Executive Summary: Key Legal and Evidentiary Issues

• The Workers' Compensation Board of Nova Scotia sought a partial stay of earnings replacement benefits owed to Patricia O'Brien pending its leave to appeal a WCAT decision.
   
• Central to the motion was whether the Board could establish irreparable harm — specifically, that it would be unable to recover benefits paid if its appeal ultimately succeeded.
   
• WCAT determined on September 26, 2025 that O'Brien's 2015 compensable left knee injury materially contributed to the ongoing knee problems she had reported since 2019.
   
• Applying the Fulton test, the court declined to assess the arguable issue question, deferring that determination to the panel hearing the leave application.
   
• Financial evidence presented by the Board — including O'Brien's modest income and property information — was found insufficient to establish a real risk of non-repayment constituting irreparable harm.
   
• Both the statutory scheme and binding authority in Devco supported the view that the risk of losing an overpayment in workers' compensation cases does not amount to irreparable harm.

Facts of the case

Patricia O'Brien suffered a compensable injury to her left knee on September 3, 2015 while working as a continuing care assistant. She was diagnosed with a knee sprain and treated with physiotherapy, with treatment concluding in early November 2015, after which she returned to work. In 2019, O'Brien reported ongoing left knee problems to the Workers' Compensation Board of Nova Scotia ("the Board"). Initial Board and Hearing Officer decisions found her knee problems unrelated to the 2015 injury. On July 28, 2022, the Nova Scotia Workers' Compensation Appeals Tribunal ("WCAT") returned the matter to the Board, directing further investigation with updated imaging and specialist consultation. A Board decision made on July 13, 2023 applied its recurrence policy and concluded there was no medical compatibility between the 2015 knee injury and the ongoing knee issues, a finding upheld by a Hearing Officer on February 6, 2024. O'Brien appealed to WCAT.

In its decision of September 26, 2025, WCAT allowed O'Brien's appeal, finding that the totality of the evidence was sufficient to conclude that it was at least as likely as not that her left knee problems were causally related, at least in part, to her 2015 left knee injury. WCAT found insufficient evidence of notable left knee problems before the 2015 injury, sufficient evidence of continued knee pain following it, and sufficient evidence to conclude that the 2015 injury materially contributed to the knee problems reported in 2019 and beyond. As a result, the Board undertook a calculation of earnings replacement benefits owed to O'Brien, which as of November 26, 2025 totalled $77,344.61. The Board had paid her $11,601.69 — approximately 15% of the total amount owing — and sought a partial stay of the remaining balance while it pursued leave to appeal the WCAT decision. The leave application was scheduled to be heard on March 18, 2026.

Policy terms and legislative provisions at issue

The Board argued that amendments to the Workers' Compensation Act, S.N.S. 1994-1995, c. 10, s. 1A, made in 2024 to embed financial responsibility and accountability into the statute's purpose, distinguished the present case from prior authority. It also relied on its overpayment recovery policy (Workers' Compensation Board Policy Number 10.2.1R1) and Board Policy 8.1.3 R3, which provides that an appeal to a Hearing Officer does not operate as a stay of proceedings. O'Brien's position was that the statutory scheme itself accepts a risk of non-recovery — neither the Act nor WCB policy treats such a risk as irreparable harm — and that no authority had been granted under the scheme to stay benefit payments pending appeal.

Reasoning and analysis

Justice Gogan applied the Fulton test (Fulton Insurance Agencies Ltd. v. Purdy, 1990 NSCA 23), which requires the party seeking a stay to establish on a balance of probabilities: (1) an arguable issue for appeal; (2) irreparable harm if the stay is denied; and (3) that the balance of convenience favours a stay. The court declined to assess the arguable issue question, following the approach in Maynard Holdings v. IForm Works Inc., 2022 NSCA 54, and deferring that determination to the panel hearing the leave application, as the question closely tracked the leave criteria itself.

On irreparable harm, the court found that the Board's core concern — potential inability to recover funds paid to O'Brien if the appeal succeeded — did not meet the required threshold. The Board offered evidence of O'Brien's modest income and property information showing a home with a 2025 assessed value of $123,400 encumbered by a 2023 mortgage of $85,184.78. The court found no evidence of default on the mortgage or other debt obligations, and no basis to conclude O'Brien was in acute financial difficulty or would fail to honour a repayment obligation. The court drew on Cape Breton Development Corporation v. Nova Scotia (Workers' Compensation Appeals Tribunal), 2008 NSCA 11 (Devco), in which Chief Justice MacDonald recognized that the risk of losing an overpayment in the workers' compensation context was "certainly not viewed as constituting irreparable harm," given the historic trade-off under which workers forgo the right to sue an employer in exchange for immediate compensation regardless of fault. Justice Gogan found no material change in the Board's overpayment recovery policy since Devco and declined to distinguish that authority on the basis of the 2024 legislative amendments. The court further noted that a stay of the decision would affect not only the monetary benefits owed to O'Brien but also her entitlement to a range of other benefits, including medical aid — benefits she had been denied since 2019 while the matter was litigated. Although the balance of convenience analysis was not strictly required once irreparable harm failed, the court noted it clearly favoured O'Brien, who had been entirely unable to work since June 12, 2019 and had received no employment income or benefits beyond the recent partial payment.

Ruling and overall outcome

The Board failed to satisfy the primary test under Fulton and did not argue any exceptional circumstances warranting a stay. The motion to stay the WCAT decision under appeal was accordingly dismissed. Patricia O'Brien was the successful party on the motion. There shall be no order for costs.