The insurance exception to the rule against double recovery is analyzed in this recent case.
It is argued that Disability Pension Benefits received by the Plaintiff do not fall within the private insurance exception to the principle that a plaintiff is only entitled to be compensated for his or her actual loss
The legal question is whether the Disability Pension Benefits should be deducted from the Plaintiff’s award for loss of future income – earning capacity ?
The Defendant’s position:
“On the basis of IBM Canada Limited v. Waterman, 2013 SCC 70 [IBM Canada], the Court must enter into an examination of the circumstances of any benefit that a plaintiff has received to determine whether it is appropriate to deduct the benefit from the award for loss of income-earning capacity. The defendant’s position is that such an analysis would lead to the conclusion that the exception does not apply to this Disability Pension.
 I do not agree with the defendant’s submission. In IBM Canada, the majority decision referred with approval to the Court’s earlier decision in Cunningham v. Wheeler,  1 S.C.R. 359. In Cunningham, the majority expressly decided that benefits payable pursuant to the provisions of a collective agreement in which the parties agreed to the benefits as part of the compensation package of an employee are not to be deducted from the award. The majority took the position that benefits which are the result of a collective bargaining agreement are “paid for by the plaintiff”, in the same way as is a privately purchased disability insurance policy and so are subject to the insurance exception. At 403–04, the majority explains this as follows:
The scheme in this case can qualify as an insurance exception on the basis of the reasons of the majority in Ratych v. Bloomer, [ 1 S.C.R. 940]. In that case, McLachlin J. writing for the majority specifically limited her comments to benefits which were not in the nature of insurance or gratuitous payments in these words (at p. 983):
These comments should not be taken as extending to types of collateral benefits other than lost earnings, such as insurance paid for by the plaintiff and gratuitous payments made by third parties.
To say that the exception applies only to private insurance, where actual premiums are paid to the insurance company, would create barriers that are unfair and artificial. It would mean that top management and professionals who could well afford to purchase their own insurance would have the benefit of the insurance exception, while those who made the same provision and made relatively greater financial sacrifices to provide for the disability payments through their collective bargaining agreement would be denied the benefits of the insurance exception. This would be manifestly unfair. There is no basis for such a socially regressive distinction.
Union representation and collective bargaining are recognized as a means for working people to protect their interests. The benefits for which employees have bargained in good faith should not be sacrificed simply because the mode of payment for the disability benefit is different from that in private insurance contracts. Where evidence is adduced that an employee-plaintiff has paid in some manner for his or her benefits under a collective agreement or contract of employment, the insurance exception should apply. It would be unjust to deprive employees of the benefits which, through prudence and thrift, they have provided for themselves.
 The majority judgment in IBM Canada also addresses this issue:
 In Guy v. Trizec Equities Ltd.,  2 S.C.R. 756, Mr. Guy’s injury led to his retirement and receipt of pension benefits. They were not deducted from damages for loss of earnings. Ritchie J., for the Court, viewed pensions, whether contributory or non-contributory, as flowing from the employee’s work and part of what the employer was prepared to pay for the employee’s services. He agreed with Lord Reid’s conclusion, in Parry, as quoted by Spence J., in Gill, that “[t]he fact that they flow from past work equates them to rights which flow from an insurance privately effected by [the employee]”: Guy, at p. 763. Similarly, in Jack Cewe, the Court did not deduct a dismissed employee’s unemployment insurance benefits from his wrongful dismissal damages. The benefits, wrote Pigeon J., for the Court, were a consequence of the contract of employment making them similar to contributory pension benefits: p. 818. (The collateral benefit issue that arose in Jack Cewe is now addressed by s. 45 of the Employment Insurance Act, S.C. 1996, c. 23, which states that a claimant who receives benefits and is subsequently awarded damages for the same period, “shall pay to the Receiver General as repayment of an overpayment of benefits an amount equal to the benefits that would not have been paid if the earnings had been paid or payable at the time the benefits were paid”.)
 In this case, Ms. Thompson called Mr. Bethel, a representative of her union, who testified that he was a member of the union bargaining committee that negotiated the collective agreement. Mr. Bethel confirmed the common sense inference that in collective bargaining the object of the employer is to negotiate the best agreement possible from its perspective and that the final compensation package involves trade-offs between wages and other benefits. His evidence on this point was as follows:
Q Were you involved in the collective bargaining negotiations?
A Yes. Twice I’ve participated in national bargaining, in 2010 and in 2015.
Q And were employees’ salary and benefits part of those negotiations?
A Yes, they are.
Q Can you describe how the collective bargaining negotiations are done?
A It involves probably — the last time around was about six to seven weeks. Our compensation package is our wages, our pension and our benefits. The employer bargaining committee are fond of saying – they’d say, you know, this is the size of the pie and however you guys on the union side decide you want to divvy it up is up to you. Of course on union side we’re charged with making sure that that pie is bigger, but …
Q So would a union member’s salary be impacted if the employer’s benefit contributions changed?
A Yes, yes. Generally it’s always sort of a trade off. If you negotiate higher wages, then you’re going to get less in your pension, less in your benefits, days off, that type of thing. If you negotiate better benefits, more on the pension, generally you’re going to get less wages also wage progression and all of the rest of that, new starting salaries, all that factors all — into it.
 In addition, the Pension Plan Members’ Booklet expressly states that the Pension Plan expresses the benefits negotiated in the collective agreement between UPS and the Teamsters Union.
 Accordingly, I find that this case is governed by the decision in Cunningham, and that there should be no deduction of any Disability Pension amounts received by Ms. Thompson from the damages awarded for loss of earning capacity.”
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