Court File and Parties

Court File No.: 2493/17 Date: 2021-01-04 Superior Court of Justice – Ontario

Re: Blake Finnemore, Plaintiff And: Jordan Hyde and David Drydak, Defendants

Before: Justice S. Nicholson

Counsel: J. Virtue, for the Plaintiff N. Tahir, for the Defendants

Heard: December 16, 2020

Reasons for Decision

NICHOLSON J.:

[1] The defendants in this motor vehicle accident action bring a motion to determine an issue before trial pursuant to rule 21.01 (1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, namely whether the plaintiff’s disability pension benefits are deductible from his income loss claim pursuant to s. 267.8(1) of the Insurance Act, R.S.O. 1990, c. I. 8, as amended.

[2] Alternatively, the defendants rely on rule 20, and frame this as a motion for partial summary judgment of an issue.

[3] The characterization of the benefits in question is contentious. They are described in different manners throughout the plaintiff’s Pension Plan booklet. For simplicity, I will refer to them as “Union benefits” until resolving the issue below.

[4] The underlying motor vehicle accident occurred on September 3, 2016. Accordingly, the version of the Insurance Act that applies to motor vehicle accidents occurring on or after September 1, 2010 governs this case.

[5] I note that the plaintiff was born on March 23, 1962. He was 54 years of age at the time of the accident and 58 when he became eligible for the Union benefits.

Rule 21.01 or Rule 20

[6] Rule 21.01 reads as follows:

To Any Party on a Question of Law

21.01 (1) A party may move before a judge,

(a) for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs; or

(b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence,

and the judge may make an order or grant judgment accordingly.

(2) No evidence is admissible on a motion,

(a) under clause (1)(a), except with leave of a judge or on consent of the parties;

(b) under clause (1)(b).

[7] Both parties consented to the filing of affidavit evidence pertaining to the plaintiff’s Union benefits.

[8] The parties refer to Gokstorp v. TD Insurance Meloche Monnex (No. 3) (2010), 102 O.R. (3d) 239, 2010 ONCA 313 for guidance on the application of rule 21.01. In that case, the motion judge had ruled that an exclusion clause in an insurance policy did not apply to the increased costs of repairing fire damage necessitated by bringing the building into compliance with the Building Code and by-laws.

[9] In dismissing the insurer’s appeal, the Court of Appeal noted that the Order and reasons of the motion judge did not rest upon hypothetical or contingent facts, nor did they dispose of any novel point of law. Accordingly, the judge was entitled to make the determination under rule 21.

[10] Rule 20.04 provides as follows:

DISPOSITION OF MOTION:

20.04 (2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

(4) Only genuine issue is question of law —Where the court is satisfied that the only genuine issue is a question of law, the court may determine the question and grant judgment accordingly, but where the motion is made to a master, it shall be adjourned to be heard by a judge.

[11] Both counsel indicated their preference to proceed under rule 21.01. While rule 20 may also be applicable, the parties were not seeking a “judgment” but merely an answer to a question of law which would assist them in resolving the case. Accordingly, I agreed that the motion would proceed pursuant to rule 21.01, with affidavit evidence filed on consent of both parties.

[12] In my view, the factual record is complete, and a resolution of this issue will greatly assist the parties in resolving the case without a trial.

The Benefits in Question

[13] As noted at the outset, the characterization of the Union benefits occupied much of the argument before me.

[14] Prior to the accident, the plaintiff was a member of the Carpenters Union Local 1256 and was engaged in manual labour and construction work as a general carpenter. As a member of the Union, contributions were made to a private pension plan based on his years of membership and contributory service. The pension fund is administered by the Union for the benefit of the membership. The plan is part of the negotiated collective agreement established for the membership.

[15] The defendants included a “Summary Description of the Carpenters’ Local 1256 Pension Plan” (“the booklet”) with their affidavit. The booklet is not the actual pension plan, but an easy to read guide intended to assist the Plan’s members to understand how the Plan works. It specifically is described to not be a substitute for the Plan’s official provisions. Unfortunately, the actual pension plan was not in evidence.

[16] It is stated that “[t]he purpose of our Plan is to provide you with a definite monthly income after retirement for your lifetime which will supplement any Government pension that you may be entitled to receive from the Canada Pension Plan (the “CPP”) and Old Age Security (the “OAS”).

