Category: Diminished Earning Capacity

Court Adopts Capital Asset Approach In Awarding Plaintiff $1,400,000.00 In Diminished Earning Capacity

In Symons v. ICBC, the Plaintiff was seriously injured in a motor vehicle accident, and consequently commenced legal proceedings, seeking damages for pain and suffering, income loss, loss of housekeeping capacity, diminished earning capacity, cost of future care, and out of pocket expenses.

 

The Defendant driver did not defend the action, however ICBC did, originally denying liability and alleging contributory negligence against the Plaintiff. However, liability was conceded at trial by ICBC, who did not pursue its’ claim of contributory negligence, nor did it argue that the Plaintiff had failed to mitigate her damages.

 

The Plaintiff suffered a variety of injuries, most notably to her lower back, which required three surgeries. She also underwent psychiatric treatment for post-traumatic stress disorder and a major depressive disorder.

 

Determining an appropriate award for diminished earning capacity is not always an easy task, particularly in the case at bar, where the Court noted that neither side had provided the Court with actuarial evidence.

 

The Court found that the Plaintiff’s expert evidence clearly established that there would be a real and substantial possibility that the Plaintiff’s injuries and continuing disabilities would cause her to lose income in the future. The Court also noted that, at the time of the accident, the Plaintiff had been very well motivated to perform well with her business as a self-employed first aid attendant in the oil and gas industry.

 

Rather than using the earnings approach in an attempt to quantify diminished earning capacity, the Court adopted the other accepted approach, that being the capital asset approach, as quantification of diminished earning capacity was not easily measurable . This approach recognizes that there has been an impairment to the Plaintiff’s ability to earn income. Factors that a Court will consider when adopting such an approach include whether the Plaintiff has been rendered less capable overall from earning income from all types of employment; whether the Plaintiff is less marketable or attractive as an employee to potential employers; whether the Plaintiff has lost the ability to take advantage of all job opportunities which might otherwise have been open to him or her, had he or she not been injured; and,whether the Plaintiff is less valuable to himself or herself as a person capable of earning income in a competitive labour market.

 

Counsel for the Plaintiff argued that the Plaintiff would most likely have worked in her chosen field to retirement had she not been involved in the accident, which the Court found to be a real possibility. The Court was critical of the position taken by ICBC’S lawyer that the Plaintiff could work part-time in her chosen profession, and supplement her income from a proposed horse breeding business, stating that “this is just so speculative as to be nonsense”.

 

In awarding the Plaintiff $1,400,000.00 in diminished earning capacity, the Court commented that :

 

[106] The third party argued that the plaintiff could work part-time at $20 to $25 per hour, making about $25,000 per year. Then, income from the plaintiff’s proposed horse breeding business would bring her up to pre-accident earnings within a year or two. This is just so speculative as to be nonsense. There was no evidence as to what a horse breeder could make and no substantive evidence that the plaintiff was so qualified except for her own love of horses. The prospect of the plaintiff working regular part-time immediately at the rate suggested by the third party is slim. The third party also argued without evidence that job opportunities for first aid attendants had dropped along with pay rates such that the plaintiff would probably not be earning more than $25,000 as a first aid attendant in any event. There was then the suggestion, not put to the plaintiff, that she would likely then have “decided to cut her losses and move onto something else”. In the alternative, the third party suggested annualized losses in the $20,000 to $30,000 range to age 65 which, given discount factors, would result in loss of earning capacity in the range of $300,000 to $450,000. No formula was given for this calculation.

 

[107] The plaintiff argued that the plaintiff would most likely have worked as a first aid attendant to retirement if the accident had not occurred. This is certainly a real possibility with the additional likelihood that the plaintiff would have advanced her skills and her reputation in the business. The plaintiff suggested that the plaintiff would have earned between $50,700 to $80,700 per year. This is less than the $87,900 per year projected by the third party for past wage loss. Against this is the real possibility that the plaintiff will return to part-time employment. The potential job as a riding instructor would earn the plaintiff only $3,360 per year. The plaintiff agreed that a more regular part-time job could earn the plaintiff as much as $26,000 per year. This left the range of possible annual income loss between $25,000 and $80,700. The plaintiff would then apply the discount table from Appendix E of the Civil Jury Instructions as was done in Erickson v. Bowie, 2007 BCSC 1465 (CanLII) at para. 5, a case provided by the third party, to come to a range from $593,500 to $1,940,700 for future income loss to retirement at age 65. This discount rate is set by the Chief Justice pursuant to s. 56 Law and Equity Act, R.S.B.C. 1996, c. 253 and BC Reg 74/2014. Ultimately, the plaintiff sought an award in the range of $1,500,000 to $2,000,000.

