A recent decision provides an excellent discussion on assessing past and future loss of earning capacity. This is a case with no liability issues (two rear-end collisions) and the only issue is quantum of damages.
Here are the two legal theories theories, as quoted from the decision (case link is below):
[4] The plaintiff complains of headaches, pain, nausea, difficulty sleeping, low mood, and anxiety, as a result of the accidents, which interferes with her work and causes her to take time off. She contends that she suffered a mild traumatic brain injury (“MTBI”), and although she has worked through the pain she experienced and associated physical limitations, she is permanently partially disabled as a result of these two accidents. The plaintiff’s claim for damages is approximately $730,000.
[5] The defendants contend that the plaintiff has worked full-time since the accidents, and has exaggerated her symptoms. To contest her claim, the defendants (among other things) rely on medical records which they contend are at odds with the plaintiff’s subjective reports of her post-accident symptoms and evidence at trial. They also contend that portions of her claim for loss of earning capacity are unsubstantiated. The defendants contend that a potential damages award for the plaintiff is $126,553.
[6] I find that the two accidents did cause the plaintiff to have a MTBI, and that she experiences headaches and other neck and back pain, as well as low mood and anxiety, caused by these accidents. She sustained the MTBI and other physical injuries in MVA #1, and MVA #2 aggravated them. However, the plaintiff must be put in the position she would have been but for the accidents, no more no less. In implementing that principle, I have considered the real and substantial possibility that the plaintiff’s pain may improve in the future, although I assess this as a small possibility and apply a negative contingency of 10%.
[7] For the reasons that follow, the plaintiff is awarded damages as assessed at $520,217.60.
Legal Framework
PAST AND FUTURE LOSS OF EARNING CAPACITY
[131] An award for future loss of earning capacity represents compensation for a future loss. It is an assessment, not a mathematical calculation (Steinlauf v. Deol, 2022 BCCA 96 at para. 55, aff’g 2021 BCSC 1118, citing Gregory at para. 32 [Steinlauf CA]), and while not amenable to precise calculation, the court is obliged to make the best estimate it can (Dunn v. Heise, 2022 BCCA 242 at para. 33).
[132] This approach applies to the analysis of both past and future loss of earning capacity since both involve hypothetical events: Rab at para. 28, citing Grewal at para. 48.
[133] The approach for considering claims for loss of future earning capacity is set out in Rab:
[47] From these cases, a three-step process emerges for considering claims for loss of future earning capacity, particularly where the evidence indicates no loss of income at the time of trial. The first is evidentiary: whether the evidence discloses a potential future event that could lead to a loss of capacity (e.g., chronic injury, future surgery or risk of arthritis, giving rise to the sort of considerations discussed in Brown [v. Golaiy (1985), 1985 CanLII 149 (BC SC), 26 B.C.L.R. (3d) 353 (S.C.)]). 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. If such a real and substantial possibility exists, the third step is to assess the value of that possible future loss, which step must include assessing the relative likelihood of the possibility occurring—see the discussion in Dornan at paras 93–95.
[Emphasis added.]
See also Steinlauf CA at para. 52; Davie at paras. 114–120; Pascuas at para. 80.
[134] More specifically, the second step requires the assessment of a future or hypothetical possibility of an event giving rise to future loss: is there a real and substantial possibility of an event occurring leading to a future loss: Rab at paras. 29, 33; Steinlauf CA at para. 53. If so, the court proceeds to the third step and assesses the likelihood of that event, then quantifies the loss by way of an earnings or capital asset approach: Rab at paras. 28, 31; Ploskon-Ciesla at paras. 16–17.
[135] Broadly, the quantification of the “value of future loss” requires a comparison of “the likely future of the plaintiff if the accident had not happened and the plaintiff’s likely future after the accident has happened”: Steinlauf CA at para. 71, citing Gregory at para. 32; Dornan at paras. 156–157. This has also been referred to as comparing the “without-accident” earning potential of the plaintiff and what the plaintiff was likely to earn as a result of the accident—being mindful that it is not the loss of earnings but the loss of earning capacity for which compensation must be made: Steinlauf CA at paras. 55–56,citing Gregory at para. 32, citing Andrews v. Grand & Toy Alberta Ltd, [1978] 2 S.C.R. 229 at 251, 1978 CanLII 1.
[136] The Court of Appeal in Ploskon-Ciesla identified the two methods of valuation under the third step – the earnings and capital asset approaches:
[16] As touched upon above, depending on the circumstances, the third and final step—valuation—may involve either the “earnings approach” or the “capital asset approach”: Perren at para. 32. The earnings approach is often appropriate where there is an identifiable loss of income at the time of trial, that is, the first set of cases described above. Often, this occurs when a plaintiff has an established work history and a clear career trajectory.