[17] Section 11 of the booklet is entitled “Can I Retire When I Become Disabled?”. It reads as follows:

11. Can I Retire When I Become Disabled?

If you become totally and permanently disabled, then with the consent of the Trustees, you may be entitled to retire and start receiving a disability pension on or after age 55 with no reductions for early retirement. Your pension will be equal to the amount of pension you have accrued under this Plan to the date of your disability. The payment of this disability pension will stop when you cease to be disabled before age 65.

A member is deemed to be disabled only while he is entitled to receive a disability pension under the provisions of the Canada and/or Quebec Pension Plan and is certified by a qualified medical doctor to be totally and permanently disabled. No member shall be deemed to be disabled while he is engaged in a regular occupation for remuneration or profit, except such occupation as may be approved by the Trustees for purposes of his rehabilitation. Further, no disability pension is payable to a member who becomes disabled while an Inactive Member or “Terminated” member, as defined in the Plan.

[18] The plaintiff’s Statements of Accrued Benefits as at December 31, 2016 and 2017 are part of the motion material. Mr. Finnemore’s normal retirement date would have been April 1, 2027, at age 65. The formula for calculating his monthly pension benefit is based on credited hours, multiplied by a “pension rate”.

[19] There is a Disability Retirement Pension Statement dated February 27, 2019 in relation to the plaintiff. It was prepared on the basis that Mr. Finnemore would retire on March 1, 2019. The statement describes that he has earned a “pension” based on his credited hours that have been contributed to the Plan by employers on his behalf. It further states:

You are entitled to receive a disability retirement pension commencing on your Date of Retirement of March 1, 2019 as provided under the terms of the Pension Plan. To qualify for a disability retirement pension you must be totally and permanently disabled. In such case, upon Trustees’ consent, you would be entitled to retire and start receiving a disability retirement pension with no reduction for early retirement. Your disability pension is equal to the amount of pension you have accrued under this Plan and payment would stop if you cease to be disabled before age 65.

You are deemed to be disabled only while you are entitled to receive a disability pension under the provisions of the Canada and/or Quebec Pension Plan. You will not be deemed to be disabled while you are engaged in a regular occupation for remuneration or profit, except such occupation as may be approved by the Trustees for purposes of possible rehabilitation.

[20] The pension payments were calculated at $1,436.28 per month and are payable for as long as Mr. Finnemore lives.

[21] Accordingly, the disability pension provided for by the Union benefits had the following characteristics:

• the member had to become totally and permanently disabled, determined by whether the member is entitled to receive CPP or Quebec Pension Plan disability benefits;
• the member had to be at least 55 years of age in order to start receiving a disability pension;
• the amount of the disability pension is not determined based on the member’s actual income but is determined by the amount of pension that he has accrued under the Plan;
• the member, once totally and permanently disabled, is entitled to retire and start receiving a disability pension with no reduction for early retirement;
• the member is entitled to the benefit, unless they return to a regular occupation, for as long as they live; and
• the member is not disabled if they are engaged in a regular occupation for remuneration or profit.

[22] Mr. Finnemore applied for CPP disability benefits and was deemed to be entitled to those benefits retroactive to July 2017. When he opted to retire on March 1, 2019, he was thus eligible for the disability retirement pension, payable in the amount of $1,436.28 per month. I note that since this amount is not calculated in reference to the plaintiff’s income, these benefits would be classified as non-indemnity benefits.

The Deductibility of Collateral Benefits

[23] At common law, payments received under an insurance policy were not deducted from tort awards, even if it resulted in “over-compensation” of the plaintiff. While the goal of tort law was to compensate tort victims for the full extent of their injuries, defendants were not entitled to benefit from the plaintiff’s foresight in securing insurance. This is described as the private insurance exemption.

[24] However, as part of Ontario’s legislative regime designed to lower auto insurance premiums, the Insurance Act provides that certain collateral benefits are deducted from the damages to which a plaintiff is entitled for income loss and loss of earning capacity. Accordingly, in Ontario, the legislature has statutorily overridden the common law private insurance exemption for certain collateral benefits in motor vehicle accident cases.

[25] The Insurance Act has been amended several times. For the purposes of these reasons, the legislative changes in Bill 59 and Bill 198 are relevant. Bill 59 governed accidents between November 1, 1996 and October 1, 2003. It was in force when the potentially controlling case of Demers v. B.R. Davidson Mining & Development Ltd., (2012) 111 O.R. (3d) 42, 2012 ONCA 384, also known as Demers v. Monty, 2012 ONCA 384 was decided by the Ontario Court of Appeal. Bill 198 governs accidents occurring on or after October 1, 2003 and governs the accident in this case.

