Personal Injury Claim for Loss of Future Earnings

This claim involved a car accident which occurred in 2014, before the ICBC No-fault changes. British Columbia’s are now legally restricted from suing guilty drivers for  accidents after May 1, 2021. These changes were introduced by the NDP government to increase the profits of ICBC, a government auto insurance monopoly. Most auto victims are no longer entitled to compensation for pain and suffering or full income loss. This case therefore will not apply to most car accidents occurring after May 1, 2021.

The claimant was driving a Honda Civic when a dump truck towing a trailer  began a left-hand turn into her lane of travel. Her body stiffened and braced before she slammed into the tires of the trailer. There was a significant collision and the tires of the trailer, pulled by the truck, compressed the hood of the claimant’s vehicle.

The claimant was 20 years old and had yet to establish herself in a career. As a result of the accident she suffered from anxiety and headaches and developed chronic pain.  Following an eight-day “fast track” trial, the judge apportioned liability 10% to her and 90% to the appellants. He assessed her damages to be $364,016.16, including $250,000 for her loss of future earning capacity. After reducing her damages by 10% for her contributory negligence, he awarded her $327,614.54.( Deegan v. L’Heureux,2023 BCCA 159)


Loss of Future Income : Earnings versus Capital Asset Approach

Every personal injury lawyer needs to understand the different between the capital asset approach and the earnings approach.

As the Court of Appeal reaffirmed the earnings approach is typically used in cases where there is an identifiable loss of income, for example, where the claimant has an established work history. On the other hand, the capital asset approach is typically used when that is not the case and the court makes an award for the plaintiff’s loss of opportunity, for example, with a young plaintiff whose career path is uncertain (see also Kringhaug v. Men, 2022 BCCA 186 at para. 43)

The trial judge in this case had settled on the capital asset approach for assessing loss of future earning capacity. One method for using the capital asset approach is to award the claimant’s entire annual income for one or more years. It was wrong in this case for the trial judge to use an earnings approach to assess a capital loss.

Evidence to Prove a Future Loss of Earnings

When setting aside the trial judges award of $250,000 the Court of Appeal stated:

[82] Despite the difficulties associated with valuing the loss of a young plaintiff’s loss of earning capacity and the appropriateness of making “global” awards in such contexts, it is always preferable for trial judges to transparently explain how they arrived at their award. In this instance, the judge’s reasons are lacking. Although the full record makes reasonably clear that the judge accepted Ms. L’Heureux’s theory of loss, there were significant shortcomings in that theory that essentially precluded its application. As a result, it must be set aside.

In order to use the earnings approach it is best to have a consistent track record of earnings for the loss in a specific job. However, given the state of the evidence in this case, it was not appropriate to calculate the present value of an annual income loss or to award the present value of a nominal percentage loss against her expected annual income. Rather, it was an appropriate case to award a multiple of the claimant’s pre-trial annual income.

The Court of Appeal concluded that had it not been for the pandemic, the claimant’s pre-trial annual income at $17 per hour would have been in the range of $35,000. In view of her youth, the chronic nature of her injuries and the judge’s finding that her injuries would adversely affect her ability to earn income in her preferred field of child care and her youth, the Court considered this an appropriate case to award  $70,000 for loss of future earning capacity. This amounts to 2 years of lost salary. The award for future loss of income was therefore reduced from $250,000 to $70,000 by the Court of Appeal.





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