On May 2, 2017, the Nova Scotia Court of Appeal issued a significant decision in Tibbetts v. Murphy, 2017 NSCA 35, on the proper interpretation of s. 113A of the Insurance Act. Specifically the issue was whether or not Canada Pension Plan Disability benefits (“CPPD”) should be deducted from tort awards for loss earning capacity in motor vehicle accident cases.
The Court of Appeal ruled that s. 113A changed the law: CPPD payments are now deductible from damages awards in motor vehicle accident cases, if the payments are made in respect of the accident.
The Court also upheld the trial judge’s award of $30,000 in general damages for pain and suffering on the grounds that the plaintiff’s fractured hip, tibia, fibula, and soft tissue injuries were persistently troubling in the manner contemplated by Smith v. Stubbert.
Decision at Trial (2015 NSSC 280)
The plaintiff, Ms. Tibbetts, was injured in July 2011 when the motorcycle she was riding collided with a truck. Her injuries included a dislocated and fractured hip, a fractured left tibia and a fractured left fibula. The trial judge apportioned fault for the accident two-thirds to Ms. Tibbetts and one third to the defendant, Murphy, who was driving the truck.
Ms. Tibbetts’ damages included awards of: $30,000 for general damages and $40,000 for loss of earning capacity. The trial judge held that Ms. Tibbett’s CPP disability benefits were deductible from the award of damages for lost earning capacity.
Court of Appeal’s Decision (2017 NSCA 35)
The majority of the Court’s reasons are devoted to the interpretation of s. 113A of the Insurance Act.
First, the Court examined the Legislative’s objective when it enacted the Automobile Insurance Reform Act, including what is now s. 113A of the Insurance Act, in 2003. Automobile insurance premiums were “sky-rocketing” in 2003 when the Legislature introduced a package of reforms, including s. 113A. The Court determined that “the objective [of the Act] was to reduce those premiums and to reduce damage awards”.
Second, the Court examined the meaning of s. 113A. This part of the Court’s reasons turned on the meaning of two phrases in s. 113A: “loss of earning capacity” and “in respect of the incident”. The Court ruled that CPP disability payments are for loss of earning capacity. The Court also held that whether the payments were made “in respect of the incident” raises a question of fact. In this case, Ms. Tibbett’s injuries were “inseparable from the incident, that being the collision”.
Third, the Court concluded that its proposed interpretation would result “in an injured person being fully compensated, but not overcompensated, for her loss of income or earning capacity”. In the Court’s view, this outcome facilitates the Legislature’s intention to reduce premiums.
The bottom line is that CPPD payments are deductible from awards for loss of earning capacity and loss of income in motor vehicle accident cases.
The Court also dealt with the plaintiff’s appeal from her award for general damages for pain and suffering. The plaintiff’s hip, tibia, and fibula were fractured in the accident. The trial judge awarded the plaintiff $30,000 in general damages, concluding that her pain and discomfort where “‘persistently troubling’ in the manner contemplated by Smith v. Stubbert”.
The plaintiff alleged that erred by relying solely on Smith v. Stubbert, the leading case on persistently troubling but not totally disabling soft tissue injuries. The Court of Appeal upheld the award of $30,000. In so doing, the Court noted that the trial judge “did not accept much of the evidence that the [plaintiff] presented”.
Implications of the Court of Appeal’s decision
The Court of Appeal’s decision clarifies the law: CPP disability benefits are deductible from awards for loss of earning capacity or loss of income when there is a factual connection between the accident and receipt of CPP disability benefits.
With respect to general damages, the Court’s decision reaffirms the wide latitude that trial judges have to assess the quantum of general damages in an individual case. In particular, a trial judge may apply Smith v. Stubbert outside of the context of soft tissue injuries.