[26] Under Bill 59, s. 267.8 (1) , (9) and (12) of the Insurance Act read as follows:

267.8 (1) In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the damages to which a plaintiff is entitled for income loss and loss of earning capacity shall be reduced by the following amounts:

1. All payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for statutory accident benefits in respect of the income loss and loss of earning capacity.

2. All payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for income loss or loss of earning capacity under the laws of any jurisdiction or under an income continuation plan.

3. All payments in respect of the incident that the plaintiff has received before the trial of the action under a sick leave plan arising by reason of the plaintiff’s occupation or employment.

(9) A plaintiff who recovers damages for income loss, loss of earning capacity, expenses that have been or will be incurred for health care, or other pecuniary loss in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile shall hold the following amounts in trust:

1. All payments in respect of the incident that the plaintiff receives after the trial of the action for statutory accident benefits in respect of income loss or loss of earning capacity.

2. All payments in respect of the incident that the plaintiff receives after the trial of the action for income loss or loss of earning capacity under the laws of any jurisdiction or under an income continuation benefit plan.

3. All payments in respect of the incident that the plaintiff receives after the trial of the action under a sick leave plan arising by reason of the plaintiff’s occupation or employment.

4. All payments in respect of the incident that the plaintiff receives after the trial of the action for statutory accident benefits in respect of expenses for health care.

5. All payments in respect of the incident that the plaintiff receives after the trial of the action under any medical, surgical, dental, hospitalization, rehabilitation or long-term care plan or law.

6. All payments in respect of the incident that the plaintiff receives after the trial of the action for statutory accident benefits in respect of pecuniary loss, other than income loss, loss or earning capacity and expenses for health care.

(12) The court that heard and determined the action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of the automobile, on motion, may order that, subject to any conditions the court considers just,

(a) the plaintiff who recovered damages in the action assign to the defendants or the defendants’ insurers all rights in respect of all payments to which the plaintiff who recovered damages in entitled in respect of the incident after the trial of the action,

(i) for statutory accident benefits in respect of income loss or loss of earning capacity,

(ii) for income loss or loss of earning capacity under the laws of any jurisdiction or under an income continuation benefit plan,

(iii) under a sick leave plan arising by reason of the plaintiff’s occupation or employment,

(iv) for statutory accident benefits in respect of expenses for health care,

(v) under any medical, surgical, dental, hospitalization, rehabilitation or long-term care plan or law, and

(vi) for statutory accident benefits in respect of pecuniary loss, other than income loss, loss of earning capacity and expenses for health care; and

(b) the plaintiff who recovered damages in the action co-operate with the defendants or the defendants’ insurers in any claim or proceeding brought by the defendants or the defendants’ insurers in respect of a payment assigned pursuant to clause (a).

[27] Under Bill 198, the wording of s. 267.8 did not change. However, for accidents occurring on or after September 1, 2010, the amendments to the Insurance Act under Bill 198 enacted through s.5.2 of O. Reg. 290/10 provide as follows:

5.2 (2) For the purposes of paragraph 2 of subsection 267.8 (1) , paragraph 2 of subsection 267.8 (9) and subclause 267.8 (12) (a) (ii) of the Act, payments in respect of an incident for income loss or loss of earning capacity under an income continuation benefit plan are deemed to include, if the incident occurs on or after September 1, 2010, the payments for loss of income under an income continuation plan described in clause 3 (7) (d) of Ontario Regulation 34/10 (Statutory Accident Benefits Schedule—Effective September 1, 2010), made under the Act.

[28] O. Reg. 34/10 to the Insurance Act, includes the following:

3(7)(d) payments for loss of income under an income continuation benefit plan are deemed to include,

(i) payments of disability pension benefits under the Canada Pension Plan,

(ii) periodic payments of insurance, irrespective of whether the contract for the insurance provides for a waiting period, deductible amount or similar limitation or restriction and irrespective of whether the contract is paid for in whole or in part by the employer, if the insurance is offered by the insurer,

(A) to persons who are employed while the contract for the insurance is in effect, and

(B) only on the basis that the maximum benefit payable is limited to an amount calculated with reference to the insured person’s income from employment.

[29] Accordingly, the legislative amendments expressly made CPP disability pension benefits deductible from damages awarded for loss of income or loss of earning capacity.

Demers v. B.R. Davidson Mining & Development Ltd.

[30] The Ontario Court of Appeal, in Demers, supra reviewed the deductibility of CPP disability benefits and Hospitals of Ontario Pension Plan (“HOOP”) disability benefits for an accident occurring in 1999. Thus, the case before the Court involved an accident under Bill 59 before CPP was expressly deemed deductible. The case, however, was argued after the legislative amendments had been made.

