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Ontario Court provides clarity on the deductibility of “non-earner benefits” in tort claims

  • Étude de marché 15 novembre 2022 15 novembre 2022
  • Amérique

  • Pratiques professionnelles

The Ontario Superior Court of Justice clarifies that non-earner benefits are not deductible from a plaintiff’s loss of income award in a tort claim.

In Ontario, parties injured in an automobile accident can receive “no fault” first-party benefits through statutory accident benefits (SABs) and simultaneously sue the “at fault” driver in tort law. There is usually overlap between the compensation provided to an accident victim from SABs and the award of damages in a civil proceeding.

Kolapully v TTC et al.[1], a recently released decision of the Ontario Superior Court of Justice, offers some much-needed clarity on whether “non-earner benefits” can be deducted from a plaintiff’s potential award for loss of income in their tort claim.

Facts

After being struck by a bus while crossing the street, Shoba Kolapully sued the Toronto Transit Commission (TTC) and one of its drivers. Ms. Kolapully suffered extensive injuries that impacted her ability to work. At trial, she was awarded $200,000 in damages for past loss of income, less a 25% reduction for contributory negligence as the jury found that Ms. Kolapully had crossed the road without having the right of way.

The TTC defendants sought to further reduce Ms. Kolapully’s award, pursuant to section 267.8 of the Insurance Act. If the plaintiff’s injuries arise from the use or operation of a motor vehicle, section 267.8 requires a tort award to be reduced by the benefits received by the injured party in a corresponding SABs category, including income loss and loss of earning capacity. Prior to trial, Ms. Kolapully had received $95,354 in non-earner benefit payments in SABs.

Superior Court’s Decision

In a decision released on October 24, 2022, the Court held that non-earner benefit payments are not considered statutory benefits for income loss, and as a result, these payments were not to be deducted from Ms. Kolapully’s past loss of income award. In coming to this conclusion, Justice Sugunasiri followed the Court of Appeal’s decision in Walker[2]: although non-earner benefits are a statutory benefit, they are to compensate for loss of enjoyment of life rather than for loss of income.

Moreover, Justice Sugunasiri found that the changes to the SABs since Walker did not alter the Court of Appeal’s analysis in Walker, where non-earner benefits are deemed non-deductible from an award for past loss of income.

Furthermore, Justice Sugunasiri clarified that the Court of Appeal’s decisions in Cadieux[3] and Walker are contradictory on the issue of the deductibility of non-earner benefits. The Court of Appeal’s discussion in Cadieux—which found that non-earner benefits were in the same “silo” as income replacement benefits and therefore deducted from income replacement benefits—was made in obiter and is therefore not binding on the Court. Relying upon the Supreme Court of Canada reasons in R. v. Henry, 2005 SCC 76, [2005] 3 S.C.R. 609, Justice Sugunasiri concluded that when considering passages found in obiter—as in Cadieux on this issue—a trial judge should contemplate what the case “actually decides.” In Cadieux, the deductibility of non-earner benefits was not what the Court of Appeal was deciding. Accordingly, only the reasons in Walker were binding on the Court.

Takeaways

The Kolapully decision resolves the uncertainty surrounding the deductibility of non-earner benefits. The payments of these benefits are not to be deducted from an income loss award in tort.

Amounts received for non-earner benefits are to compensate plaintiffs for distinct losses, and it is not a matter of double recovery.  

Fin

Auteurs supplémentaires:

Jasmine Mahal, Articling Student

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