The Nova Scotia Court of Appeal overturned a motion decision in Sparks v Holland, 2019 NSCA 3 ("Sparks"), holding that Canadian Pension Program ("CPP") disability payments are deductible from future loss of income and earning capacity.

BACKGROUND

The respondent, Catherine Holland, was involved in a motor vehicle accident with the appellant, Josh Sparks, on May 15, 2013. As a result of the injuries suffered in the motor vehicle accident, Ms. Holland received CPP disability benefits.

Ms. Holland commenced a motion against Mr. Sparks in 2016 to determine whether CPP disability benefits could be deducted from future loss of income or loss of earning capacity. The motion judge held that CPP disability benefits were not deductible from future loss. The motion judge stated that Tibbetts v Murphy, 2017 NSCA 35 ("Tibbetts") did not specifically address the issue of deductibility of CPP benefits from future earnings or earning capacity, and was therefore not binding on him.1

Mr. Sparks appealed the motion judge's decision.

THE DECISION

At issue in Sparks was whether the motion judge was bound by Tibbetts and whether the motion judge erred in its interpretation of the s. 113A of Insurance Act, RSNS 1989, c 231 ("Act").

Issue 1: Did the motion judge err in concluding that he was not bound by Tibbetts?

Justice Farrar, writing for the Court of Appeal, stated that the issue of CPP deductibility from future earnings was implicitly dealt with in Tibbetts.

The trial decision in Tibbetts held that s. 113A of the Act requires the deduction of future CPP disability payments from awards of future loss,2 a conclusion with which the Court of Appeal concurred.3 In this regard, Justice Farrar held that Tibbetts was indistinguishable from the present case, and therefore a binding precedent.4

Issue 2: Did the motion judge err in his interpretation of s. 113A of the Act?

The Court of Appeal noted that modern statutory interpretation requires answering the following three questions:

  • What is the meaning of the legislative text?
  • What did the legislature intend?
  • What are the consequences of adopting a proposed interpretation?5

What is the meaning of the legislative text?

In determining the meaning of the legislative text, the court assessed the purpose of s. 113A of the Act, thereby answering the first and second questions in a single analysis.

The court noted that an interpretation that would tend to frustrate or defeat the legislature's purpose should be rejected.6 The court referred to Tibbetts, which held that the purpose of s. 113A of the Act was to control increasing insurance premiums and to eliminate double recovery.7 The court noted that limiting the deduction of CPP disability payments to only those amounts that were paid would frustrate the legislature's intended purpose for s. 113A.

The court held that the recitations "loss of earning capacity" and "payments ...available before the trial of the action" in s. 113A should be interpreted within the context of applicable case law. Tibbetts and other loss of earning capacity cases suggest that loss of earning capacity is a future-oriented loss and that the world "available" refers to payments that a person has yet to receive.8 In this regard, the court noted that the recitation "loss of earning capacity" in s. 113A should be treated as referring to a prospective damage award.

The court concluded that section 113A, read in its proper context, requires the deduction of future CPP payments.9

What are the Consequences of the Proposed Interpretation?

Relying on Tibbetts, the court held that deducting CPP disability benefits under s. 113A would be in line with the section's underlying intention to reduce automobile insurance premiums.10 The court noted that the motion judge's interpretation of s. 113A would only serve to permit double recovery and would have the effect of giving defendants less incentive to settle claims.11

COMMENTS

The question surrounding deductibility of CPP disability benefits in motor vehicle accident cases has been the subject of competing interpretations over the past decade. This unanimous decision from the Court of Appeal in Sparks is significant for clarifying the law in this area and carries with it major implications in calculating future loss of income in personal injury cases arising from motor vehicle accidents.

This article was written with assistance from Trevor Wong, an Articled Clerk in Cox & Palmer's Halifax office.

Footnotes

1. Holland v Sparks, 2018 NSSC 136, at paras 34 and 75

2. Tibbetts v Murphy, 2015 NSSC 280, at para 86

3. Tibbetts v Murphy, 2017 NSCA 35, at para 58

4. Sparks v Holland, 2019 NSCA 3, at para 25

5. Sparks v Holland, 2019 NSCA 3, at para 29

6. Ibid, at para 44

7. Ibid, at para 38

8. Ibid, at paras 54 and 61

9. Ibid, at para 69

10. Ibid, at para 77

11. Sparks v Holland, 2019 NSCA 3, at paras 80 and 81

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