Ratych v. Bloomer

Ratych v. Bloomer
Collection
Supreme Court Judgments
Date
1990-05-03
Report
[1990] 1 SCR 940
Case number
21152
Judges
Dickson, Robert George Brian; Lamer, Antonio; Wilson, Bertha; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley
On appeal from
Ontario
Subjects
Torts
Notes
SCC Case Information: 21152
Decision Content
Ratych v. Bloomer, [1990] 1 S.C.R. 940
James Wavell Bloomer Appellant
v.
Donald Ratych Respondent
indexed as: ratych v. bloomer
File No.: 21152.
1990: January 30; 1990: May 3.
Present: Dickson C.J. and Lamer, Wilson, La Forest, L'Heureux-Dubé, Sopinka, Gonthier, Cory and McLachlin JJ.
on appeal from the court of appeal for ontario
Torts -- Negligence -- Damages -- Whether plaintiff can recover damages for loss of earnings when he has been paid his full salary under his contract of employment.
The respondent, a police officer, was injured in a motor vehicle accident involving the police cruiser he was driving and a vehicle driven by the appellant. He was unable to work for several months because of his injuries but continued to be paid pursuant to the terms of his collective agreement and did not lose any accumulated "sick credits". The respondent successfully sued the appellant for damages for lost wages. The trial judge and the Divisional Court both found that they were bound by a decision of the Ontario Court of Appeal (Boarelli v. Flannigan). The Court of Appeal refused leave to appeal without written reasons. The central issue here was whether payments made by an employer during the period when a plaintiff could not work should be brought into account in assessing his damages for loss of earnings.
Held (Dickson C.J. and Wilson, Gonthier and Cory JJ. dissenting): The appeal should be allowed.
Per Lamer, La Forest, L'Heureux-Dubé, Sopinka and McLachlin JJ.: The general principles underlying our system of damages suggest that a plaintiff should receive full and fair compensation, calculated to place him in the same position as he would have been had the tort not been committed, in so far as this can be achieved by a monetary award. In calculating damages under the pecuniary heads the measure of the damages should be the plaintiff's actual loss. The plaintiff, therefore, should not recover unless loss has been demonstrated, and then only to the extent of that loss. Double recovery violates this principle. It follows that where a plaintiff sustains no wage loss as a result of a tort because his employer has continued to pay his salary while he was unable to work, he should not be entitled to recover damages on that account.
Wages paid by an employer pursuant to a contract of employment are not akin to insurance and therefore do not fall within the principle that they should not be deducted from a monetary award because of their being akin to insurance. No loss arises in such a case and the underlying assumption that the employee has in fact suffered a loss or actually contributed to the fund from which the earnings were paid is not self-evident in the absence of evidence.
Without placing them in a determinative role, considerations relating to loss distribution generally support the view that wage benefits paid to a plaintiff while he or she is off work should be deducted from damages awarded for loss of earnings. Other methods of avoiding double recovery, such as subrogation, direct action by third parties, and the device of declaring a trust in favour of third parties, fail to provide a solution in many cases.
The following rule applies. Wage benefits paid while a plaintiff is unable to work must be brought into account and deducted from the claim for lost earnings. An exception to this rule may lie where the court is satisfied that the employer or fund which paid the wage benefits is entitled to be reimbursed for them on the principle of subrogation. This is the case where a statute expressly provides for payment to the benefactor of any wage benefits recovered or where the person who paid the benefits establishes a valid claim to have them repaid out of any damages awarded. Absent legislation or a third party claim, the only device available to the court to effect transference to the third party is a trust. Given that the third party has effective ways of enforcing his claim apart from trust, the trust doctrine applied in Arnold v. Teno and Thornton v. Prince George School Board should not be applied to collateral benefits in the usual case. A judge, however, might use this device to transfer payment to a third party where he or she is satisfied that this is both necessary and appropriate in the interests of justice. Some sort of obligation, moral if not legal, to repay the third party would need to be established to permit application of the trust device.
These comments did not extend to types of collateral benefits other than lost earnings, such as insurance paid for by the plaintiff and gratuitous payments made by third parties.
