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CONTENTS
What is Judgment Recovery?
When and How Does Judgment Recovery Become Involved in a Claim?
How Does Litigation Proceed When Judgment Recovery Becomes Involved (When There Are No Insurance Issues)?
What Can Be Recovered From Judgment Recovery?
Insurance Issues
Hit and Run Claims - section 256 of The Motor Vehicle Act
Conclusion
1. WHAT IS JUDGMENT RECOVERY?
Judgment Recovery (N.S.) Ltd. is a statutory body
corporate, incorporated in 1959 pursuant to the Judgment Recovery
(N.S.) Ltd. Act, R.S.N.S. 1989, c. 239. The objects and powers of
Judgment Recovery are set out in section 3 of the Judgment Recovery
(N.S.) Ltd. Act (the "~"), the main object being:
Objects and powers
3 (e) generally, [to] ensure that victims of uninsured or otherwise financially irresponsible motorists are expeditiously indemnified to the extent and on such terms and conditions as may be prescribed from time to time in the Motor Vehicle Act;
Judgment Recovery is the successor to the unsatisfied
Judgment Fund, references to which can still be found in
sections 211 and 212 of the Motor Vehicle Act, R.S.N.S. 1989,
c. 293.
Judgment Recovery is run by a Board of Directors, one of
whom is the Regional Vice-President, Atlantic, of the Insurance
Bureau of Canada, and the others being associated with motor
vehicle insurers in the Province. The funding of Judgment Recovery
is as set out in Section 15 of the JRA which provides that "[t]he
cost of operating [Judgment Recovery] ... shall be shared by all
[motor vehicle insurers] rateably in proportion to each such
[insurer's] share of the total motor vehicle liability insurance
premiums written in the Province".
The day-to-day operations of Judgment Recovery are run by
the Manager whose name and address (for future reference) is:
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Mrs. M. Gail LeBlanc, A.I.I.C. Judgment Recovery (N.S.) Ltd. Purdy's Wharf, Tower II suite 1706, Box 14 1969 Upper water street Halifax, Nova scotia B3J 3R7
429-2730 (telephone) 420-0157 (facsimile)
It is important to keep in mind that since Judgment
Recovery is a statutory body, its powers are limited to those
expressly set out in the JRA and sections 213 through 227 of the
Motor Vehicle Act (the "MVA"). Hence, these provisions should be
reviewed carefully when a claim against Judgment Recovery is being
considered.
Also, it is important to remember that once a claim is
paid out by Judgment Recovery, Judgment Recovery seeks recovery,
when possible, from the uninsured motorist involved. In
particular, Judgment Recovery takes an assignment of the Judgment
against the uninsured motorist pursuant to section 223 of the MVA.
See also Sections 219, and 224 through 227 of the MVA.
2.
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WHEN AND HOW DOES JUDGMENT RECOVERY BECOME INVOLVED IN A
CLAIM?
There are two basic situations in which Judgment Recovery
becomes involved in a claim:
(1) When the motorist allegedly at fault in an accident had
no insurance at the time of the accident; or
(2) When the motorist allegedly at fault had an insurance
policy at the time of the accident, but the insurer
denies it is obligated to respond to the claim.
If you are representing a claimant and either of the
above situations arises, the first step that should be taken is to
write a letter directly to Judgment Recovery outlining:
(a) The names, addresses and birth dates of all parties
involved (especially the uninsured motorist);
(b) The date and location of the accident;
(c) The nature of the claim;
(d) Any benefits received by the claimant; and
(e) Any information received from the insurer of the motorist
allegedly at fault.
Once armed with this information, Judgment Recovery can
investigate the claim to see if it is indeed a claim in which
Judgment Recovery should be involved. Pursuant to section 215(2)
of the MVA, Judgment Recovery has the authority to settle claims
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even if actions have not been commenced if the uninsured motorist
consents to the settlement.- In limited circumstances, Judgment
Recovery has the authority pursuant to section 215(11) of the MVA
to settle property damage claims under $1,000.00 without the
uninsured motorist's consent.
If settlement cannot be reached and/or the uninsured
motorist does not consent (which is almost always the case with
larger claims), the claimant will have to commence an action
against the uninsured motorist. It is important to note that all
defendants in such an action must be served personally before
approaching Judgment Recovery; Judgment Recovery has no authority
to accept service. The defendant in such an action has the right
to defend the action personally, if he so choses. This sometimes
occurs in smaller claims when the defendant has the means to
respond to the claim. A defendant's right to defend such an action
is based on the fact that even if Judgment Recovery is called upon
to respond, the defendant will eventually have to repay Judgment
Recovery.
If the defendant in such an action defaults, notice must
be given to Judgment Recovery pursuant to section 217 of the MVA
advising of the default and that the plaintiff intends to enter
Default Judgment. It is Judgment Recovery's practice to insist on
receiving of a copy of the statement of Claim as well as Affidavits
of Services on all defendants to ensure that the statutory
requirements have been met.
