also been renting an apartment from his sister at Dogberry Hill Road, in Portugal Cove-St. Phillip’s, which washis main residence.

However, after the accident, he was no longer able to shovel the 40-foot driveway connecting the property, or tocontinue paying the rent at this property as well as his storage units. He made the decision to move his residence in March 2017. Theaforementioned Hamlyn Road property contained a residence, which is where the Applicant resided up until recently; however, he wasunable to procure insurance funding to assist in this move, such that he had no choice but to sell furniture and China dish sets and/or giveit away.

This resulted in a loss for which he was not fully compensated, but one which was driven by necessity.

51. In 2017, the Applicant simply could not organize the warehouses he continued to rent. His ability to hire staff and manoeuver himself (particularly on ladders) was non-existent, such that the decision was made to sell his wedding supplies and home staging items. The simple reality is that the Applicant, with no discernable amount of employment earnings, could not afford to survive without having some disposable income, such that he entered into an informal bargain to sell these items for $100.00 per van load, for a total of eight (8) van loads.

At the time, it was unclear when he would ever return to his former employment, and the main concern was survival as opposed to long-term planning. 52. The Applicant submits, as a conservative estimate, that the collective loss of his inventory as referenced above, which are his tools of trade, and the loss of his personal effects, is a loss of several hundred thousand dollars.

Should he ever be in a position to return to his business, he no longer has the necessary equipment to do weddings, home stagings, or event decoration; thus, the loss of the physical objects has ramifications for his future earning capacity as well. These items never would have been sold/given away had he maintained his pre-injury abilities. The Applicant notes that for a typical wedding he could expect to charge $1,500.00, and for a home staging he would expect to charge $2,500.00. The only items which remain are Christmas decorations, and even that supply has become limited. 53.

There are, unfortunately, no accurate records of his inventory prior to its disposal, or the resulting loss. However, the Applicant notes that prior to the accident, he held a policy of insurance on his business inventory (i.e. not including his personal effect at his former Dogberry Hill residence) valued at $306,000.00. By his own estimation, one half (1/2) of his items were Christmas-related, and the other half were related to other business ventures (home stagings and weddings).

One needs to be mindful of the fact that when the items were removed and/or sold, it was done under extreme time and financial pressure, such that it is impossible to generate documentation as to the nature of this loss.

However, it is respectfully submitted that even if this Honourable Court accepts an extremely modest take on the inventory loss ($150,000.00, which amount represents one half of the value of the insurance policy), when coupled with the demonstrated loss of income over the last three (3) years, more than substantiates the interim payment request herein, with no consideration to general (non-pecuniary damages). [Emphasis in the original.] [ 26 ] Aside from the issue of reasonable foreseeability, there was no evidence to support his claim.

Because his financial records are incomplete, he has no invoices for purchased inventory. The Applicant acknowledges that an exact valuation of his claimed lost inventory cannot be substantiated. In his affidavit sworn June 15, 2018, without any documentation to substantiate it, he estimated his loss of inventory at $300,000.

In a Supplemental Affidavit sworn on December 19, 2018, he states with respect to the inventory, “I am very confident that it was worth in excess of $150,000.00.” [ 27 ] In John Doe , at paragraph 21 , the Court determined there was insufficient affidavit evidence supporting the amount and nature of the special damages sought by the plaintiff in that case.

The Court reiterated the plaintiff’s burden of proof and the types of damages that may be sought on an interim basis: Rule 44A.02 requires that in an application of this kind, the Plaintiff must specify the amount and nature of the special damages for which payment is sought and that this request must be supported by affidavit evidence. [ 28 ] The Applicant has not met his onus to specify the amount and nature of the special damages claimed by him for lost inventory. [ 29 ] In

summary, the Applicant cannot succeed under Rule 44A because: (

a) liability for the cause of his injuries and the damages arising therefrom has not been admitted; (

b) his claim for lost income is a claim for general damages not contemplated by Rule 44A; and (

c) he has failed to prove the amount and nature of his special damages claim for lost inventory. [ 30 ] I would dismiss the Application based upon Rule 44A. IS THE APPLICANT ELIGIBLE FOR PERIODIC PAYMENTS OF COMPENSATION PURSUANT TO

