Canada: An Economic Analysis Of Damages In Fatal Accident Claims

Surviving Dependent's Financial Perspective


The basis of any damages calculation is to restore a plaintiff to the same financial position in which he or she would have been had the wrongful act not occurred. In other words, in the case of a wrongful death claim, the objective is to allow the deceased's dependents to enjoy the same quality of life, from a financial perspective, as they would have enjoyed had the deceased lived. The award is thus meant to reflect the portion of the deceased's earnings that would have gone towards the financial support of the dependents.

Dependency rates are used to estimate a person's financial loss due to the death of his or her spouse or parent. In a two-person household, if the husband dies, then the spouse will no longer benefit from her husband's income. However, she does not need to be compensated for the loss of all of his income, since some would have benefitted only him.

Sole Dependency, Modified Sole Dependency and Cross-Dependency

In wrongful death actions, Ontario Courts have typically followed the decision of the Ontario Court of Appeal in Nielson v Kauffmann [1986 CanLII 2727 (ON CA)]. In the case of a two-income family, this decision reduced the typical sole dependency ratio in the case of a surviving spouse from 70% to 60%. However, there are instances in Ontario where the courts have preferred a cross-dependency approach, which further reduces the dependency ratio. As will be explained later in this article, this has typically occurred in situations where the application of a cross-dependency approach does not have an extreme impact on either the dependency ratio or financial result.

In Nielson, the Ontario Court of Appeal opined that in a two-income family, the "conventional wisdom" of a 70% sole dependency rate for the surviving spouse should be reconsidered, and instead used a 60% modified sole dependency rate.

Differences Between Modified Sole Dependency and Cross-Dependency Approaches

Explanation As To The Two Approaches

By way of illustration, suppose, for example, a deceased husband and surviving wife both earned a net income of $50,000 per annum at the time of the deceased's death:

  1. Under the "modified sole dependency" approach, the surviving spouse's dependency loss would be: (70% less a 10% 2-income family allowance) 60% X $50,000 = $30,000 per annum.
  2. The "cross-dependency approach" assumes that the surviving spouse has been made financially better off because funds previously spent on the deceased spouse can now be saved. Losses in this example under the "cross-dependency approach" are: 60% X $50,000 = $30,000 per annum, less savings of $50,000 X 30%= $15,000, = $15,000 per annum.

Assume for example a situation where the surviving spouse earns a net income of $80,000 per annum and the deceased spouse earned a net income of $20,000 per annum. The calculations are thus:

  1. Under the "modified sole dependency" approach, the surviving spouse's loss would be: (70% less a 10% 2-income family allowance) 60% X $20,000 = $12,000 per annum
  2. Under the "cross dependency" approach the surviving spouse's loss would be: 60% X $20,000 = $12,000 per annum, less savings of $80,000 X 30% = $24,000 per annum = Nil

Which Approach is Preferable?

As illustrated above, criticisms of the "cross-dependency approach" include:

  • if the deceased's income was significantly lower than the surviving spouse's income then it may result in no award at all, the surviving spouse being assumed to be financially better off than before, and
  • the concept that a surviving spouse can be financially better off in situations where he or she is involuntarily prevented from spending on his or her spouse as a consequence of the tortious action of a third party.

Advantages of the "sole dependency" or "modified sole dependency" approach which, as detailed above, only considers the income of the deceased and uses dependency ratios of 70% for a one-income family and 60% for a two income family, include:

  • fairness and consistency, in that it avoids the issue where dependency losses consider the comparative income of a surviving spouse,
  • it acknowledges the fact that the measurement of gains and losses as a result of the death of a spouse is an inexact enterprise, and the difficulty of tracking expenditures in a household that shares expenses, and
  • it cannot produce the outcome that a surviving spouse is financially better off as a consequence of the death of a spouse.

In his article "Fatal Accident Dependency Calculations", published in the 1999 issue of the Expert Witness, Derek Aldridge argues that the deduction component of the cross-dependency approach is inconsistent with other forms of personal injury damages assessment.