Per Dickson C.J. and Wilson, Gonthier and Cory JJ. (dissenting): Funds which a plaintiff recovers under an insurance policy and for which he or she has paid the premiums are not deductible. Workmen's compensation and sick benefits are compensation in the nature of insurance payments. Although their purpose is to make up for loss of wages to some extent, they are not themselves wages. They do not differ from benefits paid under a private insurance plan, except that they are organized collectively by the employees through their union, and fairness requires that they be treated in the same manner. The member of the group has paid for his or her insurance coverage just as much as the individual with a private contract of insurance.
In the context of labour negotiations, an employer would not agree to pay the wages of an employee who is absent from work due to illness or injuries without receiving in return certain concessions from the employees through their union. It may be next to impossible, however, for the plaintiff to prove this. Any benefit provided for the employee by the employer will come through the efforts of the union. The employee involved in a law suit with an insurer is the party least able to bear the burden of proving some cost paid for the benefit.
It is inequitable and unrealistic to require, as a pre-requisite for non-deductibility, that the plaintiff employee prove he or she has given something in exchange for obtaining the sick leave benefit from his employer. There is no reason why insurance payments should become deductible simply because they are bargained for and structured collectively by the employer and the union on behalf of the employee rather than individually by each employee.
Cases Cited
By McLachlin J.
Considered: Boarelli v. Flannigan (1973), 36 D.L.R. (3d) 4; Chan v. Butcher, [1984] 4 W.W.R. 363; Lavigne v. Doucet (1976), 14 N.B.R. (2d) 700; Hussain v. New Taplow Paper Mills Ltd., [1988] 1 All E.R. 541; Parry v. Cleaver, [1969] 1 All E.R. 555; referred to: Graham v. Baker (1961), 106 C.L.R. 340; Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229; Thornton v. Prince George School Board, [1978] 2 S.C.R. 267; Arnold v. Teno, [1978] 2 S.C.R. 287; Phillips v. South Western Railway Co. (1879), 4 Q.B.D. 406; Browning v. War Office, [1962] 3 All E.R. 1089; Bradburn v. Great Western Rail. Co., [1874-80] All E.R. 195; Tubb v. Lief, [1932] 3 W.W.R. 245; Dell v. Vermette (1964), 42 D.L.R. (2d) 326, allowing in part an appeal from (1963), 37 D.L.R. (2d) 101; Parsons v. Saunders (1963), 39 D.L.R. (2d) 190; Woodworth v. Farmer (1963), 39 D.L.R. (2d) 179; Rados v. Neumann, [1971] 2 O.R. 269; Massia v. Allen, [1973] 1 O.R. 419; Brazier v. Humphreys (1973), 38 D.L.R. (3d) 201; McCready v. Munroe (1965), 55 D.L.R. (2d) 338; Menhennet v. Schoenholz, [1971] 3 O.R. 355; Canadian Pacific Ltd. v. Gill, [1973] S.C.R. 654; Guy v. Trizec Equities Ltd., [1979] 2 S.C.R. 756; Dennis v. London Passenger Transport Board, [1948] 1 All E. R. 779; Myers v. Hoffman (1955), 1 D.L.R. (2d) 272; Rawson v. Kasman (1956), 3 D.L.R. (2d) 376.
By Cory J. (dissenting)
Bradburn v. Great Western Rail. Co., [1874-80] All E.R. 195; Boarelli v. Flannigan (1973), 36 D.L.R. (3d) 4; Shearman v. Folland, [1950] 1 All E.R. 976; Browning v. War Office, [1962] 3 All E.R. 1089; Parry v. Cleaver, [1969] 1 All E.R. 555; Hussain v. New Taplow Paper Mills Ltd., [1988] 1 All E.R. 541; Tubb v. Lief, [1932] 3 W.W.R. 245; Dawson v. Sawatzky, [1946] 1 W.W.R. 33; Bourgeois v. Tzrop (1957), 9 D.L.R. (2d) 214; Chan v. Butcher, [1984] 4 W.W.R. 363; Canadian Pacific Ltd. v. Gill, [1973] S.C.R. 654; Guy v. Trizec Equities Ltd., [1979] 2 S.C.R. 756; Lavigne v. Doucet (1976), 14 N.B.R. (2d) 700; Menhennet v. Schoenholz, [1971] 3 O.R. 355; Re U.E.W., Local 523, and Welland Forge Ltd. (1970), 21 L.A.C. 1.