 

[108] After consideration of all of the factors here and without mathematical precision, I have concluded that the plaintiff would likely have made about $80,000 per year in her first aid business and would have worked in this business as long as she could to retirement at age 65. She is driven to work now but faces significant obstacles that restrict the likelihood of her maintaining regular part-time employment at a rate of about $25,000 per year into the future. Assessing this loss as best as possible considering both positive and negative contingencies, and taking into account the discount factor without expert assistance, an award of $1,400,000 for loss of future earning capacity is appropriate here.

Court Adopts Earnings Approach In Awarding Plaintiff $500,000.00 For Diminished Earning Capacity

In Pike v. Kasiri, the Plaintiff was involved in a t-bone collision at an intersection, thereby suffering numerous injuries, including to his neck, back, groin, and hip, which required two surgeries.

 

Prior to the accident, the Plaintiff was a healthy and active person, and had been working as a plumber after obtaining his journeyman’s certificate. The life of the Plaintiff after the accident was a marked departure than from before, as his work, recreational, and social life were all affected greatly.

 

The Plaintiff sought many types of damages, including diminished earning capacity, and relied on an expert economist report to this effect.

 

Counsel for the Plaintiff argued that the Court should adopt the earnings approach, rather than the capital asset approach, in determining an award for diminished earning capacity. Counsel for the Plaintiff also submitted that the Court should adopt their economist’s calculations as to a present value of the Plaintiff’s future earnings as a plumber, which was over $1.3 million dollars, assuming the Plaintiff would have worked until the age of 65. It was also submitted that the Plaintiff, despite his efforts to re-train in the field of golf management, would not likely be competitively employable due to the injuries he sustained in the accident.

 

ICBC’S lawyer argued that there should be a cut off point with respect to damages, including diminished earning capacity, of seven and a half years after the motor vehicle accident, and argued that an award of only $94,500.00 should be awarded for diminished earning capacity. ICBC’S lawyer also submitted that the Plaintiff was employable in the golf management field, which he had chosen. Further, ICBC’S lawyer argued that the Plaintiff still has important characteristics that made him a valuable employee and a good plumber, including determination and a motivation to work hard. As such, the Plaintiff would be successful in his new chosen field.

 

In determining diminished earning capacity, the Court elected to adopt the earnings approach, rather than the capital asset approach. In awarding the Plaintiff $500,000.00, the Court commented :

 

[345] Mr. Benning provided calculations with regard to future income loss. In particular he calculated that over his remaining working life the Plaintiff would make $269,662 less in income in golf management with promotion after ten years than he would have as a journeyman plumber. The present value cumulative total future income for the Plaintiff in golf management with promotion after ten years is $817,942.

 

[347] Taking all the evidence into account and being mindful that the Court is to make an assessment of loss of future capacity and not engage in an exercise of mathematical calculation, I am guided by the minimum wage figure in the amount of $348,000 as representing the probable low end of the present value of the Plaintiff’s future earnings, and the amount of $817,942 for a position in golf management after ten years as the probable high end.

 

[348] To my mind, the probable loss of future capacity for the Plaintiff is approximately midway between those two points, as compared to the present value of his potential future earnings as a journeyman plumber in the amount of $1,087,603. I am also guided by the Plaintiff’s strong work ethic and determination on the one hand and on the other, the limitations now placed upon him by the injuries caused by the accident to his left hip and back and their sequelae, including their impact on his mental health.

Court Adopts Capital Asset Approach In Awarding Plaintiff $290,000.00 For Diminished Earning Capacity

In Carmichael v. Kwon, the Plaintiff was injured in two motor vehicle collisions, with the first one being more serious. The Plaintiff brought ICBC claims for both, seeking damages for pain and suffering, wage loss, diminished earning capacity, homemaking and child care costs, and future care. The actions were consolidated at trial, and liability was admitted on behalf of both Defendants by ICBC’S lawyer.

 

The Plaintiff suffered a variety of injuries, most notably a torn labrum and degeneration in her hip, which would eventually require three hip replacement surgeries. With respect to diminished earning capacity, the Court noted it was clear that there was a real and substantial possibility that the Plaintiff’s future earning capacity had been impaired due to her injuries.

