One of the most popular articles on this blog is one that I wrote in July 2010 “What is a Pecuniary Loss in a Personal Injury Claim?“ The article has received thousands of page views since it was published so the topic is one that is obviously of some interest to people doing research on the internet. I thought that it would be worth updating the article and providing some more information.
Pecuniary Losses Defined
The online Law Dictionary defines a pecunairy loss as: “A loss that can be defined in money terms”.
Non-pecuniary damages are losses or harms that cannot be precisely measured or valued in dollars and cents. The most common example is compensation for your pain and suffering.
On the other hand, pecuniary losses are financial losses that can (supposedly) be precisely measured. They usually involve reimbursement for your direct out of pocket expenses for things like medical treatment or travel.
Pecuniary loss of income claims
The most significant pecuniary loss a person normally suffers in a personal injury claim is their loss of income.
If you are seriously injured and not able to work, you are entitled to be compensated for any income loss you have suffered to the date of settlement or trial.
If your injuries leave you with a continuing disability that prevents you from totally or partially being able to work, you are also entitled to recover any future income loss.
If you have a job where you receive a regular paycheque or your income is the predictable, calculating your past loss of income is typically a simple mathematical exercise: The amount of time lost multiplied by your hourly wage and the time you were off work equals your pecuniary past income lost.
Future pecuniary income losses
The calculations become more challenging when the pecuniary loss sought is for ongoing or future losses.
Obviously, no one has a crystal ball. There is no way to accurately forecast the future with 100% certainty. Therefore, to some extent any award for future pecuniary loss of income is, at least to some degree, an exercise in judicial prognostication (the act of foretelling the future).
The courts have used different phrases to describe compensation for loss of future income, including:
• Loss of future income;
• Diminution of earning capacity;
• Impairment of earning capacity;
• Loss of competitive advantage; and • The “loss of a capital asset”.
It is easy to see how someone who has suffered a serious injury could have very significant future income losses. Here in Nova Scotia for example our court of appeal upheld a jury award of $400,000.00 for diminution of earning capacity in the case of Abbott v Sharpe.
What is the burden of proof for future pecuniary losses?
The Plaintiff in a personal injury claim always bears the burden of proof. In most circumstances the burden in a civil suit is the balance of probabilities. For more information on this you can take a look at this video or read this article.
However, when it comes to proving future losses the burden is different. Our court of appeal stated in Leddicote v. Nova Scotia (Attorney General) approved the approach of Justice Chipman in the Newman v. LaMarche case where Chipman J. stated:
“All that need be established is that the earning capacity be diminished so that there is a chance that at some time in the future the victim will actually suffer pecuniary loss.”[emphasis added]
The court went on to say that loss of earning capacity is compensation for “a loss which may never in fact occur.”
How much of a “chance” is enough?
So how much of a “chance” do you have to have in order to successfully establish a claim for future pecuniary income losses?
Future pecuniary claims are typically proven by using a combination of medical evidence including functional capacity evaluations outlining your ongoing medical limitations and physical abilities combined with evidence from an economist or actuary.
Economists are able to perform an analysis and compare it to public demographics and labour and employment statistics in order to determine whether you are more or less likely to suffer an income loss compared to the general population.
It is important to point out that while the “chance” of the income loss may be less than 50%, you still bear the burden of proving that chance on the balance of probabilities (50% or more).
In the words of Chief Justice Drapeau of the New Brunswick Court of Appeal in Vincent v Abu-Bakare:
“I would add that if a trial judge is unable to articulate any rational foundation for his or her assessment of future pecuniary loss, the problem is likely sourced in the claimant’s failure to provide essential evidence.”
In other words, you cannot simply claim to have suffered a loss; you must provide adequate proof to convince a judge (or a jury).
Pecuniary losses for unemployed claimants
Even if you are unemployed you may still have suffered a pecuniary loss. For example, if you have suffered an injury that limits or prevents you from performing your normal household chores you may recover the past and future value of hiring someone to perform those chores.
In most cases Plaintiffs have family members or friends who volunteer to help out while the Plaintiff is injured. Usually these volunteers are not paid and the claimant is not able to provide any receipts for actual out of pocket losses.
It used to be that these types of voluntarily services were not recoverable. Here in Nova Scotia, in Carter v Anderson our court of appeal said that if someone voluntarily assisted a Plaintiff in the performance of their household chores those services did not constitute a recoverable loss.
However, Canadian courts eventually accepted the argument that even if friends or family had voluntarily helped perform Plaintiff’s household chores it was the Plaintiff who had actually suffered a loss because the loss was the existence of “the need” for those services.
Loss of housekeeping capacity
In other words, if you are injured and you are not able to perform your normal household chores, it doesn’t matter if you hired someone to clean your house, have a spouse who did the cleaning or simply did the best you could while you were in pain.
The fact that you required the help may be sufficient to merit a pecuniary award for loss of housekeeping capacioty.
The various judicial approaches to quantifying and calculating claims for pecuniary loss of housekeeping capacity goes well beyond the scope of this article.
Conclusion
What can be said is that pecuniary losses are not limited simply to expenses that you can produce a receipt for. Pecuniary losses can extend to claims for intangible losses like diminished earning capacity and loss of valuable services like housekeeping capacity.