[17] Where there has been no loss of income at the time of trial, as here, courts should generally undertake the capital asset approach. This approach reflects the fact that in cases such as these, it is not a loss of earnings the plaintiff has suffered, but rather a loss of earning capacity, a capital asset: Brown at para. 9. Furthermore, the capital asset approach is particularly helpful when a plaintiff has yet to establish a settled career path, as it allays the risk of under compensation by creating a more holistic picture of a plaintiff’s potential future.
[137] As a final step in the damages assessment process, the court must determine whether the damages award is fair and reasonable: Lo atpara. 117.
Discussion
Steps 1 and 2: Real and Substantial Risk of a Pecuniary Loss
[138] In Ploskon-Ciesla, the Court of Appeal elaborated on the first and second steps of the Rab analysis in cases where the evidence is clear that an accident has rendered the plaintiff unable to work:
[11] With respect to the first step, I note two considerations as outlined in Rab at paras. 29–30. First, there are, broadly, two types of cases involving the loss of future earning capacity: (1) more straightforward cases, for example, when an accident causes injuries that render a plaintiff unable to work at the time of trial and into the foreseeable future; and (2) less clear‑cut cases, including those in which a plaintiff’s injuries have led to continuing deficits, but their income at trial is similar to what it was at the time of the accident. In the former set of cases, the first and second step of the analysis may well be foregone conclusions. The plaintiff has clearly lost capacity and income. However, in these situations, it will still be necessary to assess the probability of future hypothetical events occurring that may affect the quantification of the loss, such as potential positive or negative contingencies. In less obvious cases, the second set, the first and second steps of the analysis take on increased importance.
[139] As to Rab step one, “[i]n cases … where the event giving rise to a future loss is manifest and continuing at the time of trial, that evidentiary step is a given”: Steinlauf CA at para. 52.
[140] The defendants dispute that the injury has rendered the plaintiff less able to work in her pre-accident occupation and contends that she is fully able to work full-time at the same level of remuneration as she did before the accidents. I consider this argument in the context of the Rab analysis below.
Step 1: Event(s) Giving Rise to an Impairment of Capacity
[141] The following factors assist in determining whether the plaintiff has suffered an impairment of her income earning capacity:
a) Is the plaintiff less capable overall from engaging in all types of employment;
b) Is the plaintiff less marketable or attractive as an employee;
c) Has the plaintiff lost the opportunity to take advantage of all job opportunities had she not been injured; and
d) Is the plaintiff less valuable to herself as a person capable of earning money in a competitive labour market?
See Rab at para. 35, citing Brown v. Golaiy, 26 B.C.L.R. (3d) 353 at paras. 7–11, 1985 CanLII 149 (S.C.); Ploskon-Ciesla at para. 13.
[142] These factors do not provide a formula but instead comprise a means to assess whether there has been an impairment of a capital asset, which can be helpful in assessing the value of the asset lost: Rab at para. 36; Ploskon-Ciesla at para. 12.
[143] I find that the plaintiff meets all four of the Brown criteria. As a result of her injuries:
a) She is less capable overall from engaging in all types of employment, particularly those involving physical activities or lifting;
b) She is less marketable or attractive as an employee for certain jobs;
c) She has lost the opportunity to take advantage of all job opportunities; and
d) She is less valuable to herself as a person capable of earning money in a competitive labour market.
Step 2: Real and Substantial Possibility of a Pecuniary Loss
[144] Turning to step two, I further find that there is a real and substantial possibility that the plaintiff’s injuries have and will continue to result in a reduction of her earning capacity and result in a pecuniary loss.
[145] I find that the future loss of earning capacity is not merely speculative, but is a measurable risk in light of the evidence.
[146] The defendants contend that the plaintiff has exaggerated her injuries and limitations, as demonstrated by the fact that since MVA #1 to the date of trial, she has kept the same job working as a manager of a jewellery store.
[147] I reject this argument. The plaintiff’s employer has made accommodations for her since MVA #1, including modifying her job duties, distributing her job duties to other staff members, and placing an additional staff member at the store to support the plaintiff’s inventorying tasks. Further, I accept the plaintiff’s evidence that since MVA #1 to the date of trial, she has experienced pain and anxiety, fatigue from poor sleep, and other limitations (including discomfort performing some physical activities, and difficulty with close reading and concentrating) when working at the jewellery store.
