This recent decision referenced as Bains v Gret’s Projects Inc., 2017 BCSC 1530 (CanLII), provides us with a review of the law as it pertains to the “Earnings Approach” vs. the “Capital Asset Approach”.
The Plaintiff in this case, who was 27 years of age at the time of the collision which occurred on May 13, 2013, was successful in proving her claim for damages and was awarded $95,000 for non-pecuniary damages resulting from injuries to her neck, both shoulders, mid back, low back right hip and thigh, right knee, right leg, and right ribs. She has suffered from headaches, anxiety, interrupted sleep, and chronic pain as a result of the accident.
The two main contested issues in this case were:
- The degree to which the plaintiff’s functional capacity has been permanently reduced by the accident.
The Court concluded that due to her functional limitations, the plaintiff demonstrated a reduced capacity to be employable.
- Whether there was a real and substantial possibility that the plaintiff would have become a Canada Border Services agent or a police officer but for the accident.
The court agreed that there was a real and substantial possibility that the plaintiff would have succeeded in becoming a CBSA agent.
This post will primarily deal with the review of the Law as it pertains to The “Earnings Approach” vs. The “Capital Asset Approach” and focus on the calculations for past and future loss of earnings.
The Law
[110] The burden of proof of actual past events is a balance of probabilities. An assessment of loss of both past and future earning capacity involves consideration of hypothetical events. The plaintiff is not required to prove these hypothetical events on a balance of probabilities. The future or hypothetical possibility will be taken into consideration as long as it is a real and substantial possibility and not mere speculation: Athey at para. 27; Morlan v. Barrett, 2012 BCCA 66 (CanLII) at para. 38.
[111] A claim for loss of future earning capacity raises two key questions: 1) has the plaintiff’s earning capacity been impaired by his or her injuries; and, if so, 2) what compensation should be awarded for the resulting financial harm that will accrue over time? The assessment of loss must be based on the evidence, and not an application of a purely mathematical calculation. The appropriate means of assessment will vary from case to case: Brown v. Golaiy (1985), 1985 CanLII 149 (BC SC), 26 B.C.L.R. (3d) 353 (B.C.S.C.) [Brown]; Pallos v. Insurance Corp. of British Columbia, 1995 CanLII 2871 (BC CA), [1995] 100 B.C.L.R. (2d) 260 (B.C.C.A.) [Pallos]; Pett v. Pett, 2009 BCCA 232 (CanLII).
[112] Insofar as possible, the plaintiff should be put in the position he or she would have been in but for the injuries caused by the defendant’s negligence: Lines v. W & D Logging Co. Ltd., 2009 BCCA 106 (CanLII) at para. 185. The essential task of the Court is to compare the likely future of the plaintiff’s working life if the accident had not happened with the plaintiff’s likely future working life after the accident: Gregory v. Insurance Corp. of British Columbia, 2011 BCCA 144 (CanLII) at para. 32.
[113] There are two possible approaches to assessment of loss of future earning capacity: the “earnings approach” from Pallos, and the “capital asset approach” in Brown. Both approaches are correct.
[114] In Harrington v. Sangha, 2011 BCSC 1035 (CanLII), the court sets out the method of assessing future income loss in para. 147:
Future Income Loss
[147] The factors that ought to be used to measure the loss or impairment of a capital asset have been regularly described as:
- a) whether the plaintiff has been rendered less capable overall of earning income from all types of employment;
- b) whether the plaintiff is less marketable or attractive as an employee to potential employers;
- c) whether the plaintiff has lost the ability to take advantage of all job opportunities which might otherwise have been open to her had she not been injured; and
- d) whether the plaintiff is less valuable to herself as person capable of earning income in a competitive labour market.
Kwei v. Boisclair (1991), 1991 CanLII 645 (BC CA), 60 B.C.L.R. (2d) 393 (C.A.); Williamson, supra; Brown v. Golaiy (1985), 1985 CanLII 149 (BC SC), 26 B.C.L.R. (3d) 353 (S.C.).
[115] There is a real and substantial possibility that the plaintiff would have succeeded in becoming a CBSA agent. She does not have to prove this possibility on a balance of probabilities. She has satisfied me that this is a serious aspiration and that she was prepared to try her best to get that job. The possibility that she might not succeed can be factored in as a negative contingency. The Court of Appeal said in Parren v Lalari, 2010 BCCA 140 (CanLII), at para. 32, if the plaintiff establishes a real and substantial possibility, the court must then determine the measure of damages by assessing the likelihood of the event. There is also a real and substantial possibility that the plaintiff will succeed at becoming a probation officer that is within her area of interest and physical abilities.
[116] I agree with the defendants’ submission that the earnings approach is appropriate where a definite past income flow has come to an end because of an event. In this case the loss is more speculative. The plaintiff is presently capable of near full-time work at a reduced strength limit.
[117] The plaintiff is less valuable to herself as a person capable of earning income in a competitive labour market.
[118] Given that there is uncertainty about this prospect, I am of the view that the capital asset approach is the better approach to take in assessing her loss of future earning capacity.
Calculation of Past Loss of Earning Award
[119] The plaintiff has provided two calculations for past income loss. The first assumes employment with CBSA from 2014 in the absence of the accident with no negative contingencies. The loss would be $39,126 under this scenario.
[120] Assuming the plaintiff continued working as a registration clerk, the without accident income is assumed to be full-time income of $196,229 and the with accident income to be $179,978. After income taxes are deducted, her income loss under this scenario is $12,893. There should also be a consideration for lost over time. The plaintiff submits that likely she would have worked three overtime shifts per month but for the accident and they calculate this loss at $22,680.
[121] I am prepared to find that the plaintiff would likely have taken a full-time position recommended by Ms. Brar but for the accident and that she did suffer a past wage loss of $12,893. If the plaintiff was working full-time, I find it likely that she would have only taken one overtime shift a month. She did not show the propensity to work overtime prior to her accident. The plaintiff’s overtime shift loss should be reduced by two-thirds to $7,560.
[122] I would reduce the CBSA past loss of earnings scenario by 50% because of the negative contingency. I would reduce her current occupation scenario because of the reduction of anticipated overtime. Using these deductions the past earnings loss for the plaintiff is about the same for either scenario. I assess it at $25,000.
Calculation of Future Loss of Earnings Award
[123] The plaintiff urges the Court to rely on the loss of earnings approach but of course they are basing their approach on an assumption that the plaintiff would have been successful in becoming a Canada border security agent.
[124] If I based the plaintiff’s future loss of earning capacity on an assumption that her loss is limited to the reduction in hours she works at her current job, then her future loss of earning is limited to $210,103 plus loss of one over time shift per month which would be $49,124 for a total award of $259,227. I have accepted the plaintiff’s economist expert, Mr. Bening’s multiplier of 19,494 to evaluate this scenario.
[125] I believe the plaintiff’s loss is larger than that because she has lost the ability to work at certain new careers that were interesting to her. I am not satisfied that she would succeed at obtaining the CBSA position but if she had a 50% chance of doing so then her future loss of earning capacity is much higher than it would be at her current position.
[126] I find a reasonable award of damages for the plaintiff for future loss of earning capacity using the capital asset approach is $425,000.
[127] I award a total $450,000 to the plaintiff for past and future loss of capacity.
In summary, I award the plaintiff the following:
| Past Loss of Earnings | $25,000.00 |
| Future Loss of Earnings | $425,000.00 |
| Cost of Future Care | $48,105.00 |
| Special Damages | $4,367.60 |
| TOTAL: | $502,472.60 |
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