Legal Blog

SABS

Judgment creditors are, or should be, always on the lookout for assets to seize or income to garnish.

The insurance scheme in Ontario provides statutory accident benefits (SABS) for motorists injured in an accident, regardless of fault. Can a judgment creditor garnish the SABS of its judgment debtor? This issue arose in Lease Truck Inc. v Serbinek, a 2008 decision of the Ontario Superior Court of Justice.

Garnish

A judgment creditor garnished the insurance company of the judgment debtor, attempting to attach the SABS that the debtor was or would be receiving. The debtor brought a motion to set aside the garnishment, taking the position that the SABS could not be garnished. The insurance company took no position; it did not care whom it had to pay.

The debtor relied on a provision in the SABS schedule to the Insurance Act that stated, “The assignment of a benefit under this Regulation … is void.”

The debtor argued that a garnishment was the equivalent of an assignment and that, therefore, SABS could not be garnished.

The judge noted that the Insurance Act did not define either assignment or benefit, but that a legal dictionary did. Under it, an assignment is defined as a “transfer of rights or property” and a benefit is defined as “financial assistance that is received from an employer, insurance, or a public program in time of sickness, disability, or unemployment.” 

Using those definitions, “assignment of a benefit” meant a transfer of insurance financial assistance.

The judge, however, also quoted Frank Bennett, an esteemed author  of many legal texts – and a friend, so we are playing him up a bit – who defined garnishment in one of his texts as: “the legal method that permits an execution creditor (a garnishor) to seize or attach a debt owed by a third party (a garnishee) to the debtor. In other words, the creditor may be able to seize or intercept the payment due to the debtor before it is paid.”

Decision 

The judge held that “seize“ or “attach” is not the equivalent of an assignment and that a garnishment of SABS is, therefore, not prohibited under the Insurance Act. Accordingly, judge allowed the garnishment to continue. We agree. A seizure or an attachment is not voluntary; an assignment is.

Section 7(1.1) of the Wages Act states that “payments from an insurance or indemnity scheme that are intended to replace income lost because of disability shall be deemed to be wages…” The judge therefore limited the garnishment to 20% of the amount being paid in SABS to the extent that the SABS were income replacement benefits.