Principles Governing Loss of Earning Capacity

A recent decision published October 3, 2023 highlights the principles governing future loss of income claims and earning capacity, which is noted below.  This case provides a good review of the principles.  The case is Searle v Xie, 2023 BCSC 1716 (CanLII).

Future Loss of Income-Earning Capacity

[140]     The Court of Appeal has discussed the principles governing claims for loss of earning capacity in numerous cases. In Morgan v. Galbraith, 2013 BCCA 305, Justice Garson, writing for the Court, cited its earlier decision in Perren v. Lalari, 2010 BCCA 140, and described the approach at para. 53 as follows:

[53]      […] in Perren, this Court held that a trial judge must first address the question of whether the plaintiff had proven a real and substantial possibility that his earning capacity had been impaired. If the plaintiff discharges that burden of proof, then the judge must turn to the assessment of damages.

[Emphasis in original.]

[141]     In Ploskon-Ciesla v. Brophy, 2022 BCCA 217 at paras. 7–10, the Court of Appeal recently restated the operative principles which had previously been revisited in Dornan v. Silva, 2021 BCCA 228Rab v. Prescott, 2021 BCCA 345, and Lo v. Vos, 2021 BCCA 421:

[7]        The assessment of an individual’s loss of future earning capacity involves comparing a plaintiff’s likely future had the accident not happened to their future after the accident. This is not a mathematical exercise; it is an assessment, but one that depends on the type and severity of a plaintiff’s injuries and the nature of the anticipated employment in issue: Gregory v. Insurance Corporation of British Columbia, 2011 BCCA 144. Despite this lack of mathematical precision, economic and statistical evidence “provide[s] a useful tool to assist in determining what is fair and reasonable in the circumstances”: Dunbar v. Mendez, 2016 BCCA 211 at para. 21, citing Parypa v. Wickware, 1999 BCCA 88 at para. 70.

[8]        Courts should undertake a tripartite test to assess damages for the loss of future earning capacity. In Rab v. Prescott, 2021 BCCA 345, Grauer J.A. clarified this approach. Although the judge did not have the benefit of Rab when he wrote his reasons, the principles summarized therein are not novel; they have been the applicable law for a considerable time.

[9]        I will repeat those principles here, drawing heavily on Rab. I do so because it is clear the judge did not undertake the requisite steps when assessing damages, nor did he make the findings of fact necessary to quantify an award. This dearth of analysis leaves us to speculate on the basis for the award, as it did in Schenker v. Scott, 2014 BCCA 203 at paras. 55–56.

[10]      Justice Grauer in Rab described the three steps to assess damages for the loss of future earning capacity:

[47]      … 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), 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.

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