A cross-dependency approach requires that a plaintiff 's losses due to an accident should be reduced by any "savings" attributable to the accident. Similar savings are seen in other forms of personal injury damage assessments but are not deducted in the computation of losses.

For example:

  • A catastrophically- injured person may have transportation savings attributable to his inability to work. No deduction is made for these savings in the determination of his income losses.
  • A father who was injured in a motor vehicle accident in which his son was killed, will now save the money he may have spent on his son's education. These savings are not deducted in the calculation of the father's loss of income award.

Analysis of Court Decisions

In Hechavarria v Reale [2000 CanLII 22711 (ON SC)], Justice Nordheimer held that the fairest approach was a modified MARCH 2016 | The Litigator 61 sole dependency approach. In this instance, at the time of the deceased's death, her surviving spouse was earning $91,000 per year while the deceased was earning $28,000 per year. Thus, the application of a cross-dependency approach would have resulted in no dependency loss.

In commenting thereon he wrote, "the criticism of the approach taken by Dr. Pesando is that it results, in a case like this where the surviving spouse was earning an income much larger than that of the deceased spouse, in a negative number, i.e., the amount necessary for the surviving spouse to now maintain his same standard of living is less than what that surviving spouse earns on his own. Therefore, according to this approach, there is no loss sustained as a result of the death of the other spouse and the removal of that income from the "family pool". Indeed, the critics say that this approach finds the surviving spouse, put somewhat crassly, to be "better off" from the death of his spouse. The critics say that this result is a reductio ad absurdum and dismiss its application on that basis."

Consequently, Mr. Justice Nordheimer rejected the use of the cross-dependency approach, writing, "In my view the cross-dependency approach urged by [the defendant's expert] would lead to a result that does not accord with the realities of the Hechavarria family....." Nordheimer ultimately used the modified sole dependency approach "which reflected the reality that there would be some savings because there was one less member in the family unit", and based the dependency loss on 60% of the deceased's income, increased by a marginal rate of 4% for each of the three surviving dependent children.

In his decision, he wrote, "This issue was considered by the Court of Appeal in Nielsen v Kaufmann (1986), 54 O.R. (2d) 188, 26 D.L.R. (4th) 21. While the Court of Appeal concluded that the sole dependency approach was to be used, it also concluded that the sole dependency approach had to be adjusted somewhat to account for the presence of two income earners."

In other words, when there are two breadwinners in a family, it should be assumed that some portion of the surviving spouse's income was spent exclusively on the deceased spouse. This portion now remains with the survivor.

As discussed, in Nielsen v Kaufmann, the Ontario Court of Appeal adjusted the sole dependency approach by lowering the dependency factor from 70 percent to 60 percent. The Court explained "This was a family where there was obviously a pooling of resources and where the death of one partner would have an impact with some offsetting credit." Therefore, the court used rates of 60 per cent for the surviving husband plus a marginal 4 percent for each dependent child.

In his decision, Justice Nordheimer wrote, "In other words, whatever approach is eventually adopted should give rise to a result that reflects, to the degree possible, the factual realities of the family whose loss is being determined." Thus, Justice Nordheimer concluded, "In my view, the cross-dependency approach ... would lead to result which does not accord to the realities of the Hechavarria family ...."

In Robb Estate v Canadian Red Cross, [2000 O.J. No 2396 (S. C. J.) the court endorsed the loss of dependency methodology detailed in Nielson v Kauffman when it wrote:

"I accept as correct the approach used by [the defendant's actuary]... In the traditional two-income family, 60% of earnings go towards the spouse and family expenses, with an additional allocation of 4% of income to each child. The approach has been approved in Nielsen v Kaufmann."

When is a Cross-Dependency Approach Appropriate?

A cross-dependency approach has been used in situations where its application yields results that are intuitively reasonable. When a cross-dependency approach leads to the nonsensical result of a financial or income gain, then it has almost always been unsuccessful. In our research, we found three reported Ontario cases when a cross-dependency approach was employed.

