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Deductibility of CPP From Award for Lost Past Earnings

Victor Lewin - Thursday, February 05, 2015

In Hollett v. Yeager, 2014 NSSC 207, the plaintiff, Mr. Hollett, was driving home from his place of employment at Granite Springs Golf Club. While travelling, he slowed down to wait for oncoming traffic to pass, in order to turn left into a parking lot. As he was waiting, his vehicle was struck from behind by the defendant, Mr. Yeager, who drove a Dodge Ram 2500. The evidence suggested Mr. Yeager was proceeding at approximately 70 - 80 kilometers per hour when he struck the plaintiff. As a result of the collision, Mr. Hollett suffered serious personal injury and his car was a complete write off.

The defendant admitted to causing the accident in question, however he denied causing the injuries Mr. Hollett reported. The defendant claimed Mr. Hollett developed injuries stemming from his failure to take an active role in his recovery. Mr. Hollett had developed chronic pain, which he claimed was a natural consequence of the accident. A multitude of experts provided opinions illustrating Mr. Hollett's lack of desire to participate in physiotherapy, exercise or psychological counseling. Beyond this, he resisted many of the suggestions of medical practitioners, instead believing nothing could be done for his situation. Many of the medical experts saw this as a considerable impediment to his progress.

When addressing the issue of damages, Justice Coady awarded general damages of $47,500, but reduced this amount by 20% for the failure to mitigate. The decision was made pursuant to the findings of the Nova Scotia Supreme Court in Grundy v. Boudreau. In Grundy, similar to the case at bar, the failure to mitigate was so overt or extreme that the court directly applied a deduction from the general damage award.

For past lost earnings, the court was forced to make an authoritative decision on Mr. Hollett's Canadian Pension Plan ("CPP") income. In particular, the court considered whether these payments are to be deducted from an award for past income. In answering this question, Justice Coady turned to McKeogh v. Miller, 2009 NSSC 394, a decision coming from the Nova Scotia Supreme Court where Justice Scaravelli found that CPP benefits are deductible. Justice Scaravelli referred to Meloche v. McKenzie, a decision rendered by the Ontario Courts. He found that "CPP disability benefits received by a plaintiff would be deductible from an award for past income loss". In a manner similar to that of Ontario, the Insurance Act legislation in Nova Scotia includes the same categories labeled "income loss and loss of earning capacity". Justice Scaravelli thus concluded that the law applied in the same manner. However, Mr. Hollett argued it would be a mistake to follow this line of reasoning based on subsequent decisions.

Mr. Hollett argued that McKeough v. Miller should not be followed because the decision, on which McKeough relied, was subsequently overturned by the Ontario Court of Appeal in Demers v. B.R. Davidson Mining and Development Ltd., 2012 ONCA 384. In Demers, the Court of Appeal held that there were two reasons supporting the conclusion that CPP disability benefits are not deductible. The first stems from the "principle that clear unambiguous legislative language is required to change common law rights". Here, additions to the term "loss of earning capacity" under the Bill 59 regime are not unambiguous in their change of the non-deductibility of CPP benefits through the common law. Second, looking at the wording of section 267.8 (1) 2, CPP benefits are not paid in respect of the incident; they are paid in respect of the individual's disability. Consequently, no deduction is necessary. Therefore, the reasons provided support the conclusion that CPP benefits are not deductible.

The reasoning above was not available to Scaravelli J when McKeough v. Miller was tried, leaving him without the ability to reference the Ontario Court of Appeal. Because of this, Justice Coady followed the Ontario Court of Appeal and rejected the conclusion inMcKeough. Thus, in this case he did not deduct CPP benefits from the $120,000 award for lost past earnings.

Drawing from Hollett v. Yeager, we can see the Nova Scotian case law developing in conjunction with a strong and persuasive argument coming from the Ontario Court of Appeal. Both cases support the pronouncement that CPP benefits are not to be deducted from an award for lost past earnings. Whether this line of thinking will carry forward into the future remains to be seen, but today the question seems fairly settled.

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