Loss of future earning capacity

We will review a recent case referenced as Khademolhosseini v. Ji, 2019 BCSC 854 in which the total amount awarded to the Plaintiff was $485,918.80.  Of this amount, $350,000 was awarded under the category of loss of future earning capacity and this article will therefore focus on this topic specifically.

Facts on presentation:

  • Plaintiff seeks an award for loss of future earning capacity
  • Argument raised that the Plaintiff’s earning capacity has diminished and/or is less competitive in the workplace as a result of the injuries suffered in the MVA
  • Injuries include: neck, back and shoulder pain / chronic
  • Loss of capital asset approach is being pursed by the Plaintiff

The Court identifies the two approaches when dealing with a loss of future earning capacity:

  1. capital asset approach is typically used where a plaintiff has no clear earnings history and involves some of the considerations outlined in Brown v. Golaiy (1985), 26 B.C.L.R. (3d) 353 (S.C.) – enumerated below;
  2. earnings approach is more useful in instances where a plaintiff has some earnings history or the court can reasonably estimate what the plaintiff’s future earnings would be.

In advancing an argument for the capital asset approach, the Plaintiff submitted the following evidence:

  • medical expert (Dr. Waseem) was of the opinion that the Plaintiff would suffer from ongoing symptoms;
  • medical evidence confirmed that such symptoms would put the Plaintiff “at a distinct competitive disadvantage compared to his able-bodied peers”
  • a further opinion concluded that “overall, he would be restricted in his tolerance to maintain a productive work pace and there would be an adverse affect on his ability to compete in the open job market”
  • Evidence from a work performance however indicated that the Plaintiff is:
    • an exceptional engineer
    • highly valued by his employer
    • has intellectual abilities that are valued
    • his intellect sets him apart from his peers
    • has been unaffected by the motor vehicle accident
    • there has been no interruption in his career trajectory arising from the accident.

The Court concluded that the earnings approach was the appropriate method of assessing the Plaintiff’s loss of future earning capacity in this specific case:

In the case before me, while the plaintiff does not have a sustained work history, he has worked for AM Fitzgerald for two years and has proven himself to be a valuable employee. Dr. Fitzgerald testified as to his earnings potential at AM Fitzgerald, including the raises he can expect over the next number of years. I find that the earnings approach is the more appropriate method of measuring the plaintiff’s loss of future earning capacity in this case.

Finding of facts:

  • the Plaintiff’s ability to work for sustained periods of time in his occupation has been affected as a result of the injuries he sustained in the accident
  • the Plaintiff has developed coping mechanisms / accommodations which allow him to complete his work
  • however, the sustained injuries have definitively impacted the total amount of hours the Plaintiff is able to perform, but for the accident
  • the Plaintiff established that while he was able to work full hours one month, the next month the Plaintiff was greatly impacted and not able to perform the same level / hours of work.
  • this solid work impacted the Plaintiff so, that it resulted also in 2 weeks off work.
  • The Plaintiff also experiences pain while working at a desk job
  • The Court, however, accepted that work accommodations were made that allowed the Plaintiff to continue working without any significant disruption to his hours.
  • Long hours are quite important early on in an engineer’s career, however, those hours decrease with time.
  • This intense work would continue for the next 10 years time, and post that time, hours would normally decrease
  • This decline in hours would result, regardless of the accident.

The Court concluded that there was a “real and substantial possibility” that this pattern would repeat itself, which would result in a loss into the future.  The Court concluded that based on the natural decline of hours as an engineer, the loss of future earning capacity would only result for the next 10 years only.

The Court indicated that the loss would be 15% less time worked over a 10 year period based on all the evidence, and that this loss will result in a direct loss of income to the Plaintiff.

 [91]        In 2018 Dr. Khademolhosseini earned $206,630. Dr. Fitzgerald testified that she anticipated raises of 5 to 7% per annum for an exceptional engineer. I find there is a substantial possibility that Dr. Khademolhosseini will receive an increase of 5% for 2019, resulting in a 2019 income of $216,961.

[92]        Pursuant to s. 56 of the Law and Equity Act, R.S.B.C. 1996, c. 253, and the Law and Equity Regulation, B.C. Reg. 352/81, as amended by B.C. Reg. 74/2014, the discount rate used to calculate the present value of future earnings is 1.5%. The multiplier for the period of 10 years at 1.5% is 9.2222 (see Appendix E of CIVJI: Civil Jury Instructions, 2nd ed. (Vancouver: Continuing Legal Education Society of British Columbia, 2009) (loose-leaf 2018 update)). This rate accounts for inflation and general increases in productivity. The net present value of the future earnings of Dr. Khademolhosseini over the next 10 years, therefore, is $2,000,858.

[93]        The assessment of loss of earning capacity is not a mathematical exercise. Nevertheless in assessing loss of earning capacity I am informed by the calculation of 15% of $2,000,858 which is $300,129. I am also satisfied that there is a substantial possibility that the yearly increases to Dr. Khademolhosseini’s base salary as described by Dr. Fitzgerald (i.e. 5 to 7%) are not fully accommodated in the regulated discount rate. As such, I find it is appropriate to apply a positive contingency to the assessment of Dr. Khademolhosseini’s loss of earning capacity.

[94]        Taking into account the calculations set out above, and applying a positive contingency of approximately 15%, I am satisfied that the plaintiff has suffered a loss of future earning capacity in the amount of $350,000.

Referenced Cases:

The plaintiff refers to the factors established by Mr. Justice Finch in Brown v. Golaiy (1985), 26 B.C.L.R. (3d) 353 (S.C.) at 4:

 The means by which the value of the lost, or impaired, asset is to be assessed varies of course from case to case. Some of the considerations to take into account in making that assessment include whether:

    1. The plaintiff has been rendered less capable overall from earning income from all types of employment;
    2. the plaintiff is less marketable or attractive as an employee to potential employers;
    3. the plaintiff has lost the ability to take advantage of all job opportunities which might otherwise have been open to him, had he not been injured; and
    4. The plaintiff is less valuable to himself as a person capable of earning income in a competitive labour market.

 Dabu v. Schwab2016 BCSC 613 (CanLII)

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