Tag: icbc wage loss claims

BC Court of Appeal Clarifies Law in Future Wage Loss Injury Claims


When a Plaintiff suffers lasting injuries as a result of the negligence of others the law allows for compensation of future losses.   When it comes to future earnings being impacted by injury the Courts in BC do not compensate “loss of earnings” but rather a “a loss of earning capacity“.
There is a feeling amongst some personal injury lawyers that the BC Courts have handed out contradictory judgements regarding the circumstances required to prove a diminished earning capacity claim.  Today the BC Court of Appeal addressed the law of diminished earning capacity and added some welcome clarity to these types of claims.
In today’s case (Perren v. Lalari) the Plaintiff was injured in a 2004 BC car crash.  She was found to have suffered from chronic soft tissue injuries that will continue indefinitely.  According to the trial Judge the injuries rendered “the plaintiff less marketable than she was before the accident but not in a way that demonstrates any substantial possibility that she will suffer an associated loss”  The Judge went on to award $10,000 for the Plaintiff’s diminished earning capacity.  (You can click here to read my 2008 article about this trial judgement).  Interestingly the Trial Judge invited the Court of Appeal to canvass this area of law stating that “It would be helpful if the Court of Appeal has an opportunity to address these issues fully”
The Defendant appealed the judgement arguing that the Judge was wrong in law in awarding money for dimished earning capacity on the facts of the case.  The BC Court of Appeal agreed and in doing so provided the following useful summary of the law:

[30]         Having reviewed all of these cases, I conclude that none of them are inconsistent with the basic principles articulated in Athey v. Leonati, [1996] 3 S.C.R. 458, and Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229.  These principles are:

1.         A future or hypothetical possibility will be taken into consideration as long as it is a real and substantial possibility and not mere speculation [Athey at para. 27], and

2.         It is not loss of earnings but, rather, loss of earning capacity for which compensation must be made [Andrews at 251].

[31]         Furthermore, I conclude that there is no conflict between Steward and the earlier judgment in Pallos.  As mentioned earlier, Pallos is not authority for the proposition that mere speculation of future loss of earning capacity is sufficient to justify an award for damages for loss of future earning capacity.

[32]         A plaintiff must always prove, as was noted by Donald J.A. in Steward, by Bauman J. in Chang, and by Tysoe J.A. in Romanchych, that there is a real and substantial possibility of a future event leading to an income loss.  If the plaintiff discharges that burden of proof, then depending upon the facts of the case, the plaintiff may prove the quantification of that loss of earning capacity, either on an earnings approach, as in Steenblok, or a capital asset approach, as in Brown.  The former approach will be more useful when the loss is more easily measurable, as it was in Steenblok.  The latter approach will be more useful when the loss is not as easily measurable, as in Pallos and Romanchych.  A plaintiff may indeed be able to prove that there is a substantial possibility of a future loss of income despite having returned to his or her usual employment.  That was the case in both Pallos and Parypa.  But, as Donald J.A. said in Steward, an inability to perform an occupation that is not a realistic alternative occupation is not proof of a future loss.

[33] On the facts of this case, the trial judge found that there was no substantial possibility of a future event leading to an income loss.  That should have been the end of the enquiry.  That was a reasonable conclusion on the evidence because there was no evidence that she was limited in performing any realistic alternative occupation.

Can Past Wage Loss be Recovered in an ICBC Claim When You're Paid "Under the Table"?

When a person is injured through the fault of another in British Columbia and suffers a past wage loss from an “under the table” job can that past wage loss be recovered in a personal injury action? The answer is yes, however, it is much more difficult to do so than in cases where past income is accurately reported to Revenue Canada.
In a 1992 case from the BC Court of Appeal (Iannone v. Hoogenraad) the law was summarized as follows:
This plaintiff, like others in similar circumstances, had the burden of leading evidence of past accident wages losses.  That will be a difficult burden to discharge where there is no corroborating evidence such as income tax returns, but it is not an impossible burden to discharge.  Here the trial judge was satisfied on the evidence that the injuries sustained by the plaintiff prevented him from earning income which he would otherwise have earned.  The burden of proof was therefore discharged.  The loss was proven.  It is not, in my opinion, open to the defendant to avoid compensating for that loss on the ground that unreported income was taken into account in computing it.
Reasons for judgment were released today by the BC Supreme Court demonstrating the difficulty in succeeding in a past wage loss claim in these circumstances.
In today’s case (King v. Horth) the Plaintiff was injured in a 2006 Car Crash in Saanich, BC (greater Victoria).  The Plaintiff claimed damages for various losses including past loss of income.  At trial he asserted that “he would have been capable of earning greater income as a gardener had he not been injured in this accident”. This claim was largely rejected and paragraphs 25-26 of the decision demonstrate Mr. Justice Johnston’s skepticism of this claim for lost income where pre accident income was not reported to Revenue Canada:

