BC Court of Appeal reduces ‘inordinately large’ contingency reduction in personal injury case

Any additional contingency should be nominal in light of the plaintiff's age: court

BC Court of Appeal reduces ‘inordinately large’ contingency reduction in personal injury case

The BC Court of Appeal has adjusted the contingency reduction to the award for loss of future earning capacity for being inordinately large.

In Meisters v. Tompkins, 2023 BCCA 335, Maria Helena Tompkins sustained several physical injuries from a motor vehicle accident. She also suffered from headaches, depression, fatigue, and nausea due to her accident-related injuries. Tompkins sued the defendants, Maria Hendrina Meisters and Canstar Restorations GP Inc., for damages.

The defendants admitted liability, and the trial judge made awards for loss of earning capacity and costs of future care, among other heads of damages.

The Insurance (Vehicle) Act provides that an injured person’s damage award against a tortfeasor will be reduced by specific no-fault insurance benefits that the injured person “receives” or “is entitled to receive” from the Insurance Corporation of British Columbia (ICBC). The defendants applied to reduce the awards by the amount of benefits provided by the ICBC.

The judge reduced the deductions sought from the award for loss of future earning capacity by 50 percent to reflect the temporary total disability (TTD) benefits paid to Tompkins since the trial date and those still payable to age 65. The judge also reduced the award for future care costs by 20 percent to reflect medical and rehabilitation benefits paid since the trial date and those still payable in the future.

The defendants appealed to the BC Court of Appeal, challenging the contingency reductions to both the future earning capacity award and the future care award and the application of contingency reductions to benefits received after the trial.

Future earning capacity award

The appeal court noted that the initial future earning capacity award in the trial decision was crafted to reflect the 10 percent chance that Tompkins would return to paid employment. The defendants argued that the judge failed to consider the evidence that resulted in a 10 percent residual employability finding. The eventual 50 percent reduction the trial judge applied to the deduction had no meaningful connection to the respondent’s 10 percent chance of returning to work. Accordingly, the defendants argued that the deduction was unsubstantiated and inordinately large.

On the other hand, Tompkins argued that the judge’s deduction was entirely appropriate and was, in fact, generous to the defendants, given the amount of uncertainty associated with ICBC’s future payments.

The appeal court noted from case law that a court must, on a principled basis and relying on the evidence, estimate the payment of future benefits even in the face of uncertainty.

Evidence-based reduction

The appeal court said it is clear from case law that the court must estimate the future payable benefits, and any reduction to that amount based on contingencies associated with payment must be tethered, as precisely as possible, to particular evidence.

The defendants conceded that there should be a 10 percent contingency reduction based on the judge’s finding that the respondent had a 10 percent residual earning capacity. However, they argued that the 50 percent contingency reduction the judge applied was not tethered to the evidence.

The appeal court noted that the trial judge recognized that the possibility Tompkins will return to work is not high, given the 10 percent contingency that the judge applied to the award for loss of future earning capacity. However, she eventually settled on a 50 percent contingency reduction to deduct from the future earning capacity award.

The appeal court pointed out that the judge did not attempt to delineate what particular contingencies informed her 50 percent reduction. The court emphasized that trial judges must make evidence-based estimates regardless of the difficulties of such assessments. Moreover, the courts are to assess whether there is a “realistic risk” of non-payment and quantify that risk based on the evidence. In this case, the court found that other than Tompkin’s 10 percent chance of returning to work, the additional 40 percent reduction was unexplained.

Accordingly, the appeal court ruled that while the reduction should not be nominal, considering that 10 percent remains a meaningful possibility, the 50 percent reduction was inordinately large.

The appeal court considered that Tompkins was 52 years old at trial. By the time of the appeal decision, she would have ten more years to receive her Canada Pension Plan (CPP) benefits. The court said that any additional contingency should be nominal in light of her age, the judge’s findings regarding her injuries, residual earning capacity, and the maximum timeframe she would be entitled to receive CPP benefits. Accordingly, the court fixed that at 10 percent for a total contingency reduction of 20 percent.

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