Assessment of Damages after Default Judgment: What’s the Burden of Proof?
Reasons for judgment were issued recently in an interesting case: MacKean v. Royal & Sun Alliance Insurance Company of Canada
The plaintiffs were injured in a car accident with an uninsured driver. The plaintiffs settled their claim against their own insurer under the uninsured driver provisions of their own automobile policy. When the claim was settled, the plaintiffs assigned their claim to their insurer RSA.
The uninsured driver was sued but failed to file a defence and had a default judgment entered against him.
RSA then brought a motion for assessment of damages against the uninsured driver.
On the motion RSA argued that all the company had to prove was that the settlement paid was “reasonable”. If so RSA asked that judgment be entered against the uninsured driver in the amount of the settlement.
Justice Wood characterized the insurance company’s argument as follows:
“I interpret the position of the plaintiffs in this litigation to be that for a reimbursement claim by an insurer, the normal burden of proving damages on an assessment should be relaxed. For the reasons that follow I have concluded that this position is wrong in law”
Justice Wood reviewed the Civil Procedure Rules and the various avenues by which an assessment of damages can take place.
Wood J. pointed out:
“…the procedure followed for the assessment process does not change the substance of the hearing. The burden of proof and the rules of evidence remain the same, whether the matter is determined on affidavits or with witness testimony.”
At a hearing for assessment of damages, a party must prove their losses on a balance of probabilities using admissible evidence. It does not matter whether the assessment takes place by way of motion, application or a trial. Wood J paragraph 21
Justice Wood concluded his analysis of the Civil Procedure Rules and the relevant authorities “I agree that the assessment of damages ought to be carried out by the Judge based upon the evidence presented.”
Justice Wood pointed out that there may be a variety of factors that influence an insurance company’s decision to settle a claim, many of which have nothing to do with the admissible evidence or the burden of proof.
The decision is interesting because one might logically assume if a defendant fails to participate in a legal proceeding by defending the matter then that defendant should be bound by any compromise achieved by the remaining parties.
Justice Wood points out that this is not the case. Even where a defendant has failed to defend a proceeding and had a default judgment entered, the defendant is still entitled to participate in the assessment of damages and the plaintiff is still required to prove those damages on the grounds of probabilities through admissible evidence.