[25]      A second concern respecting Mr. King’s credibility relates to his claim for loss of earning capacity arising out of this accident. This claim centers around his assertion that he would have been capable of earning greater income as a gardener had he not been injured in this accident. Prior to this accident the plaintiff did not record, in any fashion, the income he claims that he earned as a gardener, nor did he declare that income on his income tax returns. There is some evidence from a former employer that he had employed Mr. King as a gardener before the accident, however, that employer kept no record of the plaintiff’s work hours or his wages.

[26]      In a document he submitted to ICBC in February 2006, the plaintiff stated his occupation as a surveyor. He did not mention any work as a gardener. Mr. King testified that he felt it was advisable not to refer to his gardening income in his dealings with ICBC, at least in the beginning, because that income had been earned “under the table.”

In addition to making it more difficult to succeed in a past wage loss claim, a further dilemma that can arise in these types of cases are problems with Revenue Canada after trial.  Whether or not a past income award is made at trial, Revenue Canada can come after a Plaintiff for back taxes when these types of cases are advanced.

The reason for this is, to discharge the burden of proof, a Plaintiff usually needs to take the stand and testify under oath as to how much money he/she earned historically but failed to report to Revenue Canada.  Trial testimony is generally a public record and Revenue Canada can use this sworn evidence to come after Plaintiffs.  So, in summary, pay your taxes!

BC Personal Injury Claims and Sick Leave Benefits

Imagine that you are injured through the fault of another in British Columbia.  As a result of your injuries you become disabled and are unable to return to work for a period of time.  Fortunately you have a good job and have built up a ‘sick bank’ at work and you are able to draw from this during your period of disability.  When you bring your claim against the person responsible for injuring you are you able to claim your lost wages?  Reasons for judgement were released yesterday by the BC Supreme Court addressing this issue.
In this case the Plaintiff was injured in 2005 in a motor vehicle collision.  The Plaintiff was unable to work for a few weeks as a result of injury.  The Plaintiff had built up a sick bank and drew from this.  In her ICBC claim she claimed compensation in an amount equivalent to the hours depleted from her sick bank.  In awarding the Plaintiff this money the court engaged in a very thorough and well reasoned discussion of the law addressing this topic which I am pleased to reproduce below:

[56]            This court has long recognized the loss of sick bank credits as a compensable loss (see generally: McCready v. Munroe (1965), 55 D.L.R. (2d) 338, 54 W.W.R. 65 (B.C.S.C.)).  InLavigne v. Doucet (1976), 14 N.B.R (2d) 700 at para. 12 (C.A.), the New Brunswick Court of Appeal held that the depletion of a plaintiff’s accumulated sick leave arising from injuries suffered in an accident removed a benefit that he or she would otherwise have and, therefore, constitutes a genuine loss.  That conceptual approach was approved of by McLachlin J. (now the Chief Justice) in Ratych v. Bloomer, [1990] 1 S.C.R. 940 at 972, 69 D.L.R. (4th) 25:

I accept that if an employee can establish that he or she has suffered a loss in exchange for obtaining wages during the time he or she could not work, the employee should be compensated for that loss. Thus in Lavigne v. Doucet the New Brunswick Court of Appeal quite rightly allowed damages for loss of accumulated sick benefits.

[57]            Some years later the issue was revived before the Supreme Court of Canada in Cunningham v. Wheeler, [1994] 1 S.C.R. 359, 113 DLR (4th) 1, where Cory J. confirmed at 13 that an employee who uses sick leave in order to receive wages while off work and loses those sick day credits is entitled to receive compensation.

[58]            In Roberts v. Earthy, 1995 CanLII 1421 (B.C.S.C.) [Roberts], Clancy J. held at para. 8 that it was not necessary to adduce evidence showing that any consideration was paid by the plaintiff or negotiated on the plaintiff’s behalf through a collective agreement or other employment arrangement.  He did so on the basis that the accumulation of sick days is not related to what has come to be known as the insurance exception to the compensatory principle where such supporting evidence is generally required.