[148] Overall, I find that the plaintiff, who is a main income-earner for her family, has pushed through her pain to maintain steady employment despite her injuries. I find that the fact she has kept a steady job since MVA #1 is evidence of her stoic nature and a product of economic circumstances requiring her to be a provider for her family.
[149] I need not find on a balance of probabilities that the plaintiff will suffer a pecuniary loss. Rather, I need only find that, on the evidence, there is a real and substantial probability that this will occur. I find that there is.
[150] In summary, following the Rab approach, I find as follows:
a) Step 1. There is a potential future event—pain and associated physical and other limitations, as well as low mood and anxiety—that could lead to a loss of capacity. Put another way, I find that the potential future event is a loss of capacity as articulated in Rab at para. 48.
b) Step 2. On the evidence, there is a real and substantial possibility that this future event will cause a pecuniary loss to the plaintiff.
[151] Having found a reasonable and substantial possibility of a loss of capacity leading to an income loss, I must now undertake an analysis of the quantification and relative likelihood of the loss occurring, both in the period after MVA #1 to the trial, and in the future.
Step 3: Earnings Approach to Valuation
[152] I adopt an earnings approach to assessment loss of earning capacity. Such an approach is appropriate where a “plaintiff has an established work history and a clear career trajectory”: Ploskon-Ciesla at para. 16. I find that the plaintiff did have an established work history and clear career trajectory as the manager of a jewellery store. I further find that, given her work limitations following MVA #1, and subsequently MVA #2, there has been an identifiable loss of income at the time of the trial, which also supports an earnings approach.
[153] I decline to adopt a capital asset approach, which can apply in cases where income loss is difficult to measure (Kringhaug v. Men, 2022 BCCA 186 at para. 43, citing Perren v. Lalari, 2010 BCCA 140 at paras. 12, 32) — I find that this is not the case here, given the plaintiff’s clear career trajectory, both with and without the accident.
Negative Contingencies
[154] However, when valuing that pecuniary loss on an earnings approach, “it [is] still … necessary to assess the probability of future hypothetical events occurring that may affect the quantification of the loss, such as potential positive or negative contingencies”: Ploskon-Ciesla at para. 11.
[155] While I find that the plaintiff suffers from pain and other limitations, the issue remains as to whether a negative contingency should apply, and, if so, what percentage. Rab is instructive on this point:
[29] Some claims for loss of future earning capacity are less challenging than others. In cases where, for instance, the evidence establishes that the accident caused significant and lasting injury that left the plaintiff unable to work at the time of the trial and for the foreseeable future, the existence of a real and substantial possibility of an event giving rise to future loss may be obvious and the assessment of its relative likelihood superfluous. Yet it may still be necessary to assess the possibility and likelihood of future hypothetical events occurring that may affect the quantification of the loss, such as potential positive or negative contingencies.
[Emphasis added.]
[156] I find that a negative contingency of 10% should apply to the assessment of damages: that even with the accident, the plaintiff’s pain symptoms may improve and increase her earning capacity. I rely on that aspect of Dr. Sivananthan’s evidence that it is possible the plaintiff’s pain will improve in the future, which I consider to be a “real and substantial possibility,” meaning a risk that is measurable and not mere speculation. I add that, in her cost of future care claim, the plaintiff seeks an annual gym cost, which I find could increase the likelihood she may engage in exercises that Dr. Sivananthan opined could improve her physical well-being and pain symptoms.
[157] I find that the likelihood of this is not significant and assess the relative likelihood of improving to be relatively small at 10%, taking into account the fact that the potential improvement would not be to a completely pain‑free state.
[158] I have also considered the possibility that the plaintiff is overusing Tylenol and Advil which is exacerbating her headaches. This was the opinion of Dr. Webber, who recommended that she reduce her use and try an alternative preventative strategy, including natural supplements and other medications, or Botox. The plaintiff was taking Tylenol and Advil daily in 2017 and 2018, and in June 2021, her doctor’s note indicates that she takes too much Tylenol and Advil. The plaintiff testified that since January 2023 to the trial, she still took these non-prescription medications three to four times in a week, which, in Dr. Webber’s opinion, can result in medication overuse headaches. However, I am not satisfied that the evidence establishes a real and substantial possibility which is measurable that the plaintiff’s headaches would improve in the future if she took less Tylenol and Advil and instead tried other strategies. Instead, I find that this possibility is merely speculative and accordingly do not assign a negative contingency in this respect.
[159] The plaintiff contends that there were potential positive contingencies that would offset any possible negative contingencies, and argued that there should be no allowance for negative contingencies in her damages assessment.
