Finnemore v. Hyde, 2021 ONSC 19

Full Decision

Is a union pension deductible from a plaintiff’s income loss claim?  Finnemore v. Hyde, 2021 ONSC 19 (CanLII) addresses this issue head on.  The analysis in that case applies to pensions generally.

The plaintiff, Mr. Finnemore, was injured in a car crash on September 3, 2016.  Prior to his collision, he was a laborer who was a member of a union.  As a member of the union, contributions were made to the private pension plan based on his years of membership and service (and not based on his income).  The plan was part of the collective agreement that the union negotiated on behalf of its members.

The plan paid members their monthly pension when they turned 65.  However, the pension permitted plan members to receive an earlier payment (disability pension) if they received CPP disability on or after the age of 55.  They would receive that disability pension until the age of 65 or until they were no longer disabled, whichever was earlier.  Then at 65 the regular pension would be paid until death.

Following his collision, Mr. Finnemore was not able to work.  He was approved for CPP disability benefits.  He was therefore entitled to his union disability pension, which he received until he turned 65. He then received his regular monthly pension.

The issue was whether Mr. Finnemore’s union pension (the disability pension and/or the regular pension) was deductible pursuant to either the Insurance Act  or the common law.

Section 267 of the Insurance Act applies only to claims arising out of the use or operation of an automobile. Subsection 267.8(1) of the Insurance Act states that “the damages to which a plaintiff is entitled for income loss and loss of earning capacity shall be reduced by”, among other things, “all paymentsrespect 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”.

There is a similar provision that applies to future income losses after a trial under s. 267.8 (9) and (12) of the Insurance Act.  However, instead of defendants getting the benefit of a straight deduction, the plaintiffs are required to hold in trust all payments received for income loss or loss of earning capacity under the laws of any jurisdiction or under an income continuation plan.  The court can then assign the right to these payments to the defendant (i.e. the defendant’s auto insurer).

Because of Ontario Regulations[1] under the Insurance Act, Mr. Finnemore’s CPP disability benefits were deemed to be “payments for loss of income under an income continuation benefit plan”.  They therefore had to be deducted from his income loss claim.  However, no regulation or legislation deemed any other pension payment to be deductible (e.g. an employment pension).

The presiding Judge in Finnemore v. Hyde, Justice Nicholson, relied upon a 2011 Ontario Court of Appeal Decision called Demers v. B.R. Davidson Mining & Development Ltd.[2] to find that Mr. Finnemore’s pension payments were not deductible.  Justice Nicholson also relied upon Labanowicz v.  Corporation of Town of Fort Erie, 2017 ONSC 630 and the Supreme Court of Canada decision, IBM Canada Limited v. Waterman, 2013 SCC 70.

Ultimately it was determined that neither the disability pension nor the regular pension was an income continuation benefit plan for income loss.  The payments were not based on Mr. Finnemore’s income.  They did not depend upon him proving or suffering any kind of income loss. Instead, they were based on his credited hours and a pension rate. The disability pension, unlike the regular pension, was also based upon him meeting a certain impairment test.

The pensions were also not payments under the laws of any jurisdiction either.  While the pensions were subject to or regulated by Ontario law (e.g. Pension Benefits Act), they were not payable under or because of Ontario Law. It was a payment pursuant to a collective agreement. 

As a result, the pension plan was not deductible under the Insurance Act.

Then Justice Nicholson assessed whether the pensions were deductible at common law.  They were not.  According to Justice McLachlin in the Supreme Court of Canada decision, Cunningham v. Wheeler, non-indemnity payments, which are payments that do not depend on the plaintiff suffering an income loss (e.g. life insurance), are not deductible from income loss claims.[3]  The plaintiff’s pension was clearly a non-indemnity payment. 

Furthermore, according to the majority decision in Cunningham v. Wheeler,[4] where a plaintiff receives a payment as a result of earlier contributions, then those payments are not deductible either (the “private insurance exemption”).

In this case, both the disability pension and regular pension were part of the same pension plan.  Mr. Finnemore contributed to the plan over the course of his career.  The pension booklet made it clear that it was his pension.  It was his property and his money. He was just accessing it earlier than he otherwise would have done so.  Further, he did not have to suffer an income loss to receive the pension payments.  As a result, under the common law the pension was not deductible.  It was a non-indemnity payment (did not depend on an income loss) and met the private insurance exemption (Mr. Finnemore contributed to the plan).

To view it in another way, the pension plan constituted a type of retirement savings.  If a plaintiff had to stop working and use up his retirement savings to live because of a collision, the defendants would not get to deduct those savings from the plaintiff’s income loss claim.  In such a scenario, the plaintiff would be depleting his nest egg because of the defendants when he otherwise would not being doing so – when he otherwise would be working!  Deducting pension benefits from an income loss claim would be akin to deducting a plaintiff’s life savings.[5] That would be unfair.

[1] See s. 3(2) of Ontario Regulation 290/10, s. 3(7)(d) of Ontario Regulation 34/10 under the Insurance Act, and 5.2 of Ontario Regulation 491/96.

[2] Demers v. B.R. Davidson Minding & Development Ltd., 2011 ONSC 2046 (Ont. C.A.)

[3] Cunningham v. Wheeler, 1994 CanLII 120 (SCC). Non-indemnity payments are payments of a previously determined amount upon proof of a specified event, whether or not there is a pecuniary loss.

[4] Cunningham v. Wheeler, 1994 CanLII 120 (SCC).

[5] Finnemore v. Hyde, 2021 ONSC 19 (CanLII) at paras. 44 and 68, and IBM Canada Limited v. Waterman, 2013 SCC 70.

Written by

James Page is a lawyer at Martin & Hillyer Associates who has been practicing personal injury and civil litigation since 2010.
James is a board member of the Ontario Trial Lawyers Association (OTLA) and the Halton County Law Association (HCLA), and a Past President of the Brain Injury Association of Peel & Halton (BIAPH).