This is the second of two parts concerning a recent Nova Scotia Court of Appeal Decision. Part 1 may be viewed here.
Loss of Earning Capacity and Treatment of Canada Pension Plan Disability Benefits
As Ms. Tibbetts was working at the time of the collision at issue, the question of income loss was also a matter for determination at trial. Ms. Tibbetts’ pre-injury employment was that of a security guard. The trial judge found that the evidence had established that this work was “primarily desk-based and essentially sedentary”. Ms. Tibbetts’ evidence was that she tried, unsuccessfully to return to her pre-accident work but that her pain levels were too severe to allow her to maintain this, or any other, employment. The trial judge found that Ms. Tibbetts retained some capacity for sedentary employment, and as a result, determined that a loss of earning capacity award was more appropriate in the circumstances than a loss of income award. On this basis, His Lordship awarded the amount of $40,000 to compensate Ms. Tibbetts for her lost earning capacity.
An additional factor for consideration arose as a result of Ms. Tibbetts’ ongoing entitlement to the receipt of Canada Pension Plan (“CPP”) Disability benefits, which she had received due to the severity of her injuries and their ongoing impact on her functioning. When considering how the receipt of these benefits should be treated in light of the lost earning capacity award, the trial judge disregarded the well established common law collateral benefits rule which holds that private insurance benefits are not deductible from an award for future lost income in a personal injury matter. Instead, His Lordship interpreted s. 113A of the Insurance Act to find that Ms. Tibbett’s CPP Disability payments were received in respect of her motor vehicle accident and were payable on account of lost earning capacity. This was an explicit rejection of reasoning applied by the Ontario Court of Appeal in a case called Demers v. B.R. Davidson Mining & Development Ltd., wherein the Court had concluded that CPP disability benefits were not paid “in respect of the incident” but rather “in respect of the disability”, under a materially identical provision of the Ontario
Insurance Act. Instead, the Trial Judge in Tibbetts concluded CPP disability benefits were indeed received by Ms. Tibbetts “in respect of the incident”, the word “incident” referring to the motor vehicle accident, and on account of lost earning capacity under s.113A of the Act.
The practical effect of this determination was that Ms. Tibbetts’ CPP Disability payments were therefore deductible from her loss of earning capacity award. The Court required Ms. Tibbetts to remit her CPP Disability benefits to the Defendant Murphy’s insurer until they were fully compensated for the $40,000 in loss of earning capacity damages awarded to Ms. Tibbetts. In other words, Ms. Tibbetts was not entitled to keep any of her ongoing CPP Disability benefits money until she had repaid the Defendant insurer the sum of $40,000.
Following the issuance of this decision, Ms. Tibbetts’ legal counsel appealed to the Nova Scotia Court of Appeal appealing the Trial Judge’s decision on apportionment of liability, assessment of general damages, interpretation of s.113A of the Insurance Act, and a procedural question related to the calling of witnesses that we will not address for the purposes of this article.
Apportionment of Liability and Assessment of General Damages
The Court of Appeal were unable to find any “palpable and overriding” error on the part of the trial judge in reaching the Court’s decision on apportionment of liability and dismissed this ground of appeal. This had the effect of upholding apportionment of fault at 1/3 attributable to Ms. Tibbetts and 2/3 to the Defendant, Murphy. With respect to assessment of general damages, the Court of Appeal determined that a review of case law showed that the trial judge’s assessment was not “wholly erroneous” and “within the range of acceptable awards”. On that basis, the Court of Appeal also declined to intervene, upholding the trial award of $30,000 in pain and suffering damages.
Interpretation of s.113A of the Insurance Act and Treatment of Canada Pension Plan Disability Benefits
The bulk of the Court of Appeal’s decision on this particular ground of appeal focused on the interpretation of s.113A of the Insurance Act. The Court distinguished the applicability of a previous decision of the Supreme Court of Canada in Sarvanis v. Canada on a similar point, and ultimately decided that the conclusion of whether CPP Disability benefits were paid “in respect of the incident” (and therefore deducible pursuant to s.113A of the Insurance Act) was a question of fact, appropriately determined by the Trial Judge.
And finally, the Court of Appeal focused on the legislative intent behind the enactment of s.113A, that of reducing automobile insurance premiums. This conclusion also informed the Court’s finding that the deduction of CPP Disability benefits furthered this legislative intent, thus changing the common law collateral benefits rule.
It is our opinion that this change will have a harsh effect on already vulnerable injury plaintiffs, further reducing any compensation they are entitled to received as a result of the negligent acts of someone else.