Past and Future Loss of Earning Capacity / Loss of Competitive Advantage

Past and Future Loss of Earning Capacity/Loss of Competitive Advantage

Our article today will focus on the issue of loss of earning capacity (past and future) and loss of competitive advantage, which is before the Courts in this recent decision from the Court of King’s Bench in Alberta.

This key issue in this case is whether the injuries sustained by the Plaintiff are deemed “minor” as interpreted by the Minor Injury Regulations.

As stated by the Court “The MIR sets a cap on non-pecuniary loss for all minor injuries.  In 2015, when the accident occurred, the minor injury amount was set at $4,892.  The MIR does not cap other heads of damages.”

In analyzing this case, the Court concluded that the injury sustained by the Plaintiff was not deemed minor and awarded the Plaintiff $55,000. for non-pecuniary damages.  You may read this decision by clicking here.

This case is also precedent setting as it relates to Pre-judgment Interest on Non-Pecuniary Damages which is applicable only in Alberta.

This article will focus on the earnings loss.

We will identify the facts, as identified by the Court, and the Court’s analysis of this claim.  There are also a number of references from leading authority that are always worth identifying and reviewing.

As per the case law:

  1. The claim is for $80,000. for loss of earning capacity (both past and future) and loss of competitive advantage;
  2. The Plaintiff claims that as a result of the injuries sustained in this crash, he is no longer able to perform physical labour and has lost the ability to supplement his income.
  3. The Defendant disputes that there has been a loss, however, in the alternative, if there is one, the earnings would be less and approximately $10,000.
  4. The Plaintiff worked for Shell Canada Energy from November 2019 to 2021 as a contractor;
  5. As a result of the pandemic, the employer reduced wages of all contractors in October 2020.
  6. The Plaintiff’s wages were reduced from $65. Per hour to $52. Per hour, but increased again by 7% in March or April of 2021.
  7. Seeking employment during this time in warehouse work did not occur in part because of the inability to do heavy lifting, and in part as there was no response from a submitted application.

The Court references the following principles:

[121]      An award based on a loss of earning capacity compensates individuals for the loss of a capital asset, the capacity to earn: MB v British Columbia2003 SCC 53. Loss of earning capacity is sometimes framed as a loss of competitive advantage: Sutherland v Encana Corp2014 ABQB 182 [Sutherland].

[122]      The test for loss of earning capacity is set out in Smith v Obuck at para 420:

The test is whether there is a real and substantial possibility the Plaintiff has been rendered less capable of earning an income from many sources of employment, is less marketable to potential employers, and is less able to take advantage of opportunities that may become available: Chisholm v Lindsay2015 ABCA 179, 600 AR 311.

[123]      The burden of proof and the method to determine damages for the loss of earning capacity is explained in Adeshina v Litwiniuk & Company2010 ABQB 80 at paras 521-22:

The plaintiff has the burden of proving future loss of earning capacity on a simple probabilities basis, namely was there a real and substantial possibility of the loss and not mere speculation: OlsonPalpal-Latoc v. Berstad2004 ABCA 92, add’l reasons 2004 ABCA 212, leave to appeal to S.C.C. refused, [2004] S.C.C.A. No. 186; Byron v. Larson2004 ABCA 398, 357 A.R. 201; Lowe v. Larue2000 ABCA 28, 250 A.R. 220.

The task of the court is to assess damages, not to calculate them according to some mathematical formula: Mulholland (Guardian ad litem of) v. Riley Estate (1995), 1995 CanLII 1971 (BC CA), 12 B.C.L.R. (3d) 248 (C.A.). Once impairment of a plaintiff’s earning capacity as a capital asset has been established, that impairment must be valued. The valuation may involve a comparison of the plaintiff’s likely future both without and then with the accident. As a starting point, a trial judge may determine the present value of the difference between the amounts earned under those two scenarios. But if this is done, it is not to be the end of the inquiry: Ryder v. Paquette, (sub nom. Ryder (Guardian ad litem of) v. Jubbal)[1995] B.C.J. No. 644 (C.A.). The overall fairness and reasonableness of the award must be considered taking into account all of the evidence.

[124]      In determining whether a reasonable chance of loss is established, a court will take into account the plaintiff’s subjective circumstances (including educational and vocational realms, as well as social circumstances): Sutherland at para 580Chisholm v Lindsay2012 ABQB 81.

Each case must be analyzed carefully.  We have written multiple articles in relation to past and future loss of earning capacity and loss of competitive advantage and provide a few further links to those articles for your interest.  Key is the more case law you review, the more you comprehend and have the ability to see how others have presented claims, and argued for and against on both sides.  It is a great opportunity to educate yourself as it relates to these issues and is very helpful in shedding light on how cases may be managed by a legal team:

  1. Loss of Future Earning Capacity – Arguments for and Against;
  2. Diminishment of Earning Capacity – Review the Event, Duration and Effect of the Injury.

There are always two different theories in every case.  In this case, we will identify the Plaintiff’s arguments and the Defendants’ arguments for review:

Plaintiff Arguments

  1. The effect of the injuries in this case prevent the Plaintiff from pursuing part time employment in the past to supplement his income;
  2. As a result of the injuries, the Plaintiff is not able to pursue future opportunities.

Defendant Arguments

  1. The loss incurred is as a result of the effects of the COVID pandemic;
  2. The loss incurred does not relate to the injuries sustained in this crash;
  3. Alternatively, the loss should be measured by the earnings during the 6 month period when the earnings were reduced and during the time the Plaintiff did not work to supplement his income.

As per the case law, we quote directly from the Court’s conclusion in relation to loss of past and future earning capacity and loss of competitive advantage.

 [130]      There is no evidence that Mr. Jackson cannot continue to be employed and earn income in the future in his chosen field of employment as a contract specialist or contract manager. The medical experts and occupational therapists all agreed that Mr. Jackson could perform all of his essential duties in his chosen field of employment as a contract specialist. In fact, he has worked uninterrupted as a contract specialist or contract manager with 6 different employers since the accident.

[131]      Further, Mr. Jackson’s chosen field of employment is better paying than part time warehouse employment. Mr. Jackson’s income was $69,493 in 2015, $74,430 in 2016, $141,676 in 2017, $103,928 in 2018, $83,159 in 2019, and $51,698 in 2020.

[132]      In the extraordinary circumstances of the COVID pandemic when Mr. Jackson’s wages were reduced, it was reasonable for him to seek other employment opportunities to supplement his income. In all the circumstances, I find that Mr. Jackson’s loss of past earning capacity is limited to a period of 6 months when he could have worked 20 hours per week at $20.49 per hour for a total of $10,660.

[133]      In my view, it would be speculative to envisage scenarios in which Mr. Jackson would be suffering a loss of earning capacity in the future, because there are no restrictions on Mr. Jackson’s ability to earn income in his chosen field of employment. As such, Mr. Jackson has not proven on a balance of probabilities that he has suffered a loss of future earning capacity.