There are many different types of damages that you can be compensated for after you are injured in an accident, including your pain and suffering, the cost of future care and ongoing medical treatments that you will require, and any loss of income you have experienced up to the time of trial.

But what about the reduction in your income going forward after the trial? What happens if you are no longer able to return to your old job because of your injuries, can no longer pursue a career that you have been working toward, or miss out on an economic opportunity? CAM LLP has already touched on some of these issues in our blog posts How is Loss of Income Calculated After an Accident? and What is my Claim Worth? Non-pecuniary Damages and Loss of Opportunity. In this post, we’ll provide more insight into what factors a court may look at to assess a plaintiff’s loss of future earning capacity.

Goals of Compensation

The main goal of the courts in awarding damages is to provide fair and just compensation: the aim is to put the injured plaintiff back in the position that they would have been in if the accident had never happened. A plaintiff isn’t supposed to be financially better off or receive a windfall; the idea is that they will simply be restored to where they would have been if they hadn’t been injured.

This can be tricky to do in practice because it necessarily involves attempting to predict likely future outcomes. Of course, there is no sure way to tell what would have happened to a plaintiff in the future or what their life might have looked like if the accident had not occurred. However, the court must make exactly that assessment to determine what the plaintiff has lost. To do so, the court will rely on oral evidence of the parties, documents such as tax returns and employment files, and opinions of expert witnesses.

Methods for Assessing Future Employment Loss

When a plaintiff is injured and their injuries affect their future work and earnings, there are two options available to the court to compensate them. The first is the more traditional approach, where the court will attempt to calculate the plaintiff’s loss of future income based on evidence about their pre-accident salary, their employment history and training, and actuarial calculations that take account of contingencies like unemployment or illness. This exercise attempts to extrapolate from known factors to arrive at a reasonable estimate of the income the plaintiff would have earned but for the accident, and a reasonable estimate of the income the plaintiff will now earn.

The second method for assessing the plaintiff’s compensation is the loss of future earning capacity approach. Loss of earning capacity is treated by the courts as loss of a capital asset, rather than an attempt to calculate actual lost earnings. This method is typically used in circumstances where the plaintiff’s pre-accident employment situation involved factors that make it difficult or impossible to calculate future income loss. For example, the plaintiff may have still been in school, or starting a new business, or pursuing a career path with many uncertainties.

An example is the recent Alberta case of Samra v. Houle. The plaintiff was a university student when he was injured in an unprovoked assault. He suffered numerous injuries, including an ankle fracture that required multiple surgeries, facial fractures, anxiety, and depression. He had been enrolled in a Bachelor of Commerce program but had to take a reduced course load after the incident, which delayed his graduation date. The plaintiff then went to law school in the UK, but he did not graduate because, according to him, he could not focus due to his injuries. The plaintiff argued that if not for the assault, he would have been a working lawyer. Instead, he was unemployed and considering alternative careers, including working in his family’s automotive shop.

The court stated that the legal test for assessing loss of earning capacity is whether there is a real and substantial possibility that the plaintiff:

• has been rendered less capable of earning an income from many sources of employment;
• is less marketable to potential employers; or
• is less able to take advantage of opportunities that might become available.

There is no formula for how these damages are to be assessed; it is a case-by-case, plaintiff-specific analysis.

In the Samra case, the judge concluded that there were factors other than the injuries from the assault that prevented the plaintiff from finishing law school. He was in a foreign country, lonely, and had suffered the loss of four family members in a 12-month time frame. The judge noted that the plaintiff had managed to complete his Bachelor’s degree after the assault (albeit later than planned), and was not satisfied that the plaintiff’s injuries impacted the overall probability of him working as a lawyer. However, there was a real and substantial possibility that he suffered a loss of earning capacity due to his injuries. His ankle injury left him unable to perform the physical aspects of automotive repair in his parents’ shop. He was less marketable to potential employers and was less able to take advantage of some of the opportunities that may have been available to him. The court awarded the plaintiff $150,000 for his loss of earning capacity claim.

By contrast, in the BC case of Cheema v Pandha, the plaintiff’s injuries were found to have significantly diminished her future earning capacity, justifying an award of $2,200,000. At the time of the accident, the plaintiff was 25 years old and had just finished a Bachelor of Business and Accounting. She had no health problems, a track record of being energetic and high-achieving, worked full-time, and had also launched a business providing makeup and eyelash services. After the accident, the plaintiff abandoned the makeup and eyelash business and suffered pain, difficulty focusing, depression and other psychological symptoms that prevented her from doing more than part-time work. The court found that the accident had a devastating effect likely to affect the plaintiff’s earning capacity over the remainder of her working life.

Loss of Earning Capacity for a Minor

The loss of earning capacity approach is also used when the injured party is a minor who does not have an established earnings pattern. If the minor is a young child, the assessment can seem somewhat arbitrary. Nonetheless, the court must try to assess the type of employment and opportunities that the plaintiff had a reasonable probability of attaining, and may look to factors such as any aptitudes or interests the child may have shown and their academic performance to date. The court may also consider the income and educational levels achieved by the child’s parents or siblings.

For example, in AT-B v Mah, where the plaintiff was a child who had been catastrophically injured at birth, the court calculated loss of earning capacity based on general assumptions that the child, whose parents were both psychologists, would likely have completed a bachelor’s degree, would have entered the work force at 23 years of age, and would have retired at age 59.

If you have been injured in an accident and have questions about how you can recover damages for future loss of earning capacity, CONTACT the lawyers at CAM LLP for a free legal consultation. Our experienced lawyers can help you get the compensation you deserve.