[31] The plaintiff in the within motion argues that Demers is determinative of the issue before me because the Union benefits are analogous to the HOOP disability benefits. The defendants argue that Demers is distinguishable and that on the proper interpretation of the legislation the Union benefits are deductible.

[32] In Demers the plaintiff was employed for St. Joseph’s Care Group at the time of her car accident. When she stopped working “due to disability”, she applied for and received both CPP disability benefits and HOOP disability benefits. The motion judge, Shaw J., had determined that neither benefit was deductible under Bill 59, since the benefits were paid due to her disability. They were not “received for loss of income or loss of earning capacity”. On the appeal, the defendant argued that both benefits compensated the plaintiff for loss of earning capacity and were therefore deductible.

[33] The Court of Appeal described the requirements that Ms. Demers had to meet to be eligible for HOOP benefits at para. 9 as follows:

[9] To receive HOOP benefits Ms. Demers was required to:

• be a member of the plan for two years and make the required contributions before the date of her disability;
• resign from her employment and apply for the benefits; and
• be totally and permanently disabled.

[34] There is a lengthier description of these benefits in the motion judge’s reasons, Demers v. B.R. Davidson Mining & Development Ltd., (2011) 106 O.R. (3d) 513, 2011 ONSC 2046 at para. 55:

[55] Ms. Demers is in receipt of a disability retirement pension from HOOP. The Plan provides that a member who:

• has completed two years of membership in the Plan;
• has made the required contributions to the Plan prior to the date of her disability;
• is totally and permanently disabled; and
• has made the prescribed application to the administrator of the Plan.

may elect to retire early and receive a disability retirement pension. If that person recovers from total and permanent disability prior to attaining the age of 65, the disability retirement pension ceases.

[35] Laskin J.A. for the Court of Appeal, at para. 7, noted that, “importantly”, Ms. Demers’ entitlement to the HOOP and CPP benefits did not depend on her being employed at the time of her application, on proving an income loss or on suffering an income loss. After reviewing the Supreme Court of Canada decisions, Ratych v. Bloomer, [1990] 1 S.C.R. 940, [1990] S.C.J. No. 37 and Cunningham v. Wheeler, [1994] 1 S.C.R. 359, [1994] S.C.J. No. 19, Justice Laskin concluded, at para. 15, that whichever approach was adopted, both the CPP and the HOOP disability benefits would not be deductible at common law. They come within the private insurance exception. Under McLachlin J.’s approach in those cases, they are non-indemnity payments. The benefits are paid on account of Ms. Demers’ disability and do not depend on her having incurred an income loss.

[36] Laskin J.A. then specifically addressed, at paras. 29 and 30, whether CPP disability benefits were deductible from payments for loss of earning capacity and determined that they were not, for two reasons. The first reason was that only clear and unambiguous language could change common law rights. The addition of the term “loss of earning capacity” in the Bill 59 regime does not clearly and unambiguously change the non-deductibility of CPP benefits at common law. The second reason is that CPP disability benefits are not paid “in respect of the incident”; they are paid in respect of Ms. Demers’ disability.

[37] Justice Laskin, at paras. 41 and 42, after reviewing the inconsistency the courts have shown in using the phrases “loss of income” and “loss of earning capacity” stated as follows:

[41] My point here is not to come down on one side or the other of this debate. What the debate shows is that the addition of the term “loss of earning capacity” in s. 267.8 (1) 2 did not clearly and unambiguously change the common law. Non-indemnity payments, such as CPP disability benefits, therefore remain non-deductible under Bill 59.

[42] That is where the amendment to the regulation in 2002 becomes important. That amendment removes any doubt about deductibility of CPP benefits. They are now expressly deductible.

[38] Laskin J.A., then applied the reasoning of the Supreme Court of Canada decision, Sarvanis v. Canada, [2002] 1 S.C.R. 921, [2002] S.C.J. No. 27, 2002 SCC 28 in interpreting “in respect of the incident”. He concluded that the phrase in s. 267.8 (1) of the Insurance Act was tied to the car accident, while CPP benefits are not tied to the accident, but depend on her disability and on meeting the qualifications for receiving these benefits. He, accordingly, concluded that the CPP disability benefits were not paid to Ms. Demers “in respect of the incident” and were not captured by s. 267.8 (1) 2 (at para. 48).

