Tag: wage loss

BC Supreme Court Confirms No Tax Deductions For Depleted Sick Bank Damages

Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, confirming that where a Plaintiff proves damages for used up sick bank hours due to a collision related injury, the recovered damages will not be subject to income tax deductions (as is done with past wage loss awards).
In the recent case (Gormick v. Amenta) Mr. Justice Sigurdson made it clear that such damages will not be subject to income tax deductions and Plaintiff’s are entitled to recover damages on a gross basis.  In reaching this decision the Court provided the following reasons:
[5]             The authorities support awarding the gross amount for loss of sick bank credits…
[9]             As is evident from DeGuzman, treating loss of sick bank entitlement as past wage loss undercompensates the plaintiff because deductions could be taken from him or her twice.  This is consistent with Ballance J.’s characterization of loss of sick bank entitlement as a “potential future loss” not in the “character of past wage loss”.
[10]         In addition, the following cases have adopted Bjarnason without further comment in awarding the gross amount for loss of sick bank entitlement:
·                 Chingcuangoco v. Herback, 2013 BCSC 268 at paras. 128-133;
·                 Kilian v. Valentin, 2012 BCSC 1434 at paras. 125-127;
·                 Chalmers v. Russell, 2010 BCSC 1662 at para. 86;
·                 Pham-Fraser v. Smith, 2010 BCSC 322 at para. 90; and
·                 Rizzolo v. Brett, 2009 BCSC 732 at para. 67.
[11]         Contrastingly, the defendant in the instant case relies on Redl v. Sellin, 2013 BCSC 581, in which the court awarded the net and not the gross amount in respect of damages for lost benefits (including paid sick days, paid time off work for medical appointments and lost vacation credits).
[12]         In Redl, the court rejected the plaintiff’s position that “as full repayment of benefits to her employers appears to be required, the net loss calculation should not be applied to the total subrogated portions of the income loss claim” (at para. 33).  In this regard, the court said, at para. 34:
It is clear under the Insurance (Vehicle) Act that the defendant’s liability for all income losses – regardless of whether a subrogated interest is claimed by an employer or an insurer – is for the net amount only.  The rights of an insurer or employer claiming a subrogated interest in an employee’s damages claim are no greater than those of the employee.  The entire gross amount of Ms. Redl’s past income loss of $37,360.05 is subject to a deduction for taxes.  How this impacts Ms. Redl’s repayment obligations is a matter between her and her employers.
[13]         However, Redl make no note of Bjarnason or the other cases following that decision.  It appears that those cases were not brought to the attention of the judge deciding Redl. 
[14]         Further, the proposition which the defendant in the instant case extracts from Redl – namely, that “[t]he rights of an … employer claiming a subrogated interest in an employee’s damages claim are no greater than those of the employee” – is not inconsistent with Bjarnason.  Bjarnason holds that an employee has the right to the gross amount of damages in respect of loss of sick bank entitlement.  Accordingly, the employer claiming a subrogated interest in the gross amount of those damages is not claiming a greater right than that of the employee.
 

No Income Tax Deductions for Depleted Sick Bank Damages


As previously discussed, when a person becomes disabled from work due to injuries and uses up banked sick time they can claim damages to be reimbursed for this loss in a tort claim.
If the tort claim arises from a BC motor vehicle accident the Insurance (Vehicle) Act requires awards for past wage loss to be reduced to take income tax consequences into account resulting in damages only for “net income loss”.  So, when damages are paid for use of banked sick time does the award need to be reduced to take income tax into account?   The answer is no and reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, addressing this issue.
In last week’s case (Chalmers v. Russell) the Plaintiff was a school teacher who was involved in two motor vehicle collisions.  The Plaintiff was not at fault for either of these crashes.  As a consequence of injuries sustained the Plaintiff had to use up several thousand dollars of banked sick time available to her through her employment.  Madam Justice Griffin awarded the Plaintiff damages for this loss and in doing so provided the following useful reasons explaining that these awards are not to be reduced to take income tax consequences into account:

[85]         I accept Ms. Chalmers’ evidence that following the first accident, she was so sore and painful that she felt it necessary to take time off work prior to the birth of her child in order to expedite her recovery.  I am mindful that she did not obtain any medical evidence in support of her decision to take time from work.  Regardless, given her advanced state of pregnancy, the trauma of the accident and the pain she was in after the first accident, I consider her decision not to return to work to be reasonable and due to her injuries.  The cost to reimburse the sick bank during this time period is $342.45 per day, totalling $3,766.95.

