



COURT OF APPEAL FOR ONTARIO

CITATION: Nemchin v. Green, 2021 ONCA 238

DATE: 20210416

DOCKET: C67869

Roberts, Trotter and Thorburn
    JJ.A.

BETWEEN

Tatiana Nemchin

Plaintiff (Appellant)

and

Yvonne Green

Defendant
    (Respondent)

Joseph Y. Obagi and Elizabeth A.
    Quigley, for the appellant

Stephen G. Ross, Thomas Macmillan and
    Meryl Rodrigues, for the respondent

Heard: October 27, 2020 by
    video conference

On appeal
    from the order of Justice Sylvia Corthorn of the Superior Court of Justice,
    dated October 28, 2019, with reasons reported at 2019 ONSC 6243.

Roberts
J.A.:

Overview

[1]

The appellant appeals from
    the trial judges order requiring her to top up the amount of the long-term
    disability benefits that she assigned to the respondents insurer pursuant to
    s. 267.8(12) of the
Insurance Act
, R.S.O. 1990, c. I.8.

[2]

Following the successful
    trial of her action, the appellant was awarded substantial damages against the
    respondent. The respondent then moved under s. 267.8(12) of the
Insurance
    Act
for an order requiring the appellant to assign her rights to the
    benefits she receives under an income continuation plan to the respondents
    insurer. The trial judge granted the respondents request and included an additional
    order that the appellant
top up any amount
    paid from her insurer, Sun Life Assurance Company of Canada, to the
    respondents insurer, Aviva Insurance Company of Canada, to account for the
    fact that Sun Life deducted applicable income taxes from its payments to the
    appellant.

[3]

While no longer contesting
    the assignment of her benefits to the respondents insurer, the appellant
    submits that the trial judges order was contrary to the principles of natural
    justice and exceeded her jurisdiction because neither party sought the top up
    that she ordered. Moreover, the appellant argues, the trial judge erred in her
    interpretation of s. 267.8 of the
Insurance Act
.

[4]

The appellant asks that the trial
    judges top up order be set aside, that the respondents insurer repay all top
    up amounts to the appellant, plus interest, and that the respondents insurer
    be required to bear all costs necessary to address the tax and other implications
    of the assignment of the appellants benefits.

[5]

For the reasons that follow,
    I would allow the appeal and grant the requested relief.

Background

[6]

The appellant sustained
    serious injuries and became totally disabled as a result of a motor vehicle
    accident involving the respondent. The jury determined the respondent was 90%
    liable for the accident. The appellant was found 10% contributorily negligent. On
    April 5, 2017 the jury awarded the appellant significant damages because of her
    injuries. With respect to her future loss of income claim, the head of damages
    relevant to this appeal, the appellant received an award of $540,000, net of a
    10% reduction for the appellants contributory negligence.

[7]

The appellants injuries
    triggered coverage for long-term disability income continuation benefits from
    Sun Life, her employers group benefits insurer. Both the appellant and her
    employer had contributed to the plan. As a result, Sun Life deducted and remitted
    income taxes from its payments to the appellant under the plan and provided to the
    appellant an annual T4A slip for the gross benefit. In the period between the
    April 5, 2017 judgment and the payment of the judgment damages by the
    respondents insurer on November 14, 2019
[1]
, the appellant received from Sun
    Life net after-tax payments totalling $104,162.34.

[8]

Following the jurys
    verdict, the respondent brought a motion under s. 267.8(12) of the
Insurance
    Act
to require the appellant to assign to the respondents insurer from
    the date of the judgment the appellants rights to the Sun Life benefits. The relevant
    provisions of s. 267.8(12) of the
Insurance Act
are as follows:

Assignment of future collateral benefits

(12) The court that heard and determined the
    action for loss or damage from bodily injury or death arising directly or
    indirectly from the use or operation of the automobile, on motion, may order
    that, subject to any conditions the court considers just,

(a) the plaintiff who recovered damages in the
    action
assign to the defendants or the defendants insurers all rights in
    respect of all payments to which the plaintiff who recovered damages is
    entitled in respect of the incident after the trial of the action
, [emphasis
    added]



(ii) for income loss or loss of earning
    capacity under the laws of any jurisdiction or under an income continuation
    benefit plan,



(b) the plaintiff who recovered damages in the
    action co-operate with the defendants or the defendants insurers in any claim
    or proceeding brought by the defendants or the defendants insurers in respect
    of a payment assigned pursuant to clause (a).

