By Ian Aikenhead, Q.C.
Damages for loss of future earning capacity are awarded usually in cases in which the plaintiff’s injuries result in permanent physical disabilities or permanent intellectual deficits. However, it is not only continuing physical or intellectual limitations that can affect the earning ability of the plaintiff and give rise to future losses.
Damages may be awarded if the court finds that there is a real or substantial possibility that the plaintiff will suffer a loss of income-earning capacity in the future as a result of injuries sustained in the accident. This is known as the “substantial possibilities” approach. The court has held that the balance of probabilities test is too high a standard for such cases. Instead, the court determines whether the loss is a real possibility and then determines the actual likelihood of it occurring, often in percentage terms.
When the court finds on medical evidence that the plaintiff may need further surgical procedures to correct an injury, but it is uncertain when those procedures will take place and to what extent the plaintiff’s capacity to earn income may be affected, it will be impossible to calculate precisely how much income will be lost. In these cases, the fact that damages may be difficult to assess does not prevent the court from employing a “best estimate” as to the future loss.
One method of considering this is:
The means by which the value of the lost, or impaired, asset is to be assessed varies of course from case to case. Some of the considerations to take into account in making that assessment include whether:
- the plaintiff has been rendered less capable overall from earning income from all types of employment;
- the plaintiff is less marketable or attractive as an employee to potential employers;
- the plaintiff has lost the ability to take advantage of all job opportunities which might otherwise have been open [to that plaintiff], had he [or she] not been injured; and
- the plaintiff is less valuable to himself [or herself] as a person capable of earning income in a competitive labour market.
The court must assess rather than calculate with mathematical certainty the future losses of the plaintiff.
I believe that a consistent theme running through the authorities is that a trial judge, in deciding on an award of damages under the heading of anticipated future loss, whatever term one actually uses, ought to endeavour to make an informed estimate or assessment of anticipated loss as opposed to merely undertaking to do a computation. Because one is considering the future which has about it always an aspect of the unknowable, contingencies positive and negative fall to be considered. Ultimately, a best estimate is required and while there will almost invariably be mathematical calculations to be considered, a purely mathematical approach will usually not be appropriate because such an analysis is too limited in scope.
The effects of future inflation and increases in worker productivity give rise to the concept of the discount rate. The discount rate represents the difference between the actual rate of interest to be earned on investing the capital sum and the rate of inflation. It also takes into account productivity factors, such as the worth of the plaintiff’s labour increasing in real terms. In British Columbia, the discount rates for claims for loss of earning capacity is 2.5%.