BC Supreme Court Confirms No Tax Deductions For Depleted Sick Bank Damages

Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, confirming that where a Plaintiff proves damages for used up sick bank hours due to a collision related injury, the recovered damages will not be subject to income tax deductions (as is done with past wage loss awards).
In the recent case (Gormick v. Amenta) Mr. Justice Sigurdson made it clear that such damages will not be subject to income tax deductions and Plaintiff’s are entitled to recover damages on a gross basis.  In reaching this decision the Court provided the following reasons:
[5]             The authorities support awarding the gross amount for loss of sick bank credits…
[9]             As is evident from DeGuzman, treating loss of sick bank entitlement as past wage loss undercompensates the plaintiff because deductions could be taken from him or her twice.  This is consistent with Ballance J.’s characterization of loss of sick bank entitlement as a “potential future loss” not in the “character of past wage loss”.
[10]         In addition, the following cases have adopted Bjarnason without further comment in awarding the gross amount for loss of sick bank entitlement:
·                 Chingcuangoco v. Herback, 2013 BCSC 268 at paras. 128-133;
·                 Kilian v. Valentin, 2012 BCSC 1434 at paras. 125-127;
·                 Chalmers v. Russell, 2010 BCSC 1662 at para. 86;
·                 Pham-Fraser v. Smith, 2010 BCSC 322 at para. 90; and
·                 Rizzolo v. Brett, 2009 BCSC 732 at para. 67.
[11]         Contrastingly, the defendant in the instant case relies on Redl v. Sellin, 2013 BCSC 581, in which the court awarded the net and not the gross amount in respect of damages for lost benefits (including paid sick days, paid time off work for medical appointments and lost vacation credits).
[12]         In Redl, the court rejected the plaintiff’s position that “as full repayment of benefits to her employers appears to be required, the net loss calculation should not be applied to the total subrogated portions of the income loss claim” (at para. 33).  In this regard, the court said, at para. 34:
It is clear under the Insurance (Vehicle) Act that the defendant’s liability for all income losses – regardless of whether a subrogated interest is claimed by an employer or an insurer – is for the net amount only.  The rights of an insurer or employer claiming a subrogated interest in an employee’s damages claim are no greater than those of the employee.  The entire gross amount of Ms. Redl’s past income loss of $37,360.05 is subject to a deduction for taxes.  How this impacts Ms. Redl’s repayment obligations is a matter between her and her employers.
[13]         However, Redl make no note of Bjarnason or the other cases following that decision.  It appears that those cases were not brought to the attention of the judge deciding Redl. 
[14]         Further, the proposition which the defendant in the instant case extracts from Redl – namely, that “[t]he rights of an … employer claiming a subrogated interest in an employee’s damages claim are no greater than those of the employee” – is not inconsistent with Bjarnason.  Bjarnason holds that an employee has the right to the gross amount of damages in respect of loss of sick bank entitlement.  Accordingly, the employer claiming a subrogated interest in the gross amount of those damages is not claiming a greater right than that of the employee.
 

bc injury law, Gormick v. Amenta, Mr. Justice Sigurdson, Sick Bank, wage loss

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ERIK
MAGRAKEN

Personal Injury Lawyer

When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.

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