 

Counsel for the Plaintiff argued that had the motor vehicle accident not occurred, then the Plaintiff would have left her job as a server, and would have trained to be a unit clerk, nurse aide, licenced nurse, or special education teacher’s assistant, which would have been higher paying jobs. Counsel for the Plaintiff sought over $500,000.00 in damages for diminished earning capacity.

 

ICBC’S lawyer acknowledged that the Plaintiff would be limited to sedentary or part-time work, and would require accommodations, however argued that an award of $200,000.00 for diminished earning capacity would be more appropriate.

 

Rather than using the earnings approach for the purposes of determining an amount to award the Plaintiff for diminished earning capacity, the Court adopted the capital asset approach, as set out in Brown v. Golaiy. This was primarily due to the Plaintiff’s young age, and that the accident happened so early on in the Plaintiff’s working life. The Court was impressed with the Plaintiff’s work ethic, as well as past efforts that she had made to improve her career potential. The Court focused on the effect that the Plaintiff’s hip injury would have on her ability to earn income in the future, ruling that it would render the Plaintiff substantially less capable of earning an income after her recovery from the first hip replacement. Further, the Plaintiff’s capacity to earn income would be effected due to her need for a second hip replacement, and consequent recovery period.

 

The Court, after also factoring in contingencies such as a disruption in the Plaintiff’s career due to maternity leave, awarded the Plaintiff $290,000.00 in diminished earning capacity.

 

[135] Having regard to such factors, it is evident the hip injury will render her substantially less capable of earning an income until after she recovers from the first hip replacement, which will be five to ten years from the time of trial. She will become progressively more restricted in her physical mobility until the surgery, such that there is a real and substantial possibility that she would only be able to work part-time in the years immediately preceding her first hip surgery. I accept the evidence of the occupational therapist, Ms. Townsend, that the plaintiff cannot currently return to her pre-MVA employment because of its physical demands and will only be able to work in a sedentary job which allow her to have postural breaks and which does not involve extensive neck flexion or higher strength demands. The recovery period after hip surgery will be approximately three months.

 

[136] While it is probable that her career prospects will improve after she recovers from the first surgery, by that time she will have lost the opportunity to build her career while she is relatively young. Further, even once she has recovered from her first hip injury, I find that there is a real and substantial possibility that her chronic pain disorder, and related low back and neck pain, will continue to affect her in the sense that it will diminish her sense of capacity to earn an income and render her less marketable as a potential employee than she would otherwise have been.

 

[137] Even after the first surgery, based upon the evidence of Dr. Duncan, it is evident that her hip condition will further interrupt her earning capacity due to her need for second hip replacement surgery in twenty to twenty-five years – which will still be within her working life. At that point she will require a longer recovery period of 6 months. I accept that the third hip surgery will probably occur in her 70s, at which time it is probable that she will have retired.

 

[139] I also note that she has a strong work ethic as demonstrated by her relatively long work history for someone of her age. Given her past efforts to improve her career potential (i.e. repeating grade 12 to improve her marks, taking a college culinary course which she paid for through a student loan, changing jobs to obtain a better paid position, pursing a plan to move into health care work), I find that there is a real and substantial possibility that she would have taken some form of additional training to obtain a better position in health care, had the MVA not occurred.

Court Uses Capital Asset Approach In Awarding Plaintiff $120,000.00 For Diminished Earning Capacity

In Suthakar v. Humble, the Plaintiff was injured in a motor vehicle accident, and consequently commenced legal proceedings, seeking damages for pain and suffering and various other types of damages, including diminished earning capacity. Liability was admitted on behalf of the Defendant by ICBC’S lawyer.

 

ICBC’S lawyer argued that the Plaintiff had failed to prove that there was a real and substantial possibility of a future event leading to an income loss. The Court was puzzled by this argument, considering that the opinion of one of ICBC’S very own doctors, as well as the preponderance of the other expert witnesses, did not support this position.

 

The Court was impressed with the Plaintiff’s determination and fortitude in being able to continue to work essentially full time at her job in the food preparation/service industry.

 

The Court also noted that, based on the medical evidence, there was a strong chance of a real and substantial possibility that the Plaintiff would encounter episodic flare ups of her symptoms, and that over time, ongoing pain can detrimentally affect the ability to work. Further, the Court noted that there was a real and substantial possibility that the Plaintiff’s earning capacity would be impaired in the future.

