Future Loss of Income Awards: Deductibility of Private Pension and CPP Benefits

Written By: Dale Orlando and Cody Malloy, Student-at-Law

In tort claims, there are two types of compensatory damages: pecuniary damages and non-pecuniary damages.  Pecuniary damages are measurable monetary figures from past or future loss, such as: medical bills, cost of care, loss of income, and property damage.  Non-pecuniary damages are difficult to measure in monetary terms from past or future loss, such as: pain and suffering, emotional distress, decrease in quality of life and damage to relationships.

In some cases, there are deductions from damages owed to a plaintiff due to benefits already received or owed in the future.  For example, if the plaintiff has received accident benefits (ABs) from a motor vehicle collision, the amount of ABs received by the plaintiff prior to trial are deductible from the awarded damages to avoid double recovery by the plaintiff.

Defendants have sought to deduct pension payments, both private pension payments and payments under the Canada Pension Plan (CPP), either already received by or owed to the plaintiff from future loss of income awards.  Fortunately for plaintiffs, case law supports the notion that pension payments are not deductible from future loss of income awards because the private insurance exception applies.  In essence, benefits received by a plaintiff from a private insurer are not deductible from damage awards in personal injury claims because the plaintiff has paid into the benefit that they received.

Justice Gans held in Labanowicz v Fort Erie (Town), 2017 ONSC 630 (CanLII) that the private insurance exception applies to private pension payments, and therefore are not deductible from future loss of income awards.  The court reasoned that pension payments are not a form of indemnity against a breach by a tortfeasor, they are a form of deferred payment for services rendered as an employee.  Furthermore, the fact that a plaintiff financially contributed to the pension plan makes a court less inclined to deduct private pension payments from future loss of income awards.

With regards to benefits payable under the CPP, this area of law is still developing.  The CPP benefit umbrella consists of the following seven benefits:

  • Retirement pension
  • Post-retirement benefit
  • Post-retirement disability benefit
  • Survivor’s pension
  • Children’s benefit
  • Death benefit

CPP payments are most likely not deductible from future loss of income awards, but only in non-motor vehicle collision claims.  Justice Charron authored the Ontario Court of Appeal’s decision in Cugliari v. White, 1998 CanLII 5505 (ON CA).  The court noted that there is a common law presumption that CPP benefits are not deductible from tort damage awards unless the legislature explicitly makes these payments deductible in legislation.  Cugliari dealt with the now repealed section 267(1) of the Insurance Act.  A few years after this case was decided, the Ontario legislature explicitly made CPP disability pension payments deductible for motor vehicle collision claims in section 3(7)(d)(i) of the Statutory Accident Benefits Schedule (SABS).  The Ontario legislature implemented this deduction explicitly in SABS because they wanted to lower auto insurance premiums.

For non-motor vehicle collision claims, the common law presumption remains because the Ontario legislature has not explicitly made CPP payments deductible.  The court in Cugliari described CPP disability payments as akin to private insurance (non-indemnity payments), which is important in reinforcing the common law presumption that CPP benefits are non-deductible.

If you have suffered an injury that has resulted in past and/or future loss of income, you could be entitled damages.  At McLeish Orlando, we always ensure our clients are properly compensated for their past and/or future loss of income.  If you think you have a claim for loss of past and/or future income, do not hesitate to contact us for a free consultation.

Dale Orlando


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