[9]

The trial judge considered
    how the assignment of all rights in respect of all payments to which the
    plaintiff  is entitled under s. 267.8(12)(a) should apply to the
    appellants income continuation plan. She found that s. 267.8(12)(a) called
    for the assignment of the
gross
amount of the Sun Life benefits, and not
    the
net after-tax
payments. She rejected the appellants submission that
    a ruling from the Canada Revenue Agency (CRA) should be obtained to determine
    if the appellants tax liability and Sun Lifes tax withholding obligation
    would change once the rights to the payments under the plan were assigned to
    the respondents insurer. She found that Sun Lifes obligation to withhold
    income tax was irrelevant to the appellants right to receive the gross amount
    of the payments.

[10]

Having concluded that the
    respondents insurer was entitled to receive the gross benefit under the
    appellants income continuation plan, the trial judge considered two methods of
    structuring the assignment. Under the first approach, Sun Life would make
    payments directly to the respondents insurer while deducting taxes at source. The
    appellant would then top up the payments to compensate for the source
    deductions. The assignment would remain in place until the earlier of the
    appellant reaching the age of 65 and the respondents insurer recovering the
    amount it had paid in tort damages for future loss of income. From the trial
    judges perspective, this arrangement served to insulate the respondents
    insurer from the appellants personal tax situation: the appellant would be
    responsible for any shortfall arising from the deductions at source and she
    would receive the benefit of any tax refunds resulting from overpayment without
    depriving the respondent of its right to receive the full benefit.

[11]

Under the second approach,
    the appellant would not top up the payments, and the respondents insurer would
    receive the net payments from Sun Life. In both cases, the appellant would
    receive the benefit of any tax refund and bear responsibility for any
    shortfall. However, under the second approach, the respondents insurer would
    recoup the amount owing under the assignment more slowly.

[12]

The trial judge concluded
    that the appellant was required to top up the net payments from the date of the
    judgment that were assigned to the respondents insurer so that they would
    equal the gross payments to which the appellant was entitled under the Sun Life
    plan.

[13]

With respect to the amounts
    already paid by Sun Life under the income continuation plan, the trial judge ordered
    the appellant to disclose to Aviva the gross amount of her entitlement since
    the jurys verdict. This amount, later determined to be $124,951.05, was deducted
    from the $540,000 income loss award in accordance with the trial judges top up
    order, despite the fact that the appellant had only received net payments of
    $104,162.34 from Sun Life. At the hearing of the appeal, counsel for the
    appellant indicated that the appellant has not made any further top up payments
    on the assigned payments.

Issues

[14]

I would summarize the issues
    as follows:

i.

Was the trial judges top up order procedurally
    unfair and contrary to natural justice?

ii.

Did the trial judge err in her interpretation
    and application of s. 267.8 of the
Insurance Act
?

(1)

Procedural Fairness

[15]

It is common ground that
    neither party requested that the trial judge make the top up order. Rather, the
    appellant submitted that the gross amount of the payments received from Sun
    Life should be credited against the amount assigned to Aviva, even though Aviva
    would receive only payment of the net benefit, and that, regardless, there
    should be a mechanism to address the potential income tax shortfall or
    overpayment by the appellant arising from the deduction of income tax at source.
    The respondent sought an assignment to its insurer of the appellants rights to
    the net after-tax benefits received from Sun Life from the date of judgment, with
    a provision for an accounting of any taxes refunded in the case of overpayment
    on source deductions. The trial judge did not request submissions from the
    parties on the issue of top up.

[16]

In my view, the trial judge resolved
    the rights of the parties, imposed a burden on the appellant, and provided a
    remedy to the respondent, on a theory never pleaded and with respect to which
    battle was never joined:
Rodaro v. Royal Bank of Canada
(2002)
, 59 O.R. (3d) 74 (C.A.), at para.
    63. Accordingly, the order must be set aside.

[17]

Anticipating this outcome,
    the parties requested that this court look afresh at the top up question and
    the underlying issue of the parties respective rights and obligations under
    the statutory assignment, rather than remitting it to the trial judge for a
    rehearing. I am of the view that the record and the parties submissions are
    sufficient to permit such a determination. I turn now to that analysis.