 

The Court chose to adopt the capital asset approach in determining an amount to award for diminished earning capacity, rather than the earnings approach, which is typically used when the future income loss is more easily measurable on a quantifiable basis. The Court, citing the well known case of Brown v. Golaiy for the application of the capital asset approach, ruled that the Plaintiff, due to her residual symptoms, would be less marketable and less attractive as an employee, and would lose the ability to take advantage of all job opportunities that would otherwise have been open to her. Further, the Plaintiff would be less capable overall of earning income from all types of employment, and would less valuable to herself in a competitive market.

 

The Court would ultimately award the Plaintiff $120,000.00 for diminished earning capacity.

 

[105] When I assessed Ms. Suthakar’s pre‑trial loss, I estimated a low likelihood that she would have scaled back her work hours at the second job in the absence of the Accident. However, even if the Accident had not occurred, as time marched on and she aged, the chances of that real and substantial possibility coming to pass would have risen appreciably. In my view, it is highly likely that Ms. Suthakar would not have been able to maintain her demanding pre-Accident work pace for 20 years, as she and her husband intended. It is also worth noting in this regard that she had only endured working two jobs for 42 weeks and was in her 20’s at that time. There is a high chance of a real and substantial possibility that she would have chosen to work less or given up her second job altogether for any number of reasons.

 

[106] On the other hand, however, Ms. Suthakar’s track record as a driven, stand‑out employee supports a likelihood that she may have received promotions at one or both jobs and enjoyed higher earnings, employment benefits and further employment opportunities as a result.

 

[107] Bearing in mind the applicable legal principles, including the Brown criteria, in light of the evidence and weighing the pertinent contingencies, I conclude that the sum of $120,000 is the present value of a fair and reasonable measure of Ms. Suthakar’s loss of future income-earning capacity.

Court Prefers Earnings Approach Over Capital Asset Approach In Awarding Plaintiff $500,000.00 For Diminished Earning Capacity

In Arletto v. Kin, the Plaintiff was injured in a motor vehicle accident, and consequently sued for damages for pain and suffering, income loss, and diminished earning capacity. Liability was admitted by ICBC’S lawyer.

 

The Plaintiff was a forklift operator who the Court found was very stoical with respect to his work. The Court was of the opinion that, prior to the motor vehicle accident, the Plaintiff had planned to work full time until he reached the age of 65, but the Court did not feel that this was realistic given his injuries. The Court was impressed by the Plaintiff, concluding that he was a hard worker with high job satisfaction, and that he had not sought accommodation despite working through pain. The Court also noted that the reduction in the Plaintiff’s work was medically recommended.

 

The Court cited previous case law for the proposition that the assessment of diminished earning capacity must be based on the totality of the evidence, rather than a purely mathematical calculation, and that the Plaintiff should be put in the position he or she would have been without the injuries caused by the negligence of the Defendant.

 

In the case at bar, the Court preferred the “earnings approach” in determining diminished earning capacity, over the “capital asset” approach, as the “earnings approach” is more helpful when the loss is easily measurable.

 

In awarding $500,000.00 for diminished earning capacity, the Court would eventually determine that there was a substantial possibility that the Plaintiff’s work hours would be reduced by 20% every year up to the time of early retirement at age 60. The Court also took into consideration that there would be a loss of pensionable benefits for the Plaintiff from the age of 60 to the age of 65.

 

[64] The plaintiff no longer works full time according to his evidence. The medical evidence generally supports the conclusion that the plaintiff should not be working as a forklift driver because this will only exacerbate his condition and obtaining full time work as a checker is uncertain. Although the plaintiff’s dream of being a crane operator is ended, the reality of this position and the plaintiff’s circumstances before the accident are such that there was not a substantial possibility of getting this job regardless of the accident. However, the fact that he cannot ever get this job because of the vertigo from the accident must be taken into account. While the risk of being unable to work in the future as a forklift driver is not specifically quantifiable, it does exist and must be taken into account.

 

[66] Overall, I have concluded that there is a substantial possibility that the plaintiff will probably work but with work hours reduced by 20% in each year to the point of taking early retirement at age 60 in 2023. Given the estimated cumulative value of this income adjusted without risk of unemployment, minus the present value, the plaintiff potentially has lost earning capacity of about $132,000 over this period. Based upon comparison of estimated figures to date of retirement without the accident in 2028, the total potential loss of earnings is about $420,500.

