Lack of Business Records Negativley Impacts Diminished Earning Capacity Claim

When a self employed individual fails t properly account their business income and expenses this can create difficulties in advancing a claim for diminished earning capacity.  Reasons for judgemetne were released this week by the BC Supreme Court, Victoria Registry, demonstrating this.
In this week’s case (Musgrove v. Elliot) the Plaintiff was involved in two collisions.   The Defendants admitted liability.  THe Plaintiff sustained vaiours injuries which were still symptomatic at the time of trial.  He was self employed as a builder of residential decks and fences.  The Plaintiff’s injuries negatively affected him at work such that he had to rely more heavily on subcontractors and labourers to do work he otherwise would have done himself.  The Court accepted this, however, awarded only a fraction of the damages the plaintiff was seeking for these losses based on the Plaintiff’s lack of corroborating records.  In doing so Mr. Justice  Johnston provided the following reasons:
[56]         In late 2007 Mr. Musgrove moved to the Victoria area and began to establish himself in his own business as a fence and deck builder. He had perhaps 10 months to build that business before the first of his two accidents, and in that time he kept lamentably few records of his earnings or expenses.
[57]         There is thus little reliable evidence of what Mr. Musgrove actually earned before the first accident, and evidence of actual earnings is usually the most reliable basis on which to assess damages for income losses claimed as a result of an accident.
[58]         Mr. Musgrove’s poor record keeping habits continued after the accidents, leaving little upon which to base a confident assessment of what he has earned since the first accident, or what he has paid out to others to do work he says he could and should have been able to do himself but for his injuries…
[72]         I am satisfied that as a result of the injuries he suffered in the accidents, Mr. Musgrove had to hire others to do work that he would have done himself had he not been injured. This represents a loss to Mr. Musgrove for which he should be compensated.
[73]         Mr. Musgrove must accept responsibility for the consequences of his poor or non-existent records. One such consequence may be an award lower than it might have been had he kept proper records. In all of the circumstances, I assess Mr. Musgrove’s loss of earning capacity at $20,000 from the time of the accident to trial.

bc injury law, Mr. Justice Johnston, Musgrove v. Elliot, Self Employed Business Losses

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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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