Statutes and Regulations Cited
Family Law Reform Act, R.S.O. 1980, c. 152, s. 60.
Authors Cited
Brown, Donald J. M. and David M. Beatty. Canadian Labour Arbitration. Agincourt, Ont.: Canada Law Book, 1977.
Cooper-Stephenson, Kenneth D. and Iwan B. Saunders. Personal Injury Damages in Canada. Toronto: Carswells, 1981.
Goldsmith, Daena A. "A Survey of the Collateral Source Rule: The Effects of Tort Reform and Impact on Multistate Litigation" (1988), 53 J. Air L. & Com. 799.
McLachlin, B. M. "What Price Disability? A Perspective on the Law of Damages for Personal Injury" (1981), 59 Can. Bar Rev. 1.
New York (State). Governor's Advisory Commission on Liability Insurance. Insuring our Future: Report of the Governor's Advisory Commission on Liability Insurance. New York: The Commission, 1986.
Ontario. Inquiry into Motor Vehicle Accident Compensation in Ontario. Report of Inquiry into Motor Vehicle Accident Compensation in Ontario. (Coulter Commission.) Toronto: Ministry of the Attorney General, 1988.
Ontario. Law Reform Commission. Report on Compensation for Personal Injuries and Death. Toronto: The Commission, 1987.
Palmer, Earl E. Collective Agreement Arbitration in Canada, 2nd ed. Toronto: Butterworths, 1983.
Sanderson, John P. The Art of Collective Bargaining. Toronto: De Boo, 1979.
United Kingdom. Royal Commission on Civil Liability and Compensation for Personal Injury. Report of the Royal Commission on Civil Liability and Compensation for Personal Injury (1978), Cmnd. 7054, I-III.
United States of America. Attorney General. Report of the Tort Policy Working Group on the Causes, Extent and Policy Implications of the Current Crisis in Insurance Availability and Affordability. February, 1986.
APPEAL from a judgment of the Ontario Court of Appeal refusing leave to appeal a judgment of the Divisional Court (1988), 63 O.R. (2d) 544, 48 D.L.R. (4th) 576, affirming a judgment of the Ontario Supreme Court (1987), 60 O.R. (2d) 181, 40 D.L.R. (4th) 180, 16 C.C.E.L. 245. Appeal allowed, Dickson C.J. and Wilson, Gonthier and Cory JJ. dissenting.
James M. Flaherty and J. M. Chadwick, for the appellant.
James E. Lewis, Q.C., for the respondent.
The reasons of Dickson C.J. and Wilson, Gonthier and Cory JJ. were delivered by
//Cory J.//
Cory J. (dissenting) -- I have had the advantage of reading the reasons so cogently expressed by my colleague, Justice McLachlin. While I agree with much of what she has said, I have come to a different conclusion.
The issue raised in this case is whether sick leave benefits provided to the respondent under a collective agreement should be deducted from damages for loss of income awarded to him against the appellant tortfeasor. The essential question to be resolved is whether benefits provided pursuant to a collective agreement can be distinguished from those awarded under a private insurance contract. The appellant has not questioned the validity of the rule established in Bradburn v. Great Western Rail. Co., [1874-80] All E.R. 195 (Ex. Div.), that benefits awarded under a private insurance contract should not be deducted from damages awarded against a tortfeasor.
My colleague found that sick leave benefits provided under a collective agreement could not be equated with those obtained under a contract of private insurance, unless the employee can prove that he or she gave up something in exchange for the employer's assurance of continued wages in the event of injury. I find that I cannot distinguish between benefits paid pursuant to a collective agreement and those provided under a private insurance contract. In my view, the provision of sick leave benefits in a collective agreement is part of the package of wages and benefits arrived at through the give and take of bargaining. It is unfair to require the employee to prove that he or she furnished consideration to the employer in exchange for receiving these benefits.
Factual Background
On February 21, 1982, the appellant, James Bloomer, while driving his car, collided with a police vehicle driven by the respondent, Donald Ratych, a police constable employed by the Peel Regional Board of Commissioners of Police. As a result of the accident the respondent suffered injuries that kept him off work from February 21 to June 3, 1982. During his absence from work, he received from his employer a sum equivalent to his lost wages in accordance with Article 21.01 of the 1981-82 Collective Agreement between the Peel Regional Board of Commissioners of Police and the Peel Regional Police Association. Article 21.01 states:
21.01When a member of the Force is absent by reason of illness or injury occasioned by, or as a result of his duties within the meaning of the Workmen's Compensation Act, he will be entitled to his full pay and benefits while he is thereby incapacitated, and there shall be no loss of accumulated sick credits. "Full pay" shall be interpreted so as to preclude the possibility of members receiving a greater net pay while on Compensation than while working.
