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Paine Edmonds LLP - Blog

What is My Case Worth? Loss of Earning Capacity Damages Explained

Paine Edmonds - April 12, 2012

By Ivar Lee, Partner at Paine Edmonds LLP, and Chris Trueman, Associate at Paine Edmonds LLP, Vancouver Personal Injury Lawyers

One of the most contentious components of a personal injury claim is assessing the appropriate amount of compensation for “loss of earning capacity”.
These damages are meant to compensate an injured person who has evidence to prove that their injuries will limit their ability or capacity to earn
income in future. This amount of compensation is in addition to other types of compensation, such as “pain and suffering” damages (see our previous blog on this topic).

In many cases, insurance companies will try to argue that an injured person’s injuries do not limit their ability to earn income at all. In BC car
accident cases, insurance companies such as ICBC often outright refuse to offer anything unless there is strong evidence to support such a claim.
The reason why insurance companies take such a stern position is due to the simple fact that this type of compensation can be very significant,
especially for a high income earner who is unable to earn as much income due to their injuries. In such cases, the amount of “loss of earning capacity”
damages can often exceed the amount for pain and suffering damages. In fact, often times when the media reports a large judgment made by the courts, loss of earning capacity compensation is typically the largest component, not the award for pain and suffering. Of course, for those that do not earn as much income, the amount may not be as significant or may be far less than the pain and suffering award.
Nonetheless, it is a loss that they should still be compensated for in some measure.

Given that insurance companies will often refuse to offer this type of compensation, it is very important that you retain a knowledgeable and experienced personal injury lawyer to present this claim for you. A personal injury lawyer will be able to gather the necessary opinions from medical and economic experts to prove this part of your claim. Also,
most importantly, a personal injury lawyer will be able to present the legal arguments to convince the insurance company you’re dealing with to
soften their position and offer compensation.

The law in this area is complex but the main principles that a court must consider were recently summarized by the BC Supreme Court in the decision,
Parker v. Lemon, 2012 BCSC 27:

[42]The approach to such claims is well set out in the decision of Garson J.A. in Perren v. Lalari, 2010 BCCA 140at
paras. 25-32, which I summarize as follows:
(1)A plaintiff must first prove there is a real and substantial possibility of a future event leading to an income loss before the Court will embark
on an assessment of the loss;
(2)A future or hypothetical possibility will be taken into consideration as long as it is a real and substantial possibility and not mere speculation;
(3)A plaintiff may be able to prove that there is a substantial possibility of a future income loss despite having returned to his or her employment;
(4)An inability to perform an occupation that is not a realistic alternative occupation is not proof of a future loss;
(5)It is not the loss of earnings but rather the loss of earning capacity for which compensation must be made;
(6)If the plaintiff discharges the burden of proof, then there must be quantification of that loss;
(7)Two available methods of quantifying the loss are (a) an earnings approach or (b) a capital asset approach;
(8)An earnings approach will be more useful when the loss is more easily measurable;
(9)The capital asset approach will be more useful when the loss is not easily measurable.

Remember that every case is different and the evidence required and the right approach to quantify the loss will vary so make sure you speak to a knowledgeable and experienced personal injury lawyer to help you best present your case. If
you would like to arrange a free consultation with one of our

Vancouver personal injury lawyers at Paine Edmonds LLP to discuss your case further in person or on the phone, please feel free
to contact us.


Take care out there!

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