Insufficient Reasons Lead To Retrial Of Diminished Earning Capacity Award

Update May 27, 2014 – After reassessment the trial judge assessed damages at the original amount
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Reasons for judgement were released last week by the BC Court of Appeal sending a case for re-trial after a judge failed to adequately explain how substantial damages for diminished earning capacity were assessed.
In the recent case (Morgan v. Galbraith) the Plaintiff was injured in a 2006 collision. He worked as a senior account manager at the Royal Bank of Canada at the time.  Following the crash he returned to this job with accommodation until his contract expired.  From there he never returned to work at the bank instead he pursued a career in professional lacrosse.  This chapter of his life ended with a concussion suffered in 2011.  By the time of trial he was working as a basketball and lacrosse coach.
At trial it was found that the Plaintiff suffered from ongoing injuries from the collision.  His diminished earning capacity was assessed at $700,000.  The BC Court of Appeal found that the reasons supporting such an assessment were lacking from the trial judgement and the matter was sent back to trial for reassessment of this loss.  In doing so the BC Court of Appeal provided the following reasons:
[54]         The economic evidence relied on by Mr. Morgan quantified lifetime earnings of a sport coach in Oregon at $883,004.  The judge did not explain the basis of his $700,000 assessment.  This amount approximates 80% of lifetime earnings of a coach, notwithstanding that Mr. Morgan is now employed as a coach.  I do not mean to imply that the assessment must be a mathematical calculation.  Rather, my point is that there must be findings of fact on which to base the assessment.  Here, the reasons for judgment on this point are not sufficient to permit appellate review.  The judge gave no hint as to the factual basis on which he reached the conclusion that on these facts $700,000 was an appropriate measure of Mr. Morgan’s future damages.  The judge did compare this case to another similar case, but, in my view, that would not be an appropriate way to assess what is essentially a pecuniary damage award.  I do not consider that it is appropriate for this Court to infer from the judge’s reasons the necessary findings of fact in order to substitute a different award or to affirm the correctness of the award. 
[55]         The judge could well have chosen the earnings approach given that Mr. Morgan was likely to pursue a career in sport regardless of the accident and that doing so after the accident was possible but with limitations.  The judge made no findings concerning the extent of those limitations.  As I have concluded that the appropriate disposition of this appeal is to remit the question of the assessment of damages for future loss of earning capacity to the judge, I will leave to the trial judge the question of the appropriate approach to adopt.  To reiterate, I agree with Mr. Morgan that on a proper evidentiary basis the judge has already found that there is a loss of future earning capacity under the Perren test.  He need not reconsider that finding.  But it will be necessary for him to revisit the assessment on a proper factual underpinning.
[56]         If the assessment is still to be based on the capital asset approach the judge must consider the four questions in Brown in the context of the facts of this case and make findings of fact as to the nature and extent of the plaintiff’s loss of capacity and how that loss may impact the plaintiff’s ability to earn income.  Adopting the capital asset approach does not mean that the assessment is entirely at large without the necessity to explain the factual basis of the award: Morris v. Rose Estate (1996), 23 B.C.L.R. (3d) 256 at para. 24, 75 B.C.A.C. 263; Mulholland (Guardian ad litem of) v. Riley Estate (1995), 12 B.C.L.R. (3d) 248 at para. 43, 63 B.C.A.C. 145.
[57]         In conclusion, on this ground of appeal, I would remit the question of the quantification of future loss of earning capacity to the trial judge to reassess damages in accordance with these reasons.