 

[67] There is also a loss of pensionable benefits in the five years from age 60 to age 65 when the plaintiff would likely not contribute but could otherwise have been expected to contribute and to retire at that age, but for the accident.

 

[68] Future loss of earning capacity is assessed overall at $500,000.

Award Of $250,000.00 For Diminished Earning Capacity Upheld On Appeal

In Fadai v. Cully, the Plaintiff was injured in a rear end motor vehicle collision, and consequently advanced an ICBC claim for damages for pain and suffering, diminished earning capacity, and several other types of damages.

 

At trial, the Plaintiff was successful in obtaining a nearly $400,000.00 award. Of this amount, $250,000.00 was awarded for diminished earning capacity. ICBC’S lawyer appealed, but only on the amount awarded to the Plaintiff for diminished earning capacity.

 

ICBC’S lawyer argued that the award for diminished earning capacity was not supported by the evidence.

 

As is always the case with respect to an award for diminished earning capacity, the Plaintiff must establish a real and substantial possibility of a future event leading to an income loss. The Court of Appeal determined that the trial judge had made the necessary factual findings to support his ruling that the Plaintiff had indeed established such a possibility.

 

In dismissing the appeal, the Court determined that there was evidence upon which the trial judge could reasonably make the award that was made for diminished earning capacity, and that the award was not unreasonable or wholly erroneous.

 

[59] I cannot give effect to the appellants’ argument on this point. It does not take account of three critical considerations: (1) the respondent’s age and long-term potential to earn income as a salesperson; (2) the real and substantial possibility that the respondent’s inability to control his temper will eventually result in job loss in circumstances complicating his ability to secure alternative employment; and (3) the real and substantial possibility that the respondent’s attitudinal disposition will impact his work performance and interfere with his ability to obtain promotions or access better paying jobs that might otherwise have become available to him over time.

 

[61] In my view, the factual findings made by the trial judge are rooted in and supported by the evidence. His reasons have not been shown to reflect error in principle. The award made for loss of future earning capacity cannot be characterized as unreasonable or wholly erroneous. To the contrary, the trial judge’s approach to the difficult task he faced was detailed, thoughtful and well-reasoned.

Court Adopts Capital Asset Approach In Awarding Plaintiff $110,000.00 For Diminished Earning Capacity

In Ali v. Rai, the Plaintiff was injured in two motor vehicle accidents, approximately two months apart. At trial, the Court found the Plaintiff suffered from chronic back pain which had affected his employment in the bookbinding industry, given the physical nature of his duties.

 

Counsel for the Plaintiff sought an award for diminished earning capacity equivalent to three years of salary for the Plaintiff.

 

ICBC’S lawyer argued that the Court should adopt the earnings approach when determining an amount for diminished earning capacity, whereas counsel for the Plaintiff argued that the capital asset approach was the proper method.

 

The earnings approach is typically used by the Court when a quantifiable, mathematical calculation is the easiest means to arrive at an amount for diminished earning capacity. When such an approach is not viable, the capital asset approach will be used.

 

A key issue considered by the Court was whether or not the Plaintiff would have an accommodating employer indefinitely into the future. Counsel for the Plaintiff submitted that, although the Plaintiff has a very accommodating employer, if she were to retire, then it would be unlikely that a new employer would be so accommodating. The Court agreed with this point.

 

The Court would eventually award the Plaintiff $110,000.00 for diminished earning capacity, which was the equivalent of two years of salary.

 

[154] Conversely, the plaintiff submits the only risk to the defendant is if an award for loss of earning capacity is made and Mr. Ali is accommodated for the rest of his career. The plaintiff submits Mr. Ali should not bear the risk that the accommodation will continue. Counsel for the plaintiff relies on Davidge. Madam Justice Griffin assessed the loss of earning capacity of a plaintiff who went back to work in the same capacity as before the accident. The plaintiff did not suffer a decrease in earnings, but Griffin J. accepted he suffered chronic pain and exerted extra effort to overcome it and continue working. It was questionable whether he could continue to do so until retirement and he would be vulnerable if he lost his job as his experience and skills were only suitable for labour intensive jobs. Griffin J. awarded the equivalent of two years’ earnings for loss of future earning capacity.

