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CPP benefits received after a trial deductible from auto injury lawsuit awards, appeal court rules


January 28, 2019   by Greg Meckbach




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Has your client been successfully sued after a vehicle accident in Nova Scotia? The damages may be reduced if the claimant can get disability benefits in the future through the Canada Pension Plan, a court has ruled.

Sparks v. Holland, recently released by the Nova Scotia Court of Appeal, shows disagreement among judges about how to interpret a 15-year-old amendment to provincial auto insurance law.

Section 113A of the Insurance Act applies in cases where a motorist is sued by an accident victim and the court awards damages for income loss and loss of earning capacity. That section essentially says that damages are reduced, in some cases, if the plaintiff is also getting benefits under an income-continuation benefit plan. The intent is to prevent double recovery.

That section of the act was tabled by the legislature in 2003 “to help reduce the sky-rocketing automobile insurance premiums being charged in Nova Scotia,” Judge David Farrar of the Nova Scotia Court of Appeal wrote in Sparks v. Holland, released Jan. 18.

Catherine Holland was injured in 2013 in a vehicle accident. Holland filed a lawsuit in 2016 against Josh Sparks. Holland’s injuries from the accident were serious enough that she receives Canada Pension Plan disability benefits.

Sparks and Holland disagreed on whether CPP disability benefits received by or available to the plaintiff [in this case, Holland] after a trial in a lawsuit are deductible from an award for income loss and loss of earning capacity. The question was put to Judge Gerald Moir of the Supreme Court of Nova Scotia.

Sparks argued CPP disability benefits should be deductible from the award, while Holland said they should not be.

Last June, at the lower court level, Justice Moir ruled in favour of Holland, a ruling that was overturned on appeal. Justice Moir took an “overly technical approach to syntax and tense,” Nova Scotia Court of Appeal Justice David Farrar wrote in the appeal court decision overturning the ruling.

Section 113A states: “In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the damages to which a plaintiff is entitled for income loss and loss of earning capacity shall be reduced by all payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for income loss or loss of earning capacity under the laws of any jurisdiction or under an income-continuation benefit plan if, under the law or the plan, the provider of the benefit retains no right of subrogation.”

Justice Moir observed that the main verb in section 113A is: “shall be reduced.”

That verb is not in the future tense, he noted. “It is present tense, indicative mood, and passive voice,” he wrote. “The subordinate verb phrase ‘were available’ is past tense. It points to the past. Immediately, s. 113A tells you when in the past:  ‘before the trial of the action.’”

The text of that section, “especially ‘payments… that were available before the trial,’ does not extend to benefits only available after the trial,” Justice Moir added.

But if a judge interprets the law this way, “CPP disability benefits would be deductible before the trial of the action, and would not be deductible after the trial of the action,” Justice Farrar wrote for the appeal court. “It would be little more than a token gesture for the legislature to eliminate double recovery to the date of trial, and to permit double recovery thereafter.”