Victoria Edwards, a personal injury lawyer with Siskinds LLP, was recently published in Law360.
This article was originally published by Law360™ Canada, part of LexisNexis Canada Inc.
Read the full article below.
A recent British Columbia Court of Appeal case highlights the importance of ensuring a strong evidentiary record to support income loss claims in personal injury actions. In L’Heureux v.Deegan  B.C.J. No. 674, the British Columbia Court of Appeal substituted an award for future lost earning capacity in a motor vehicle action.
The plaintiff/respondent was injured in a motor vehicle collision in June 2014. The trial was heard through the “fast track” litigation process available in British Columbia. The trial lasted eight days.
As a result of the collision, the plaintiff sustained injuries and impairments including anxiety, myofascial pain in her neck and shoulders, as well as cervicogenic headaches. The trial judge apportioned liability as 90 per cent for the defendant and 10 per cent to the plaintiff. He assessed the plaintiff’s damages to be $364,016.16, including $250,000 for her loss of future earning capacity. The trial judge also assessed the plaintiff’s future care damages to be $34,267.02 for bimonthly chiropractic treatments until retirement.
The defendant/respondent appealed the quantification of the loss of future earning capacity and future care costs. The main issue on appeal was whether the trial judge award of $250,000 in lost future earning capacity was supported by the evidence.
Evidence available at trial
The respondent graduated from high school in 2012. Prior to the collision, she worked as a server at a restaurant. After the collision, she was completely off work for a month, before gradually returning to full-time duties as a server. She was unable to maintain the physical demands of her job. She worked for a time as a nanny, though again struggled with the physical aspects of her job.
In July 2019, she took an education program to be an administrative assistant. She secured employment in this role, making $17 per hour, until she lost her job due to the COVID-19 pandemic. She then became pregnant and did not return to work. Working as a server, a nanny and an administrative assistant all aggravated her myofascial pain symptoms. Her symptoms reduced when she took time off work.
The respondent testified at trial that she hoped to open an in-home daycare when her child was 2 or 3 years old. She believed she could manage five children at daycare, though likely not the full seven children permitted by the regulations.
The respondent called her family doctor and two physiatrists to give medical evidence. They opined that as a result of the motor vehicle collision, the respondent had sustained injuries and impairments including myofascial pain and cervicogenic headaches. They noted that her symptoms improved with chiropractic treatment, rest and the occasional use of anti-inflammatories.
Standard of review
In considering the trial judge reasons, the Court of Appeal noted that the damages award was owed high deference. The standard of review for findings of fact, including inferences drawn from those facts, and finding of mixed fact and law, is palpable and overriding error.
Loss of future earning capacity
There is a three-step process for assessing loss of future earning capacity:
- Is there evidence of a potential future event that could lead to a loss of capacity (e.g., chronic injury, future surgery or risk of arthritis …)?
- On the evidence, is there a real and substantial possibility that the future event in question will cause a pecuniary loss?
- Assess the value of that possible future loss, which must include an assessment of the relative likelihood of the possibility occurring.
There was a sufficient evidentiary foundation for the trial judge conclusion that the respondent met the first two steps. Though the trial judge did not express himself particularly clearly in articulating how he came to this conclusion, he did not misapprehend the medical evidence or conflate the respondent’s chronic pain with an impairment of her earning capacity as suggested by the appellants.
Trial reasons are not to be finely parsed in search of error. They are to be read as a whole, functionally, and in the context of the live issues at trial, informed by the submissions of the parties. The judge’s reasons were clear that he had a good grasp of the medical evidence.
The problem lay with the quantification of the respondent’s lost earning capacity.
Perhaps it was because of the nature of the “fast-track litigation” procedure, but the respondent did not provide typical loss of earning capacity evidence such as a functional capacity evaluation, vocational rehabilitation report or labour economist report. This lack of evidence made it difficult for the trial judge to quantify her future loss.
The trial judge correctly identified that the proper approach for assessing lost earning capacity in this case was the “capital asset approach,” as the respondent was young with an uncertain career path. The capital asset approach is an alternative to the “earnings approach,” which is suitable in circumstances where the plaintiff has an established work history.
The trial judge award of $250,000 for lost earning capacity was an “at large” or “global” award. It is appropriate to make such an award in cases where the future is hard to predict. But such an award must still be grounded in the evidence.
The trial judge award was based on a future where the respondent opens an in-home daycare and takes care of five children, instead of the maximum seven that she might otherwise have minded. The respondent’s mother had operated an in-home daycare for 29 years, and she provided evidence that she could expect to charge $650 per month per child.
Extrapolating this number over the respondent’s expected working life and applying a present value modifier, the total future loss would be approximately $412,473. Accounting for contingencies, the trial judge arrived at the $250,000 number.
The Court of Appeal found that there was not a sufficient evidentiary record to support this conclusion. There were at least three shortcomings in this theory of economic loss:
- The respondent had not adduced evidence that her home was suitable for hosting an in-home daycare.
- The respondent adduced no evidence to assist the judge in understanding how profitable she expected her daycare to be. She gave numbers estimating revenue, but none to account for the cost of business.
- The respondent’s theory did not account for the fact that she had proven herself to be capable of working as an administrative assistant at above minimum wage. Could she expect to earn more as an administrative assistant versus running a daycare?
The appropriate approach to quantifying future earning capacity loss in this case would have been to multiply the respondent’s pretrial income.
Based on the respondent’s pretrial income of $17 per hour, the chronic nature of her injuries, and the trial judge finding that her injuries would impact her ability to care for children, the appropriate award for loss of earning capacity would be $70,000.
Cost of future care
The quantification of the respondent’s future care claims was upheld on appeal. The Court of Appeal did note that it is not appropriate for the court to consider accident benefits (called Part 7 Benefits) until the damages have been assessed. There was some confusion that resulted in the trial judge initially not awarding future care costs on the basis that they would be paid for by the respondent. The decision was corrected, and the trial judge quantification was upheld by the Court of Appeal.
Though quantifying loss of future earning capacity can be tricky for young plaintiffs with uncertain career trajectories, it is important to ensure there is a sufficient evidentiary foundation to allow the court to reasonably quantify the future loss. Parties should consider whether expedited trial processes will allow them to fully present their case before committing to the more limited procedure.
Victoria Edwards is an associate personal injury lawyer at Siskinds, The Law Firm. She provides top quality legal services to her clients by prioritizing clarity and accessibility when explaining legal options to her clients. Her practice includes motor vehicle litigation, short- and long-term disability claims, slips/trips and falls and dog bite cases. Edwards attended Western Law, where she worked and volunteered in the legal clinic. She works primarily out of Sarnia, Ont., for clients across southwestern Ontario.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.