Top Court Clarifies Standard of Proof for Past and Future Loss of Income

When assessing loss of past income and loss of future income in personal injury cases, the courts are called upon to determine the likelihood of hypothetical events. In Grewal v. Naumann, 2017 BCCA 158, the Court of Appeal clarified the law in BC with respect to the standard of proof for hypothetical events, past or future.

The plaintiff in Grewal was injured in a car accident and received a $515,057 judgment after a trial. Prior to the accident, he had been a security guard but had completed several financial planning courses and had intended to enter that career field. The defendants appealed the decision, specifically the $187,434 award for past loss of income earning capacity and $150,000 award for future loss of income.

For the plaintiff’s loss of past income, the trial judge found that the plaintiff would have earned $310,000 in the years between the accident and trial based on statistical calculations about his career trajectory up to trial. For the plaintiff’s future loss of earning capacity, the trial judge found that the plaintiff would have most likely gone on to have a career as a financial planner, and would suffer no loss of income from the accident in that career. The trial judge found there was a small but real and substantial possibility that should the plaintiff be required to seek work outside of financial planning, he might earn less as a result of the injury and awarded $150,000.

The basis of the defendant’s appeal, was that it was not open to the trial judge to make an award for diminished future earning capacity given his finding that the most likely outcome was that Mr. Grewal would have a successful career as a financial planner and that the trial judge failed to provide adequate reasons justifying his award for diminished future earning capacity.

The appellants position was that the trial judge’s award for the plaintiff’s past loss of income cannot be justified on the facts as found and was not adequately explained in the reasons for judgment. They also argued that once the trial judge had concluded that the plaintiff would have a career as a financial planner, it was not open to him to award him money for a potential loss of earning potential.  The defendants proposed that where the plaintiff is attempting to prove a past loss of earning capacity they must do so on the balance of probabilities and not the lesser burden of proof of likelihood as applied by the trial judge.

The jurisprudence in BC with respect to the standard of proof for past loss of income in personal injury cases is unsettled .  Two cases previously decided by the court of appeal, Reynolds v. M. Sanghera & Sons Trucking Ltd., 2015 BCCA 232 and Ostrikoff v. Oliveria, 2015 BCCA 351 suggest that the plaintiff must prove past loss of earning capacity on a balance of probabilities as contrasted with the task in claiming future loss of earning capacity, which requires a plaintiff establish a real and substantial possibility of a future event occurring that could result in the plaintiff’s loss of earning capacity

Prior to this case, the Court of Appeal in Smith v. Knudsen, 2004 BCCA 613, rejected that a claim for past loss of opportunity had to be established on a balance of probabilities. Mr. Justice Goepel rejected that proposition in Reynolds and Osterkoff and found that to the extent they state that a past hypothetical event must be proven on the balance of probabilities, they must be regarded as per incuriam, or wrongly decided.

Mr. Justice Goepel affirmed the distinction between future and past hypothetical events set out the Supreme Court of Canada in Athey v. Leonati, [1996] 3 S.C.R. 458.

In Athey, the court held that for hypothetical or future events in personal injury, such as how the plaintiff’s life would have proceeded without the accident, are not proven on the balance of probabilities. Instead, the likelihood of the events is simply given weight according to their likelihood. A future of hypothetical possibility will be taken into consideration as long as it is a real and substantial possibility and not speculation.

Mr. Justice Goepel provided the following summary of the law in BC with respect to an assessment of a loss of past and future earning capacity.

“[48] In summary, an assessment of loss of both past and future earning capacity involves a consideration of hypothetical events. The plaintiff is not required to prove these hypothetical events on a balance of probabilities. A future or hypothetical possibility will be taken into consideration as long as it is a real and substantial possibility and not mere speculation. If the plaintiff establishes a real and substantial possibility, the Court must then determine the measure of damages by assessing the likelihood of the event. Depending on the facts of the case, a loss may be quantified either on an earnings approach or on a capital asset approach: Perren v. Lalari, 2010 BCCA 140 at para. 32.”

Although Mr. Justice Goepel found that the trial judge had correctly stated the law, he found that the trial judge’s assessment of damages with respect to the plaintiff’s potential earnings was fatally flowed in that the award exceeds what he had earned in the past and couldn’t be justified on the facts.

With respect to the trial judge’s findings on the plaintiff’s future loss of earning capacity, Mr. Justice Goepel set aside the award. He found that the trial judge rightly concluded that as the plaintiff was likely to leave his job as a security guard and pursue a career in financial planning, it was likely he would not suffer a reduction in earnings from his injuries. The plaintiff was required to prove that there was a real and substantial possibility that his earnings might be reduced, which may have occurred if he was likely to take other employment instead of financial planning. Mr. Justice Goepel accepted that there was lesser real and substantial possibility that he might leave financial planning and that the award given by the trial judge was too large in light of the small likelihood of it happening.

Grewal provides some much needed clarity to the law in BC with respect to the standard of proof for hypothetical events. This is especially important for anyone practicing in personal injury.

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