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