[59]            The case authorities do not appear to support a universal approach to the quantification of the loss flowing from the depletion of sick leave benefits.  For example, in Collins v. Ma, 1990 CanLII 1634 (B.C.S.C.), the court endorsed a contingency calculation being applied in order to take into consideration the likelihood of an employee drawing on the lost banked sick days in the future.  That approach was followed by the court in Olson v. Nixon, [1991] B.C.J. No. 155, 1991 CarswellBC 1346 (S.C.).

[60]            In Roberts, however, Clancy J. made no deduction for contingencies.  Likewise, more recently in Choromanski v. Malaspina University College, 2002 BCSC 771, the court rejected the defence argument that there should be a  reduction of the loss taken based on the plaintiff’s work history and the rate at which he had traditionally availed himself of his sick benefits. 

[61]            In my view, whether it is appropriate to make deductions for contingencies in quantifying the loss will depend upon the presence or absence of certain factors.  Those would include, for example, whether there is a maximum limit of accumulated sick leave, whether the plaintiff is able to cash out accumulated sick leave days on termination or retirement, whether the plaintiff has several years of employment remaining in which to potentially use the sick leave or has only a few months of employment left until retirement with a significant sick leave remaining, or whether the plaintiff has left the employment in which he earned the sick day credits altogether.  It cannot be predicted with any degree of certainty whether a person who is healthy today will be so tomorrow.  Illness or injury can afflict any one of us at any time.  Placing much if any reliance on the plaintiff’s past use of sick benefits strikes me as an unsound and potentially unfair approach because it fails to adequately protect a plaintiff against an unexpected serious or catastrophic illness in the future which could occur in any otherwise healthy plaintiff, or against a future injury, which, by its nature, is unpredictable.  In neither case would those future events necessarily be related to the plaintiff’s past use of sick benefits.

[62]            I accept that had Ms. Fenwick not used her sick leave credits, she would have been entitled to transfer them from her then employer, the Vancouver School Board, to her new employer, the Coquitlam School Board.  As well I am satisfied that, pursuant to her collective agreement, any monies awarded to Ms. Fenwick on account of lost sick days is repayable to her then employer in order to replenish her sick leave bank.  Beyond that, the evidence pertaining to the details of the portability of Ms. Fenwick’s sick day credits was not well developed.  I do not have cogent evidence as to whether there is a maximum number of sick days allowable, the formula for which she has earned them or whether she is able to cash them out on retirement or termination.

[63]            As best I can decipher from the evidence, the loss that Ms. Fenwick has sustained is a potential future loss in the sense that it would only be experienced if she has insufficient sick leave credits to adequately cover a future period of absence due to illness in respect of which she could have drawn upon the lost sick bank for income continuation.

[64]            Ms. Fenwick thoroughly exhausted her accumulated sick leave as a result of the accident.  She is a relatively young woman in the early stages of her career as a teacher.  I have found that she likely will experience flare-ups of her symptoms caused by this accident from time to time in the future which may require her to miss brief intervals of time from work.  She may also suffer from other illness or medical conditions in the future which will keep her from work. 

[65]            I am satisfied that fair and reasonable damages for this loss is compensation which reflects the actual hours Ms. Fenwick missed from work and used as sick time, multiplied by her approximate average hourly rate, without deduction.  To that, I would add her wage loss stemming from fifteen hours of unpaid absences attributable to her injuries.  The total damages amount to $5,469.18.

[66]            Ms. Fenwick’s counsel raised a concern about whether damages for Ms. Fenwick’s lost sick bank entitlement could be validly characterized as pre-trial earnings or income and thereby attract a deduction for income tax pursuant to sections 95 and 98 of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231.  In my view, this kind of loss is not in the character of past wage loss.  Accordingly, there will be no deduction for income tax

