A. Where a plaintiff is
held to suffer a negative loss (i.e. has had a "gain")
under one head of damage, that gain is not to be offset or deducted
from another head of damage where the plaintiff has suffered a
loss.
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I. FACTS AND ISSUES
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Mr. Baker died after a truck driven by the appellant struck the
motorcycle that he was riding, in November 2010. Mr. Baker's
wife, Mary Baker, brought an action for liability in negligence and
sought an award of damages under the Fatal Accidents Act,
RSA 2000, c F-8, claiming for both herself and her young son:
- Damages for sorrow and bereavement;
- Loss of income for the widow (Mrs. Baker) while she was on long
term disability due to grief;
- Special damages;
- Past and future economic contributions to the Baker household
by the deceased including past and future loss of housekeeping;
and
- Loss of dependency for household income and financial
services.
At the time of his death, Mr. Baker had been involved in a
number of business ventures and was operating an investment firm.
Following his death, Mrs. Baker discovered that the company had
almost no money in its accounts and it was ordered into
receivership. Between 1998 and 2010, Mr. Baker's reported
earnings had ranged between $0 and $20,100 per year. Prior to 1998,
Mr. Baker had worked as a junior high school math and science
teacher where he earned approximately $60,000 per year before
taking early retirement. This made the calculation of the loss of
dependency complicated.
Trial:
At trial, the appellant argued that Mr. Baker's income was less
than the amount of his household consumption. Accordingly, the
calculation for loss of income dependency showed that Mrs. Baker
had received a net pecuniary gain as a result of Mr. Baker's
death. The appellant relied on MacKinnon v
Tremere, 2000 BCSC 743, and argued that the
pecuniary gain calculated under Mrs. Baker's dependency claim
should off-set against any damage award for loss of household
services.
The trial judge refused to "set off" this
"gain" from the loss of household services award and
declined to award any amount for loss of income dependency. When
calculating damages, the trial rejected the appellant's
argument that the positive dependency amount should be deducted
from the loss of household services award. Rather he accepted the
principle of fairness articulated by the Alberta Court of Appeal in
Chernetz v Eagle Copters Maintenance Ltd,
2008 ABCA 265 and held that fairness
required the headings of loss of income dependency and loss of
household services to be considered separately. He found that
allowing set-off implied "a degree of mathematical accuracy
that did not exist in the estimation of income loss."
Issue: Did the trial judge err in refusing to
offset the "gain" realized by the respondents with
respect to their claim for loss of income dependency against their
claim for loss of household services?
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II. HELD: For the
Plaintiff; appeal dismissed.
- The issue was whether a negative loss under one head of
pecuniary damages can offset or reduce an award made under another
head of pecuniary damages. The Court found:
- An award of damages should only be interfered with where the
trial judge applied a wrong principle of law or the overall amount
is a wholly erroneous estimate [para 11].
- The Court acknowledged that the Supreme Court of Canada had
decided that the appropriate method to assess damages is under
separate heads since that is the only way in which a meaningful
review of an award is possible on appeal and the only way of
affording reasonable guidance in future cases: Andrews
v Grand & Toy (Alberta) Ltd. [1978] 2
S.C.R. 229, 1971 [para 18]:
- The Court held that the MacKinnon
decision's conclusion that the Supreme Court had off-set heads
of damages in Ponyicki v Sawayama [1943]
SCR 197 was erroneous. Nowhere did the majority of the Supreme
Court in Ponyicki state that the law
requires set off between different awards of damages, such as loss
of income dependency and loss of household services.
- The Court held:
[26] The proposition that a tortfeasor should
receive, in effect, a credit from the widow and children of a
deceased owing to an arithmetic gain under a pecuniary head of
damages is repugnant and contrary to any principle of fairness. Put
another way, if a plaintiff fails to establish a recoverable loss
under a pecuniary head of damages (in this case loss of income
dependency), then no award is to be made under that pecuniary head
of damages. However, in a situation where there is a negative loss
under one head of pecuniary damages no credit or offset is to be
afforded a tortfeasor where the plaintiff has established a claim
under another pecuniary head of damages (in this case loss of
household services). MacKinnon is not
binding on this court nor is it persuasive. I decline to follow it
as a matter of law as it, inter alia, offends the principle of
fairness.
- The Court focused on "fairness", stating that
"the failure to prove a loss of income dependency when there
has been established on the evidence a negative loss or
"gain" does not abate nor reduce the award for loss of
household services. It simply means that there will be no recovery
for the loss of income dependency":
[27] This court considered and endorsed the
principle of fairness, albeit in a somewhat different context, in
Chernetz v Eagle Copters Maintenance Ltd.
In Chernetz, this court upheld the trial
judge's decision not to offset a dividend paid to the widow of
the deceased that had originated as the proceeds of a life
insurance policy held by the deceased's private corporation.
Specifically, this court stated at para 112:
The trial judge did not rely upon the statute [section 6 of the
Fatal Accidents Act] but simply upon the principle of fairness.
Whether or not the statute is applicable, we agree that this is an
additional ground for not deducting the payment in question from
the award.
[28] I hold that the trial judge was correct at para
184 of his judgment where he stated, in part, "as a matter of
fairness, there should be no set-offs as between the income loss
(gain) and household services". Furthermore, I agree with the
trial judge where he stated, in part, at para 185, "they [Mrs.
Baker and her son] should not be denied full compensation for
[household services] simply because they were unable to satisfy the
court that Mr. Baker would have made a net financial contribution
to the household, had he not lost his life in an
accident".
[29] To reiterate, the failure to prove a loss of
income dependency when there has been established on the evidence a
negative loss or "gain", does not abate nor reduce the
award for loss of household services. It simply means that there
will be no recovery for the loss of income dependency.
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