(2)

Section 267.8 of the
Insurance Act

(a)

The parties positions

[18]

The appellant submits that
    the trial judges top up order represents an erroneous interpretation of the trust
    and assignment provisions of s. 267.8 of the
Insurance Act
. Under the
    trust provisions, the appellant can only hold in trust and pay over to the
    respondents insurer the payments she actually received. Under the statutory
    assignment, the respondents insurer, as assignee of the rights to the taxable
    collateral benefits, must assume the tax consequences of the benefits along
    with the benefits themselves. Otherwise, the appellant, as tort victim, is left
    in a worse net position than a tort victim with no collateral benefits, and the
    respondents insurer receives a windfall.

[19]

The respondent says that
    even if the trial judge erred, her top up order is reasonable and causes no
    prejudice to the appellant. It also best serves the principle of finality that
    benefits both parties because there will be no need for an ongoing accounting
    or other administrative reconciliation. Relying on
Kant v. The Queen
,
[2001] 2 C.T.C. 2703
(T.C.C.), the respondent submits that the appellant may
    not be required to pay taxes on the benefits after the assignment since they
    are not taxable in [her] hands when assigned because she derives no benefit
    from them. According to the respondent, the appellant can seek a refund of the
    taxes remitted by Sun Life.

(b)

Analysis

[20]

It is my view that the trial
    judge misinterpreted ss. 267.8(9), (10), and (12)(a)(ii) of the
Insurance
    Act
and applied the trust and assignment provisions in a manner contrary
    to the plain meaning of the legislative text and its purposes. She also erred
    in failing to take into account Sun Lifes withholding and remittance of income
    tax as a statutory trust and its effect on the appellants rights under the
    plan.

[21]

As this court indicated in
Bapoo
    v. Co-Operators General Insurance Co.
(1997), 154 D.L.R. (4th) 385 (Ont.
    C.A.), leave to appeal refused, [1998] S.C.C.A. No. 62, at p. 389, the
    interpretative framework to be applied is as follows:

The modern approach to statutory
    interpretation calls on courts to interpret a legislative provision in its
    total context.
The court's interpretation should comply with the legislative
    text, promote the legislative purpose and produce a reasonable and just meaning
.
    Professor Sullivan described the modern approach in the following passage in
Driedger
    on the Construction of Statutes
:

There is only one rule in modern
    interpretation, namely, courts are obliged to determine the meaning of
    legislation in its total context, having regard to the purpose of the
    legislation, the consequences of proposed interpretations, the presumptions and
    special rules of interpretation, as well as admissible external aids
. In other words, the courts must consider and take into account all
    relevant and admissible indicators of legislative meaning. After taking these
    into account, the court must then adopt an interpretation that is appropriate.
An
    appropriate interpretation is one that can be justified in terms of (a) its
    plausibility, that is, its compliance with legislative text; (b) its efficacy,
    that is, its promotion of the legislative purpose; and (c) its acceptability,
    that is, the outcome is reasonable and just
. [Emphasis added; Citations
    omitted.]

[22]

It is well established that
    the legislative purpose of s. 267.8 is to promote fair compensation to injured plaintiffs
    and prevent double recovery. As this court observed in
Cadieux v. Cloutier,
2018 ONCA 903, 429 D.L.R. (4th) 468,
    leave to appeal refused
[2019]
    S.C.C.A. No. 63
, at para. 17: 
Section 267.8 of the
Insurance Act
contains
    provisions designed to address [the overlap between tort damages and collateral
    benefits] and to prevent double recovery. It reflects the principle that
    victims should be fairly compensated, but not over-compensated.

See also:
Carroll
    v. McEwen
, 2018 ONCA 902, 429 D.L.R. (4th) 443, at para.
38;
Cobb v.
    Long Estate,
2017 ONCA 717, at
    para. 52;

El-Khodr v. Lackie
, 2017 ONCA 716, 416 D.L.R. (4th) 189, at para.
33, leave to appeal refused, [2017] S.C.C.A. No.
    461. As I shall explain, I conclude that the effect of the trial judges order
    is to leave the appellant undercompensated and in a worse position than if she
    had not had collateral benefits from Sun Life.