[160] I do not accept the plaintiff’s argument, and instead I find the existence of any positive contingencies (e.g., the plaintiff’s risk of future injury, or that the plaintiff would have taken on more remunerative work or a second job without the accident) to represent hypothetical events which are not measurable and constitute mere speculation.
[161] In all the circumstances, I find that a 10% reduction for the contingency that the plaintiff’s headaches and other neck and back pain (and other symptoms) may improve in the future should be made.
Past Wage Loss: Quantification and Relative Likelihood
[162] The defendants contend that significant aspects of this claim were not verifiably documented. However, the assessment of loss of income capacity is not a mathematical calculation, and the court must do the best it can. In addition, I find that the plaintiff’s evidence concerning her experience at work, including the degree to which she had to leave early or miss shifts at times, is generally reliable. I do not find that the letter from the plaintiff’s employer setting out her days missed in 2017 (but not other years), or the ICBC Certificate of Earnings (dated March 20, 2017) to be conclusive of the extent or the amount of time the plaintiff missed work due to her MVA #1 and MVA #2 injuries to the date of the trial, as the defendants argued.
[163] The plaintiff testified that she missed two shifts per month on average due to her injuries from August 2018 to the trial, and I accept this evidence. I generally accept the plaintiff’s calculations for past income loss (with some adjustments, which are incorporated in the table below), which are generally consistent with her evidence and which I find to be reasonable, and which makes a reduction for lost hours during COVID-19. I do, however, adjust the hourly rate for 2017 to be $17.00 as the defendants contend (and not $17.50 as claimed), although I use an 8.5 hour work day.
[164] The following amounts are allowed for past loss of earning capacity:
| Year | Loss of Income | Hours Lost | Effective Rate of Pay |
| 2017 | $12,571.50 | 739.5 = 87 days x 8.5-hour day | $17.00 |
| 2018 | $9,793.97 | 425.27 | $23.03 |
| 2019 | $3,896.16 | 162.07 | $24.04 |
| 2020 | $1,948.08 (assessed at ½ hours lost in 2019, for the COVID-19 pandemic) | – | N/A |
| 2021 | $4,115.50 | 142.80 | $28.82 |
| 2022 | $5,820.39 | 216.05 | $26.94 |
| 2023 | $6,157.36 | 234.12 | $26.30 |
| TOTAL | $42,354.88 |
[165] I apply no contingency to this amount, which reflects the plaintiff’s past loss of earning capacity, and is not affected by the negative contingency risk I have found that her condition may improve in future.
Future Loss of Earning Capacity: Quantification and Relative Likelihood
[166] For the reasons set out above, I reject the defendants’ submission that the plaintiff has not met the test for a real and substantial possibility of future loss.
[167] I assess loss of future income on the basis that the plaintiff will likely experience a 25% loss of capacity until the age of retirement of 67 or 68 years of age. This equates to an annual loss of income of $16,224, which I find to be reasonable (using $24.00 per hour as the rate of pay, and a $64,896 annual income, as submitted by the plaintiff).
[168] I find a 25% reduction for loss of capacity based on my finding that the plaintiff experienced, and will continue to experience, a material amount of pain and other limiting symptoms in her work, but also that she has been able to reasonably cope and maintain relatively steady work since MVA #1. (The plaintiff sought a reduction of earning capacity of 30%, but I instead use 25% in light of my finding as to the reliability and weight of the plaintiff’s evidence.) Using the future income loss multiplier of $17,870 (for $1,000 per year to age 67) yields a loss of income in the amount of $289,922.88 ($16,224 / $1,000 x $17,870), which I round to $290,000.
[169] Applying a negative contingency of 10% yields a net amount for loss of earning capacity of $261,000 ($290,000 x 0.9).
Step 4: Fairness and Reasonableness
[170] I consider the award fair and reasonable. The plaintiff has and continues to experience significant pain, low mood, anxiety, and other symptoms associated with two motor vehicle accidents, as I have found above. This has negatively impacted her quality of life and productivity at work in a material way. She has been stoic, maintaining steady employment at her job as a manager of a jewellery store since MVA #1 (with some absences from work, and with assistance from her employer’s work accommodation measures). There is a small possibility that her pain and other symptoms will improve, but she will likely remain permanently partially disabled until her retirement. MVA #1 occurred when she was 38 (she is currently 46), and without the accident, she would have likely maintained steady remunerative employment as a jewellery store manager until she retires at age 67 or 68.
[171] I find that an award of $42,354.88 (for past loss) and $261,000 (for future loss) is fair and reasonable to compensate her for the loss of earning capacity, having regard to the future uncertainties, and the possible hypothetical event of a future improvement in her symptoms.
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