In his action against the appellant, the respondent sought to recover $7,987.38 in special damages, representing his wages during the period he was unable to work. At trial, Ewaschuk J. found for Mr. Ratych, stating that he was bound by the decision of the Ontario Court of Appeal in Boarelli v. Flannigan (1973), 36 D.L.R. (3d) 4. The appellant's appeal to the Divisional Court was dismissed on the same ground. The Court of Appeal refused to grant leave to appeal.
The Non-Deductibility of Private Insurance Proceeds
The interrelationship of the tort system and other forms of compensation from private or public collateral sources has become a complex problem with the growth of legislation providing benefits for injured workers. Commentators have complained that the development of the law in this area has been characterized by instability, recurrent shifts in judicial thinking and the absence of underlying principle: McLachlin (prior to her appointment to the bench), "What Price Disability? A Perspective on the Law of Damages for Personal Injury" (1981), 59 Can. Bar Rev. 1, at p. 44; Cooper-Stephenson and Saunders, Personal Injury Damages in Canada (1981), pp. 469-74. Yet despite any confusion that may have beset this issue, no court in Canada or England has questioned the principle enunciated in Bradburn, supra, that benefits awarded under a private insurance contract should not be deducted from damages awarded against a tortfeasor.
In Bradburn, the plaintiff had been awarded damages for injuries he had sustained due to the negligence of the defendant railway company. The defendant moved to have these damages reduced by an amount the plaintiff had received from a private insurer to compensate him for the income he had lost as a result of the accident. The Court of Appeal held that the plaintiff was entitled to receive both the amount payable by the insurer and the damages for loss of income recoverable from the defendant. Pigott B. held at p. 197:
I think that there would be no justice or principle in setting off an amount which the plaintiff has entitled himself to under a contract of insurance, such as any prudent man would make on the principle of, as the expression is, "laying by for a rainy day". He pays the premiums upon a contract which, if he meets with an accident, entitles him to receive a sum of money. It is not because he meets with the accident, but because he made a contract with, and paid premiums to, the insurance company, for that express purpose, that he gets the money from them.
The reasoning applied in Bradburn and other early cases was based primarily on the principle that the accident was not the causa causans, but merely a causa sine qua non of the receipt of the collateral benefit. However, by the middle of this century this justification had been superceded by the argument that the tortfeasor should not benefit from the plaintiff's foresight. As Asquith L.J. stated in Shearman v. Folland, [1950] 1 All E.R. 976 (C.A.), at p. 978:
What in a given case is, and what is not, "collateral"? Insurance affords the classic example of something which is treated in law as collateral. Where X is insured by Y against injury which comes to be wrongly inflicted on him by Z, Z cannot set up in mitigation or extinction of his own liability X's right to be recouped by Y or the fact that X has been recouped by Y: Bradburn v. Great Western Ry. Co. [supra] and Simpson v. Thomson [(1877), 3 App. Cas. 279; 38 L.T. 1; 29 Digest 290, 2355]. There are special reasons for this. If the wrongdoer were entitled to set-off what the plaintiff was entitled to recoup or had recouped under his policy, he would, in effect, be depriving the plaintiff of all benefit from the premiums paid by the latter and appropriating that benefit to himself.
While the English courts have reduced the scope of the rule of non-deductibility, they have never questioned the Bradburn rule as it applied to private insurance. In Browning v. War Office, [1962] 3 All E.R. 1089, the Court of Appeal held that a plaintiff's disability pension should be deducted from his damages for loss of earnings, but both Lord Denning M.R. and Diplock L.J. cited the Blackburn rule as a well-recognized exception to the general principle that a plaintiff should not be compensated for more than he or she has lost.
