What is future loss of earning capacity in injury cases in BC?
In personal injury claims (e.g. car accidents, slip and falls, medical malpractice, or sexual assault) there are different categories of compensation that a plaintiff can seek. A common claim is for loss of income earning capacity (i.e. the reduced ability to earn income because of someone else’s negligence). In the case of Grant v Ditmarsia Holdings Ltd, 2020 BCSC 1705, Madam Justice Wilkinson was evaluating a case involving a person who had suffered almost no income loss between the date of injury (February 10, 2015) and the date of trial (July 27, 2020) but nevertheless claimed loss of income earning capacity into the future. Wilkinson J. summarized the issue as follows:
[87] While not claiming a loss for past wages, the plaintiff does claim damages for loss of future income earning capacity. The plaintiff did not miss any time from work due to the injuries claimed, apart from a small amount of time to attend physiotherapy. The plaintiff testified that he had no particular plans for retirement prior to the Accident. The plaintiff’s annual income in 2010 was approximately $70,000. He has worked consistently since then and earned $77,000 in 2017, $81,000 in 2018, and $101,000 in 2019.
[88] Until the case of Perren v. Lalari, 2010 BCCA 140, this Court struggled with trying to reconcile the case law on this head of damage. The court in Perren clears up much of this confusion.
[89] After summarizing the case law, the court in Perren confirmed as follows:
[32] A plaintiff must always prove, as was noted by Donald J.A. in Steward, by Bauman J. in Chang, and by Tysoe J.A. in Romanchych, that there is a real and substantial possibility of a future event leading to an income loss. If the plaintiff discharges that burden of proof, then depending upon the facts of the case, the plaintiff may prove the quantification of that loss of earning capacity, either on an earnings approach, as in Steenblok, or a capital asset approach, as in Brown. The former approach will be more useful when the loss is more easily measurable, as it was in Steenblok. The latter approach will be more useful when the loss is not as easily measurable, as in Pallos and Romanchych. A plaintiff may indeed be able to prove that there is a substantial possibility of a future loss of income despite having returned to his or her usual employment. That was the case in both Pallos and Parypa. But, as Donald J.A. said in Steward, an inability to perform an occupation that is not a realistic alternative occupation is not proof of a future loss.
[90] The possibility of future loss of income must be real and substantial and not mere speculation: Athey v. Leonati, [1996] 3 S.C.R. at para. 27. The award cannot be based on a theoretical loss: Kim v. Morier, 2014 BCCA 63 at paras. 7-8.
What is a real and substantial possibility?
In this case, Wilkinson J. did find a real and substantial possibility. The judge concluded that the presence of chronic pain was sufficient to find a real possibility that the plaintiff would suffer income loss into the future. The analysis used by the court was as follows:
[102] On the totality of the evidence, I find that there is a real and substantial possibility that the plaintiff will experience future income loss for the following reasons:
a) He continues to suffer from daily chronic pain.
b) His upper extremity injuries are permanently disabling.
c) Without reducing his work pace and accommodating his functional limitations, there is a real possibility of future workplace injury.
d) The plaintiff’s ongoing limitations and reduced functionality will likely continue in the future and are likely permanent.
e) To continue long term in his current supervisory position the plaintiff would require accommodations from his employer with respect to a reduced pace and limited lifting and overhead work, more so in a non-supervisory position.
f) As a result of the pain and permanent disablement there is a real and substantial possibility that the plaintiff will have to retire earlier than 65, and the plaintiff testified that he had no plans to retire even at that age.
As a result of that finding, the plaintiff is now able to be compensated for the loss to their body’s ability to earn income through labour. The fact of ongoing chronic pain that impairs efficiency at work was sufficient in this context to warrant compensation.
How are these awards valued?
Compensation for these types of awards is a bit like looking into a crystal ball. The courts will often take either an “earnings approach” or a “capital asset approach”. The earnings approach tends to focus on a mathematical calculation (i.e. the plaintiff will suffer $1,000 loss per year for 10 years) whereas the capital asset approach looks at the economic loss for the impairments. Capital assets valuations can vary widely in how they are valued (including using a year’s annual earnings as a basis, a percentage of total life-time earnings, or another figure). The primary focus is that, regardless of how the award is calculated, it is fair and represents the contingencies positive and negative of the plaintiff’s reduced earning capacity.
In the Grant case, Wilkinson J. performed the weighing of relative contingencies in a consist manner that helps explain the process as follows:
[104] In assessing future loss I am required to estimate a pecuniary loss by weighing, while not specifically being required to assign specific numeric values to, the possibilities and probabilities of future events and relating the evidence and findings of fact to the quantification of the loss: Dunbar v. Mendez, 2016 BCCA 211 at para. 21. Contingencies ought to be considered in each case to aid in the proper assessment of damages to ensure fairness and reasonableness of the award.
[105] The plaintiff’s evidence was that his current employer has acknowledged his physical limitations, so there is a real possibility that his current level of physical demands would be reduced in future years. The plaintiff’s testimony was that he did not seek accommodation in the workplace, and just did what needed to be done to get the job done. This was in part due to the lack of ability in the employees he supervised or, he testified, due to lack of resources generally, or that he wanted to ensure the job was done to his standards.
[106] The plaintiff is now 56 years old. If his employer is not able to afford the accommodations required for the plaintiff to continue working fulltime for the long term he will have to compete with healthy counterparts in the open job market, before he could retire.
[107] If unable to continue to perform the duties of his current position, it is possible that the plaintiff may obtain a position that is less physically demanding, despite his evidence that such a job is not readily available in his industry. That position may not provide income at the same level.
[108] The plaintiff’s psychological condition could worsen due to the cumulative effects of pain and lack of sleep. Dr. Jackson did not provide an opinion with regard to the plaintiff’s psychological symptoms or prognosis. There was no evidence before me as to the plaintiff’s psychological prognosis. Pain management treatment and treatment of sleep issues may improve the plaintiff’s symptoms.
[109] The plaintiff may suffer a future indivisible injury at work or outside work that renders him unemployable or he may be laid off due to economic factors. The plaintiff has a history of work and non-workplace injuries which have negatively affected his ability to work, at least on a temporary basis.
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[113] Given the skill level of the plaintiff, his reputation with his employer and the industry, and his own sense of joy and pride in his work, I find it is likely that the plaintiff will be able to work at his current performance level fulltime for at least three years but not likely more than five years. In my view, it is fair and reasonable to value the plaintiff’s loss of income earning capacity, taking into consideration the other various contingencies at play and discount rates, at $325,000.
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