(Note: the case discussed in this post was overturned by the BCCA addressing the issue of tax consequences in ICBC past income loss awards.)
In reasons for judgement published today by the BC Supreme Court (Laxdal v. Robbins) Madam Justice Gerow discussed two interesting issues that often come up in ICBC Claims.
The first is the “LVI Defence“. In today’s case the Plaintiff was injured in a 2006 car crash in Nanaimo, BC. This collision appears to fit ICBC’s LVI criteria in that the Plaintiff’ vehicle suffered minimal damage and this was stressed by the defence at trial. In finding that the Plaintiff indeed suffered injury in this crash despite the rather insignificant amount of vehicle damage Madam Justice Gerow had this very practical take on the evidence presented:
 Although the severity of the accident is a factor that should be taken into consideration when determining whether Ms. Laxdal suffered injuries in the motor vehicle accident and the extent of those injuries, it is not determinative of either issue. Rather, the whole of the evidence must be considered in determining those issues.
 In this case, the uncontradicted evidence of both Ms. Laxdal and Dr. Roy, her family doctor, is that Ms. Laxdal suffered a soft tissue injury in the accident. As a result, I have concluded that Ms. Laxdal’s injuries were caused by the motor vehicle accident of September 11, 2006.
The court went on to award $15,000 for the Plaintiff’s pain and suffering for “mild to moderate soft tissue injury in her neck and back with some pain radiating into her shoulders. Her injuries had mostly recovered…approximately 8.5 months after the accident, and it is unlikely that there will be any significant residual symptoms as a result of the accident“.
The second issue dealt with by the court worth noting was the award for past loss of income and the proper calculation of “net income loss”.
There is a debate amongst lawyers in the Personal Injury Bar with respect to the proper calculation of “net income loss” when the amount of past wage loss in a BC Vehicle Crash tort claim for any given year is so small that the figure would be tax exempt but when added up with the other income earned by the Plaintiff the gross figure would be taxable. The answer to this question is important as it effects the amount that can be awarded for past wage loss in a BC Car Crash tort claim due to s. 98 of the Insurnance (Vehicle) Act.
In today’s case, Madam Justice Gerow decided as follows:
“In my view, the authorities support the conclusion that where the gross award is at or below the amount exempt from taxation, there would be no tax payable so that the net past income loss would be the same as the gross past income loss….Accordingly there will be no deduction for income tax as the amount of past wage loss is below the personal exemption.”
This is a great result for BC Plaintiff’s injured in car crashes who suffer a modest past wage loss as it permits the gross amount to be recovered so long as the award fall below the personal income tax exemption for any given calendar year. I imagine ICBC is not as pleased as Plaintiffs are with this interpretation and perhaps this issue will go up to the Court of Appeal for consideration. If it does I will be sure to write about the result.