In Parry v. Cleaver, [1969] 1 All E.R. 555, the House of Lords reversed the Browning decision, holding that an officer's pension should not be deducted from his damages for loss of earnings. In the course of their judgments, their Lordships affirmed the importance of the rule in Bradburn. Lord Pearce stated at pp. 575-76:
One must, I think, start with the firm basis that Bradburn v. Great Western Ry. Co. [supra] was rightly decided and that the benefits from a private insurance by the plaintiff are not to be taken in account.
. . .
The Australian cases have accepted Bradburn's case [supra] as correct. So, too, the Canadian cases. It has never been criticised in our courts. It accords with the view of the AMERICAN RESTATEMENT. And counsel for the respondent has not assailed it here.
The Bradburn case was also used by Lord Reid to support his decision that the proceeds of insurance should never be deducted from damage awards. He stated at p. 558:
As regards moneys coming to the plaintiff under a contract of insurance, I think that the real and substantial reason for disregarding them is that the plaintiff has bought them and that it would be unjust and unreasonable to hold that the money which he prudently spent on premiums and the benefit from it should enure to the benefit of the tortfeasor. Here again I think that the explanation that this is too remote is artificial and unreal. Why should the plaintiff be left worse off than if he had never insured?
In the recent decision of Hussain v. New Taplow Paper Mills Ltd., [1988] 1 All E.R. 541, the House of Lords moved English law once more towards deductibility, holding that a plaintiff's sick pay benefits must be deducted from the damage award he had received in a suit against his employer. However, their Lordships affirmed the importance of the Bradburn rule. As Lord Bridge stated at pp. 544-45:
... where a plaintiff recovers under an insurance policy for which he has paid the premiums, the insurance moneys are not deductible from damages payable by the tortfeasor....
Since the early part of this century, the Bradburn rule has been consistently applied by Canadian courts. It has been affirmed by appellate courts in Saskatchewan (Tubb v. Lief, [1932] 3 W.W.R. 245 (Sask. C.A.), Dawson v. Sawatzky, [1946] 1 W.W.R. 33 (Sask. C.A.)), New Brunswick (Bourgeois v. Tzrop (1957), 9 D.L.R. (2d) 214 (N.B.S.C., App. Div.)), Ontario (Boarelli v. Flannigan, supra), and British Columbia (Chan v. Butcher, [1984] 4 W.W.R. 363). In addition, this Court in both Canadian Pacific Ltd. v. Gill, [1973] S.C.R. 654, at p. 668, and Guy v. Trizec Equities Ltd., [1979] 2 S.C.R. 756, at p. 763 has cited, with approval, the following statement of Lord Pearce in Parry v. Cleaver, supra:
If one starts on the basis that Bradburn's case (1874), L.R. 10 Ex. 1, decided on fairness and justice and public policy, is correct in principle....
Thus it can be seen that the principle that the funds that a plaintiff recovers under an insurance policy, for which he or she has paid the premiums, are not deductible is firmly established. It is a principle said to be based upon fairness and justice.
The Application of the Bradburn Rule to Insurance Benefits Paid Pursuant to a Collective Agreement
While courts in Canada and England have consistently applied the Bradburn principle with respect to private insurance proceeds, they have encountered difficulties in developing a uniform approach for dealing with collateral benefits provided by an employer to an employee. In England, the House of Lords in Hussain, supra, has developed a distinction between disability pensions and sick leave payments. Disability pensions are equated with insurance and are therefore non-deductible in accordance with the principles enunciated in Bradburn. On the other hand, sick leave payments are regarded as wages and are considered to be deductible.
This approach was not adopted unanimously by the House of Lords until the decision was rendered in Hussain, supra. It appears to be based upon obiter statements by Lord Reid in Parry v. Cleaver, supra, where he commented generally on the subject and stated at p. 560 that "wages are a reward for contemporaneous work but that a pension is the fruit, through insurance, of all the money which was set aside in the past in respect of his past work." According to Lord Reid, the wages paid to an individual while he or she is off work do not differ in kind from the wages paid while he or she is working. Yet he found that the money paid as a disability pension is a benefit that the individual would never have received but for the accident.