SECTION 26.2 OF THE ACT ? [ 31 ] The Respondent says that the Applicant is not eligible for an award of periodic compensation pursuant to

section 26.2 of the Act . I agree. [ 32 ] In order to understand to whom

section 26.2 of the Act applies, it is necessary to understand that

section in the context of the Act as a whole and, in particular, sections 26 to 26.3 . This involves an exercise of statutory

interpretation. At paragraph 75 of Lynch v. St. John's (City) , 2016 NLCA 35 , Green, C.J.N.L. (as he then was), with Harrington, J.A. concurring, held: [75] The real question becomes how does one discern the object and purpose – and hence the legal effect – of the legislative act set in motion by the legislature? The answer is by reference to all relevant sources of meaning, including the words used, the statutory context, the court’s knowledge of the state of the pre-existing law, social context, the perceived mischief that caused the government (or private member) to act by introducing the bill into the legislature and the legislative history. There is no separate stand-alone search for

actual intentions of legislators, either collectively or individually. In that sense, the search for intention is fictionalized. Rather, thephrase “intention of the legislature” is a convenient turn of phrase that compendiously encapsulates the result of an interpretive exercise(“our [i.e. the Court’s] characterization” of the legislative intent: per Wagner and Gascon JJ. in Canada (National Revenue) v.Thompson, 2016 SCC 21 at paragraph 32) that involves consultation of all relevant sources of meaning.

It is the inference thatis drawn from all these sources that may, as a convenient fiction, be referred to as the intention of the legislature. In other words, theintention of the legislature is not a separate component of the search for meaning, but rather a description of what results from thatsearch, properly conducted. [33] Let us begin by looking at the wording of the Act, and in particular sections 26 to 26.3. Those sections provide: Advance payments and release 26.

(1) Where an insurer makes a payment on behalf of an insured under a contract evidenced by a motor vehicle liability policy to aperson who is or alleges to be entitled to recover from the insured covered by the policy, the payment constitutes, to the extent of thepayment, a release by the person or his or her personal representative of a claim that the person or his or her personal representative or aperson claiming through or under him or her or under the Fatal Accidents Act may have against the insured and the insurer.

(2) Nothing in this

section precludes the insurer making the payment from demanding, as a condition precedent to the payment,a release from the person or his or her personal representative or another person to the extent of the payment.

(3) Where the person starts an action, the court shall adjudicate upon the matter first without reference to the payment but ingiving judgment the payment shall be taken into account and the person shall only be entitled to judgment for the net amount.

(4) The intention of this

section is to permit payments to a claimant without prejudice to the defendant or his or her insurer,either as an admission of liability or otherwise, and the fact of a payment shall not be disclosed to the judge or jury until after judgmentbut before formal entry of the judgment. Insurer to give notice of claim 26.1

(1) Where an insurer receives a claim from a person who is or alleges to be entitled to recover from an insured covered by a motorvehicle liability policy, the insurer shall, in writing, inform the named insured of the receipt of the claim.

(2) An insurer who makes a payment on behalf of an insured under a contract evidenced by a motor vehicle liability policy to aperson making a claim shall, in writing, inform the named insured of the total amount paid with respect to the claim. Application for periodic payment 26.2

(1) An injured person, or the administrator or a beneficiary of the estate of a deceased person, to whom or on whose behalfcompensation is payable under a contract evidenced by a motor vehicle liability policy for bodily injury or death caused by anautomobile or the use or operation of an automobile may apply to a judge of the Trial Division for an order directing an insurer to pay thecompensation periodically.

(2) A judge to whom an application is made under subsection (1) may make an order directing an insurer to pay compensationperiodically on the terms the judge considers just. Settlement of claims 26.3

(1) An insurer who is defending an action on behalf of an insured arising out of bodily injury to or the death of a person or loss ordamage to property caused by an automobile or the use or operation of an automobile shall attempt to settle the claim as expeditiously aspossible.

