Date: Sun, 30 Nov 2003 12:10:26 -0500

From: David Cheifetz

Subject: Set-off of pecuniary and non-pecuniary benefits

Dear Colleagues:

Somewhat diffidently ..

I'm adding to what Prof. Luntz wrote in his note of November 30.

Paraphrasing the issue in another way - the deductibility of apples from oranges - there has been some discussion (the quality of the discussion is for another day) on the issue in judgments of Canadian courts in the context of the deductibility of no-fault benefits, provided by statute, in tort claims for personal injuries arising out of motor vehicle accidents.

The legislation provides for the deduction of such benefits from the damages without specifying how and from what. The general form of the problem was whether the various no-fault benefits could be deducted from the non-pecuniary portion of the general damages award if the amount of the benefits exceeded analogous portions of the pecuniary damages award or even the total of the pecuniary damages award. The end result is that only like may be deducted from like, whatever like means in the context of the particular case. See, Bannon v McNeely, (1998), 38 O.R. (3d) 659, 159 D.L.R. (4th) 223 (Ont. C.A.). There are similar decisions in at least British Columbia. Bannon refers to and applies a British Columbia C.A. decision.

The rationale of these cases seems, to me, to suggest that Ontario and B.C. judges would not offset alleged intangible (non-pecuniary) benefits against proven financial losses or even against other proven non-pecuniary damages of a different "type", assuming such existed in an appropriate case.

There had been prior trial decisions in which such deductions were allowed on the basis that, otherwise, there would be double recovery. In what was viewed as the leading case, Cox v. Carter (1976), 13 O.R. (2d) 717 (H.C.J.), the trial judge wrote:

I would observe that while my interpretation may result in the subtraction, figuratively, of apples from oranges, the total amount of the plaintiff's assessment of damages against the defendant, before Insurance Act considerations are taken into account, is not reduced. All that has happened is that, in effect, part of his damages have been received by him in advance. In the same vein, if the submission of the plaintiff were given effect, the plaintiff would be benefiting from a double recovery, contrary to the policy of the subsection:

The Ont. C.A. specifically rejected that argument, stating that "if at all possible, apples should be deducted from apples, and oranges from oranges." The C.A. agreed with and applied an earlier decision of the B.C. C.A. in which that Court had said that it is implicit in similar B.C. legislation that "It is only where the benefit corresponds with the particular heading of claim for damages that the benefit is to be deducted, and then only from the award for that particular head of damages." This is, of course, a restatement of the equivalence principle described by Prof. Fleming.

While it is probably true to say that, ultimately, the Ontario and BC decisions literally turn on the wording of the legislation, it seems, to me, that the decisions would have been the same even if the Courts did not think the result was mandated by the wording of the statute.

David Cheifetz
Fernandes Hearn LLP
Toronto, Canada
416-203-9588

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