Ruling on a question of law – is a severance package received by the plaintiff deductible from the amount awarded for past and future loss of income. The court found that the private insurance exception to the general rule against double recovery was applicable and the severance package was not deductable from any amount awarded for loss of income.

[2014] O.J. No. 6336

2014 ONSC 7522

Ontario Superior Court of Justice

G. Mew. J.

December 17, 2014

The plaintiff was injured when he fell from a golf cart and suffered a traumatic head injury. After hospitalization and rehabilitation, the plaintiff returned to his employment. He experienced two demotions and was ultimately terminated approximately five and a half years after the accident. The severance packaged accepted by the plaintiff on termination specified inter alia payment in biweekly instalments “as per current practice” for a maximum of 104 weeks.

The matter proceeded to trial before a jury and the plaintiff sought a ruling on the issue of whether the severance package should be deducted from any amounts which the jury awarded the plaintiff for loss of income.

The plaintiff argued the private insurance exception to the general rule against double recovery was applicable.

The defendants argued a proper application of the rule against double recovery required the deduction of the severance package.

The court referred to Young v. Sutherland, [2000] N.S.J. No. 327, where the court declined to deduct a severance package on the basis the benefits obtained in the severance package were not gratuitous payments but were obtained as a result of the plaintiff giving up his rights in exchange for the severance package.

The court found that the plaintiff’s severance package was more than simply an agreement to continue to pay the plaintiff for two years. The benefits obtained by the plaintiff were the result of him giving up his legal rights as a long-term employee. The court found that the application of the insurance exception to the severance package received by the plaintiff in Young v. Sutherland was consistent with the flexible approach to the compensation principle outlined by the court in IBM v. Waterman, 2013 SCC 70. And as a result, the plaintiff’s severance package was not deductible from any award made for loss of income.