Diebold v Economical Mutual Insurance Company, 2022 ONSC 5592.
Reading Time: 5 Minutes
By: Weston McArthur (Articled Clerk)
Pamela Diebold (one of the Plaintiffs) was involved in a motor vehicle accident on
March 28, 2015, in Henrietta, New York, USA. She was injured and claimed to have suffered
a loss of earning capacity.
The Plaintiff Diebold was employed at Economical Mutual (the Defendant) and was
covered under a group policy with Sun Life Assurance Company through this employer. The
Plaintiff Diebold applied for and received both short-term and long-term disability benefits.
The Plaintiff’s long-term disability benefits ceased on July 31, 2017, and she sued Sun Life
for additional payments of those benefits. In addition, the Plaintiff claimed “general damages,
damages for breach of contract, interest, punitive damages, aggravated general damages, and
exemplary damages” [para 13].
In January 2019, the Plaintiff reached a confidential settlement with Sun Life. The
Plaintiff’s claim was settled “on an all-inclusive basis” [para 14].
The Defendant, Economical Mutual, held that the Sun Life settlement payment should
be deducted from any award that the Plaintiff receives at trial under the loss of income head
of damages. The Defendant relied on section 267.8(1) of the Ontario Insurance Act. The New
Brunswick equivalent is section 265.4(1). Section 267.8(1) provides that:
267.8(1) In an action for loss or damage from bodily injury or death arising directly or
indirectly from the use or operation of an automobile, the damages to which a plaintiff
is entitled for income loss and loss of earning capacity shall be reduced by the
1. All payments in respect of the incident that the plaintiff has received or that were
available before the trial of the accident for statutory accident benefits in respect of
the income loss and loss of earning capacity.
2. All payments in respect of the incident that the plaintiff has received or that were
available before the end of the trial of the action for income loss or loss of earning
capacity under the laws of any jurisdiction or under an income continuation benefit
3. All payments in respect of the incident that the plaintiff has received before the trial
of the action under a sick leave plan arising by reason of the plaintiff’s occupation or employment.
Justice Gibson found that the broadness of the language in section 267.8(1) of the
Insurance Act was key, and concluded that the settlement payment by Sun Life should be
deducted from any award of damages that the Plaintiff receives for loss of income. The judge
focused on the phrase “All payments in respect of the incident that the plaintiff has received
or that were available before the trial of the action.”
Further, given that LTD benefits are deductible from awards for loss of income under
section 267.8(1), it made sense by extension that a settlement payment for LTD benefits
would be deductible as well.