Ruling sets aside 10-percent negative contingency applied to certain heads of damages
The Court of Appeal for British Columbia has set aside a 10-percent negative contingency applied to certain heads of damages awarded in a personal injury case and increased the award for cost of future care to $55,000.
The appellant was a licensed optometrist in BC. In March 2016, he sustained injuries when the respondent’s vehicle struck his car from behind. Since the respondent admitted liability for the accident, the determination of damages was the primary issue at trial.
At trial, the appellant presented evidence of physical injuries resulting from the accident, including ongoing chronic pain in his neck, shoulder, and arms, as well as a nerve tear in his right foot that recovered but that continued to be aggravated during long walks.
The appellant testified that these injuries impacted both his professional and personal life by limiting his ability to work full-time and to engage in recreational activities. Medical experts testified that the injuries would likely prevent him from working full-time as an optometrist in the future.
In July 2023, the trial judge awarded the appellant $405,122.74 in damages, including $99,000 for non-pecuniary damages, $38,699.04 for past loss of earning capacity, $256,500 for future loss of earning capacity, $6,600 for cost of future care, and $4,353.70 for special damages.
In assessing the damages, the trial judge considered the appellant’s pre-existing degenerative disc condition. The judge noted that, despite the injuries, the appellant continued to work and to expand his optometry business and other professional activities, including by purchasing his parents' optical retail business and starting an online sales platform.
The appellant appealed the trial judge’s decision. He challenged the adequacy and the calculation of the damages. The appellant took issue with the judge’s application of a 10-percent negative contingency to non-pecuniary and past and future earning capacity damages.
Damages adjusted
In Sharma v. Sagoo, 2024 BCCA 319, the British Columbia Court of Appeal issued a decision ruling that the trial judge erred in applying a 10-percent negative contingency to the awards for non-pecuniary damages and loss of earning capacity.
The court found insufficient evidence to support a finding that the appellant’s pre-existing condition would have become symptomatic without the accident. The medical evidence suggested that the condition would likely have remained asymptomatic, the court said.
Regarding cost of future care, the appellant sought $55,000 at trial to cover medical treatments and care needs. The trial judge awarded $6,600 upon concluding that the appellant had not consistently accessed treatment following the accident and was unlikely to fully use the proposed care.
The appeal court found the judge’s reduction of the amount from $55,000 to $6,600 unjustified, especially since the care was medically recommended and unopposed by the defence. The appeal court thus substituted the amount for cost of future care with $55,000.
While the appeal court made these adjustments to the trial judge’s decision, it upheld the judge’s approach to non-pecuniary damages and loss of earning capacity.
The appeal court disagreed with the appellant’s argument that the non-pecuniary damages award of $99,000 was inordinately low. The appeal court found this award within the range of acceptable outcomes and chose to defer to the trial judge’s assessment.
The appeal court noted that the trial judge based the assessment on a review of the evidence, including medical reports and the appellant’s ability to continue working and engaging in recreational activities, though at a reduced level.
Lastly, the appeal court upheld the trial judge’s decision to use the capital asset approach, which resulted in an award of $256,500 for future loss of earning capacity, instead of using the future income projections of the appellant’s expert, who estimated losses as high as $5.9 million.
The appeal court noted that the judge reasonably expressed concern that the data provided by the economic experts could be overly optimistic, unreliable, and speculative.