[39] Rather than repeat the same analysis as he had for CPP disability benefits, Justice Laskin stated at paras. 49-50:

[49] The analysis of the question whether HOOP disability benefits are deductible does not differ from the analysis for CPP disability benefits. Thus, Ms. Demers’ HOOP benefits, too, are not deductible from payments for loss of earning capacity.

[50] There is one distinction between the two benefits. Unlike the case with CPP disability benefits, there is no amending regulation to now make HOOP benefits deductible. However, the absence of an amendment does not change the analysis.

[40] In the years since the decision in Demers, the Ontario legislature has not seen fit to make further amendments to the legislative scheme which would make retirement disability pension benefits such as HOOP deductible. Thus, the law in Ontario is that benefits such as the HOOP benefits are not currently deductible from awards of income loss or loss of income earning capacity.

Addressing the Arguments of the Defendant Moving Parties

[41] The defendants put forth several rationales by which they say the reasoning in Demers does not apply in this case.

[42] First, defence counsel points out that Demers was a Bill 59 case while the present case must be determined under Bill 198. However, in my view, Laskin J.A.’s analysis in relation to the HOOP benefits remains binding post-Bill 59. He found that those benefits were not deductible at common law. Unlike CPP, no amendment post Bill 59 has been made that would apply to the HOOP benefits. HOOP benefits would therefore continue to not be deductible. In my opinion, if the Union benefits are akin to the HOOP benefits, then it is of no import that Demers was decided under Bill 59.

[43] Secondly, counsel for the defendants argues that the focus in Demers was inappropriately on whether the collateral benefit in question could be classified as an indemnity or non-indemnity payment. In his submission, the focus must be on the words “loss of earning capacity” which goes beyond merely categorizing payments as indemnity or non-indemnity. He relies upon Cugliari v. White, (1998), 38 O.R. (3d) 641 (ONCA), where Charron J.A., stated as follows:

I agree that the categorization of payments as either indemnity or non-indemnity is not the determinative test. The deductibility of collateral benefits pursuant to s. 267 of the Act must be governed by the words of the statute. Nonetheless, I find the distinction helpful since, in my view, the words “payment…for loss of income” do import a notion of indemnification.

[44] However, as seen in IBM Canada Limited v. Waterman, 2013 SCC 70, [2013] 3 S.C.R. 985, a decision of the Supreme Court of Canada, the distinction between indemnity and non-indemnity benefits continues to be made in non-motor vehicle accident cases. Justice Cromwell, in the context of the deductibility of pension benefits from an award of damages for wrongful dismissal, stated as follows:

In my view, employee pension payments, including payments from a defined benefit plan as in this case, are a type of benefit that should generally not reduce the damages otherwise payable for wrongful dismissal. Both the nature of the benefit and the intention of the parties support this conclusion. Pension benefits are a form of deferred compensation for the employee’s service and constitute a type of retirement savings. They are not intended to be an indemnity for wage loss due to unemployment. The parties could not have intended that the employee’s retirement savings would be used to subsidize his or her wrongful dismissal. There is no decision of this Court in which a non-indemnity benefit to which the plaintiff has contributed such as the pension benefits in issue here has ever been deducted from a damages award.

[45] Plaintiff’s counsel refers me to Labanowicz v. Corporation of the Town of Fort Erie, 2017 ONSC 630, a case involving a non-motor vehicle accident. Gans J. considered the deductibility of OPSEU disability pension benefits from an award for loss of income, ultimately finding that they were not deductible at common law. Justice Gans referred to IBM and the above quote from Justice Cromwell in reaching that conclusion.

[46] Non-indemnity payments, such as pension benefits, are not deductible at common law from awards of damages. In motor vehicle accident cases a collateral benefit is only deductible if it is expressly ensnared by s. 267.8 (1). Thus, in Demers, Laskin J.A. concluded that the CPP benefits and HOOP benefits, as non-indemnity payments, were not deductible under Bill 59 or the common law.

[47] Third, defence counsel argues that simply finding that every disability pension benefit is not deductible ignores that each plan has different wording. Thus, he says that the wording in the HOOP plan and the Union plan must be specifically examined and that such plans ought not to simply be lumped together. In his submission, the approach in Demers eliminates the flexibility to look at the wording of the plans in question.

[48] I agree that the approach must be to review the specific benefits in question and to see if they “match” any of the exceptions described in s. 267.8 (1). The use of the word “pension” does not make what would otherwise be deductible, not deductible. In the within case this is difficult because we do not have the precise wording of the Union benefits and we only have a summary of the nature of the HOOP benefits as gleaned from the two decisions in Demers.