[86]         As noted in Bjarnason v. Parks, 2009 BCSC 48, depletion of a sick bank is a compensable loss: at para. 56.  However, it is not an income loss so there should be no deduction for income tax in accordance with ss. 95 and 98 of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231: Bjarnason at para. 66.

In addition to the above, today’s case is worth reviewing for the Court’s discussion of non-pecuniary damages for mothers whose injuries affect their ability to look after their young children.  In today’s case the Plaintiff sustained various soft tissue injuries which, while not disabling, continued to affect the Plaintiff and interfered with her ability to look after her infant children.  Madam Justice Griffin assessed non-pecuniary damages at $50,000 and in doing so provided the following reasons:

[123] Importantly, Ms. Chalmers has lost the experience of being a relatively pain-free, physically active mother of her infant children during an important period in their young lives.  This is clearly a huge loss for Ms. Chalmers.

[124] I conclude that a reasonable award of non pecuniary damages, that is fair to all parties, is $50,000.

This is not the first time that pain interfering with parenting has been considered a relevant matter by the BC Supreme Court in addressing non-pecuniary damages and you can click here to read a previous post further discussing this topic.

BC Personal Injury Claims and Reimbursement of "Sick Bank" Time


Many BC employees have the benefit of a “sick bank“.  For those of you not familiar with these, a sick bank is basically a pooled amount of time which an employee is able to be absent from work for sickness and still receive full pay.  Sometimes a sick bank grows over the years of employment provided it is not drawn from.
When you are injured as the result of someone else’s carelessness, become disabled for a period of time and have to use up your “sick bank” are you entitled to recover damages to reflect the value of this used up asset?  Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, discussing this area of law.
In today’s case (Burton v. Bouwman) the Plaintiff was involved in a total of 3 motor vehicle collisions.  Following each collision he missed time from work and had to draw money from his sick bank.  In his lawsuit against the at-fault motorists he claimed for various damages including damaged for his depleted sick bank.
The Plaintiff largely succeeded in this claim.  In awarding the Plaintiff compensation for this loss Madam Justice Gray summarized and applied the law as follows:

[157] Mr. Burton is not entitled to receive cash from CSC for unused banked sick leave.  The banked sick leave will only be of value to him if he becomes sick and has insufficient banked sick leave, with the result that he takes an unpaid leave.

[158] There is a real and substantial possibility that Mr. Burton will become sick while still employed by CSC and have insufficient banked sick leave.  Mr. Burton is entitled to compensation to reflect that…

[189] Mr. Burton did not suffer a wage loss as a consequence of the accidents, because he was able to use his banked sick time.  However, he claims lost banked sick leave and annual leave, $21,600 for lost overtime, and an unspecified amount for the past lost opportunity to earn income outside CSC.  The position of the defence is that Mr. Burton should recover nothing for these claims.

[190] As discussed above, Mr. Burton is entitled to be compensated for the loss of his banked sick time.  CSC paid Mr. Burton about $12,000 for his banked sick leave after the First Accident, about $250 after the Second Accident, and about $18,700 after the Third Accident.  That is a total of about $30,950.

[191] The method of compensating a continuing employee for loss of sick bank credits was discussed in Bjarnson v. Parks, 2009 BCSC 48, and the cases cited in it.  In that case, and in Roberts v. Earthy, [1995] B.C.J. No. 1034 and Choromanski v. Malaspina University College, 2002 BCSC 771, the court awarded the full amount of salary corresponding to the banked sick leave, without making any deduction for contingencies.  Other cases cited in Bjarnson made such a deduction.

[192] I would assess the likelihood that Mr. Burton will become sick while working at CSC and have insufficient banked sick leave at 75 percent.  As a result, Mr. Burton is entitled to damages of $22,500 in respect of his lost banked sick leave.