$75,000 Pain and Suffering Awarded for Headaches and Chronic Pain

Reasons for judgement were released today awarding a Plaintiff just under $150,000 damages in total as a result of two ICBC claims.
One thing I’ve been meaning to point out for some time on this blog is that in BC tort claims (which include car accident claims), ICBC is almost never named as a party to the lawsuit. There are a few circumstances when it is appropriate to name ICBC directly but these are few and far between. It is a safe bet that if a case goes to court in BC involving a BC car accident it is more often than not an ICBC claim. I know that this case involves ICBC (despite them not being named as a party) because the defence lawyer is an ICBC in house lawyer from Kamloops. When you are looking at precedents to help you value your ICBC case to determine what a fair settlement, you should know that most any BC car accident case serves as a valuable precedent because even if ICBC is not mentioned or is not the insurer in any given case, each BC case serves as an example of how our courts value injuries in BC.
Getting back to the case – here the Plaintiff was injured in 2 car accidents for which others were at fault. The first in 1998, the second in 2004. In the first accident the Plaintiff was a passenger in a pick-up truck involved in a roll-over accident. In the second the Plaintiff was a passenger in a vehicle that was T-boned. Both crashes were significant and resulted in injuries.
This case is a good example of how complex chronic pain ICBC claims can be when they head to trial. In this case the court heard from over 10 lay witnesses who could comment on their observations of the Plaintiff’s injuries (or lack thereof by the witnesses called by the ICBC defence lawyer). The court also had access to medical evidence from over 6 doctors and other specialists.
The Plaintiff presented a case of chronic pain affecting every single aspect of her life. The defence case was one of injury which significantly improved after 2 years.
The court concluded that, although the Plaintiff ‘exaggerated her claim to some extent‘ she ‘has suffered to some degree from headaches and chronic pain over the past 10 years, and will continue to suffer these in the future, over some limited period of time. Some of her complaints are psychosomatic and she may benefit from counselling‘.
The court awarded damages as follows:
The plaintiff shall recover damages as follows:

general damages: $75,000

past income loss: $680

cost of future care: $4,271.72

diminished future earning capacity: $60,000

special damages: $7,753.60

In doing so the court recited some good quotes from previous BC judgements addressing the assessment of damages. These precedents are worth knowing for anyone advancing and ICBC injury claim. Particularly the court referred to a great BC Court of Appeal case summarizing the principles used in the assessment of damages in personal injuries, the key quote being:

The most basic of those principles is that a plaintiff is entitled to be put into the position he would have been in but for the accident so far as money can do that. An award for loss of earning capacity is based on the recognition that a plaintiff’s capacity to earn income is an asset which has been taken away. Where a plaintiff’s permanent injury limits him in his capacity to perform certain activities and consequently impairs his income earning capacity, he is entitled to compensation. What is being compensated is not lost projected future earnings but the loss or impairment of earning capacity as a capital asset. In some cases, projections from past earnings may be a useful factor to consider in valuing the loss but past earnings are not the only factor to consider.

Because damage awards are made as lump sums, an award for loss of future earning capacity must deal to some extent with the unknowable. The standard of proof to be applied when evaluating hypothetical events that may affect an award is simple probability, not the balance of probabilities. Possibilities and probabilities, chances, opportunities, and risks must all be considered, so long as they are a real and substantial possibility and not mere speculation. These possibilities are to be given weight according to the percentage chance they would have happened or will happen.

The trial judge’s task is to assess the loss on a judgmental basis, taking into consideration all the relevant factors arising from the evidence … [The factors] include:

[1] whether the plaintiff has been rendered less capable overall from earning income from all types of employment;

[2] whether the plaintiff is less marketable or attractive as an employee to potential employers;

[3] whether the plaintiff has lost the ability to take advantage of all job opportunities which might otherwise have been open to him, had he not been injured; and

[4] whether the plaintiff is less valuable to himself as a person capable of earning income in a competitive labour market.

The task of the court is to assess damages, not to calculate them according to some mathematical formula. Once impairment of a plaintiff’s earning capacity as a capital asset has been established, that impairment must be valued. The valuation may involve a comparison of the likely future of the plaintiff if the accident had not happened with the plaintiff’s likely future after the accident has happened. As a starting point, a trial judge may determine the present value of the difference between the amounts earned under those two scenarios. But if this is done, it is not to be the end of the inquiry. The overall fairness and reasonableness of the award must be considered taking into account all the evidence.

The court then did a great job of summarizing the two approaches when addressing future wage loss and ICBC claims, summarizing the law as follows:

There are two methods of assessment under this head of damages, although both have the same outcome. The court can either use the “real possibility” approach, and compare the plaintiff’s likely earnings, had she not been injured, with the income she likely now earns, factoring in the positive and negative contingencies; or the court can value the loss of earning capacity as a capital asset (as Finch J.A., as he then was, suggested in Pallos v. ICBC (1995), 100 B.C.L.R. (2d) 260 (C.A.)).

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If you would like further information or require assistance, please get in touch.

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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