The Alberta Court of Queen’s Bench’s recent decision in Bexson v Williams is the first Alberta case to interpret and apply the legislation relating to advance payments under s. 581(5) of the Insurance Act, RSA 2000, c I-3 and s. 5.6(3) of the Fair Practices Regulation, Alta Reg 382/2003.Section 5.6 of the Fair Practices Regulation sets out the initial criteria, that an applicant applying for advance payment must establish that:He/she is a claimant (plaintiff) who is or alleges to be entitled to recover losses or damages from an insured who is covered by a motor vehicle liability policy; andAs a result of the injuries of the claimant, the claimant is unable to pay for the necessities of life; orThe payment is otherwise appropriate.The Court, in Bexson, added further clarification to the requirements:Either the Defendant has admitted he is liable or else it is probable that he will be found to be liable given the available evidence;The claimant is unable to pay for his life necessities or the advance payment is appropriate for other reasons, as determined by the Court; andThat the advance payment will be less than the amount that the Plaintiff is likely to recover.In determining a Plaintiff’s entitlement to an advance payment, the Court is mostly concerned with protecting an injured party who has established that, because of the injuries that he has suffered, the Plaintiff is unable to pay for necessities of life (such as utility bills or rent) and these financial consequences may prevent the Plaintiff from pursuing a claim. The Plaintiff must demonstrate, on a balance of probabilities, that his inability to meet the necessities of life is more likely than not caused by the accident in which he was involved.If the injuries caused by the accident are not sufficiently connected to the Plaintiff’s inability to pay for life necessities, entitlement to an advance payment may still be found if certain circumstances are met.The Court in Bexson v Williams found that the legislation providing for advance payments should be interpreted liberally.The Court should not be restricted to ordering lump sum payments, but instead can rule for monthly payments to a Plaintiff. Further, the Court is permitted, by the legislation and regulations, to order advance payments on any condition it deems appropriate. This allows courts, for instance, to award advance payments, in a sum that would not exceed the maximum amount that the applicant is likely to recover, for virtually any social policy reason they find appropriate.In Bexson v Williams, the Court found that the Applicant would likely not be awarded more than $75,000 and, even though the Court found that the Applicant’s injuries were likely not sufficiently caused by his accident only, still awarded him an advance payment of $35,000. This amount was payable in $5,000 increments, once per month for 6 months, to enable the Applicant to pay his utilities and other bills. Connor Glynn, a partner with Parlee McLaws LLP, represented the successful applicant.In light of the Court’s decision in Bexson v Williams, insurers may want to consider taking action before such an application for advance payment is made. While the idea of giving money to claimants without a final settlement may seem counter-intuitive, there are certainly some benefits in doing so on certain files.Section 636 (formerly Section 321) of the Insurance Act, sets out a mechanism whereby an insurer can make without prejudice advance payments to a claimant. In the appropriate circumstances, such an action can be a useful device to establish goodwill with the claimant, which, in turn, could become a stepping stone to settlement and resolution of the matter.THINGS TO CONSIDERAn insurer does not need a claimant’s consent or agreement to make an advance payment. Having said that, effective advance payments can be made through agreements between the parties, or even through letters crafted unilaterally by the insurer. The letter should include provisions that state that the payment is made on a without prejudice basis and without an admission of liability, as well as a clear statement that the amount of the payment will be deducted from the claimant’s award at the end of trial and before judgment is entered.What this means for you?In conclusion, advance payments can be of benefit to both the insurer and the claimant, and may be a viable option to consider in certain cases, particularly in consideration of the Court’s direction in Bexson v Williams. Advance payments can also provide insurers an opportunity to obtain documentary production, as insurers may issue a payment under s. 636 in exchange for the production of specific material from the claimant that is of significant value in the investigative process. Finally, this has financial benefits for an insurer, as pre-judgment interest will stop running on the amount of the advance payment.Disclaimer This post is intended to provide general information concerning developments in the law and is not intended to provide legal advice in respect of any particular situation.