$80,000 Non-Pecuniary Damages for Chronic Pain and PTSD

Reasons for judgement were released today by the BC Supreme Court awarding damages for injuries and loss as a result of a 2007 BC Car Crash to a previously disabled Plaintiff.
In today’s case (Viner-Smith v. Kiing) the Plaintiff was previously disabled with depression and other medical issues.  In 2007 he was involved in a rear-end car crash.  The Crash caused various physical injuries and exacerbated his pre-existing depression.
In assessing the Plaintiff’s non-pecuniary damages (money for pain and suffering and loss of enjoyment of life) at $80,000 Mr. Justice Holmes summarized the accident related injuries as follows:

[51] The plaintiff now suffers from the complex interaction of a combination of chronic pain, major depressive disorder, and PTSD.  The chronic pain syndrome and PTSD are a result of the motor vehicle accident.  A depressive disorder was present before the accident but in my view was increased or exacerbated from the effect of the accident.   The combination of conditions can have the effect that a worsening of the symptoms of any one may cause another to worsen.

[52] The combination of these disorders is notoriously difficult to treat pharmacologically.  Dr. Passey’s prognosis for the plaintiff “…remains poor for a full recovery and I am pessimistic about any future significant improvements” and “even with further treatment it is most likely that he will have a restricted lifestyle, diminished ability to enjoy life and a restricted capacity for any type of competitive employability for the foreseeable future.”

[53] The plaintiff therefore sustained soft tissue injury in the accident and he suffered significantly in the immediate post accident period with diminishing pain over three or four months.  He also suffered an increase or exacerbation of the psychological symptoms of anxiety, depression and agoraphobia which he had experienced pre-accident but to a lesser degree.

[54] The plaintiff’s pre-accident depression involved passive thoughts of suicide but post accident they escalated to active ideation, with the plaintiff researching methods to commit suicide although not following through because of the effect he believed it would have on his family.  The symptoms of agoraphobia in not leaving his home, answering the phone, getting the mail, and becoming isolated and reclusive, appear to have increased from sporadic and partial pre-accident to the plaintiff tending toward being totally reclusive and isolated after the accident.  The plaintiff even stopped filling out the monthly forms required to receive the funding for his son’s autism program and the government cut off payment.

[55] There is a good deal of evidence in the Odyssey documentation,  the records of Dr. Applegarth, and the testimony of his wife and friends,  that the plaintiffs depression and anxiety conditions existed prior to the accident.  The accident injuries ended the ability of the plaintiff to continue with the Odyssey program, however it may well not have succeeded in any event and the plaintiff was very unhappy with Odyssey before the accident and on the verge of withdrawing.

[56] The surgery for the CSDC has not occurred although available since 2004.  There was no firm commitment made to undergo the surgery and until it was successfully completed the plaintiff would not be returning to work.

[57] The plaintiff had not worked for 6 years at the time of the accident, including an unsuccessful attempt in 2003 doing only non-driving dispatch work.  Statistically persons who have not worked for two years are unlikely to return to employment.

[58] The health of the plaintiff prior to the motor vehicle accident was certainly impaired and he had significant disability.  The plaintiff was particularly vulnerable to both psychological and physical injury and both were caused by the defendant.  The plaintiff at the time of the accident was engaged in a tangible program directed toward an ultimate return to employment, however the result was problematical and uncertain.  There is no doubt however the effect of injuries the plaintiff sustained in the accident did interfere with his ability to rehabilitate himself and did constitute a set back to him.

[59] I agree with the assessment of Dr. Pullyblank that the prospects for the plaintiff’s return to work as a bus driver were low before the accident but lower still after.  The major effect of PTSD is that the plaintiff is eliminated from employment driving a bus or related occupations as that might trigger his fear of driving, accidents, injury and death.

[60] The plaintiff, because of the increased level of his depression and anxiety post accident, and his chronic pain and PTSD, has suffered a further impact on his already impaired quality of life.  The loss of hope of returning to employment as a bus driver, which he loved, and the lessening of his chances generally for remunerative employment, will impact his enjoyment of life…

[65] I assess the plaintiff’s non-pecuniary general damages for pain and suffering, loss of enjoyment of life and loss of amenities at $80,000.

