Executive Summary: Key Legal and Evidentiary Issues

• Insurer sought default judgment after settling a motor vehicle claim under uninsured motorist provisions.

• The uninsured defendant was noted in default but did not participate in the litigation.

• Certas Direct attempted to recover $105,000 from the uninsured defendant based on the assigned claim.

• Court required evidence demonstrating the reasonableness of the settlement amount.

• Lack of evidence on plaintiff’s injuries or losses prevented court from granting judgment.

• Certas was given 21 days to submit further evidence or risk dismissal of the motion.

Background of the parties

Manogaran Kumarasamy, the plaintiff, was involved in a rear-end motor vehicle accident. The at-fault driver, Gerard Akosa-Sarpong, was not insured and did not respond to the legal proceedings. As a result, he was noted in default. Kumarasamy held a policy with Certas Direct Insurance Company, which included uninsured and underinsured motorist coverage. The plaintiff pursued a claim against Certas under this coverage.

Settlement and assignment of claim

Certas settled the claim with Kumarasamy for $105,000. As part of that settlement, Kumarasamy assigned his legal rights against Akosa-Sarpong to Certas. This allowed Certas to step into Kumarasamy’s position and seek recovery of the settlement amount directly from the uninsured defendant.

Motion for default judgment

Following the assignment, Certas brought a motion seeking default judgment against Akosa-Sarpong in the amount of the settlement. Since the defendant had already been noted in default and did not contest the action, the focus shifted to whether the insurer could obtain judgment without needing to provide strict proof of damages.

Use of settlement as proxy for damages

The court referred to the legal principle that in subrogated or assigned claims, a settlement amount may be used as a proxy for actual damages, provided it is shown to be reasonable. Prior case law, including Bell v. Chatrie and MacKean v. Royal & Sun Alliance Insurance Co., supports this approach. However, the burden remains on the party seeking judgment to offer evidence showing the settlement aligns with what the plaintiff likely would have recovered at trial.

Insufficient evidence provided

In this case, the only information before the court was the fact of the settlement and the allegations in the pleadings. There was no documentation regarding the nature of the injuries, extent of the damage, wage loss, or any other basis upon which the court could assess whether the $105,000 was reasonable. The court acknowledged that reaching the settlement during a pretrial conference implied an adversarial process but held that it was not enough on its own.

Court’s ruling and next steps

Justice Callaghan declined to grant default judgment on the current record due to lack of supporting evidence. Certas was granted 21 days to submit additional materials substantiating the settlement amount. If no further evidence is submitted within that period, the motion will be dismissed.  No final winner yet. The court did not grant Certas Direct Insurance Company's motion for default judgment.