Disagreement arises from breakdown of heads of damages in settlement minutes
The Nova Scotia Court of Appeal has dismissed a long-term disability plan trust fund’s appeal upon finding that a judge did not err by determining that it waived its right to be informed by not participating in the mediation.
In Nova Scotia Public Service Long Term Disability Plan Trust Fund v. Feener, 2025 NSCA 49, the respondent got a full-time position at the Nova Scotia Community College in 1998. Since he continued making payments, he remained insured under the Nova Scotia Public Service Long Term Disability Plan (LTD plan) despite a leave of absence from the college since 2012.
The appellant – the trustees of the Nova Scotia Public Service Long Term Disability Plan Trust Fund – administered the LTD plan trust fund under a trust agreement between the Nova Scotia Government Employees Union, the province, and the trustees.
Under the LTD plan’s subrogation provisions, the settlement of a claim by the respondent against his employer would only take effect if the fund agreed to the settlement.
While working as a consultant for 3248461 Nova Scotia Limited, the respondent suffered a slip-and-fall injury at his workplace in Sydney, Nova Scotia, on Feb. 11, 2015. He sustained another slip-and-fall injury in his driveway around a week later and sought medical treatment the next day.
In March 2015, the respondent went off work from his current workplace and never returned. Found to be disabled, he has received disability benefits under the LTD plan since November 2015.
The respondent brought a legal action against his employer. He alleged negligence and sought personal injury damages based on his workplace injury. He and his employer agreed to try to resolve the action through mediation.
The fund received briefs and books from both sides before the mediation, in which it did not participate. At the mediation conducted in April 2023, the respondent and his employer agreed to an all-inclusive settlement amount of $365,000. This settlement agreement depended on the fund’s consent per the LTD plan.
Immediately after the mediation, the respondent informed the fund, which was unaware of settlement offers, about the tentative settlement and the settlement minutes. The fund consented to the settlement amount, but not to the breakdown of the heads of damages under the settlement minutes.
The fund and the respondent agreed to set aside enough settlement funds in trust for the fund’s subrogation claim. The respondent received LTD benefits amounting to $365,074.06 under the LTD plan for the period from Nov. 20, 2015 to Apr. 11, 2023.
However, the fund and the respondent failed to resolve the dispute over allocating the settlement funds among the heads of damages. Thus, the fund filed an application asking the court to resolve the matter.
In August 2024, the application judge determined how to allocate the settlement funds among the heads of damages. He set past wage loss and the corresponding pre-judgment interest apportionment at $32,442.91, and the future wage loss apportionment at $65,703.
Appeal dismissed
The fund appealed the application judge’s decision. The Nova Scotia Court of Appeal dismissed the appeal upon finding that the judge acted within his discretion.
First, the appeal court rejected the fund’s argument that the judge committed a legal error by determining that the appellant waived its right to be informed of the respondent’s claim by deciding not to participate in the mediation.
The appeal court explained that the judge did not find that the fund irrevocably waived its rights to be informed and instead found that the fund could not influence the real-time allocation of damages because it chose not to attend the mediation despite the respondent’s invitation. The appeal court added that this finding by the judge did not impact his analysis or the case outcome.
The appeal court noted that the respondent notified the fund of the settlement after the mediation ended. The appeal court pointed out that the fund approved the settlement, which depended on its approval, and applied to resolve the issue of the heads of damages when it could not agree with the respondent regarding the allocation.
Second, the appeal court ruled that the judge did not misapprehend the evidence on the riskiness of the income loss claim. The appeal court noted that the judge had to weigh the risks involved in various claims and considered the income loss claim riskier due to liability and causation issues.
Third, the appeal court held that the judge approached the allocation of damages consistently with previous cases. The appeal court said the judge assessed the overall claim and settlement amount, not the accuracy of individual claims, to reach a fair allocation.
Lastly, the appeal court concluded that the judge applied a 50-percent puffery reduction after prorating the heads of damages in accordance with established case law and with the goal of ensuring fairness.
