Executive Summary: Key Legal and Evidentiary Issues

• The trial judge erred in applying the capital asset approach instead of the earnings method, despite the appellant’s established career and clear income history.

• Past and future loss of earning capacity were improperly assessed as a single “global” amount, reducing transparency and potentially misapplying tax treatment.

• The Court found that two negative contingencies were considered without properly analyzing their relative likelihood or separating them from past loss.

• Trial findings supported using the earnings approach, based on eight years of reliable income data and a proven plan to work until age 65.

• Future loss was discounted by 10% for possible recovery from frozen shoulder surgery, but no deduction was applied to past loss.

• The Court reassessed the damages, setting aside the $89,641.02 award and substituting $25,995 (less tax) for past loss and $206,583.56 for future loss.

Background and personal circumstances

Catherine Dianne Lewis worked as a full-time hairstylist for nearly 40 years. At the time of the collision in December 2016, she was healthy, active, and intended to work until at least age 65. She managed most household tasks, was physically active, and enjoyed her career and client relationships. The motor vehicle accident, for which the defendants admitted liability, caused a range of injuries, including a mild traumatic brain injury, ongoing back, neck, and shoulder pain, frozen shoulder syndrome, and persistent anxiety and depression.

Impact on work and eventual retirement

Although Ms. Lewis returned to work shortly after the accident and saw some increases in income in the following years, she ultimately retired in January 2022 at age 58. The trial judge accepted her decision to retire was due to the collision-related injuries and found it likely she would have otherwise continued working until 65.

Trial award

The trial judge awarded Ms. Lewis:

• $220,000 for non-pecuniary damages

• $89,641.02 as a global amount for both past and future loss of earning capacity

• $6,397 in special damages

• $5,200 plus additional amounts for future care (to be determined later)

The judge rejected her $162,000 claim for the cost of future housekeeping services.

Grounds of appeal

Ms. Lewis appealed the trial judge’s approach to loss of earning capacity and the dismissal of her housekeeping services claim. She argued that:

1. The trial judge wrongly used the capital asset approach when the earnings approach was more appropriate given her stable work history.

2. Past and future loss of earning capacity should have been assessed separately, not as a lump sum.

3. The trial judge misapplied negative contingencies without weighing their actual likelihood.

4. The judge erred in rejecting her claim for future housekeeping costs despite expert evidence.

Court of Appeal findings

Justice Riley, writing for a unanimous court, allowed the appeal in part. The Court found the trial judge:

• Misapplied the capital asset approach when the earnings method was more suitable.

• Improperly lumped past and future income loss together, making it unclear whether tax obligations were correctly applied.

• Failed to properly analyze negative contingencies or apply them specifically to future (not past) losses.

Reassessment of damages

Relying on Ms. Lewis’s average net annual income of $44,564 from 2014–2021, the Court reassessed damages as follows:

• Past loss of earning capacity: $25,995 for the 7-month period between retirement (January 2022) and trial (September 2022), subject to a deduction for tax under s. 98 of the Insurance (Vehicle) Act.

• Future loss of earning capacity: $229,537.29 (based on 5.5 years of future earnings), reduced by 10% due to the possibility of successful frozen shoulder surgery, resulting in a final award of $206,583.56.

The Court declined to award any amount for future housekeeping services. It accepted the trial judge’s conclusion that Ms. Lewis had not shown she was likely to actually hire outside help, despite her limitations and access to financial resources.

Final outcome

The Court of Appeal set aside the original $89,641.02 award and substituted:

• $25,995 (less tax) for past loss of earning capacity

• $206,583.56 for future loss of earning capacity

The appeal was allowed in part, with the damages for loss of earning capacity increased and the claim for future housekeeping costs dismissed.