(2) Where an insurer admits liability in respect of all or part of a claim, the insurer shall make payments to the person makingthe claim pending the determination of the amount owing.

(3) The amount of the payment under subsection (2) shall be based on the insurer's estimate of the amount owing in respect ofthe claim having regard to information provided to the insurer by the person making the claim. (4) Subsections 26(1), (2) and (3) apply, with the necessary changes, to an advance payment made under this section.

(5) An insurer's failure to comply with this

section shall be considered by the court in awarding costs. [34] Those sections are intended to permit or require, as the context requires, insurers to make advance payments on claims arisingout of contracts of automobile insurance.

Section 26 provides that an advance payment of funds by an insurer on behalf of an insured to athird party claimant acts as a release of, and is without prejudice to, the claims of that person.

Section 26.1 requires an insurer to providenotice of a claim to its insured.

Section 26.2 enables an insured (or their estate) to claim periodic compensation from their insurer.Section 26.3 requires an insurer to attempt to settle a claim by a third party claimant and, where the insurer admits liability in respect ofthe claim, to make payments to the claimant pending the determination of the amount owing.

[ 35 ] Although the Applicant initially sought payment under both sections 26.2 and 26.3, at the hearing of the matter his counsel limited himself to seeking an order for compensation under

section 26.2. This is because counsel acknowledged that it was decided in Wade that

section 26.3, although placing an onus on an insurer to act in good faith to fulfil its obligations, provides that the only financial remedy available to a dissatisfied claimant from the Court is an award of costs. [ 36 ] Orsborn, C.J.T.D., in Wade , also decided that

section 26.2 , which does provide a dissatisfied claimant with the opportunity to seek a court order for periodic payments from the insurer on account of damages, only applies to an insured claiming against their own insurer. That is, Wade stands for the proposition that a third party claimant, such as the Applicant, claiming against an insured person, such as the Respondent, may not avail of

section 26.2 . [ 37 ] Counsel for the Applicant has asked me to reconsider the principles enunciated in Wade in light of certain information he has presented and submissions he has made, to see if the

interpretation of

section 26.2 in Wade is too narrow. [ 38 ] To reiterate, Orsborn, C.J.T.D. decided in Wade , at paragraphs 24 and 25, that

section 26.2 of the Act contemplates payments to an insured under the contract with their insurer. It does not contemplate third party claimants seeking interim payments from a defendant driver’s insurer with whom the third party claimant has no contractual relationship. This is, of course, separate and apart from the good faith obligation of an insurer to a third party claimant under

section 26.3. Orsborn, C.J.T.D. stated the scope of application of

section 26.2 as follows: 24. Subsection 26.2 is directed to securing the availability of periodic payment of compensation to a person who is contractually entitled to such compensation from an insurer. The claimant must be a person "to whom ... compensation is payable under a contract" of motor vehicle liability insurance . The intent, as I appreciate it, is to give the court the jurisdiction to order the periodic payment of contractual benefits (compensation) as the preconditions for payment may be established from time to time. I do not read anything in this

section that confers jurisdiction on the court to order payment to a third party claimant injured by an insured, whether such payment is for special or general damages . An injured third party may be entitled by law to recover from an insurer, but that is not the same as saying that the insurer is bound by contract to pay compensation to the third party. Contractually, the insurer agrees to indemnify its insured in respect of certain losses, including claims by third parties. But there is no contract between the insurer and the third party.

An injured third party may eventually be able to pursue a direct claim against an insurer pursuant to subs. 28(1) of the Automobile Insurance Act , but this right is statutory and not contractual and arises only after the third party has recovered judgment against the insured. 25. The application to the Trial Division contemplated by subs. 26.2(2) is a 'free-standing' application. It involves only the insured and the insurer, and it is not dependent on or related to any litigation commenced by a third party claimant seeking tort damages. [Emphasis added.] [ 39 ] The Applicant submits that this

interpretation of

section 26.2 is not tenable based upon a plain reading of the Act . He submits that this is because

section 26.2 could and should have used the word “insured” if its application was limited to insureds, given that “insured” is a defined term under section 2(1)(e).

