Undeclared Income And Tort Recovery Difficulties
Although income loss from ‘undeclared’ sources is recoverable in a BC personal injury claim attempting to do so can create some practical difficulties. First off testifying to actual income differing from declared income can open the door to consequences to Revenue Canada. Second, proving the loss can become a real barrier for a Plaintiff. This second concern was highlighted in reasons for judgement released recently by the BC Supreme Court, Prince George Registry.
In the recent case (Welygan v. Willms) the Plaintiff was injured in a 2008 motorcycle accident. While much of her claim was rejected at trial the Court did accept that she suffered from some injury and wage loss. The Plaintiff worked in the food service industry and derived some of her income in tips. Her tips were undeclared. The Court did not accept the level of loss that the Plaintiff testified to and in doing so the Court provided the following comments highlighting the difficulty in assessing losses based on undeclared income:
[396] Her only irregular employment was as a server in bars from time to time where she earned minimum income supplemented with undeclared income from tips.
[397] Undeclared tips is a commonplace occurrence for young people working in the food service industry, although it makes it more difficult to determine the plaintiff’s actual pre-accident income when the only evidence of the value of the tips comes from her “estimate” at trial, unsubstantiated by any written record.
[398] The plaintiff possessed a certificate from a medical terminology course that she never used, and says she had aspirations to go to hairdressing school although she had not made any inquiries or taken any steps towards that end.
[399] I am unable to assess her pre-trial loss of income claim on any other basis than her history of earnings from the food service industry, using her income tax information, and adding a somewhat arbitrary amount for tips that I will accept she was receiving but not reporting, for the time period in which I conclude she was incapable of returning to that work because of injuries related to the accident.
[400] I have found that the plaintiff recovered from her disabling pain from the accident by the end of 2008, and by that point in time her pre-existing psychiatric illnesses had settled back to their pre-accident level and were no longer exacerbating her physical pain.
[401] The plaintiff says she intended to continue working at Steamers Pub until September 2008 and then go to hairdressing school.
[402] She was making approximately $660 per month in 2008 from Steamers Pub, up to the time of the accident, from her income tax records.
[403] In addition she says she was making about $900 per month from undeclared tips.
[404] I am not prepared to accept a figure of $900 per month for tips without some independent proof. I will accept an amount of half that number of $450 per month for tips.