This is an appeal from a decision of the BC Supreme Court in Lewis v Gibeau, 2023 BCSC 784, a personal injury case from 2016 where a 58-year old former hairstylist was sitting passenger in a friend’s vehicle when the defendant vehicle ran a red light and hit them as they executed a left turn. The court considered the plaintiff’s appeal on two grounds: 1) whether the trial judge erred by using the capital asset approach to value the plaintiff’s income loss, lumping together the analyses of past and future losses of earning capacity, and improperly applying contingencies to discount the loss of earning capacity award, and 2) whether the trial judge’s rejection of the plaintiff’s claim for future costs of housekeeping services could be upheld. The appeal was allowed on the former ground but not on the latter. 

The court set aside the trial judge’s “global award of $89,641.02 for past and future earning capacity” and substituted in its place an award of $25,955.00 for past loss of earning capacity and $206,583.56 for loss of future earning capacity. 

Key Point

No identifiable loss of income?

The court discussed at some length how the courts decide between the capital asset and earnings approaches in calculating losses of income. A capital asset approach is appropriate where there is no clearly identifiable earnings history to be used as a yardstick for measuring a plaintiff’s income loss whereas an earnings approach is appropriate where there is an identifiable loss of income at the trial or a demonstrated work history. The trial judge ultimately found the plaintiff had no identifiable loss of income, however this did not hold up to scrutiny as the court held that the trial judge also found that the plaintiff “stopped working due to an inability to cope with her collision-related injuries” and “from January 2022 onward, her income was zero.” The plaintiff worked as a hairstylist for 40 years and was said to have a sizeable client base. The court deemed an earnings approach was in fact appropriate in the circumstances. 

Lumping Together the Past and Future Losses

The court identified three things that distinguish the analyses for past and future income losses, which also necessitate that the analyses not be lumped together:

1. Past losses require courts to look backward from the date of the trial to that of the collision, comparing the actual to the without-accident hypothetical scenario, while future losses require a prospective analysis of the plaintiff’s earning trajectory with and without accident. There is a difference in perspective which the trial judge failed to account for in her analysis of the income losses. 
2. The hypotheticals required for the analysis of a future loss may not be relevant to that of a past loss, and the real and substantial possibilities and contingencies may operate differently between the two. In the plaintiff’s case, the court found two negative contingencies had not come to fruition by the time of trial, which the trial judge failed to consider when lumping together the losses.
3. The court held the trial judge essentially found “free-floating negative contingencies” without ascertaining their actual impact on the plaintiff’s loss of earning capacity. These were (1) a real and substantial possibility that the plaintiff might have been able to keep working if she stretched out her work week and worked fewer hours, and (2) a real and substantial possibility that the plaintiff’s frozen shoulder would improve to the point that she would return to work. While the trial judge found these to be real and substantial possibilities, she failed to assess their likelihood and make specific contingency deductions. On contingency (2), the court ultimately found a 10% reduction was sufficient, as the likelihood of the plaintiff’s return to work was minimal even if the plaintiff’s frozen shoulder improved — this brought the $229,537.29 future loss figure down to $206,583.56.

Future Housekeeping Costs

Regarding the claim for future housekeeping costs, the court upheld the trial judge's dismissal. Although an expert suggested Ms. Lewis would benefit from professional housekeeping services, the Court found no error in concluding that the division of chores between Ms. Lewis and her husband reflected the normal adjustments of family life rather than establishing a compensable future cost of care.

Key Takeaways

Figuring out whether a capital asset or earnings approach is appropriate remains an essential first step in evaluating these losses. Determining whether there is an identifiable loss of income on the evidence is crucial in making that decision. Understanding how the various negative contingencies operate both going into the past and future is also essential. Even more important, as it applies to the analysis for future loss of income earning capacity, is assessing the likelihood of a negative contingency and ascribing to it a percentage reduction value — it will not suffice to simply state that a negative contingency exists in the circumstances with nothing more. 

For housekeeping losses, defence counsel should emphasize that a family's adaptation to injury— such as family members taking on additional chores — can be viewed by the Court as a natural evolution of family responsibilities rather than a loss warranting compensation. This supports arguments that no award should be made when family members can and do fill the gap.

Application of Income Loss Decision in Alberta

In Alberta, cases have continued to use a blended approach for past and future income loss assessments. While the Court’s decision in Lewis is persuasive in Alberta, there is no similar decision limiting the assessment of income loss damages in this manner. Further, Alberta courts have continued to use a capital asset approach in calculating income losses even when there is an identifiable earnings history available (see Mason v Thompson, 2020 ABQB 76). Presently, the law in Alberta allows for more judicial discretion in awarding past and future income losses compared to the limits of assessment established in this case.