Section 26.2 uses the word “injured person”, the scope of which, he submits, is necessarily broader. [ 40 ] Furthermore, says counsel for the Applicant, section 26(1), which also contemplates an advance payment of compensation, uses what he describes as “nearly identical language” as

section 26.2. Section 26(1) contemplates an interim payment being made to a third party other than the insured: 26.

(1) Where an insurer makes a payment on behalf of an insured under a contract evidenced by a motor vehicle liability policy to a person who is or alleges to be entitled to recover from the insured covered by the policy, the payment constitutes, to the extent of the payment, a release by the person or his or her personal representative of a claim that the person or his or her personal representative or a person claiming through or under him or her or under the Fatal Accidents Act may have against the insured and the insurer. [Emphasis added by the Applicant.] [ 41 ] The Applicant submits that it is unreasonable to suggest that there is a fundamental difference between (1) a person entitled to recover from the insured covered by the policy (which payment is made by an insurer on behalf of an insured under a contract evidenced by a motor vehicle liability policy) in section 26(1); and (2) a person to whom “compensation is payable under a contract evidenced by a motor vehicle liability policy” in

section 26.2. Wade , he submits, wrongly distinguishes between the two. [ 42 ] The Applicant states that this is not a submission based upon mere semantics and points to the legislative history of the Act to support his position. First, he refers to, Bill 30, An Act to Amend the Automobile Insurance Act, the Insurance Companies Act and the Highway Traffic Act to Effect Certain Reforms Respecting Automobile Insurance , which formed the basis for the enactment of

section 26.2, and contains the following Explanatory Note: The clause would also permit a claimant to whom compensation is payable to apply to a judge for an order directing an insurer to pay compensation periodically to the claimant.

[Emphasis added.] [ 43 ] The Applicant submits that the drafters of this Explanatory Note could have used the word “insured” to indicate to whom this provision applies instead of “claimant”, which does not distinguish between an insured claimant and a third-party claimant. In support of this position, he points to section 26(4) where the defendant is the insured and the claimant is a different party. Consequently, he says, section 26(4) of the legislation provides that a claimant need not be an insured:

(4) The intention of this

section is to permit payments to a claimant without prejudice to the defendant or his or her insurer, either as an admission of liability or otherwise, and the fact of a payment shall not be disclosed to the judge or jury until after judgment but before formal entry of the judgment. [Emphasis added.] [ 44 ] Finally, the Applicant points to Hansard when Bill 30 was introduced in the House of Assembly on June 1, 2004, by the Honourable Dianne Whalen, the then Minister of Government Services. According to the Applicant, the Minister provided the following explanation of

section 26.2 : Companies must make interim payments to individuals whose claims are being processed , and where liability is not in dispute. Companies must inform policy holders of claims made against them, and the amount ultimately paid out. [Emphasis added.] [ 45 ] The Applicant submits that the wording “individuals whose claims are being processed” is wider in scope than “insured” or, to use the language Ms. Whalen employs in the following sentence, a “policy holder”. [ 46 ] For all of the foregoing reasons, the Applicant submits that

section 26.2 ought not to be limited to a claim by an insured against their insurer, but should also provide for periodic compensation in respect of a claim by a third party claimant. [ 47 ] The arguments on behalf of the Applicant are flawed. Considered in the context of the Act , and taking into account its legislative history as outlined above, I can conduct no better an analysis of

section 26.2 than was done by Orsborn, C.J.T.D., in Wade . I adopt his reasoning for the purposes of this decision. [ 48 ] But insofar as the points related above were not considered by the Court in Wade , let us look at the Applicant’s submissions in more detail. [ 49 ] Importantly, as will be seen below, the language of

section 26.2 is not “nearly identical” to the language of section 26(1). Each of sections 26, 26.1, 26.2 and 26.3 speaks of insurers, insureds and third party claimants in different language as the context requires. Other descriptors, such as “claim” or “claimant”, which are not defined in the Act , must be understood within the context of the particular

section in which they are found. As a result, “claim” and “claimant” may mean one thing for the purposes of one provision in the Act and something else for another. [ 50 ]

Section 26 contemplates a person such as the Applicant and the advance payments by the Respondent’s insurer already received by him. The claimant referred to in section 26(4) is, therefore, a claimant to whom an insurer makes a payment on behalf of an insured under a contract evidenced by a motor vehicle liability policy. The claimant in that context is the person who is or alleges to be entitled to recover damages from the insured covered by the policy.

