Car Accident Injury Claimant Awarded over $1.8 Million for Loss of Corporate Profits With No Lost Salary

In this personal injury trial heard in Vancouver (Zen v. Readhead, 2011 BCSC 190) the BC Supreme Court reaffirmed that  a claimant’s  ability to earn income is a capital asset and if that capacity has been diminished the claimant is entitled to compensation for that loss.  The claimant alleged that his injuries affected his ability to work and as a result,  his three  family owned companies underperformed after his car accident.  The claimant says this led to a decrease in corporate profits and a corresponding decrease in the dividends available to him.  
It was common ground however that the claimant’s salary did not decreased at all because of his injuries.  
Despite no loss of salary Judge Fenlon found that an injury claimant is entitled to recover a business loss suffered by a company which he controls if the loss is proven and is directly linked to the injuries sustained.  Take a read of a 1994 loss of profits injury case which relied in part on the case quoted by the Judge: Everett v. King (1982), 34 B.C.L.R. 27 at p. 30, aff’d (1983) 53 B.C.L.R. 144.  
The claimant was injured when the other driver  ran a stop sign with her pick-up truck striking  the claimant’s sedan on the front passenger side. The claimant’s car ended up against a curb and the injury claimant hit his head and the left side hit the driver’s side of the vehicle in the accident.  
The Court found that the claimant suffered significant and debilitating injuries in the accident, most of which have become chronic.  The claimant was 45-years-old at trial . He used to be an outgoing athlete who weekly ran 40 kms, did the Grouse Grind, and took an active role in the lives of his daughters, all while working long days in the family business including most Saturdays. Now he is a different man.” He is sleep-deprived and in chronic pain, which makes him irritable and prone to frustration and anger. He can no longer push himself athletically, which was a central part of his life and the way he managed stress. He has a diminished role in the lives of his daughters, and in particular his youngest daughter.  The claimant’s relationship with his wife has been significantly affected and he has, in his words, “missed out on the best years of [his] life”.” The claimant was awarded $110,000 for pain and suffering.  
The judge went on to award the following for loss of corporate profits:  

[98]         I therefore assess loss of future earning capacity based on the loss of half of the dividends flowing from a loss of sales of 10% per year to age 65. Using average sales over the past ten years of $15.873 million, and assuming a 15% profit margin, the company will lose pre-tax income of $238,095. Taking into account corporate tax and the contingencies discussed above, I estimate Mr. Zen’s gross loss of income per year at $100,000.  

[99]         Based on a four-year lag in sales impact, the new sales people hired would not affect sales volume for four years, which could justify continuing to assume a 20% reduction in sales until 2014. I am nonetheless satisfied that a 10% reduction is an appropriate basis to assess damages, in light of the fact that the multiplier does not take into account any negative contingencies other than premature death. Using a future income loss multiplier of 14,850 (as provided in the actuarial report), and assuming a loss of $100,000 per year, damages for future loss of income due to decreased sales are $1,485,000.  

In summary the judge accepted the claim and awarded:

Pain and Suffering	110,000
Out of pocket expenses:
Personal Training Sessions	10,640
Physiotherapy and Chiropractic Treatment	1,760
Integrative Therapy and Prolotherapy	10,411
Psychological Counselling	4,285
Mileage and GP Fees	570
Cost of Future Care
Counselling and Pain Management	5,000
Training and Structural Integration	64,868
Loss of Earning Capacity to Trial	340,000
Future Loss of Earning Capacity	1,485,000
TOTAL:	$2,026,534

　Posted by Mr. Renn A. Holness