Contingencies

By Ian Aikenhead, Q.C.

In order to assess future loss in the most realistic way possible, the court should apply contingencies to take into account the uncertainty of pre­dicting the future and the chance that the assumptions on which the loss has been assessed may turn out to be wrong. The court should do so based on the evidence tendered.

In recognition of the fact that the future cannot be foretold, allow­ance must be made for the contingency that the assumptions on which the award for pecuniary loss is predicated may prove inac­curate. In most cases this will result in a deduction, since the earnings and cost of care figures are based on an uninterrupted stream which does not reflect contingencies such as loss of employment, early death, or the necessity of institutional care. Where no evidence is available, courts have made a deduction in the range of 20 per cent. Where evidence is available, the deduc­tion for contingencies may be increased, decreased, or eliminated according to the proof presented.

The approach usually taken is to assess the future loss award and then apply a percentage adjustment. Examples of “negative contingencies” are the poor health of the claimant and the potential for strikes, lockouts, lay-offs, and voluntary unemployment. Examples of “positive contingencies” are the opportunity for overtime work and the possibility of promotion. In each case the court is obliged to weigh the contingencies on the basis of the evidence. If the court finds that the contingencies balance out, then no adjustment upward or downward is made. The Court of Appeal has held that in the absence of unusual factors, 20% should be the maximum con­tingency deduction.

In a case involving positive contingencies regarding future losses, the Court accepted that the plaintiff’s employ­ment record may have improved as the plaintiff matured and extended his education.

In a case involving negative contingencies, the Court applied a 75% dis­count to the plaintiff’s future loss of earning capacity damages to account for a number of contingencies, including the possibility that her symp­toms might dissipate.

Contingency adjustments to past loss of income are applied on the bal­ance of probabilities. Contingency adjustments to awards for future loss of income earning capacity are made on the “substantial possibilities” test.

Article by Ian Aikenhead, Q.C.

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