Canadian Underwriter

How Nova Scotia is reducing auto tort awards

January 17, 2018   by Greg Meckbach

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A $40,000 award in a personal injury auto lawsuit has been cut down to zero because the plaintiff received Canada Pension Plan disability payments as a result of her injuries.

Shirley Tibbetts was riding her motorcycle in Northern Antigonish County, N.S. in 2011 when she collided with an oncoming truck driven by Reginald Murphy.

Tibbets sued Murphy, who was found to be two-thirds responsible by the Supreme Court of Nova Scotia in 2015. Tibbetts was found one-third liable, a ruling upheld by the Nova Scotia Court of Appeal in 2017. The Supreme Court of Canada announced Jan. 11, 2018 that it will not hear Tibbetts’ appeal.

Tibbetts argued that $469.80 a month in CPP disability benefits should not be deducted from her loss of income award. She started receiving the benefits on Mar. 1, 2012, after suffering several serious injuries resulting from the crash, including a hip fracture. She underwent several surgeries and was immobile after being released from hospital.

In addition to awarding Tibbetts $40,000 for loss of income, Justice David MacAdam of the Supreme Court of Nova Scotia ruled that Tibbetts was entitled to $10,000 for loss of housekeeping and valuable services, $15,000 in costs of future care, and $30,000 in general damages.

The Nova Scotia legislature passed the Automobile Insurance Reform Act in 2003, intended to help reduce auto insurance premiums, the Nova Scotia Court of Appeal noted.

As a result of that legislation, Section113A of the Nova Scotia Insurance Act now stipulates that, in an auto personal injury lawsuit, damages 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.”

Also, deductible from such awards is money received from an “income-continuation benefit plan if, under the law or the plan, the provider of the benefit retains no right of subrogation.”

Tibbetts argued that Nova Scotia’s Automobile Insurance Reform Act did not explicitly deduct CPP payments from tort awards. But the court ruled that deducting CPP disability payments meets the intent of the act because CPP disability benefits are for “loss of earning capacity” and the CPP has no right of subrogation.

Deducting CPP disability benefits from Murphy’s tort award “would result in an injured person being fully compensated, but not overcompensated, for her loss of income or earning capacity,” Justice Linda Oland of the Nova Scotia Court of Appeal wrote in her ruling in Tibbetts v. Murphy, released May 2, 2017.