(i)

The trust provisions under ss. 267.8(9) and (10)

[23]

While the trial judge did
    not expressly address the application of the trust provisions under ss.
    267.8(9) and (10) to the amounts received by the appellant pre-assignment, the
    effect of her order requiring the deduction of the gross amount of the payments
    to the appellant under the Sun Life plan since the date of judgment on April 5,
    2017 resulted in the deduction of more than the amount of the payments actually
    received and held in trust by the appellant post trial and pre-assignment. This
    effect runs contrary to the provisions of ss. 267.8(9) and (10).

[24]

Under s. 267.8(9)(ii), prior
    to any assignment under ss. 267.8(12)(a)(ii), a successful plaintiff must hold
    
payments
in respect of the incident
that the plaintiff receives
after the trial of the action for income loss or loss of earning capacity 
    under an income continuation benefit plan
in trust
(emphasis added).
    Subsection 267.8(10) requires the plaintiff who holds money in trust under
    subsection (9) to pay the money to the persons from whom damages were
    recovered in the action, in the proportions that those persons paid the
    damages.

[25]

Subsections 267.8(9) and (10)
    impose a statutory trust on the payments that the plaintiff actually receives
    for the benefit of the defendant or the defendants insurer. These provisions
    reflect basic trust principles: a trustee is only chargeable for the trust
    property that he or she actually holds or controls; and the trust property does
    not form part of the trustees property but is held for the beneficiary of the
    statutory trust:
Lewin on Trusts
, 19th ed. (London: Sweet &
    Maxwell, 2015) at pp. 2-4 and 285. See also
In Re Scott
, [1948]
    SASR 193, at p. 196. Under ss. 267.8(9) and (10), the plaintiff as
    trustee holds the monies received in trust for the defendant or the defendants
    insurer who pays the judgment damages.

[26]

The trust property in the
    present case consisted of the net after-tax payments that the appellant
    received pre-assignment from Sun Life from the date of the judgment in the
    amount of $104,162.34. The appellant, as trustee, was only required to hold in
    trust and then pay to the respondents insurer these actual payments from Sun
    Life, which were net of tax. Contrary to the provisions of ss. 267.8(9)
    and (10), the trial judges order erroneously inflated that amount to
    $124,951.05, representing the gross pre-tax amount, which had the effect of
    reducing the appellants compensation by $20,788.71 once the trust funds were
    set off against the judgment damages. The appellant was never required to hold
    this amount in trust and it should be repaid.

(ii)

The assignment provisions under s.
    267.8(12)(a)(ii)

[27]

Similar reasoning led the
    trial judge into error with respect to the assignment provisions under s.
    267.8(12)(a)(ii) of the
Insurance Act
. As noted, this section permits a
    defendant to seek the assignment to its insurer of all rights in respect of
    all payments to which the plaintiff who recovered damages is entitled in
    respect of the incident  under an income continuation benefit plan. In my
    view, the trial judge conflated the respondents insurers entitlement to the
    rights to the plan benefits with the mechanism of a specific mode of payment, namely
    an assignment, and therefore failed to apply the assignment provisions under s. 267.8(12)(a)(ii)
    in a manner consistent with the trust provisions under s. 267.8(9) and
    (10).

[28]

The trial judge correctly
    recognized at para. 16 of her reasons that the assignment is of all rights in
    respect of all payments and that [t]he assignment is of more than the
    payments themselves. However, she failed to recognize that the respondents
    insurer, as assignee, steps into the shoes of the appellant and acquires the
    entitlement to the rights to the appellants benefits subject to all the
    equities and obligations existing between the appellant and Sun Life under the
    plan:
Frederick v. Aviation & Gen. Ins. Co.
, [1966] O.J. No. 1064
    (C.A.). Instead, the trial judge effectively concluded that the respondents
    insurer was entitled to collect the appellants gross benefits as if they were
    not taxable or as if the appellant had elected to take the entire taxable sum in
    hand.

