BC Court of Appeal Clarifies Law on Future Income Loss

In the recent BC Court of Appeal (“BCCA”) decision of Fatla v. McCarthy, 2024 BCCA 311, the BCCA clarified the law on future income loss claims in personal injury cases. The plaintiff, who was injured in a collision, appealed the trial court’s decision regarding her future income loss, arguing that the award was both unfair and potentially sexist.

At the time of the accident, the plaintiff worked as a Rehabilitation Assistant. However, the trial judge based her future income loss on the average income of females rather than males, despite substantial evidence showing that pay inequality persists in many professions, including the plaintiff's. Mr. Justice Groberman, writing for the court, made a significant ruling that the plaintiff’s income loss should be calculated based on the earnings of a male counterpart rather than those of a female.

BC’s highest court highlighted the following key points:

[29]      …The plaintiff alleges that the judge erred in doing so, suggesting that his approach ignored case law that accepts that gender earnings are converging. She also argues that failing to use male averages (or averages for all persons) amounts to a failure to respect the equality values of the Canadian Charter of Rights and Freedoms.

[30]      The use of gender-specific statistics to assess loss of earning capacity can be problematic. Not only is there an expectation and hope that the gap between men’s and women’s earnings will diminish in future, but there is also a recognition that individuals may not conform to historic gender norms…

[31]      This Court has made a number of observations on the issue of gender-based statistics in recent years, including considered discussions in Steinebach v. O’Brien, 2011 BCCA 302, Crimeni v. Chandra, 2015 BCCA 131, Gill v. Lai, 2019 BCCA 103 and McColl v. Sullivan, 2021 BCCA 181.

…

[41]      In my view, the following principles can be drawn from the above:

a.   damages for loss of future earning capacity are to be assessed on an individual basis: Gill at para. 55;

b.   gender-based earning statistics “may be useful where they can fairly be said to be the most accurate predictor of the lost stream of earnings”: Crimeni at para. 23;

c.   however, gender-based earning statistics require caution because they may incorporate bias: Steinebach at para. 55; Crimeni at para. 23; Gill at para. 54; and

d.   it may be reasonable, depending on the evidence, for a court to assume a convergence in earnings: Crimeni at para. 23.

[42]      What courts should in fact do about statistical bias is a difficult question which raises evidentiary issues and issues of principle. Discerning when the statistics reflect “bias” rather than “lifestyle choices” is not necessarily straightforward. This is also the case, as Steinebach notes, with projecting convergence. For reasons I explain, however, those issues are not directly before us. I would leave them for another case.

[43]      Suffice it to say, gender-specific statistics guide rather than determine damages. Gender-specific statistics may incidentally align with a plaintiff’s gender, but not invariably so. Two examples illustrate this point. To the extent that female economic multipliers reflect a greater likelihood of leaving the workforce to care for children, they may be appropriate for a male plaintiff who intends to be a “stay at home dad”. Those same statistics may be inappropriate for a female plaintiff who intends to remain in the workforce without interruption. In every case, the burden is on the plaintiff to demonstrate their future losses.

[33]      Perhaps the most important principle is that damages for loss of future earning capacity are meant to be compensatory and are to be determined on an individual basis. A plaintiff may (in an uninjured state) have an earning capacity that is greater or less than the average of earnings of people with their academic or professional qualifications. Tables like those presented to the trial judge are blunt instruments when it comes to assessing losses.

Mr. Justice Groberman went on to further clarify the law on future income loss writing:

[39]      The Court’s reference to awarding the plaintiff their “entire annual income for one or more years” has, unfortunately, sometimes been read as if it allows a court to arbitrarily assign an amount for the plaintiff’s loss. At trial, the defendant’s suggestion that an award of a year or two years’ salary would be appropriate appears to me to stem from a misunderstanding of Pallos. While a court can quantify the plaintiff’s damages for loss of future earning capacity in that way, it is required to carefully consider the evidence, and come to a fair assessment of the plaintiff’s loss.

…

[41]      Where, however, the evidence supports a more precise estimate of the plaintiff’s loss, it is incumbent on the court to consider that evidence. In McKee v. Hicks, 2023 BCCA 109 at paras. 81–83, the Court emphasized that even where a judge uses the second approach described in Pallos, “if there are mathematical aids that may be of some assistance, the court should start its analysis by considering them.”

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