The 30 year old plaintiff was injured in a motor vehicle accident. His main injury was constant back pain which limited his functional capabilities. Despite a lack of pre-accident loss of income, the court awarded $330,000 in loss of earning capacity, noting the plaintiff had a documented history of reduced abilities at his work, leisure, and housekeeping activities. 

The court’s approach to calculating future loss of earnings was interesting, assigning probabilities to certain income scenarios. While the court’s award is disappointing to insurers and defendants, the court took notice of several contingencies which can be used to argue for a reduced loss of earning capacity award. Notably, the court assigned a 10% chance the plaintiff’s injuries would improve and applied a 20% labor market contingency which accounted for possible labor market shortages, voluntary decision to leave the labor force, or deciding to pursue a different line of employment. The loss of earning capacity award was reduced for these contingencies. The court provides an easy to read explanation for how to calculate loss of future income where commissions or bonuses are part of a plaintiff’s income. 

Details of the Plaintiff

The plaintiff was nearly 26 years old when he was in a significant car accident. Liability was admitted at trial. The court was left to decide general damages, loss of earning capacity, and future cost of care. 

The plaintiff’s injuries consisted of pain to his back, neck, shoulder and jaw. The injuries to his neck, shoulder, and jaw subsided a few weeks after the accident. However, his back pain persisted to trial despite attending over 100 physiotherapy sessions and participating in over 40 sessions of an active rehabilitation program with a kinesiologist. A subsequent accident was found to have only mildly exacerbated his back pain. His back pain was constant and a medical expert found the plaintiff would continue to experience pain into the future. He was awarded $90,000 in general damages. 

The court found the plaintiff was a stoic individual who was trying to best manage his pain. The court did make note the plaintiff’s testimony was vague at times and his testimony was somewhat inconsistent with medical records stating he only had one day of soreness over a two week period. However, the court observed the plaintiff was generally credible in his testimony and noted a plaintiff’s stoicism is a factor which should, generally, penalize a plaintiff.[1]

Prior to the accident the claimant was heavily involved in sports. After the accident he could no longer participate in soccer, golf, or slo-pitch with the same intensity or frequency, those activities causing him pain. Despite his limitations, he maintained steady employment from the accident to trial, receiving promotions and increasing his income. 

Loss of Earning Capacity Analysis

The court was satisfied the plaintiff’s injuries could lead to a loss of income earning capacity, satisfying the test of whether, on the evidence, there was a real and substantial possibility there will be a future loss. The court restated the appropriate approach for assessing whether there is a loss of earning capacity:

1. the first is evidentiary whether the evidence discloses a potential future event that could lead to a loss of capacity (i.e., chronic injury, future surgery or risk of arthritis);
2. the second is whether, on the evidence, there is a real and substantial possibility that the future event in question will cause a pecuniary loss; and
3. if such a real and substantial possibility exists, then the third step is to assess the value of that possible future loss, which must include assessing the relative likelihood of the possibility occurring.[2]

A physical medicine and rehabilitation specialist noted the plaintiff would fulfill his almost exclusively sedentary job duties but he was in constant discomfort, this impairment likely to persist into the future. The plaintiff had restrictions in his sitting tolerance and required accommodations to manage his back pain. He was able to sit for periods of 30 to 60 minutes on a modified frequent basis throughout the day. An occupational therapist further found the plaintiff was moderately restricted in bending, crouching, kneeling and crawling, and needed to pace himself with repetitive tasks or working in tight spaces. The plaintiff may not have been able to work at full capacity if he changed jobs to a position requiring repetitive lifting or twisting. 

The plaintiff sought $1,462,082 for future loss of earning capacity on the basis of the plaintiff losing $60,000 per year for a period of 35 years. This amount was claimed despite the plaintiff having no discernible pre-trial loss of income and having increased his income through job changes and promotions. 

The court considered three scenarios for the plaintiff’s future income if the accident had not occurred:

1. the plaintiff would not have earned commissions;
2. the plaintiff would have earned commissions up to 1.5 to 2 times his salary; and
3. the plaintiff would have earned commissions of 3 times his salary.

The plaintiff’s employer corroborated evidence that options two and three were possible; option one appeared unlikely. To earn commissions the plaintiff would have had to work more hours than he did in any pre-trial year. 

Nonetheless, the court opined option two was the most likely although suggested his income at this rate and with the required work hours would not have continued unabated until retirement. The plaintiff valued work-life balance and being a good father to his future kids. The court decided he would have earned this increased income from 2023 to 2028 (to $130,000 per year) and the plaintiff would have decreased his hours and income (to $100,000) thereafter until retirement at age 65. 

This scenario was compared to his prospective with-accident earnings, the court similarly analyzing three scenarios:

1. the plaintiff would not have earned commissions, his income remaining stagnant at $75,000 per year (a loss of $55,000 per year for five years and $25,000 per year thereafter);
2. the plaintiff would have earned some commissions, though they would not be as high as he could have earned without the accident ($115,000 for the first five years and $85,000 thereafter, a total loss of $15,000 per year for 35 years); and 
3. the plaintiff would not suffer any loss.

Taking a unique approach — and rather than finding one scenario was more likely than the others — the court calculated the plaintiff’s future loss of earnings at $410,000 considering the various possibilities of the above with-accident scenarios. The court found there would be a 70% chance of scenario 2 occurring and assigned a 15% chance for each of scenario 1 and 3. While it would have been more commonplace for a court to find only one scenario was most likely, scenarios 1 and 3 effectively cancel each other out. 

To finalize the award, the court reduced the $410,000 amount by case specific risks. 10% risk was assigned to the potential impact of his earning capacity being negatively affected by his injuries; that his condition may deteriorate over time; and the risk he may lose his job in the future or not be able to find a similarly accommodating employer. The court offset this 10% risk by an equal 10% chance the plaintiff’s condition may improve. 

A 20% general contingency was also deducted for general labour market contingencies. This was to consider situations where there might be labour market shortages, the plaintiff’s decision to pursue a different line of employment, or a voluntary decision to leave work temporarily or partially. The court accounted for this contingency despite lack of expert evidence, consistent with prior court decisions.[3]  With this deduction, the court awarded the plaintiff $330,000 for loss of earning capacity. 

While this decision is unhelpful when arguing there should be no award for loss of earning capacity where there is no pre-trial loss of income, solace can be had in knowing the court will continue to consider contingencies like a plaintiff’s condition improving.

Questions?

If you have any questions with respect to this bulletin, please contact Andrew Bitz at abitz@brownleelaw.com or at 403.260.5321.

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1. Stapley v Hejslet, 2006 BCCA 34 at para 46
2. Rab v Prescott, 2021 BCCA 345 
3. Montazamipoor v Park, 2022 BCSC 140 at paras 105-110