BC Court of Appeal clarifies test for reducing damages awarded due to failure to mitigate losses

The BC Court of Appeal has recently clarified the appropriate test to apply in a claim to reduce damages awarded due to the plaintiff's failure to mitigate their losses.

In Haug v. Funk 2023 BCCA 110, Celedonia Haug was in a motor vehicle accident in congested traffic on Highway 1 in BC. Her vehicle was hit from behind and pushed forward into the car ahead of her. Randy Funk admitted liability for the damages.

Before the accident, Haug was a full-time residential care worker, and for the past ten years, she has worked at a group home for mentally and physically disabled individuals. She has provided clients with housecleaning services and maintained an extensive vegetable patch at her home. After the accident, Haug has experienced daily pain associated with heavy tasks, including carrying her gardening supplies and digging her garden. Following the accident, she also took two weeks off work from the group home.

Damages awarded by the trial judge

The trial judge found that Haug had suffered soft tissue injuries in her neck and back from the accident. The pain was mild but persistent and chronic. However, the judge found a high probability that her current symptom levels "will be significantly lessened following reconditioning."

During the trial, the respondents argued that any award of non-pecuniary damages should be reduced by 25 percent to account for Haug's failure to follow proper treatment and attend massage therapy sessions according to her doctor's recommendation. Applying the two-step test set out in jurisprudence for a reduction in a damages award because the plaintiff failed to mitigate her losses, the judge awarded $22,500 for non-pecuniary damages. The award accounted for a 25 percent reduction for Haug's failure to mitigate.

Failure to mitigate test

On appeal, Haug alleged that the trial judge misapplied the failure to mitigate test and misapprehended evidence at both test stages.

The case of Chiu v. Chiu, 2002 BCCA 618 sets out a two-step test to analyze a reduction in damages award due to the plaintiff's failure to mitigate her losses. The defendant must prove that "the plaintiff acted unreasonable in eschewing the recommended treatment and the extent, if any, to which the plaintiff's damages would have been reduced had they acted reasonably."

Haug argued that the judge made an error at both test stages. She claimed that "a failure to follow every recommendation from every doctor is not a failure to mitigate."

The BC Court of Appeal disagreed, finding that the judge decided the reasonableness factor not only based on Haug's failure to pursue massage therapy but her failure to pursue any of the recommended treatments. The court said, "a failure to follow every recommendation from every doctor is not unreasonable, but a failure to follow any recommendation is."

The second branch of the test requires the defendant to prove "the extent, if any, to which the plaintiff's damages would have been reduced had they acted reasonably." The respondents asserted that the trial judge correctly identified and applied a "real and substantial possibility" standard, not a "balance of probabilities" standard.

The appeal court ruled that the balance of probabilities standard is the correct one to apply. The defendant must prove on a balance of probabilities that "the plaintiff's injuries would have been reduced to some degree had they acted reasonably." The court said that once this standard had been established, the court could assess the reduction to the damages award based on the extent to which the injuries would have been avoided.

The court further said that a defendant must establish on a balance of probabilities the causal link between an unreasonable failure to follow a prescribed treatment and a reduction in the plaintiff's damages. If they do, then the judge could go on to assess the likelihood of the degree of a reduction.

The court emphasized that it was not enough to say there is "a real and substantial possibility that the plaintiff would not be in her present condition but a better one instead, had she taken timely treatment." It must be demonstrated on a balance of probabilities.

In this case, the court pointed out that even if the trial judge had applied a lower standard of proof, she ultimately found that Haug would be in a better position had she taken the treatment. Ultimately, the "balance of probabilities" threshold had been met. Accordingly, the court found no error in the trial judge's decision.

After finding a high probability that treatment would put Haug in a better position, the court ruled that a reduction of 25 percent was appropriate.