Judgment Recovery then has 30 days in which to file a
Defence on behalf of the uninsured defendant (s). Once a Defence is
* Such settlements are the easiest, quickest and least expensive way to deal with a claim against Judgment Recovery and should be pursued whenever possible.
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filed, Judgment Recovery then has the right, pursuant to
section 217 (2) of the MVA, to "take on behalf of and in the name of
the defendant any steps that the defendant himself/herself may have
taken in the action".
It is noted that uninsured motorists often do not
cooperate with Judgment Recovery, making it very difficult for
Judgment Recovery to defend claims. Hence, the courts have
indicated that they are prepared to exercise their discretion and
not enforce certain civil Procedure Rules as against Judgment
Recovery due to the special problems Judgment Recovery may have
with uncooperative defendants. For example, in stead v. smith
(1986), 73 N.S.R. (2d) 82 (S.C.T.D.), the court held that Judgment
Recovery was not bound to comply with Rule 21.01(2) with respect to
replying to a Notice to Admit.
3.
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HOW DOES LITIGATION PROCEED WHEN JUDGMENT RECOVERY
BECOMES INVOLVED (WHEN THERE ARE NO INSURANCE ISSUES)?
Dealing with Judgment Recovery when there is no insurance
issue involved is much like dealing with an insurer. Perhaps the
main difference is that often Judgment Recovery's first
notification of the existence of a claim is receipt of a statement
of Claim along with a Notice of Intention to Enter Default
Judgment. In those circumstances, Judgment Recovery has had no
opportunity to investigate the claim, hire an adjuster and/or
interview the plaintiff or the uninsured defendant. Since Judgment
Recovery relies on the information supplied by plaintiff's counsel,
the more detailed the documentation sent by plaintiff's counsel,
the better chance there is of settling the claim with Judgment
Recovery. Detailed medical reports, appraisal reports and receipts
are essential and, if there is a loss of income claim, income tax
returns will be required.
Judgment Recovery will often request that a discovery
examination of both the plaintiff and defendant take place since
this will give Judgment Recovery its first opportunity to obtain a
statement from the plaintiff and will give the defendant an
opportunity to have his/her say. Even if an uninsured defendant
has given up his/her right to control the litigation by failing to
file a Defence, it is still important to keep the defendant
involved in the process since at the end of the day, the defendant
will be called upon by Judgment Recovery to repay the Judgment.
It is noted that since Judgment Recovery has no statutory
ability to respond to a claim until a Judgment is entered, interim
payments cannot be made by Judgment Recovery.
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Once a matter is settled, or a claim is tried, Judgment
Recovery requires the following settlement documentation which it
will prepare:
(1) an Order for Judgment;
(2) a certificate of Judgment;
(3) a Release;
(4) an Affidavit pursuant to Section 214 of the MVA (to be
discussed); and
(5) an Assignment of Judgment pursuant to section 223 of the
MVA.
To avoid any problems down the road, Judgment Recovery
always makes its cheques payable to the claimant unless a Direction
to Pay signed by the claimant is presented to Judgment Recovery.
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4. WHAT CAN BE RECOVERED FROM JUDGMENT RECOVERY?
Pursuant to Section 213(7) of the MVA, the maximum amount
recoverable from Judgment Recovery with respect to bodily injury,
death or property damage arising from anyone accident (regardless
of how many plaintiffs are involved) is $200,000.00 inclusive of
interest, plus one-half costs (per section 213(2) of the MVA).
There is also a deductible of $200.00 with respect to
property damage.
Perhaps the most important thing to remember about
Judgment Recovery is that it was intended to be a last resort for
recovery and does not provide any compensation if the plaintiff has
recei ved compensation from any other source including, but not
limited to, motor vehicle accident insurance.
Sections 214(1) and (3) of the MVA state:
Accompanying affidavit
Specifically,
214 (1) The judgment creditor shall accompany his application with an affidavit setting out
(a) that he has received
( i) nothing under the judgment or as the result of the accident giving rise to the judgment, or
(ii) as a result of the accident from or on behalf of the judgment debtor, no more than an amount stated in the affidavit and the source or sources of that amount and the value of real property, goods or services so received as determined under subsection (4);
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(b) that no part of the amount sought by him will be paid to an insurer to reimburse or otherwise indemnify the insurer in respect of any amount paid or payable by the insurer by reasons of the existence of a policy of automobile insurance within the meaning of Part VI of the Insurance Act; and
(c) that no part of the amount sought from Judgment Recovery (N.S.) Ltd. is sought in lieu of making a claim or to the best of his knowledge, information and belief for the purposes of receiving a payment that is or may be payable by reason of the existence of a policy of automobile insurance within the meaning of Part VI of the Insurance Act.