[29]

In my view, the language of
    s. 267.8(12) does no more than clarify the mechanism of the
assignment
of the appellants rights to the payments within the scheme of s. 267.8. This
    means that by virtue and for the term of the assignment, the respondents
    insurer has all the appellants rights and is subject to all the provisions
    under the plan, including, subject to the plan
[2]
, the ability to deal directly
    with Sun Life and to contest the deduction of income taxes from the payments.
    But, while s. 267.8(12)(a) refers to all
rights
in respect of all
    payments to which the plaintiff who recovered damages is
entitled

    rather than payments
received
by the plaintiff, as was the case in
Bapoo
,
    it does not entitle the respondents insurer to receive payments greater than
    those the appellant receives. Subsection 267.8(12) does not refer to payments
    received, because the focus of this provision is not on the entitlement to
payments
,
    but rather on the broader entitlement to the plaintiffs underlying
rights
,
    which includes a right to payment, among others.

(iii)

The trust and assignment provisions are
    complementary mechanisms

[30]

The trial judges approach
    fails to take into account the complementary nature of the trust and assignment
    provisions in the context of s. 267.8 as a whole which, as earlier noted, is
    designed to ensure fair compensation to the injured plaintiff:
Cadieux
,
    at para. 111.

[31]

First, the trial judges
    approach would introduce a discrepancy between the provisions of ss. 267.8(9)
    and (10), and (12) of the
Insurance Act
,

which are

intended to be complementary. As
    earlier noted, the modern rules of statutory interpretation require the words
    of the statute to be read in their entire context and in their grammatical and
    ordinary sense harmoniously with the scheme of the Act, the object of the Act,
    and the intention of the enacting legislative body:
Cadieux
, at para.
    109, citing
Rizzo & Rizzo Shoes Ltd. (Re)
, [1998] 1 S.C.R. 27, at
    para. 21.

[32]

Subsections 267.8(9), (10),
    and (12) provide for two different mechanisms that work together to achieve the
    same underlying aim of providing compensation without over-compensation:
Cadieux
,
    at para. 24;
Carroll
, at para. 38;
El-Khodr
, at para. 33. As
    discussed above, the plain meaning of s. 267.8(9) is that a plaintiff is
    required to hold monies
actually received
in trust. Here, prior to any
    assignment to the respondents insurer under s. 267.8(12)(a)(ii), the
    appellant was required to hold in trust the actual net after-tax payments from
    Sun Life as she received them. It would not make common sense for the
    assignment to apply to gross pre-tax amounts if the trust does not. This would
    place the appellant in a different and worse position simply because the
    mechanism of assignment was engaged as opposed to the mechanism of a trust.

[33]

Second, and similarly, it
    would not make common sense for there to be a different meaning of the word
    payments in each of ss. 267.8(9), (10) and (12). Reading the provisions
    harmoniously, the grammatical and ordinary sense of the word payments is
    the same in the trust and assignment provisions under s. 267.8(9), (10),
    and (12). As noted, the payments referred to in ss. 267.8(9) and (10) are the
    payments actually received and held in trust by the appellant. In this case, from
    the date of the judgment, this amounted to $104,162.34 in payments that the
    appellant actually received. The word payments in s. 267.8(12) must refer to
    the same payments but to be received under the mechanism of an assignment.

(iv)

Effect of Sun Lifes statutory obligations

[34]

The trial judges errors in
    her interpretation and application of the trust and assignment provisions led
    her to ignore the effect of Sun Lifes withholding and remittance of income
    taxes to the CRA from the plan payments pursuant to its statutory obligations. Again,
    as the appellants assignee, the respondents insurer has all the same rights
    as against Sun Life as the appellant, and Sun Life has all the same defences. These
    defences may include any statutory obligation on the part of Sun Life to
    withhold and remit taxes to the CRA from the plan payments.

[35]

The respondent argues that, post-assignment,
    Sun Life is no longer required to withhold and remit taxes because the
    appellant no longer receives the benefit of the plan payments; however, as I
    explain in para. 38 below, this is by no means certain absent a court order or
    CRA ruling. Moreover, it is common ground that pre-assignment, Sun Life was
    obliged under the provisions of the
Income Tax Act
, R.S.C. 1985, c. 1
    (5th Supp.), to deduct and remit taxes from payments made directly to the
    appellant for her benefit under Sun Lifes income continuation plan. Further,
    post-assignment, Sun Life intends to continue withholding and remitting income
    taxes regardless of whether the payments are issued directly to the appellant
    or to the respondents insurer, until otherwise exempted by court order or CRA
    ruling.

