In this personal injury action arising from a motor vehicle accident, the parties moved under Rule 21 for a determination before trial as to the deductibility of an LTD settlement from any damages awarded for loss of income. The plaintiff agreed that LTD benefits paid under the policy were deductible from income loss, but argued that the settlement was not deductible because it followed litigation and was not necessarily all for LTD benefits (i.e. the settlement could have included costs or punitive damages). Justice Gibson rejected the plaintiff’s position and held that Economical was entitled to deduct the LTD settlement from any damages awarded for loss of income. A key factor in the analysis was that the minutes of settlement in the LTD proceeding stated that the settlement was a taxable LTD benefit. This suggested to Justice Gibson that the settlement was for income replacement rather than other claims.