Maximum payment (3) Judgment Recovery (N.S.) Ltd.
shall not be liable to pay the judgment credi tor an amount greater than the amounts set out in section 213 less any amount stated in the affidavit required by this section.
(emphasis added)
section 214(1) of the MVA was considered by the Nova
Scotia Supreme Court, Appeal Division (as it then was) in Workmen's
Compensation Board of New Brunswick et ale v. Judgment Recovery
(N.S. Ltd. (1983), 61 N.S.R. (2d) 361. The court made a number of
comments concerning Judgment Recovery that are important to keep in
mind. For example, on page 364, the court cited the following
passage from the trial judge's decision (which was upheld):
As has been said access to the fund is 'sort of a last resort'. The purpose and intent of the legislation is to provide some monetary
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compensation to injured motorists where no other funds are available to minimize a hardship caused by the uninsured tortfeasor.
The legislation envisages neither subsidization nor double compensation.
In the Workmen's Compensation (supra) case" the
plaintiffs had recovered Workmen's Compensation Benefits in excess
of Judgment Recovery's statutory limit. The court held that the
claimants were not entitled to recover further from Judgment
Recovery as they could not comply with the Affidavit provisions of
the MVA. In particular, the Court held at page 366:
The affidavits simply state that the appellants have not received any payment from or on behalf of the defendant. They do not say that they have received "nothing under the judgment or as a result of the accident giving rise to the judgment;" . In view of the compensation payments it is clear that the applicants cannot comply with this section. Under s. 192 (3) [now s. 214 (3)] of the Act deductions must be made for funds recovered from other sources. The compensation payments in this case far exceed the limits payable by Judgment Recovery. That provision can be usefully contrasted with the procedure relating to the Unsatisf ied Judgment Fund. Under the provisions relating to the Unsatisfied Judgment Fund the applicant only had to show that he had received nothing under the judgment. See s. 190(3) (h) of the Motor Vehicle Act. The words were obviously added in the new section to require the applicant to show in addition, that he received nothing as a result of the accident.
(emphasis added)
Finally, the court noted at page 368:
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That Unsatisfied Judgment Funds were intended to be a last resort for judgment creditors invol ved in accidents is made clear by the cases. See Telfer v. Kerr, [1949] 2 D.L.R. 627, and Hiltz v. Judgment Recovery (N.S.) Ltd. (1973), 4 N.S.R. (2d) 390.
Hence, Judgment Recovery has always taken the position
that it is entitled to deduct any and all benefits received by the
plaintiff, including 'collateral benefits' that other defendants
would normally not be entitled to deduct.
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5. INSURANCE ISSUES
Due to the absolute liability provisions found in
section 133(4) of the Insurance Act, R.S.N.S. 1989, c. 231, the
issue as to whether a motor vehicle liability insurer must respond
to a third party claim does not arise as frequently as before.
However, the issue still arises, usually under one of the following
circumstances (although there are others):
(1) When there is an issue as to whether the policy was void
ab initio;
(2) When there is a question as to whether the policy had
lapsed, been cancelled or was terminated; and
(3) When there is a question as to whether the operator of
the vehicle had the owner's consent to operate the
vehicle at the time of the accident. Under these
circumstances, the insurer will often file a Defence on
behalf of the defendant owner only, denying that the
owner had given the defendant operator consent to use the
vehicle. The insurer is then involved in the action and
the insurance issue usually gets sorted out.
Most problems arise when the insurer denies coverage and
is not part of the ensuing action. In such circumstances, Judgment
Recovery attempts to deal with the insurer on an informal basis.
Unfortunately, there are often delays between the time the insurer
denies coverage and the time that Judgment Recovery is notified of
the claim. If an insurer refuses to voluntarily disclose
information with respect to coverage, and/or Judgment Recovery and
the insurer cannot sort out or negotiate a settlement as to who
should respond to the claim, Judgment Recovery can make an
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application pursuant to section 216 of the MVA to determine whether
the insurer must respond to the claim. Judgment Recovery always
looks at a section 216 of the MVA application as a matter of last
resort. Often, the insurance issue can be sorted out after
exchanging documents and, if necessary, after discovery
examinations. If not, then the section 216 of the MVA application
procedure can be used. It is noted that it is almost always to the
plaintiff's advantage to have an insurer respond to a claim since
insurance policy limits are usually higher than Judgment Recovery's
limits, a plaintiff can recover full costs against an insurer and
the insurer is not entitled to deduct collateral benefits, which
Judgment Recovery is able to do pursuant to Section 214 of the MVA.
A hearing pursuant to section 216 of the MVA is like a
mini-trial on the issue of insurance alone. Viva voce evidence is
given. Plaintiff's counsel really does not have much of a role at
such a hearing.