In addition to assessment for pain and suffering for chronic pain and PTSD imposed on pre-existing depression this case is also worth reviewing for the court’s award of damages for wage loss for a previously disabled plaintiff.  In today’s case it was accepted that the accident caused no past wage loss and that given the Plaintiff’s pre-accident absence from the workforce it was ‘statistically unlikely’ that he would return to the work force even if the accident did not happen.  Despite this, Mr. Justice Holmes awarded the Plaintiff $50,000 for diminished earning capacity.  The court’s key discussion in coming to this figure is reproduced below:

[67]         The plaintiff does not seek past income loss and that is because there has been none.  He remains on disability insurance from his original employment.  Regardless of the motor vehicle accident it was problematic whether the plaintiff would have completed his rehabilitation program with Odyssey, pursued conditioning, lost weight, underwent successful surgery for his ear problem and hernia, and been successful in dealing with his depression, agoraphobia, gout and other health problems.

[68]         I am of the view that on the whole of the evidence there was only a minimal chance, absent the motor vehicle accident, that the plaintiff would have successfully achieved rehabilitation through the Odyssey program, successfully resolved his ear problem with surgery, and overcome his other medical and psychological conditions that would perhaps then have allowed him to attempt a return to his job as a bus driver after a six year absence.

[69]         On the evidence, I accept the injuries resulting from the motor vehicle accident give rise to only a minimal change from the plaintiff’s pre-accident earning capacity.  That change is that as a result of the effects of PTSD he will no longer be capable of employment as a bus driver or in any related work which will trigger his PTSD symptoms.

[70]         The reality however is that both prior to, and after, the motor vehicle accident the plaintiff presented to any prospective employer as a person:

·       who had not worked for six years

·       that was physically deconditioned

·       who could not sustain physical activity for prolonged periods

·       who suffered SCDS which triggered dizziness, balance problems, and headaches at random and on physical activity

·       suffered episodic bouts of depression and suicidal ideation

·       suffered diverse anxiety and agoraphobia feelings

·       and personally doubted his own ability to return to work.

[71]         The plaintiff pre-accident did not pursue any job opportunity although with training or further education had many options open to him, most of which still remain after the motor vehicle accident.

[72]         The PTSD has however further reduced the plaintiff’s pre accident ability to earn income and I assess the further diminution in the plaintiffs earning capacity attributable to the effect of the injury from the motor vehicle accident at $50,000.

Can a Plaintiff be Awarded Significant Funds for Future Wage Loss when their Pain and Suffering is Relatively Minor?

The answer is yes and reasons for judgment were released today by the BC Supreme Court demonstrating this.
In today’s case (Sidhu v. Kiraly) the Plaintiff was awarded $35,000 for non-pecuniary damages for accident related soft tissue injuries.
Madam Justice Brown found that the Plaintiff suffered “soft tissue neck and back injuries and developed secondary muscle contraction occipital headaches”  These injuries largely improved over time and the Court found that “so long as (the Plaintiff) does not undertake any heavy labour, he has no significant complaints.  If he undertakes heavy work of any kind, his symptoms flare, he has neck, mid-back and shoulder pain as well as headeaches.
Unfortunately for the Plaintiff, his own occupation at the time of the collision involved heavy labour and once he realized the permanent nature of his injuries he concluded he could not carry on in his occupation.  He retrained for a lighter career as a realtor.  The court found that this was reasonable given the accident related injuries and awarded the Plaintiff $350,000 for his diminished earning capacity.  In arriving at this assessment Madam Justice Brown engaged in the following analysis:

[25] Turning now to future loss of income or future loss of capacity, as I have indicated, I accept that the plaintiff will not be able to return to his work as a heavy duty mechanic and that he is permanently unable to undertake heavy labour of any kind.  This is a limitation on the plaintiff’s “ability to take advantage of all job opportunities which might otherwise have been open to him, had he not been injured”, and a valid consideration in the determination of future income loss: Brown v. Golaiy (1985), 26 B.C.L.R. (3d) 353 at para. 8 (S.C.).

[26] I also am of the view that his choice of real estate agent as a future career was a reasonable one in the circumstances.  In my view, given the plaintiff’s personality and his persistence, he is likely to succeed as a real estate agent.

[27] The plaintiff relies on the report of Gerry Taunton to calculate future income loss. Mr. Taunton calculates Mr. Sidhu’s without accident income as a mechanic to age 65 at $1,096,233 and his with accident income as a realtor at $561,552, a  difference of $534,681.

[28] The court must consider all of the evidence in assessing what makes a reasonable award for such a future loss.  Projections, calculations and formulas may be useful in determining what is fair and reasonable.  It is important for the courts to look at all relevant factors before fixing an amount.  Any award under this head of damages must be set off against appropriate contingencies.

