The plaintiff/appellant broke his arm when he was five years old and the defendant/respondent was an orthopaedic surgeon whose negligence in the treatment of the plaintiff’s arm resulted in permanent deformity. The plaintiff was 19 at the time of trial. He had finished high school and the first year of a three-year industrial electrician apprentice program.
The issues on appeal were twofold:
- when to award and how to calculate the monetary value of an award for loss of future earning capacity
- is an award for future housekeeping appropriate where the plaintiff has not paid for such services in the past and might not do so in the future.
Both issues merit reporting and the case will be broken down into two parts. Loss of future earning capacity will be addressed in this summary and the loss of housekeeping being the subject of a future summary.
Briefly, while the plaintiff had experienced some symptoms and limitations over the years due to his deformed arm, the evidence suggested that such limitations were short-lived and that he was fully functional. At the time of trial, the plaintiff was working as an apprentice electrician. The evidence was that, while he was experiencing pain, tightness and a popping sensation in his elbow, he “was able to discharge all his duties without missing any time due to his symptoms.”
The trial judge found that the medical evidence established that the plaintiff suffered (i) an impairment to his earning capacity, (ii) a real and substantial likelihood that he is less capable of earning income in the future due to his injury and (iii) established that there were “fewer opportunities available to him in the future because of possible complications with his injury.” She awarded the plaintiff $65,000 for loss of future earning capacity. The plaintiff appealed the quantum of the award.
The Court of Appeal set out the three questions a judge must answer in the affirmative prior to assessing the monetary value of an award for future loss of earning capacity:
- Is there evidence to suggest a potential future event that could lead to a loss of capacity?
- On the evidence, is there a real and substantial possibility that the future event in question will cause a pecuniary loss?
- What is the value of the possible future loss?
The first two questions were answered in the affirmative by the trial judge and neither party took issue with this finding. At issue in the appeal was the quantum.
The Court of Appeal began its reasoning by noting that the objective of an award for future loss of earning capacity is “to return the plaintiff to the position they would have been in had they not been injured” and in this case it involves a comparison of the plaintiff’s likely future working life without the injury to his likely future working life with the injury. To quantify the loss, one can use either the earnings approach or the capital asset approach. The earnings approach is typically used in cases where there is an identifiable loss of income, such as where the plaintiff has an established work history. On the other hand, the capital asset approach is typically used when, as in this case, the plaintiff does not have a proven employment record and the trial judge must make an award for the loss of “opportunity”. To assign a dollar value for the loss of opportunity under the capital asset approach, the court may choose one of three methods:
- Determine a minimum annual income loss for the plaintiff’s remaining years of work, and multiply the annual loss by the number of years remaining, then calculate the present value of this sum.
- Award the plaintiff’s entire annual income for one or more years.
- Award the present value of some nominal percentage loss per annum against the plaintiff’s expected annual income.
In the case at hand, the projected present value of the plaintiff’s lifetime earnings as an industrial electrician without the injury was just over $3,000,000. The trial judge awarded a loss of earning capacity award of $65,000, which the Court of Appeal noted to be about 2% of the plaintiff’s total earning capacity, “which is so inordinately low as to be a wholly erroneous estimate of his loss”. Based on the medical evidence presented at trial, the Court of Appeal went on to assign a 10% impairment to the plaintiff’s future earning capacity, which based on his estimated future income equated approximately $310,000. After applying negative contingencies of 20%, the award for loss of future earning capacity was set at $250,000.
This case is significant because it dealt with a plaintiff who was five at the time of injury and 19 at the time of trial. He had completed the first year of a three-year apprenticeship program with very few, if any, difficulties arising from his injuries. He had no proven track record of employment. The medical evidence showed he might encounter complications two or three decades down the line and that there was “considerable uncertainty regarding both the path Mr. McKee would have taken absent Dr. Hicks’ negligence and the path that lies ahead for him due to Dr. Hicks’ negligence.” An award of $250,000 for loss of future earning capacity under these circumstances is significant and plaintiffs should be advancing and fighting for this head of damages with more vigour, relying on this most recent court of appeal decision.
The discussion around housekeeping awards is also worth reporting, and I’ll be summarizing that in a future post.