[36]

The parties did not
    reference the provisions of the
Income Tax Act
that give rise to Sun
    Lifes statutory obligations to withhold and remit taxes. Presumably, the income
    from the plan is taxable in the hands of the appellant under s. 6(1)(f) of the
Income
    Tax Act
because both the appellant and her employer contributed to the
    plan: See also
Pugh v. Canada
, [2000] T.C.J. No. 585, at para. 9;
Bouchard
    v. Canada
, 2008 TCC 408, at para. 14. If that is the case, then the income
    from Sun Life under the income continuation plan would fall under the
    definition of salary or wages at in s. 248. Under s. 153 of the
Income
    Tax Act
, Every person paying at any time in a taxation year (a) salary,
    wages or other remuneration  shall deduct or withhold from the payment the
    payees tax. This is no mere mechanical exercise as the trial judge stated. Amounts
    deducted but unremitted by any person are deemed to be held separate and apart
    from the property of the person and in trust for Her Majesty and for payment
    to Her Majesty pursuant to s. 227(4) of the Act.

[37]

Regardless if its position
    is correct, the fact that Sun Life purports to withhold and remit income taxes
    pursuant to a statutory obligation to the CRA means that those monies are
    imposed with a statutory trust and therefore do not form part of the payments
    made under the plan. Even if the respondent prevails and Sun Life is no longer
    required to withhold and remit taxes, this does not alter the nature and effect
    of its present withholdings and remittances as statutory trust funds. In
    consequence, so long as Sun Life withholds and remits taxes pursuant to the
    statutory trust provisions of the
Income Tax Act
, Avivas assigned
    rights are to the net after-tax payments.

[38]

I do not accept the
    respondents submission that the trial judges order causes no prejudice to the
    appellant because she can simply apply for a tax refund and be in no worse
    position. First, it is by no means certain that the CRA would agree that the
    appellant is entitled to a refund of the taxes remitted by Sun Life. It is
    dependent on a whole host of variables, including the appellants personal tax
    circumstances about which there is no evidence. Second, the appellant would likely
    be required to incur considerable expense to ascertain whether the CRA accepts
    this position. This additional financial burden is contrary to s. 267.8 of the
Insurance
    Act
since it undermines the purpose of full compensation for the
    appellant.

[39]

The respondent obtained an
    assignment to its insurer of the appellants rights to future collateral
    benefits under the Sun Life plan from the date of judgment. If it disputes the
    deduction of income tax at source, then the respondents insurer, having
    stepped into the appellants shoes through the assignment, must take the
    necessary steps and incur the necessary expense to deal with that issue. For
    the term of the assignment, the appellant has assigned her rights with respect
    to those payments. While s. 267.8(12)(b) of the
Insurance Act
requires
    her to cooperate with the respondents insurer, it is the respondents insurer,
    as assignee, that must direct what is to be done in relation to the plan
    benefits.

[40]

The respondent and its
    insurer cannot complain of its situation. If they had acceded to the
    appellants request to seek a ruling from the CRA on the tax issue, the issues
    of quantum and liability for taxes following the assignment could have been
    ascertained. As it presently stands, the respondents insurer is only entitled
    to receive what Sun Life pays. It would be patently unfair to require the
    appellant to pay for the very step that she submitted was necessary before the trial
    judge made her assignment order. Having taken the benefits of the assignment,
    the respondents insurer must undertake the concomitant burdens.

Conclusion

[41]

The trial judges
    interpretation leads to an unfair result. It imposes a financial burden on the
    appellant that she would not have incurred if she did not have collateral
    benefits. This runs counter to the principle of full compensation. The
    statutory assignment of her rights under the Sun Life plan means that for the term
    of the assignment the appellant no longer receives any benefit under the plan
    and should be relieved of any financial burden in respect of it.

[42]

Accordingly, the correct
    interpretation of s. 267(12)(a)(ii) of the
Insurance Act
is that the
    assignment of the appellants rights under the plan means that the respondents
    insurer is entitled to a credit for the actual payments that the appellant
    receives under the plan. As matters now stand, this means net of the taxes
    withheld by Sun Life. The respondents insurer is entitled to take whatever
    steps are necessary, at its own expense and with the appellants co-operation,
    as required under s. 267(12)(b), to deal with the issue of the tax withholdings
    with Sun Life and the CRA.