In Canada, courts have applied Parry v. Cleaver to support the non-deductibility of pension and sick leave benefits, devoting very little attention to the distinction enunciated by Lord Reid. This Court has held that Canada Pension Plan payments and payments from an employer's private pension plan should not be deducted from a plaintiff's damages: see Canadian Pacific Ltd. v. Gill, supra; Guy v. Trizec Equities Ltd., supra. But the Court's reliance and citation of Parry v. Cleaver extends only to statements made by Lord Reid and Lord Pearce which indicate the manner in which pensions can be equated with insurance. They should not be regarded, in my opinion, as approving the obiter distinctions between pensions and accident and sick leave benefits set out by Lord Reid.
The New Brunswick Court of Appeal in Lavigne v. Doucet (1976), 14 N.B.R. (2d) 700 (C.A.), has held that a police officer who had received full salary from his employer during his period of disability could not recover damages for lost earnings. But the court in that case appears to have relied only on the English Court of Appeal's decision in Browning, without considering Parry v. Cleaver.
In British Columbia and Ontario, on the other hand, the appellate courts have relied on Parry v. Cleaver to hold that accident and sick pay benefits cannot be deducted from the award of damages. In Chan v. Butcher, supra, the British Columbia Court of Appeal held that payments received by an employee under a "short-term disability plan" funded by her employer could not be applied to mitigate damages. The court stated that these benefits should be regarded as akin to insurance benefits and not wages. Macfarlane J.A. commented at pp. 367-68:
... the plan under which the benefits are payable need not necessarily resemble the ordinary contract of insurance.... as Lord Pearce observed in Parry v. Cleaver, at p. 37, it is sufficient if the character of the payments is the same as those derived from private insurance, namely, "they are intended by the payor and the payee to benefit the workman and not to be a subvention for wrongdoers who will cause him damage".
Adopting the same approach, I would say that the benefits in this case were intended to insure the employee against the risk of unemployment caused by illness or accident, and not for the advantage of the wrongdoer who caused the employee to become unemployable. Surely when the risk becomes reality and benefits are paid to relieve the employee from the burden of unemployment, then such benefits ought to be regarded as in the nature of insurance.
The appellate decisions in Ontario are perhaps most apposite, not so much because they reflect the dramatic swing back towards a general policy of non-deductibility that followed the Parry v. Cleaver decision, but rather because they focus on the evidentiary issue central to the case at bar. In Menhennet v. Schoenholz, [1971] 3 O.R. 355, the court held in a brief decision that in the absence of evidence to the contrary, sick pay received by a plaintiff from his employer should be regarded as a gratuitous payment by the employer that was deductible from a damage award.
Less than two years later, in Boarelli v. Flannigan, supra, the Ontario Court of Appeal delivered a lengthy decision endorsing in broad terms the principle of non-deductibility and explicitly reversing the court's decision in Menhennet. On the subject of benefits obtained pursuant to collective bargaining agreements, Dubin J.A., as he then was, held at p. 14:
Therefore, with respect to collateral benefits obtained, pursuant to collective bargaining agreements or private contracts of employment, I would view such benefits as part of the wage package and the benefits received as having been paid for by the employee, and I do not think that they should be treated any differently than a benefit received from a private insurance plan.... I think it safe to assume in present society that such benefits are included in the wages which the employee receives and for which he must work, rather than requiring proof of such facts in every case. It is well known that in the determination of a remuneration to be paid to employees "fringe benefits" are considered in arriving at a total wage benefit package, and the amount of the weekly salary or wage is dependent upon the cost of the totality of the benefits. [Emphasis added.]
In addition, he decided that even if the payments in Menhennet had been made ex gratia by the employer, they should still be non-deductible. He stated at pp. 15-16:
That brings me to consideration of the judgment of this Court in Menhennet v. Schoenholz, supra. In that case the injured party received a payment from his employer which was described as sick pay. The Court was of the opinion that there was no evidence to show that this was a payment obligatory on the employer's part, payment for which benefit had been negotiated or accepted by the union for an employee in lieu of an increase in his hourly wage. It is to be observed that it is implicit in that judgment that, if it had been shown that the payment therein was a fringe benefit as part of the total wage package, the said sum would not have been deducted, which is consistent with the views that I have heretofore expressed. However, relying on the principles in Browning v. War Office, supra, on the assumption that the payment was ex gratia, the Court held that the amount should be deducted.
As pointed out in Parry v. Cleaver, supra, the source of the payment is no longer relevant and, therefore, the fact that it is the employer in one case and a friend in another, who is the donor, should not affect the result. In my opinion, therefore, such ex gratia payments made by an employer should not be deducted from the award of damages which would otherwise prevail.
