Thanks.

I understand the nature of the collateral source rule. I just don’t think it is legitimate. If the purpose of damages in both tort and contract is to “put the injured party in the position he would have been had the wrong not occurred,” than the collateral source rule --- in the absence of subrogation --- provides a windfall to the plaintiff. The arguments made in favor of the private insurance exception are really unconvincing. There’s no evidence that allowing double recovery encourages people to buy insurance. People buy insurance for peace of mind, not because they think they’re going to get a double payment. Indeed, my guess is that most people do not know about the collateral source rule when they take out a policy. I do not think that there is a person out there who has ever bought a policy of insurance hoping to be able to have a double recovery. On the contrary, I think most people taking out insurance do so so as to receive quick payment for losses as well as payment for losses that might not be recoverable from any defendant. It’s a question of risk aversion, rather than one of encouraging people to buy insurance on the off chance that they will get a windfall.

The other arguments in favor of the collateral source rule, namely deterrence and punishment, are equally unconvincing since damages are not supposed to be about punishment. Canada’s former CJ McLachlin has also opined, rightfully in my view, that in the modern age where astronomical tort damages can be caused by “a moment’s inattention,” deterrence or punishment seems out of proportion to fault.

My real concern is in contract. The Canada Supreme Court has recently permitted several contracts plaintiffs to have a windfall where there is no right of subrogation. In Waterman, the court allowed a wrongfully discharged employee to have both his pension and lost wages at the same time. This was so even though the pension plan clearly stated that in employee could not have both.

As a result, whatever the justification for the collateral source rule in tort, the rule seems in applicable in cases of contract like these, where expectation, rather than deterrence or punishment should be the concern.

My concern in asking the question was whether there was a way for courts to ascertain the existence of subrogation rights before awarding damages. If there is a right to subrogation, then allowing the plaintiff to keep damages from the defendant would be appropriate, since the insurers would ultimately clawback the amounts paid. If there is no right to subrogation, then the court ought to know that, and be permitted to reduce damages due from the defendant by the amounts received from the insurers.

From the answers received so far, it appears that my idea is a rather weak one, since it isn’t clear to me that courts have systematically considered the question of subrogation at the damages phase.

Thanks very much for your thoughts, however,
-----------------------------------------
Matthew P Harrington
Professeur
Faculté de droit
Université de Montréal
3101 chemin de la Tour
Montréal, Québec H3T 1J7
514.343.6105
www.commonlaw.umontreal.ca
----------------------------------------

From: Wright, Richard<mailto:rwright@kentlaw.iit.edu>
Sent: June 21, 2018 11:22 AM
To: Gerard Sadlier<mailto:gerard.sadlier@gmail.com>
Cc: Harrington Matthew P.<mailto:matthew.p.harrington@umontreal.ca>; obligations@uwo.ca<mailto:obligations@uwo.ca>
Subject: Re: Subrogation & Litigation Question

Under traditional and justified common law principles, Gerard is correct: the availability of recovery from insurance or some other third source does not and should not affect recovery under the tort claim. These are two independent claims, in tort and contract. The insured has paid for the contract coverage (through private insurance, employment contract, or social insurance taxes) and thus he, rather than the tortfeasor, should obtain the benefit of that contract, just as he should if it were recovery under a Los Vegas bet regarding future injury or loss. This is the so-called "collateral source" rule. The insurer, however, may have (and usually does have) a subrogation claim against the tort recovery proceeds, by a term in the insurance contract (or the social insurance provisions).

However, this has been changed in many US states as one of the planks of so-called "tort reform," which allows the tortfeasor, rather than the insured, to obtain the benefit of the collateral source through reduced tort liability. Unjust and inefficient.


On Wed, Jun 20, 2018 at 7:43 PM, Gerard Sadlier <gerard.sadlier@gmail.com<mailto:gerard.sadlier@gmail.com>> wrote:
Hi Matt

As a matter of Irish law, the answer is that it should make no
difference as a matter of principle. Whether a party is insured or
has received a pay out under an insurance policy, so that the claim is
being pursued by insurers should not be relevant to quantum.

In practice, the Court always knows if the claim is being pursued for
or on behalf of insurers.

Kind regards

Ger

On 6/20/18, Harrington Matthew P. <matthew.p.harrington@umontreal.ca<mailto:matthew.p.harrington@umontreal.ca>> wrote:
> This might sound like a rather naïve question, but I hope colleagues will
> bear with me if it is:
>
> I am looking into the problem of subrogation and compensating advantage.
> Specifically, I`m wondering if --- at the damages phase --- it would be
> appropriate for a court to enquire as to whether (1) there is insurance, (2)
> whether the insurers have paid out prior to trial, and (3) whether the
> insurers have a right of subrogation.
>
> I`m not assuming any complicated set of facts. Simple tort or contract
> claim. Liability is admitted or determined.
>
> I’d appreciate any thoughts on this. And, as I say, if this is an elementary
> question the answer to which I ought to know already, I hope you`ll excuse
> my ignorance.
>
> Kind regards.
>
> Matt
>
>
>
> -----------------------------------------
> Matthew P Harrington
> Professeur
> Faculté de droit
> Université de Montréal
> 3101 chemin de la Tour
> Montréal, Québec H3T 1J7
> 514.343.6105
> www.commonlaw.umontreal.ca<http://www.commonlaw.umontreal.ca>
> ----------------------------------------
>
>