Deductibility of CPP Disability Benefits from Past Loss of Income

In New Brunswick, pursuant to s. 265.4(1) of the Insurance Act, RSNB 1973, c. I-12, certain types of benefits received by an injured party after a motor vehicle accident have to be deducted from a Section A award of damages for past loss of income. Among such benefits are those under an “income continuation plan”.

Under that regime, one of the issues regularly raised pertain to the deductibility of Canada Pension Plan (CPP) disability benefits received by a plaintiff. In other words, are CPP disability benefits considered an “income continuation plan” for the purpose of s. 264.5(1) of the Insurance Act?

The Supreme Court of Canada has consistently held that CPP disability benefits are not deductible from an award of damages: Canadian Pacific Ltd v. Gill, [1973] SCR 654; Sarvanis v. Canada, 2002 SCC 28; Sabean v. Portage La Prairie Mutual Insurance, 2017 SCC 7. In Sarvanis, paras 31 & 33, the unanimous bench explained the nature of CPP disability benefits thusly:

[31]  […] A CPP disability benefit, by contrast, is not contingent on events at all, but on the present disabled condition of a qualified contributor under 65 years of age who makes an application for payment. Whether or not the present serious and long-term disability that entitles an otherwise qualified contributor to receive CPP disability benefits happens to be the result of “death, injury, damage or loss” is not relevant to the determination of eligibility. The only relevant question, assuming a person has met the conditions of eligibility with respect to age and contribution status, is the status of the applicant as disabled at the time the application is made.

[33]  […] the clear purpose of the CPP disability benefits is to supplement the incomes of disabled Canadians who have difficulty meeting day-to-day expenses because of their inability to work, that is, their status as disabled. For this reason, it has already been held by this Court that CPP disability payments are not to be considered indemnity payments, and therefore that they are not to be deducted from tort damages compensating injuries that factually caused or contributed to the relevant disability. See Canadian Pacific Ltd. v. Gill, [1973] S.C.R. 654, at p. 670; Cugliari, supra.

[Underlining added]

It adds, at para 35, that while other “pensions are paid on the same basis as a tort claim is, […] the CPP is paid on the same basis as an insurance claim”.

That being said, the fact that CPP disability benefits are similar in nature to insurance benefits, does not transform the mandatory legislative regime into an insurance plan: Sabean, paras 34-40; Economical Mutual Insurance Co v. Lapalme, 2010 NBCA 87 para 94.

The courts in New Brunswick have consistently followed the same reasoning to hold CPP disability benefits not deductible from past loss of income, as not being an income continuation plan: Richard v. Arsenault, 2002 NBQB 9 paras 58-60; Harris v. Sterniczuk, 2004 NBQB 26 para 9; Blythe v. Crowther, 2004 NBQB 68 paras 38-39. Although the issue was not expressly addressed by the trial judge in Matthews v. McIntyre, 2019 NBQB 127 paras 15 & 55, the decision further supports that conclusion as the plaintiff’s past loss of income was not reduced to account for her CPP disability benefits.