Section 26 therefore contemplates three parties: the insurer, the insured and the third party claimant. [ 51 ]

Section 26.1 also contemplates three parties: an insurer who receives a claim from a person who is or alleges to be entitled to recover from an insured covered by a motor vehicle liability policy. In that section, too, the claimant would be the third party claimant against the insured. [ 52 ]

Section 26.3 contemplates three parties as well: an insurer, an insured, and a third party claimant. That is,

section 26.3 first contemplates an insurer who is defending an action on behalf of an insured . Where the insurer admits liability in respect of all or part of a claim, the insurer shall make payments to the claimant in that action pending the determination of the amount owing. The claimant there is also a person advancing a claim against an insured. [ 53 ]

Section 26.2, on the other hand, refers only to two parties. An application may be made to the Court for an order directing an insurer to pay compensation periodically to an injured person to whom compensation is payable under an insurance contract for bodily injury or death caused by an automobile or the use or operation of an automobile. The reference in

section 26.2 to an administrator or a beneficiary of the estate of a deceased person on whose behalf compensation may be payable does not add a new category of claimant insofar as the deceased must be a person entitled to compensation under a contract of insurance. Thus, under

section 26.2, only two parties are involved: the insurer and the person, usually the insured, who is able to claim directly under the insurance contract. [ 54 ] Neither the Explanatory Note to Bill 30 nor Hansard assists the Applicant. The reference in the Explanatory Note to a “claimant” to whom compensation is payable making application to a judge for an order directing an insurer to pay compensation periodically captures the meaning of

section 26.2 as interpreted in Wade . That is, where the claimant is the insured. It does not extend the language of

section 26.2 to include a third party claimant.

[ 55 ] Similarly, the reference in Hansard that insurance companies must make interim payments to individuals whose claims are being processed, where liability is not in dispute, describes

section 26.3. Although it may also describe

section 26.2 as between the insurer and the insured as found in Wade , it does not support an

interpretation of

section 26.2 that the claimant under that

section can be anyone other than an insured. [ 56 ] One important difference between

section 26.2 and

section 26.3, as noted in Wade , is that the former authorizes a claimant to seek an order for payment from the Court whereas the latter limits the Court remedy to an order for costs. That is, a claimant in respect of whom an insurer may not be fulfilling its

section 26.3 obligations has only limited recourse to the Court. Their remedy (other than in costs) is confined to the Court ordering the insurer to fulfill its statutory obligations ( Wade at paragraph 49). On the other hand, an insured has the ability under

section 26.2 to ask the Court to order a sum payable on account of damages to be subsequently determined. One must presume, therefore, that the Legislature deliberately differentiated between a person with a direct relationship with an insurer, the insured under

section 26.2, from a person with an indirect relationship, a person claiming to be entitled to compensation from an insured who is privy to a contract of indemnity by the insurer under

section 26.3. It is not open to the Court to deviate from that legislated distinction. [ 57 ] Consequently, I am satisfied that the object and purpose of the Act , and hence its legal effect, are to permit or require advance payments by insurers to their insureds or to third party claimants as specifically addressed in each of sections 26, 26.2 and 26.3.

Section 26.2 is not available to the Applicant insofar as he has no direct contractual entitlement to compensation from the insurer of the Respondent. Any entitlement that he has to interim payment must be found under either Rule 44A or

section 26.3 of the Act . [ 58 ] Consequently, the Application pursuant to

section 26.2 of the Act must fail. disposition [ 59 ] The application is dismissed. [ 60 ] The Respondent sought her costs. Notwithstanding her success on the application, I order that costs be in the cause. _____________________________ Robert P. Stack Justice