 

[156] The defendants submit nothing has been proven but if it has, any award should be heavily discounted. As I understand the defendants’ position, it is that the plaintiff is not at risk of having his hours or wages cut and he will be accommodated indefinitely.

 

[157] I am satisfied the plaintiff has proven there is a real and substantial possibility of loss of income earning capacity in the future. He has an accommodating employer but she may retire and sell or reduce his wage to one commensurate with the hours he is working on set up and supervising and not allow him to draw on a dwindling overtime bank. If he loses his job he is less valuable to himself and potential employers because he is not fully able to do physical work.

Court Uses Capital Asset Approach In Awarding Nurse $450,000.00 For Diminished Earning Capacity

In Stoneson v. Testa Estate, the Plaintiff was injured in a motor vehicle accident, when she was rear ended by a vehicle that had been rear ended itself. She commenced an ICBC claim, seeking damages for pain and suffering, income loss, diminished earning capacity, future care, and out of pocket expenses. Liability was admitted by ICBC’S lawyer.

 

At the time of the accident, the Plaintiff was a regional nurse practice consultant with an established work history. At the time of trial, the Plaintiff was still symptomatic with pain in her back and neck, and was still heavily dependent on medication. The Court found that such injuries would likely continue to limit her ability to work, and found that it was most suitable to base the award for diminished earning capacity on the capital asset approach, rather than a strict mathematical calculation.

 

The Court considered many contingencies in arriving at its’ decision, such as the possibility that the Plaintiff’s pre-existing back problem may cause issues in the future; the fact that a significant portion of her income is based on overtime, which is not predictable ; and, that the labour market contingency of unemployment would not be applicable to the Plaintiff, who has a job in high demand.

 

The Court awarded the Plaintiff $450,000.00 in diminished earning capacity.

 

[50] Damages for loss of earning capacity are a matter of assessment, not calculation according to a mathematical formula. Once impairment of a plaintiff’s earning capacity as a capital asset has been established, that impairment must be valued. The valuation may involve a comparison of the likely future of the plaintiff if the accident had not happened with the plaintiff’s likely future after the accident has happened: Rosvold v. Dunlop, 2001 BCCA 1 (CanLII) at paras. 8-11; Clark at paras. 76-77.

 

[53] I therefore base the assessment of future income loss on the extra income the plaintiff could have earned by working on an 80% basis to age 65. Based on her half-time income for 2013, the additional income would be $69,000 a year. The actuarial multiplier contained in the report of the defendant’s economic expert, Mr. Szekely, produces a present value of $508,000.

 

[54] The multiplier from Mr. Szekely’s report that I have used does not consider “labour market contingencies” such as unemployment. That is appropriate in this case because the plaintiff is well-established in a job for which there is high demand.

 

[55] There are, however, other contingencies that must be considered. In addition to her pre-existing low back condition becoming more symptomatic, there is also the fact that a large portion of her income is based on overtime and therefore not predictable. Applying what I consider to be a reasonable deduction for those contingencies, I award $450,000 for loss of future earning capacity.

Court Uses Capital Asset Approach In Awarding Plaintiff $175,000.00 For Diminished Earning Capacity

In Crevier v. Thompson, the Plaintiff was injured in a motor vehicle accident, and commenced an ICBC claim for many types of damages, including pain and suffering, and diminished earning capacity. At the time of the accident, the Plaintiff was 24 years old, and had a hairdressing diploma. She worked part-time as an entry level stylist. The Court held that the Plaintiff continued to be symptomatic at the time of trial, but was of the opinion that the injuries sustained by the Plaintiff did not have as great of an effect on her life as the Plaintiff contended they did. The Court further held that the Plaintiff’s pain would likely continue into the future.

 

Counsel for the Plaintiff adduced an expert report with respect to diminished earning capacity, with the report primarily based on assumptions that the expert was asked to make by counsel for the Plaintiff. Rather than attempting to determine an amount for diminished earning capacity by using the earnings approach, which is more suitable where the loss can be easily measured, the Court used the capital asset approach, as the Plaintiff had no history of full time employment, and had yet to fully establish herself in her field. Although the Court found that the future income loss numbers in the report were not supported by any evidence, the Court nevertheless awarded the Plaintiff $175,000.00 for diminished earning capacity, believing that the Plaintiff would continue to endure pain that would affect her marketability as an employee and limit opportunities that would have otherwise been open to her.