In her reasons, my colleague has not accepted Lord Reid's distinction between wages and pensions. Instead, she states that benefits of the kind at issue in this case might be regarded as akin to insurance. However, she holds that this inference can be drawn only if the employee can prove that he or she has given up something in exchange for the wage benefit received.
Like my colleague, I am unable to accept the distinction between pensions and wages relied upon in Hussain, supra. While the distinction may have some relevance within the particular structure of English labour relations law, I hesitate to apply it in the Canadian context. It is noteworthy, I believe, that the manner in which sick benefits have traditionally been characterized by Canadian labour law experts appears to run contrary to the approach taken by the House of Lords. In both Brown and Beatty, Canadian Labour Arbitration (1977), at p. 467, and Palmer, Collective Agreement Arbitration in Canada (2nd ed. 1983), at pp. 670-71, the authors state that the majority of Canadian labour arbitrators have held that an employee who is in receipt of sick benefits may properly claim payment for statutory holidays that occur during the period of his or her illness. The arbitrators' conclusion on this point is based on the fact that sick benefits are regarded as insurance rather than wages. According to both texts, the majority view is expressed in the arbitral decision of Re U.E.W., Local 523, and Welland Forge Ltd. (1970), 21 L.A.C. 1, at p. 5 (Christie), where the Board stated:
Workmen's Compensation and sick benefit are not wages; they are compensation in the nature of insurance payments, flowing from injury or sickness as the case may be. The purpose of such payments is to make up for loss of wages to some extent, but they are not themselves wages.
I am in complete agreement with this statement. In my opinion, sick leave benefits such as those at issue in this case are no different than benefits paid under a private insurance plan, except that they are organized collectively by the employees through their union.
The provision of sick leave benefits in a collective agreement is part of the package of wages and benefits arrived at through the give and take of bargaining. An individual member of the collective bargaining group, such as the respondent, is bound to accept the group insurance coverage. There is no alternative.
The group insurance will operate on the same principle as any private insurance scheme. All members of the bargaining unit will be obtaining coverage based on the actuarily calculated expectations of loss of time at work due to accident and illness of all members of the bargaining unit during the term of the insurance. Thus it can be seen that my colleague's concern that an employee with only one day's employment may be covered and unfairly compensated by a tortfeasor is of no relevance. A private insurance contract will cover an accident which occurs one day after the contract is in place. It is a risk taken into account by the insurer in writing the terms of the policy and fixing the premium. Precisely the same principle is applicable to group insurance. Some members of the group will never have to avail themselves of the coverage in 35 or 40 years of employment. Others will not be so fortunate. Depending on the circumstance, a group policy may cost just the same amount as private insurance. The individual employee will pay for that coverage in reduced wages or by the other provisions of the collective agreement.
There is no difference in operating principle between private and collective insurance. The worker within a collective unit should not be punished for his membership in the group or for his or her payment of the insurance premium or its equivalent through the group. It has been held that it would be unfair to deduct the wages recovered by an individual through a private contract of insurance. It is equally unfair to deduct these wages from the individual who, as a member of a group, receives group insurance coverage for wages lost due to accident or illness. The member of the group has paid for his or her insurance coverage just as much as the individual with a private contract of insurance. Fairness requires that the member of the group be compensated in the same manner as the individual with the private contract of insurance.
The negotiation of a collective agreement is a painstaking process of bargaining and compromise. While both sides recognize that an amicable agreement is in the best interests of both union and management, the spirit of negotiations is characteristically one of self-interest, not altruism. As Sanderson states, at p. 1, in The Art of Collective Bargaining (1979), the collective agreement:
... represents the compromises, the victories and defeats, large and small, of one group of negotiators over the other.
...
It is written and agreed upon by a number of individuals acting largely in a representative capacity. The collective bargaining process in essence is adversary in nature and represents the manner in which two opposite parties arrive at a ceasefire agreement for a specified period of time.
