On January 18, 2019, the Nova Scotia Court of Appeal rendered its unanimous (5-0) decision in Holland v. Sparks, overturning a motion decision that carried significant consequences for the calculation of future income loss awards in Nova Scotia. The decision makes it clear that in Nova Scotia:

  • Future CPP Disability Benefits. Future Canada Pension Plan (CPP) disability benefits are deductible from damages awards for loss of future income or earning capacity.
  • Interpretive approach. Courts must interpret a statute in its full context and purpose, looking to the meaning and intent of the provision. Courts must read the words first in their ordinary sense. A technical grammatical analysis of a statutory provision in isolation from its legislative context is not commensurate with this approach.
  • Look to the future. Damages for loss of earning capacity are mostly "future-focused", awarded where the plaintiff will be capable of working post-trial, but not at their pre-injury level.

In Holland v. Sparks, the plaintiff was in a motor vehicle accident with the defendant on May 15, 2013. She brought an action seeking damages for her personal injuries and loss of income on January 26, 2016. The parties disagreed on whether future Canada Pension Plan (CPP) disability benefits the plaintiff received after the trial of her action would be deductible from any award for loss of earnings or loss of earning capacity, pursuant to Section 113A of the N.S. Insurance Act, which provides:

113A 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 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 benefit plan if, under the law or the plan, the provider of the benefit retains no right of subrogation. (emphasis added)

The parties also disagreed on whether the issue was already determined in Tibbetts v. Murphy, in which the N.S. Court of Appeal previously dealt with the deductibility of CPP benefits under Section 113A. The plaintiff argued Tibbetts v. Murphy only dealt with the deductibility of past CPP disability benefits received before trial. The parties referred the issue to a judge for determination on a motion.

The (Overturned) Motion Decision. The motion judge determined future CPP benefits are not deductible from awards for future income loss or earning capacity. The judge reach his conclusion after conducting a technical grammatical analysis of Section 113A, an approach that attracted appeal.

The Appeal Decision. The Court of Appeal overturned the motion decision, holding that future CPP disability benefits are deductible from awards for future income loss or earning capacity. Emphasizing the need to interpret legislative text in accordance with its purpose and broader context, the Court held the motion judge erred in focusing on an isolated grammatical nuance of each phrase of the text of Section 113A:

  • Legislative purpose. With respect to the purpose of the legislation, the Court confirmed its finding in Tibbetts v. Murphy that the Legislature enacted Section 113A primarily to control rising automobile insurance premiums by reducing damages awards in tort actions.
  • No double recovery. With this legislative purpose in mind, the Court determined the only way to give full effect to the purpose Section 113A was to interpret it to include both past and future CPP disability benefits. The Court noted the motion judge's interpretation would have permitted double recovery, the elimination of which was one of the Legislature's primary goals in enacting Section 113A.
  • Section B benefits. While CPP disability benefits were in issue, the Court drew a comparison between CPP benefits and Section B benefits, and said Section B benefits are also deductible from awards for past and future income loss.

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