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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.

JK

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