[29] Having considered the assessment provided by Mr. Gerry Taunton and considering the contingencies in this case, positive and negative, in my view, an appropriate award for future loss of income or capacity is $350,000.  I do not accept the defendant’s submission that one year of income would be appropriate in this case.  As I have indicated, the plaintiff has been permanently disabled from his lifetime occupation as a heavy duty mechanic.  He has been forced to retrain.    There is some prospect that he will earn more than the median income of male realtors in British Columbia.  There is also the prospect that he will earn less.  I have assessed the amount of the award in this case as best I am able, considering all of the contingencies.

More on ICBC Claims, Soft Tissue Injuries and Assessment of Damages

Reasons for judgement were released today by the BC Supreme Court, New Westminster Registry, (Runghen v. Elkhalil) awarding a Plaintiff just over $147,000 in total damages as a result of injuries and damages sustained in a BC car crash.
The collision occurred in 2004 when the Plaintiff’s vehicle was rear-ended.  The issue of fault was admitted leaving only an assessment of damages at issue at trial.
In awarding $40,000 for pain and suffering (non-pecuniary damages) Madam Justice Fenlon made the following findings with respect to the Plaintiff’s injuries:
[16]            Based on the evidence of the experts, which is largely consistent, I find that Ms. Runghen suffered mild soft tissue injuries to her cervical and lumbar spine as a result of the accident; I further find that due to those injuries, she has headaches and chronic pain that has affected her ability to function both at home and at work.  I also find that Ms. Runghen’s pain and related incapacity are likely to markedly improve once an appropriate treatment plan is put in place.
Madam Justice Fenlon engaged in a thoughful discussion at paragraphs 17-34 of the judgement which is worth reviewing for anyone ingterested in seeing some of the factors courts take into consideration when valuing pain and suffering in ICBC soft tissue injury claims.
The balance of the judgement deals largely with claims for past wage loss and diminished earning capacity.   Awards were made under both of these heads of damages.  The court found that the Plaintiff’s ability to work was diminished as a result of chronic pain and that this would likely continue for at least some time after the trial.  In awarding $35,000 for diminished earning capacity the court engaged in the following analysis:

[50]            As noted earlier in these reasons, I accept that the chronic pain experienced by Ms. Runghen to date has been a limiting factor in her ability to take on longer hours at work.  I expect that limitation will continue to some extent over the next year, as she engages in a rehabilitation exercise program.  After that time, it is probable that she will be able to increase the amount of time she works to be more in keeping with what she would have been doing prior to the accident.  In coming to this conclusion, I recognize that Ms. Runghen had not established her career as a massage therapist and that we do not have a solid base line from which to work.

[51]            I am mindful that there is no certainty possible in terms of predicting what will occur in the future; there is a possibility, even with the correct treatment for her injuries, that Ms. Runghen may still experience some limitations.

[52]            Applying the considerations identified in Brown v. Golaiy (1985), 26 B.C.L.R. (3d) 353 (S.C.), I find that Ms. Runghen is likely to be somewhat less capable, overall, of earning income from all types of employment and that, in particular, she is likely to be less capable of earning incoming from her chosen field of massage therapy.  Ms. Runghen may have to consider retraining in another field or another area of specialization within massage therapy if she wishes to work full-time.

[53]            In my view, given the potential for marked improvement in Ms. Runghen’s condition that both Dr. Cameron and Dr. McGraw identified in their reports, and based on Ms. Runghen’s own experience with a similar but truncated rehabilitation program with Karp, it would not be appropriate to apply the precise mathematical calculation of future income loss used by Ms. Runghen.  Rather, this is an appropriate case to award a sum that takes into account the various contingencies and possibilities, without overcompensating Ms. Runghen by assuming the status quo and calculating a set wage shortfall over the next 36 year’s of her working life.  I set that sum at $25,000. 

[54]            I find that Ms. Runghen will need approximately six months to put in place and complete a four-month exercise rehabilitation program.  During that time, she will continue to work at her current level.  I therefore award damages of $10,000 to cover loss of income during this period.  

[55]            In summary, I award Ms. Runghen  a total of $35,000 for loss of future income and loss of earning capacity

 

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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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