Finally, it is noted that when there are two defendants
in an action and one of the defendants is insured, Judgment
Recovery is entitled to avail itself of the "one percent rulefl•
This rule is based on the fact that co-defendants in an automobile
accident are, in most circumstances, jointly and severally liable
under the Tortfeasors Act, R.S.N.S. 1989, c. 471. This means that
the plaintiff is entitled to recover his/her entire judgment from
either defendant. Hence, even if the insured defendant is only one
percent responsible for the loss, due to joint and several
liability, the plaintiff can recover 100 percent of his/her damages
from that defendant's insurer and hence, Judgment Recovery need not
respond. The "one percent rule" was approved by Justice Grant in
an unreported supplementary decision in Lutely and Stanhope v.
Estate of Jarvis et al ..
6.
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HIT AND RUN CLAIMS - SECTION 256 OF THE MOTOR VEHICLE ACT
section 256(1) of the MVA states:
Hit and run claim 256 (1) Subject to the other provisions
of this Section, where the death of or personal injury to any person is occasioned in the Province on or after the first day of January, 1959, by reason of ownership, maintenance, operation or use of a motor vehicle and the person having a cause of action in respect of the death or injury cannot establish
(a) the identity of the motor vehicle and of the driver and owner thereof; or
(b) the identity of the driver, where at the time the death or injury was caused the vehicle was in the possession or charge of a person without the consent of the owner,
the person having the cause of action in respect of the death or injury may bring an action in the Trial Division of the Supreme Court or in a county court against the Registrar in his name of office.
It is important to note that hit and run claims against
the Registrar, being entirely statutory in nature, must be brought
in accordance with the strict provisions of the MVA.
Such actions must be brought within one year of the date
that the cause of action arose (see section 256(3) of the MVA).
Notice of intention to bring the action must be given to the
Registrar two months previous before commencing the action (see
section 256 (2) of the MVA). It is noted that although the
Registrar is named as a defendant in the action, the Registrar is
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not "liable personally or in his official capacity for payment of
any Judgment rendered" (per section 256 (4) of the MVA). Since
there is no fund to pay the Judgment, the judgment creditor must
recover his/her Judgment from Judgment Recovery. Judgment Recovery
regularly defends the Registrar with respect to such claims.
No costs or disbursements can be recovered in an action
against the Registrar (see Section 256(6)' of the MVA).
section 256(7) of the MVA clearly outlines that claims against the
Registrar are not subject to the collateral benefits rule and any
such benefits received by a plaintiff can be deducted from his/her
claim.
Perhaps the most important part of Section 256 of the MVA
is sUbsection 5. Pursuant to section 256(2) of the MVA, when a
Notice of Intended Action is given to the Registrar, the claimant
must also provide an Affidavit confirming that his/her claim
conforms with the provisions of section 256(5) of the MVA. The
most important provision in section 256(5) of the MVA is
sUbsection (b) which provides that the court must be satisfied:
(b) that all reasonable efforts have been made to ascertain the identity of the motor vehicle and of the owner and driver thereof ....
In Rushton v. Registrar of Motor Vehicles (1993) (not yet
reported), Justice Saunders held that the plaintiff had not made
all reasonable efforts to locate the unknown motorist and,
therefore, failed to establish the right to make a claim against
the Registrar. At page 7 of his decision, His Lordship provided
some guidance as to what reasonable efforts could have been taken:
She worked in Scotia Square ,the very building where the parkade is located. It
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would not have been too much to expect that she make the following inquiries or take these initiatives: Attend, perhaps several times, at the parkade exit between 4: 00 and 5: 00 o'clock in the afternoon to see if the same motorist (who might well be a worker there) and vehicle were departing. Or post a notice in the elevators and by the entrance doors to the parking lot. Or notify the building's security personnel and see what inquiries they might make. Or notify the local police department and check periodically to see what progress had been made. The police are professionals who undoubtedly have many ways of pursuing such complaints, which are after all, not uncommon. Or pay to run a notice in a local newspaper. Or see if any newsletter in the office tower in which she worked might carry a notice in their next edi tion. Or circulate an inter-office memorandum among the businesses occupying the same tower on the chance that the incident would be recognized by the driver or someone to whom that driver had later spoken. These are all legitimate and relatively inexpensive ways to proceed. They spring to mind readily. There are undoubtedly other reasonable efforts one could make, using a little imagination and innovation.
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7. CONCLUSION
The most important thing to remember when bringing a
claim which may involve Judgment Recovery is that the provisions of
the MVA with respect to Judgment Recovery should be read thoroughly
and carefully to ensure that all requirements of the MVA are met.
Judgment Recovery should be notified as quickly as possible, even
if an action has not been commenced, to give Judgment Recovery time
to investigate the claim and determine whether settlement is
possible. As with most claims, the more information that can be
supplied concerning a claim, the better off both the claimant and
Judgment Recovery will be.
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