Disposition

[43]

In my view, the fairest
    order that is also in keeping with the purposes of s. 267.8 of the
Insurance
    Act
is to amend the trial judges order to provide for the assignment from
    the date of judgment of the appellants rights in respect of all payments under
    the Sun Life plan to the respondents insurer, net of all income tax withholdings
    so long as Sun Life continues to withhold and remit income taxes to the CRA from
    the payments made under its plan, until the appellant reaches the age of 65 or the
    respondents insurer has been fully reimbursed for its payment of the loss of
    income damages award, whichever event occurs earlier. We were advised that the
    appellant has not received any tax refunds or credits with respect to the
    withholdings since the date of judgment. As a result,
so
    long as Sun Life continues to withhold taxes from the payments made under its
    plan
, this order obviates the need for an annual accounting.

[44]

In the event the respondents
    insurer wishes to contest with Sun Life and/or the CRA the issue of tax
    withholdings during the period of the assignment, the respondents insurer
    shall pay all expenses associated with such request, including for the
    preparation of any necessary forms or returns by the appellant or her financial,
    legal or other advisors, and the payment of any disbursements or fees. This
    arrangement is consistent with the requirement in para. 4 of the order that the
    respondents insurer shall pay the appellant the reasonable costs that she
    incurred to preserve her rights to payment of the long-term disability benefits
    under the Sun Life plan.

[45]

Accordingly, I would allow the
    appeal. I would amend para. 2 of the October 28, 2019 order to reflect the
    disclosure of the gross and net payments for the benefits under the Sun Life
    plan, set aside paras. 3, 5 and 6 and insert in their place a new paragraph (or
    paragraphs as the case may be) in accordance with these reasons. I would order
    that the respondents insurer pay to the appellant the amount of $20,788.71
    that was deducted from its payment of the appellants loss of income damages
    award. As earlier noted, according to the parties submissions, the appellant
    has not paid any top up amounts under paras. 5 and 6 of the October 28, 2019
    order. If that is incorrect, the appellant is at liberty to provide evidence of
    such payments and this courts order can provide for their repayment. I would
    amend para. 9 to provide that the appellant shall co-operate with the
    respondents insurer, at the latters expense, and that this co-operation shall
    also include participation in any process regarding Sun Life and/or the CRA
    concerning the income tax remitted by Sun Life.

[46]

The parties did not make
    submissions as to what should occur with respect to any set off against the
    judgment in the event that the taxes previously remitted by Sun Life were
    refunded by the CRA and/or in the event that Sun Life no longer withholds the
    taxes. Accordingly, if the parties cannot agree on the formulation of the additional
    terms to be inserted into the order in accordance with these reasons, or they
    require additional direction to address the set off issue or any other issue
    necessary for the implementation of this courts decision, I would permit them
    to make brief written submissions of no more than two pages, plus a draft form
    of order, within seven days of the release of these reasons.

[47]

In accordance with the
    parties agreement, I would grant the appellant her partial indemnity costs of
    the appeal in the amount of $30,000, inclusive of disbursements and applicable
    taxes.

[48]

If the parties cannot agree
    on the disposition of the costs on the motion before the trial judge, I would
    allow them the opportunity to forward to the panel brief written submissions of
    no more than two pages, with a costs outline, within seven days of the release
    of these reasons.

Released: April
    16, 2021 L.R.

L.B.
    Roberts J.A.

I
    agree. Gary Trotter J.A.

I
    agree. Thorburn J.A.





[1]
This delay
    appears to have resulted in part from the appeal of the decision on the merits,
    which this court dismissed on July 31, 2019 with reasons reported at 2019 ONCA
    634, and from the fact that the payment of damages was put off until the
    quantum of the assignment could be ascertained in the post-trial ruling
    currently under appeal. That motion was only argued in October 2019.



[2]

We
    were not provided with a copy of the Sun Life plan. While a June 26, 2018 email
    from Sun Life to appellants counsel, noted by the motion judge at para. 21 of
    her reasons, refers vaguely to some mechanical difficulty with payment
    protocols, it does not indicate, in my view, any restriction against the respondents
    insurer dealing directly with Sun Life. As a result, I presume there is none.


