Executive Summary: Key Legal and Evidentiary Issues

• Dispute concerned allocation of settlement funds from a workplace injury claim, affecting the Fund’s subrogation rights.

• The Trustees argued the application judge misapprehended evidence regarding the riskiness of the income loss claim compared to other heads of damage.

• The appellant alleged errors in law concerning the legal test applied to assess heads of damage and the puffery adjustment.

• The sequence and method of the judge’s 50% puffery adjustment to income loss were challenged, claiming it led to an unjust result.

• The Fund’s non-participation in mediation limited its input on real-time allocation of damages, though no waiver of substantive rights occurred.

• The appeal was dismissed, as the judge’s discretion and methodology were consistent with prior case law and not in error.

Facts of the case

Sterling Feener, insured under the Nova Scotia Public Service Long Term Disability Plan (LTD Plan), was injured in a slip and fall at work on February 11, 2015, and was subsequently found disabled and eligible for LTD benefits. A second fall occurred at his home a week later, on or about February 18, 2015. He began receiving LTD benefits as of November 20, 2015, and had been on leave from Nova Scotia Community College since 2012 while working as a consultant for OTS at the time of the injuries.

Feener sued OTS for negligence relating to the workplace injury and settled at mediation on April 11, 2023, for $365,000, subject to the Fund’s consent. The Fund was invited but chose not to attend the mediation. It consented to the global settlement amount but not to the proposed breakdown across heads of damages.

Discussion of policy terms and clauses at issue

The LTD Plan contained a subrogation clause entitling the Fund to recover amounts paid out in disability benefits from any third-party recovery by the insured. The Plan stipulated that settlements required the Fund’s consent, which Feener sought following mediation. The dispute centered on the allocation of settlement proceeds between heads of damages, particularly past and future income loss, which influenced the Fund’s subrogation recovery.

Outcome of the decisions

The application judge allocated $32,442.91 to past income loss and pre-judgment interest, and $65,703.00 to future income loss. He applied a 50% puffery adjustment to reflect the risks and uncertainties associated with these claims due to liability, causation issues, and Feener’s pre-existing mental illness. The Nova Scotia Court of Appeal dismissed the appeal, finding no misapprehension of evidence or error of law, and upheld the judge’s discretion and methodology, which aligned with prior cases like Kontuk and Hollis. Costs of $5,000 were awarded to Feener.