 

[93] I also find that the income figures assumed by Mr. Benning are not supported by the evidence. There is no doubt that some hairdressers can earn incomes in the $60,000 range; clearly Ms. Morris is one of them. However, she is well experienced and well trained. I suspect that she and others like her are capable of earning significant incomes. However, the plaintiff had not achieved anything close to the experience and training of Ms. Morris.

 

[94] The plaintiff no doubt hoped to do well, but hope and achievement are very different. There is no pattern of behaviour of the plaintiff to establish that it was likely she would progress as a stylist in the way she hoped. It is therefore not appropriate to calculate a loss of future income on assumptions that cannot be connected to the plaintiff. To accept the assumptions advanced by the plaintiff and used by Mr. Benning in his calculations runs contrary to the principle in Perren v. Lalari at para. 30 that a future or hypothetical possibility will only be taken into account “…if it is a real and substantial possibility and not mere speculation”.

 

[95] I also find on the evidence that the plaintiff will likely return to the workforce in some capacity. At the time of the collision she had only basic education and experience as a hair stylist. Dr. Deutscher is of the opinion that vocation is not necessarily closed to her. I find that she can function reasonably well but that she will likely have some pain in the future that will interfere with her ability to earn income.

 

[97] I find that the plaintiff has established all of the requirements to establish a loss of future earning capacity as she will likely experience some pain in her neck and back for the remainder of her working life that will impact her marketability as an employee and limit the opportunities for employment that might otherwise have been open to her. As counsel for the plaintiff noted, the plaintiff does not appear to be academically inclined and she may not be attracted to or be well suited to many of the more sedentary jobs that are open to her.

Court Of Appeal Sets Aside Awards For Past And Future Loss Of Earning Capacity; Remits To Trial Judge For Fresh Assessment

In Ostrikoff v. Oliveira, the Plaintiff was involved in a motor vehicle accident, and brought an ICBC claim for many types of damages, such as non-pecuniary damages, past loss of earning capacity, and future diminished earning capacity. The Plaintiff owned a motorcycle design and repair business, which he claimed suffered financially as a result of the injuries he sustained in the accident. The trial justice awarded the Plaintiff $95,000.00 in past diminished earning capacity, and $325,000.00 in future diminished earning capacity. ICBC’S lawyer appealed both awards, arguing that the trial justice based his decision on speculation, and did not provide adequate reasons for the awards that were made. The Court of Appeal, using a deferential standard of review, allowed the appeals, and ordered that the two issues be remitted to the trial justice for a fresh assessment.

 

[21] I agree with the principles advanced by Mr. Ostrikoff; however, it remains true that it is for the plaintiff to prove a claim for past loss of earning capacity on a balance of probabilities, and that an award must keep in touch with the evidence before the court. It seems to me that the judge himself, in saying a projection of increased income would be speculation, recognized that past income capacity loss predicated on increasing earnings was not proved to the requisite standard.

 

[22] It is of interest that the judge performed a rough comparison of this award with the cost of a full-time employee earning $15 an hour. That assessment, however, was not based on evidence that the business was capable of earning enough to pay a $15 wage rate on a full-time basis – that is, it seems to me that the comparison itself is speculative.

 

[28] The conclusion that Mr. Ostrikoff has a claim for loss of future earning capacity appears to be unassailable. Yet in my respectful view, the award cannot be sustained for two reasons. First, and apart from the impenetrability of the reasons on the projected length of Mr. Ostrikoff’s working life or the projected stream of lost earnings for which he may be compensated using this approach, the award is linked, as the judge said, to a “net income stream analysis”, and so the award cannot be entirely separated from the judge’s view of the track of increasing earnings he projected for Mr. Ostrikoff. Above I have found that the projected track was not supported by the evidence and was, itself, considered by the judge to be speculative. The linkage of the future loss of earning award to the flawed income stream analysis is fatal, in my view, to the assessment of damages for loss of future income.

 

[29] Second, the judge does not appear to have adequately considered both negative and positive contingencies, and thus, again failed to assess the impact of the injuries on Mr. Ostrikoff’s ability to earn income. The judge did recognize a positive contingency of favourable surgery on Mr. Ostrikoff’s shoulder; however, the scale of that contingency, perhaps in the range of 35%, is not discussed in the reasons for judgment. Nor did he discuss negative contingencies, such as those attaching to the uncertain future of Mr. Ostrikoff’s business. These are all matters that affect a proper award on a loss of capital asset approach.