In Wilson v Beck [2011 CanLII 1789 (ON SC)], Justice Morisette accepted the cross-dependency approach in the case of a two income family. However, this did not have a significant impact on the calculated dependency losses. Use of a cross-dependency approach served to reduce the modified sole dependency ratio by approximately 5% from 60% to 55%.

In Timpano et al v Alexander et al, 2008 [(2008) CanLII 8270 (ON SC)], Mr. Justice Whitten accepted evidence, from both the plaintiff 's and defendant's economic experts, that a cross- dependency approach was applicable, and indicated that he would have used a dependency factor of 40% had the action been successful. In this instance, both experts agreed that the surviving spouse now had funds available which would not have been available had the deceased survived.

In Rupert et al v Toth et al [(2006) CanLII 6696 (ON SC)], Justice Low accepted evidence that the cross-dependency approach was appropriate, based on the particular circumstances, and applied a dependency factor of 40%. She wrote "the cross-dependency approach has sometimes been accepted as the starting point in determining an appropriate award (see, for example MacNiel Estate v Gillis (1995), 138 N.S.R. (2d) 1 (N.S.C.A.) and sometimes rejected in favour of what has become known as a modified sole dependency approach (see Nielsen et al v Kauffmann (1986), 54 O.R. (2d) 188 (C.A.) and Hechavarria et al v Reale et al (2000), 51 OR (3d) 364 (S.C.J.))."

While the cross-dependency approach is much less frequently used compared to the modified sole dependency approach in Ontario, as previously detailed, it has been used in familial income circumstances considered appropriate. However, when employed, although it has reduced the applicable dependency ratio to as low as 40%, to the best of our knowledge it has never been accepted in Ontario in circumstances where it produced an extreme result, such as decreasing the dependency ratio or losses to zero.

The Single Parent Family

What happens in the case of death of a single parent? Any dependent children would obviously have a loss of dependency claim that endures until such time as they are no longer financially dependent. The issue is how this dependency claim should be calculated. The simplest approach is to apply a "modified sole dependency approach" with the standard sole dependency rate reduced as appropriate, based on the circumstances, from, for example, 70% to say 50%.

Why such a high dependency ratio when a marginal 4% is used in the case of additional dependent children in a two parent family? When determining the applicable dependency ratio, to ensure that the surviving children be no worse off, those children should be able to live in the same house, eat the same food, enjoy the same automobile transportation, attend the same school and activities, etc. However, they will not need that portion of family income that would have benefited the deceased alone. Therefore, to determine a minor child's dependency ratio, allowance should include joint or familial expenses as well as expenditures that would have benefitted the child or children alone.

Remarriage and Divorce

While statistics as to the possibility of marriage and divorce are available, there are no statistics applicable that reflect qualitative factors such as the presence of minor children, physical appearance or financial circumstances of a surviving spouse. In addition, there are differences between the remarriage rates of widowers and divorcees with widowers being less likely to remarry.

Furthermore, divorce and remarriage statistics inherently assume that had the couple divorced, then no matrimonial support would have been payable by the deceased, which may or may not be the case. Remarriage statistics also inherently assume that if the surviving spouse were to remarry, the new spouse will contribute financially as much as the deceased spouse, which also may not be the case. Consequently, contingencies for divorce and remarriage are subjective. No expert can opine on these subjective matters, which are typically based on the evidence and credibility of the surviving spouse.