[49] The defendants contend that the HOOP benefits in Demers did not have a requirement that they be tied to earning capacity. In contrast, a member is only eligible for Union benefits if they do not have the ability to earn remuneration or profit. However, in reviewing Justice Shaw’s decision on the motion in Demers, at para. 66, it is clear the HOOP benefits did have the same requirement. The defendants in Demers argued at paragraph 66 that when Ms. Demers recovered, she would no longer qualify for the disability retirement pension.

[50] Section 267.8 (1) 2 qualifies “loss of earning capacity” with the words “under the laws of any jurisdiction or under an income continuation benefit plan”. In my view, the Union benefits are not “under the laws of any jurisdiction” or “an income continuation benefit plan”.

[51] Defence counsel relies on the wording in the booklet that provides that “[y]ou should know that the Plan is regulated by provincial and federal legislation. Regular periodic reports are required by the provincial government as proof that the Plan is being operated on a sound basis”. Accordingly, the defendants argue that this means that the Plan qualifies as being “under the laws of any jurisdiction”.

[52] In my view, the Union benefits are not payable “under the laws of any jurisdiction”, simply due to the reference to the Plan being regulated by provincial and federal legislation. I interpret that description in the booklet to be informing the Plan member that the pension plan must be administered in accordance with the Pension Benefits Act, R.S.O. 1990, c. P.8, as amended, for example. The fact that the Plan is subject to the laws of Ontario, does not make the benefits payable “under the laws of Ontario”.

[53] Furthermore, the Union benefits are not “an income continuation plan”. The amount of the monthly benefits bears no relation to the plaintiff’s income, but instead is based on his employers’ contributions and his credited hours as a member of the Plan. They are payable for as long he lives, in contrast to disability benefits that are payable to age 65.

[54] It is noteworthy that the non-CPP amendment made by O. Reg. 34/10 of the Insurance Act in subparagraph 3(7)(d)(ii) does not include benefits unless they are periodic payments of insurance calculated in reference to a person’s income from employment. The amendment did not expressly provide for the deductibility of disability pension benefits. As pointed out by Shaw J., in Demers, at paras. 76-77:

[76] If pension disability benefits are not a form of wage replacement, but the legislature nevertheless wanted pension disability benefits deducted from damages for loss of income or loss of earning capacity, the legislature could require the deduction, as it did with respect to CPP disability benefits for accidents on or after October 1, 2003. But to deprive the plaintiff of her well-recognized common law rights, the legislature must, to use the words of Charron J.A. in Cugliari, do so by clear and unambiguous language. Although s. 267.8(9) to (13) prevail over the Pension Benefits Act prohibition on assignments or seizures of pensions, those subsections do not clearly and unambiguously require pension disability benefits to be deducted from damages for loss of earning capacity. Section 267.8 (9) requires that a plaintiff hold in trust all payments received after trial for “income loss or loss of earning capacity” or “under any income continuation benefit plan”. Section 267.8 (9) 2 permits the court to order that the plaintiff assign all payments received after trial for “income loss or loss of earning capacity” or under an income continuation benefit plan”. These are the same terms used to describe the payments in s. 267.8 (1) 2. Because pension disability benefits are not payments received “for income loss or loss of earning capacity” or “under an income continuation benefit plan”, s. 267.8 (9) and (12) do not, in my view, assist the defendant’s position. They do not provide the clear and unambiguous wording necessary if the plaintiff’s non-indemnity payments are to be deducted from her damages for pecuniary loss.

[77] Kosanovic held that CPP disability benefits, as non-indemnification payments, were not deductible under s. 267.8 (1) 2. HOOP disability benefits are non-indemnification payments. If CPP disability benefits were not deductible, it would follow that HOOP disability benefits are not deductible. The legislation changed the common law regarding the deductibility of CPP disability benefits. The legislation did not change the common law regarding the deductibility of private pension plan benefits.

[emphasis added]

[55] Accordingly, whether the Union benefits, or HOOP benefits for that matter, may be considered payments made for “loss of earning capacity”, they do not satisfy either of the other two criteria needed to be deductible. Nor are they “deemed” to be deductible under 3(7)2 of O. Reg 34/10.

[56] Defence counsel argues that the Court of Appeal in Demers engaged in only a cursory statutory interpretation of s. 267.8 (1) in determining whether the HOOP benefits ought to be deductible. In counsel’s submission, the Court’s conclusion on the basis that the phrase “loss of earning capacity” was not a clear and unambiguous change to the common law rule was the result of that superficial review. He urges me to engage in the exercise conducted by McDermid J. in Sunderland v. John Duff Ltd., 2009 ONSC 18233 and that by doing so the proper conclusion is that the Union benefits are deductible under s. 267.8 (1).

[57] In Sunderland, decided prior to Demers, it was determined that benefits under the Ontario Teacher’s Pension Plan Disability Pension (“OTPP”) were deductible from an award for loss of earning capacity pursuant to. 267.8 (1) 2 of the Insurance Act, under the Bill 59 regime. The OTPP benefits had the following characteristics:

• contributions to the plan were made by the employer and teacher;
• a member with at least 10 years of service who became disabled while employed in education and who, as a result of the disability, ceases to be employed in education prior to their normal retirement date was eligible for either a full disability pension or a partial disability pension; and
• a member receiving a disability pension under the pension plan would not be eligible to receive a retirement pension.

[58] In Sunderland it was conceded by the defendant, properly in my view, that the disability pension was not payment for income loss or payment under an income continuation benefit plan. Counsel argued, as here, that the disability pension was payment for “loss of earning capacity” comparable to Canada Pension Plan disability payments and therefore would be deductible. Counsel in that case relied upon Meloche v. McKenzie, [2005] O.J. No. 3761 (S.C.J.).

[59] In Meloche Patterson J. had found that CPP disability benefits were “tied to a recipient’s inability to engage in the act of gainful employment” or “as a result of a loss of earning capacity”, and thus, were deductible. I note that Justice Shaw on the original motion in Demers, specifically considered and did not follow Meloche. Laskin, J.A., at least implicitly, over-ruled Meloche in Demers when he determined that CPP disability benefits were not deductible under Bill 59.

[60] Counsel for the plaintiff in Sunderland argued that the provisions of section 267.8 (1) 2 were not sufficiently “clear and unambiguous” to deprive the plaintiff of the rights she enjoyed at common law. I note that Laskin J.A. later took that view in Demers.

[61] Ultimately, Justice McDermid held that the OTPP disability pension benefits were deductible, stating at para. 21:

[21] The plaintiff is entitled to the OTPP Disability Pension because “while employed in education” she became disabled to the point that she is “incapable of further employment.” In other words, the constellation of abilities, skills and aptitudes that she might apply for the purpose of earning money, i.e., her “earning capacity”, has been compromised by the bodily injuries that she sustained in the motor vehicle accident to the point that she is “incapable of further employment.” The pension is founded on “disability” and not upon “retirement”. Were it not for the disability, the plaintiff would not be entitled to either an OTPP Disability Pension or an OTPP Retirement Pension.

(emphasis in original).

[62] The Sunderland case does not appear to have been judicially considered in a case reported on. Respectfully, it may no longer represent the law of Ontario given the Court of Appeal’s decision in Demers. Sunderland was determined prior to the Court of Appeal decision in Demers, a decision which would have been binding upon McDermid J. unless he was able to distinguish the OTPP benefits from the HOOP benefits. Secondly, McDermid J., was referred to Meloche and may have placed undue reliance on a case that was subsequently over-ruled, at least implicitly, by Demers. Finally, Ms. Sunderland was not otherwise eligible for retirement in that case. In the case before me, a member of the Union Pension Plan is eligible for early retirement and a reduced pension at age 55. Mr. Finnemore had turned 55 prior to receiving his Union benefits and was, accordingly, eligible for a Union Retirement Pension.

[63] I agree with plaintiff’s counsel that Laskin J.A. thoroughly analyzed the law in determining that HOOP benefits were not deductible under s. 267.8 (1). I reiterate his comments at paragraphs 49-50, where he stated:

[49] The analysis of the question whether HOOP disability benefits are deductible does not differ from the analysis for CPP disability benefits. Thus, Ms. Demers’ HOOP benefits, too, are not deductible from payments for loss of earning capacity.

[50] There is one distinction between the two benefits. Unlike the case with CPP disability benefits, there is no amending regulation to now make HOOP benefits deductible. However, the absence of an amendment does not change the analysis.

[64] Thus, even though Justice Laskin did not repeat the same analysis for the HOOP disability benefits as he did for the CPP disability benefits does not mean that he did not engage in a thorough analysis of the deductibility of the HOOP disability benefits. Similarly, just because he did not engage in the same type of analysis that McDermid J. performed, does not make Justice Laskin’s analysis perfunctory. It certainly does not grant a lower court the ability to discount the weight of that authority.

