The Relationship Between Non-Earner Benefits and Loss of Income Claims

In Ontario, automobile insurance policies include accident benefits which cover the loss of income and the expenses related to recovering from injuries sustained in an accident.

Where a policyholder is not employed full-time and therefore does not qualify for ‘income replacement benefits’, they may instead be eligible for ‘non-earner benefits’. Non-earner benefits are typically for those who have recently graduated from school but have not yet secured employment, or those who were in school full-time at the time of the incident.

In motor vehicle accident claims, a claimant proceeds with both an Accident Benefits claim as well as a Tort claim. Under Accident Benefits, loss of income falls under Income Replacement Benefits and Non-Earner Benefits (NEBs). Under Tort, one of the heads of damages is Loss of Income (LOI). Tort defendants often seek a reduction of the loss of income award, claiming that they get credit for the NEBs obtained through the accident benefits regime. This blog will discuss if NEBs are deductible from a tort award for loss of income.

The Superior Court of Justice recently heard the trial of Kolapully v. Myles and Toronto Transit Commission (2022), ONSC 6024. In this tort action, the Plaintiff was awarded $200,000.00 in past loss of income. The Defendant, Myles and TTC, requested that the award be reduced in consideration of the NEBs Kolapully received through accident benefits.

The courts in Ontario consider past cases which have set a precedent for certain issues. The leading cases pertaining to this issue have decided the issue differently. In Walker v. Ritchie (2005), the Court concluded that NEBs were compensation for the loss of enjoyment of life and were not to be deducted from a tort loss of income award. In Cadieux v. Cloutier (2018), however, the same Court commented that NEBs and IRBs belong in the “income loss silo”, suggesting that there should be a deduction for the same.

The Statutory Accident Benefits Schedule (SABS) dictates that the deduction of “payments for loss of income” ensures that there is no double recovery of the same loss. However, the Judge in Kolapully notes that NEBs are not specifically listed in the SABS, whereas other income benefits are. The SABS also identifies the purpose of the deducted benefit to be “income continuation”. NEBs do not fall under the category of “income continuation”, as they are a benefit for an individual that was not employed at the time of an incident.

Justice Sugunasiri further went on to say that the wording within the SABS leaves NEBs “ambiguous at best and does not have the express language one would expect to see if the Legislature intended to group NEBs with other income replacement benefits”. Justice Sugunasiri also disagreed that NEBs provide payment for a loss of earning capacity.

The Court in Kolapully found that the argued case law of Cadieux was not binding as it dealt with vastly different issues. Justice Sugunasiri instead follows the decision of Walker as it is heavily relied upon in the Court of Appeal. As such, there is no loss of income deduction in a tort award where a Plaintiff has also been paid their entitlement to Non-Earner Benefits. A Plaintiff is therefore entitled to the full loss of income award.