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Demers v. Monty, 2012 ONCA 384


The plaintiff, Demers was injured in a car accident in April 1999 and sued the at-fault motorist for damages including, inter alia, loss of income and loss of earning capacity. At the date of loss, the plaintiff was employed and she continued her pre-accident employment for several years after the accident, but ultimately ceased working "due to disability" in February 2003. She applied for and received disability benefits through the Canada Pension Plan (CPP) and Hospitals of Ontario Pension Plan (HOOP).

A motion was brought to determine whether as a matter of law the CPP and HOOP disability benefits would be deductible under the Insurance Act, R.S.O. 1990, c. I-8, from any award for loss of income or loss of earning capacity, and moreover, if so, whether the deduction should be gross or net of income tax.

Law and application

As the subject accident occurred in 1999, the action was governed by the Bill 59 regime of the Insurance Act, section 267.8 of which states:

Liability for loss or damage

267.8  (1) 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 the following amounts:

2. 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.

Notably, Bill 59 modified section 267(1)(c) of the prior Bill 68, OMPP ruling by:

  1. adding "loss of earning capacity" in subparagraph 2 so that damages are to be reduced by payments for loss of income or loss of earning capacity,
  2. in subsection (1) identifying the type of damage to which reduction applies, that is damages for income loss and loss of earning capacity; and
  3. adding the phrase "in respect of" in subparagraph 2 so that only payments received "in respect of" the incident are deductible.

Based on the facts

Justice Shaw determined that Demers was entitled to CPP disability benefits because she met a minimum qualifying period of work and had suffered a "severe and prolonged mental or physical disability", and to the HOOP benefits because she had been a member of the plan for the requisite time period, made the required contributions to the plan, had resigned from her employment and was "totally and permanently disabled." Importantly, the Court found that the subject disability benefits were therefore not paid for income loss or loss of earning capacity in respect of the incident, but were instead paid in respect of the recipient's disability. Therefore, the benefits were not deductible.

  1. The Court of Appeal upheld Justice Shaw's ruling that neither benefit was deductible from any tort award for loss of income or loss of earning capacity.

Important to note

The court explicitly stated that if the subject accident had occurred after October 1, 2003, then the subsequent Bill 168 insurance regime would have applied and Demers' CPP benefits would have been deductible. Under Bill 168, section 5.2 of O.Reg 312.03 clearly allowed CPP Disability Benefits to be deducted from an award of tort damages. The Court used this legislative change as reasoning that had the legislature intended to make CPP disability benefits deductible under the Bill 59 regime, the legislature could have and should have used clear and unambiguous language such as that of Bill 168 to do so.


With respect to collateral benefits, the Court of Appeal's ruling in Demers v. Monty, has now made it clear that for accidents governed by the Bill 59 regime (ie, accidents which occurred between November 1, 1996 and September 30, 2003), collateral benefits paid in respect of a plaintiff's disability, including CPP disability benefits, are not deductible. However, for accidents occurring after October 1, 2003, CPP benefits are deductible.


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