[65] Plaintiff’s counsel focused his arguments on the fact that the Union benefits are from the plaintiff’s pension plan. The plaintiff has been contributing to his pension plan over the course of his career and these benefits are his property. Seen as pension benefits, the Union benefits ought to be considered as “sacrosanct”. The benefits are not payable as a continuation of the plaintiff’s wages or as sick leave. They are not insurance. They are paid out of a repository of funds into which the plaintiff’s employers have paid and now belong to the plaintiff.

[66] The booklet makes it clear that these benefits are from the plaintiff’s pension. Mr. Finnemore is accessing his pension with no reduction for early retirement, on account of his disability. It’s his money.

[67] In plaintiff’s counsel’s submissions, the common law applies to the deductibility of collateral benefits from an award of damages, unless, and only in motor vehicle accident cases, the benefits in question fit within the specific wording of s. 267.8 (1). Paragraph 1 relates to statutory accident benefits. Paragraph 2 relates to benefits paid under the laws of any jurisdiction or under an income continuation plan. Under the deeming provision, this includes CPP and long-term disability benefits. The final category is sick leave benefits. Pension benefits do not fit into any of those categories and are not deductible.

Disposition

[68] I agree with plaintiff’s counsel that the defendants seek to deduct payments that are being made from the plaintiff’s own property, his vested pension plan. The fact that the plaintiff can access the plan early, on account of his disability, does not make the funds any less his. The plaintiff has already earned and banked the money from when he worked prior to the accident. In my view, these are not the same as insurance monies meant to protect a person for his or her inability to work, an income continuation plan or the same as sick benefits. Additionally, the plaintiff, following the onset of disability, is no longer able to continue to contribute to his or her pension through the accumulation of credited hours. Thus, it is a sensible conclusion that pension benefits ought not to be deductible to the advantage of a defendant. It would be comparable to deducting a plaintiff’s life savings from an income loss award.

[69] The defendants have failed to persuade me that the HOOP disability benefits in Demers are materially distinguishable from the Union benefits in this case. The plaintiff’s eligibility for the Union benefits, like both CPP and HOOP, is based on a finding that he is “totally and permanently” disabled and has made the requisite contributions to the Plan. Just like the HOOP benefits, the plaintiff was entitled to retire. Just like the HOOP benefits, the benefits ceased being payable if he returned to gainful employment.

[70] The highest court in Ontario has analyzed the deductibility of such benefits and ruled that they are not deductible under Bill 59. The changes made in Bill 198 did not expressly provide for the deductibility of retirement pension disability benefits, unlike the express inclusion of CPP in the amendment.

[71] The defendants rely on Sunderland, a case which arguably relied on a case that has been over-ruled, and itself was determined prior to when the Court of Appeal heard Demers. As thorough an analysis as McDermid J. performed, I am bound by stare decisis.

[72] In Duggan v. Durham Region Non-Profit Housing Corporation, 2020 ONCA 788, a case released the day after the hearing of this motion, Feldman J.A., stated as follows, at para. 52:

[52] The doctrine of stare decisis requires that all courts follow and apply authoritative precedents. Intermediate appellate courts, like the Divisional Court, are generally bound by their past decisions: Kovach (Divisional Court), at para. 42; Fernandes v. Araujo, 2015 ONCA 571, 127 O.R. (3d) 115, at para. 45. As Sharpe J.A. explained in Fernandes, at para. 45, this doctrine is a bedrock principle of our legal system:

As an intermediate court of appeal, we are ordinarily bound to follow our past decisions, even decisions with which we disagree. It is important that we do so. Our common law legal tradition rests upon the idea that we will adhere to what we decided in the past. As expressed by the Latin phrase stare decisis, we stand by things that have been decided. The rule of precedent provides certainty, clarity and stability in the law. It fosters the orderly and efficient resolution of disputes and allows parties to obtain reliable legal advice and to plan their affairs accordingly.”

[73] Accordingly, I order that the plaintiff’s retirement pension disability benefits, received as a result of his membership in his union’s pension plan, are not deductible from an award for income loss or loss of earning capacity under s. 267.8 (1) of the Insurance Act, nor are they subject to the trust or assignment provisions in s. 267.8 (9) or s. 267.8 (12).

[74] The defendants’ motion is accordingly dismissed.

[75] If the parties are unable to agree on the costs of this motion, the plaintiff may make written submissions as to costs, no more than three pages in length, double-spaced, in addition to any pertinent offers and draft bill of costs, within twenty days of the release of this endorsement. The defendants have ten days from receipt of the plaintiff’s submissions to respond on the same basis. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.

Justice Spencer Nicholson Date: January 4, 2021