Thus, in practice, most courts have been extremely reluctant to apply statistical average remarriage rates and the assumption that remarriage would completely mitigate a surviving spouse's loss of dependency claim. In fact, in most instances the courts have reduced dependency claims by relatively nominal amounts to account for the possibility of remarriage. See, for example, Parsons Estate v. Guymer (1998), 162 D.L.R. (4th) 390 (Ont. C.A.) where Weiler J.A. wrote at para. 14:

"It is well established that the event of remarriage is a factor which is taken into account by courts in assessing damages for loss of care: Larock v. Steele (1983), 20 A.C.W.S. (2d) 203 (Ont.C.A.); Naeth Estate v. Warburton, [1993] S.J. No. 470 (QL) (Sask.C.A.) [reported 59 W.A.C. 11]. Remarriage is not necessarily a benefit: Brown v. Finch, 1997 CanLII 4099 (BC CA), [1997] B.C.J. No. 2601 (QL) (B.C.C.A.) at p. 6 [reported 4 W.W.R. 670]. The extent to which damages will be affected is a question of fact which depends on all the circumstances: Naeth Estate, supra."

In Naeth Estate v. Warburton, supra, Sherstobitoff J.A. commented:

"The authorities are clear that a remarriage of a spouse who is a plaintiff in a fatal accident action is something which must be taken into account in determining damages. The same applies to a common law relationship such as we have here. The extent to which damages will be affected is a question of fact depending on all of the circumstances and must be dealt with on a case by case basis."

Term of an Award

Awards for dependency claims are typically based on joint life expectancies of the deceased and survivor. The award for MARCH 2016 | The Litigator 63 loss of dependency for a child is limited to the period during which the child would have been financially dependent on the deceased parent for financial support. Thus, the assumption that a child's claim for dependency ends at age 18 or 21 may not always be reasonable. For example, in circumstances where the child planned to attend university, he or she should be considered financially dependent until the completion of his or her studies and entering the workforce.

Concept of Loss of Inheritance

Plaintiffs - typically children who either do not have a dependency claim or after their dependency claim expires - may argue that they have lost the possibility of an inheritance or an increased inheritance as a result of a deceased parent's premature death. This compensation is meant to replace the amount by which a deceased's estate would have increased had he or she lived, and is typically based on an estimate as to annual savings. In addition, it reflects the fact that a deceased has lost the ability to accumulate wealth on a tax-free basis possibly using a tax-free savings account (TFSA), a registered retirement savings plan (RRSP), and the tax-free appreciation in the value of a primary residence.

A loss of inheritance claim would only apply to persons who are not considered dependent on a deceased's income. This is because in computing a dependency rate, allowance is already made based on the full amount of the deceased's income.

Thus, a dependent child could potentially have a loss of dependency claim until they are no longer considered financially dependent and a loss of inheritance claim thereafter. Similar to other heads of damages, this claim is by its nature speculative and involves an attempt to project future circumstances. While somewhat novel in Ontario, awards have been made for this head of damages in jurisdictions outside of Ontario.

In Panghali v. Panghali, 2014 BCSC 647 (CanLII), the plaintiffs claimed that they had lost a potential inheritance as a consequence of the deceased's premature death, on the basis that the untimely death had stopped the deceased from accumulating assets that would eventually have entered her estate and flowed to her children. This compensation is meant to replace the amount by which the deceased's estate would have increased had she lived.

In its decision, the court described the circumstances under which such an award might be appropriate as follows: "Courts in British Columbia have given higher awards under this head of damages, but only where there is evidence establishing a pattern of income and savings that would support the potential for a significant estate remaining at the end of the deceased's natural lifespan...".

In Stegemann v. Pasemko, 2010 BCCA 151 (CanLII), the BC Court of Appeal held: "The trial judge attempted to take Ms. Collier's pattern of building assets and her retirement goals into consideration in assessing the present value of the dependents' losses of inheritance. He awarded $20,000 to Mr. Stegemann and $30,000 each to Arthur and Stephanie Stegemann. In my view, the trial judge made no error in his assessment of loss of inheritance, and it was not affected by his underestimate of Ms. Collier's future income. I would not interfere with his decision with respect to damages for loss of inheritance."


Hopefully, the above-noted analysis will contribute to an understanding of some of the more important economic issues involved in wrongful death claims.

This article was written for and published by The Litigator, March 2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions