Before And After: NS Supreme Court Decision On CPP Benefit Deductability

The Nova Scotia Supreme Court has decided that Canada Pension Plan disability benefits are not deductible from damages of future income loss or lost earning capacity arising from a motor vehicle accident.

The recent decision of the Supreme Court of Nova Scotia in Holland v Sparks1 decides a question of law on whether s.113A of the Insurance Act applies to future Canadian Pension Plan (CPP) payments. This is a significant decision due to the impact on deductible amounts for injury claims resulting from motor vehicle accidents.

Background

In Holland v. Sparks, the plaintiff, Holland, was involved in a motor vehicle accident on May 15, 2013. She had been receiving CPP disability benefits as a result of injuries sustained by the accident. The question for the court was whether the CPP disability benefits Holland was to receive after trial were deductible from an award of damages for loss of earnings or loss of earning capacity. It was agreed by the parties that the benefits already received were deductible.

Nova Scotia Legislature enacted the Automobile Insurance Reform Act (also known as "Bill 1") in 2003. A purpose of Bill 1 was to lower motor vehicle insurance premiums and fund lowered premiums through limitations on the amounts claimable by individuals injured in motor vehicle accidents. One of these limitations included introducing deductions for certain categories of collateral benefits.

The plaintiff made a motion relating to this limitation under Nova Scotia Civil Procedure Rule 12. The question of law before the court was: Do the deductions from income loss and loss of earning capacity permitted by Section 113A of the Insurance Act, as amended, include CPP disability benefits received by or available to a Plaintiff after the trial of the action?

Section 113A of the Insurance Act 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.

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