In the context of labour negotiations, it strains common sense to imagine that an employer would agree to pay the wages of an employee who is absent from work due to illness or injuries received in an accident without receiving in return certain concessions from the employees through their union. Nothing is given gratuitously. Usually benefits are only acquired by hard bargaining. But it may be next to impossible for the plaintiff to prove this. Any benefit provided for the employee by the employer will come through the efforts of the union. They will flow from the union as a collective unit and the cost of or the consideration given for the group insurance may be extremely difficult to calculate. The exchange may be a simple one of lower wages for higher benefits or it may involve factors that are more intangible. Union and employer representatives may be reluctant or unable to provide an exact description of the nature of the bargain. The employee involved in a law suit with an insurer, a professional litigant, is the party least able to afford to pay for the opinion of lawyers, or the expert evidence of economists, union negotiators and others required to satisfy the burden of proof that my colleague would place upon him or her. It is difficult to imagine that the group coverage of police officers would be any less expensive than a private contract of insurance. Although there is no evidence on the point, I think it should be recognized that the police face job-related risks of accident and injury that must be much higher than almost any other category of employment. It may well be impossible to calculate what the individual police officer is paying for his or her disability coverage. Yet as surely as night follows day, payment is being made.
In light of all these factors, I believe that it is inequitable and unrealistic to require, as a pre-requisite for non-deductibility, that the plaintiff employee prove he or she has given something in exchange for obtaining the sick leave benefit from his employer. In my view, there is no reason why insurance payments should become deductible simply because they are bargained for and structured collectively by the employer and the union on behalf of the employee rather than individually by each employee. I would adopt the words of Lord Reid, at p. 558, in Parry v. Cleaver, supra, on this point, but extend them to the employee accident sick leave provisions considered in the case at bar:
Then I ask -- why should it make any difference that he insured by arrangement with his employer rather than with an insurance company? In the course of the argument the distinction came down to be as narrow as this: if the employer says nothing or merely advises the man to insure and he does so, then the insurance money will not be deductible; but if the employer makes it a term of the contract of employment that he shall insure himself and he does so, then the insurance money will be deductible. There must be something wrong with an argument which drives us to so unreasonable a conclusion.
The Need for Legislative Reform
In her reasons, my colleague has observed that the focus of tort law is shifting inexorably away from concerns of moral culpability and punishment toward those of compensation and the efficient distribution of loss. She has noted the conclusions of the Royal Commission on Civil Liability and Compensation for Personal Injury in England, the Osborne Commission in Ontario and two American reports, all of which have recommended the legislative reform or abolition of the collateral benefits rule. While her comments focus on the problems in the law relating to collateral benefits, I believe they highlight the need for broad and creative legislative solutions that will promote values of compensation and efficient cost-sharing in fields such as motor vehicle accident law.
But the task of reform is primarily that of the legislatures. As the evolution of the collateral benefits rule in England and Canada has demonstrated, judicial efforts to create exceptions and distinctions have not been entirely successful. Far better, in my opinion, is the approach taken in the United States, where the collateral benefits rule has remained relatively untouched by the courts but has been widely revised or abolished by state legislatures.
Conclusion
In my opinion, the benefits obtained by Mr. Ratych from his employer pursuant to the collective agreement should not be deducted from the special damages for loss of income he has been awarded. These benefits are merely a collective form of private insurance, and should be treated in accordance with the rule in Bradburn, supra. The benefits form part of the package of wages and benefits arrived at through struggle and tough bargaining between the union and the employer. It is unfair and unrealistic to require the employee to furnish proof that he or she has provided a specific quid pro quo in exchange for the benefits. If the Bradburn rule is abolished by the legislature, then it would follow that the entire category of benefits that are equivalent to insurance would become deductible. However, in the absence of such legislation, there seems to me to be no reason why in all fairness the courts should treat benefits paid pursuant to a collective agreement differently from benefits received under a private insurance contract.
For these reasons, I would dismiss the appeal with costs.
The judgment of Lamer, La Forest, L'Heureux-Dubé, Sopinka and McLachlin JJ. was delivered by
//McLachlin J.//
McLachlin J. -- This case raises a single question: can a plaintiff who has lost work as a result of injuries caused by a tortfeasor recover from the tortfeasor damages for loss of earnings, where he has been paid his full salary pursuant to his contract of employment?
The issue raises the broader question of the interrelation of the tort system with other systems of compensation. The essential question is one of basic policy: how far is it right that a person should be compensated for the same loss from more than one source?
Facts
Mr. Ratych, a polic