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Solving the Meaning of Life


September 30, 2010   by Randal S. Carlson and Danielle Bourgeois


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Litigation arising from fatal injuries in Alberta, as in most other provinces, centers on two types of damages. The first type of damages is awarded by statute to family members pursuant to the Fatal Accidents Act 1 (FAA), or similar legislation. This award for the intangible claim for “grief and loss of the guidance, care and companionship of the deceased person.” 2 The second type of damages is based on the claims made by those family members dependent on the deceased individual, such as a surviving spouse or children, for the financial and household support they would have received from the deceased.

The loss of dependency claim is not an easy one to calculate, as it includes a multitude of considerations including future income streams, the deceased’s own personal consumption habits, negative contingencies and numerous other factors. Expert evidence is normally required in the calculation or assessment of such claims.

Bereavement claims

All common law jurisdictions in Canada have a statute allowing an action to be brought by the estate of a deceased person against the person or persons that caused the death, for the benefit of dependents. The reason for such statutes is that, surprisingly, the common law prior to the mid-1800s did not allow such claims either by deceased persons or by their dependents. 3

In most injury actions, general damages are based on an assessment of the relative “pain and suffering” of the injured individual. When the plaintiff is an immediate family member of a person killed in an accident, the loss is undoubtedly significant. In Alberta, claims for “bereavement” are limited by the FAA — $75,000 for spouses and interdependent partners and $45,000 for each child.

Loss of dependency claim

Separate from the bereavement claims are those arising from the loss sustained by dependents of the deceased person. This is not a claim based on the intangible loss of a loved one. It is a pecuniary or monetary-based claim for the financial loss suffered by a dependent based on the expected value of the deceased’s person’s future income that could reasonably have been expected to be spent for the benefit of each dependent plaintiff. Separately, the FAA also allows claims for expenses incurred in the care of the deceased prior to death, funeral expenses and grief counseling. Typically, however, the most significant part of a FAA claim is the loss of dependency.

As an aside, historically, even after FAA-type legislation was introduced, the estate of a deceased person did not have a claim for the deceased person’s own future earnings. The court decided that claims by the deceased individual for loss of future earning capacity (called a “lost years” claim) fell within the meaning of “actual financial loss” in the Survival of Actions Act 4 (SAA).

This situation was again changed in 2002, when the applicable section of the SAA was amended to exclude, among other things, claims based on future earnings by the deceased. The amendment was not made retrospective, however, and therefore claims based on fatalities prior to the amendment can still include the lost years claim. In such cases, the lost years claim and the competing dependency claim must be reconciled. 5

The loss of dependency claim is most usually significant when brought by the deceased’s spouse and under-age children. However, others have potential claims of the same type as well. Loss of dependency claims can be advanced by parents based on expected support in their old age, and by adult children dependent on the deceased. The starting point in the calculation of the claim is that the dependents are entitled to “an award of such amount as will assure them the comforts and station in life which they would have enjoyed but for the accident.” 6

The steps involved in calculating the claim can be succinctly summarized. 7 First, it must be determined what the total amount of money the deceased would have earned but for the accident. Having determined total earnings, the second step is to deduct the taxes that would have been paid on those earnings. The net total is therefore the amount that would have been potentially available (disposable income) for the benefit of the dependent plaintiffs. Third, and finally, having determined net earnings, the amount is reduced by what has been called the “personal consumption rate” of the deceased, and further adjusted for any positive or negative contingencies. The opposite perspective of the same calculation is referred to as the “dependency rate.”

To provide a general illustration of the dependency rate, the author C.J. Bruce, in Assessment of Personal Injury Damages, 3rd ed.,8 noted a “standard” approach for the dependency rate for a couple was 70 per cent, with four per cent added for each child to reflect the reality that personal consumption decreases as more family members are added. Bruce’s dependency rate has been followed or noted in several decisions in Alberta and elsewhere. 9

Contingencies and other issues

The starting point for the dependency calculation is normally statistics-based. The individual characteristics and spending patterns of the deceased may provide further guidance for a court in determining an appropriate award.

“Pre-death” contingencies are those that might have affected the depen- dants financially if the deceased had not died. Such contingences include the possibility of unemployment, divorce, or early death in any event due to poor health or a particularly dangerous occupation.

“Post-death” contingencies are factors that could affect the dependants’ loss post-judgment. Commonly, the likelihood of a surviving spouse remarrying is the subject of consideration.

Whether or not such additional contingencies are actually introduced is another matter. Justice R.P. Fraser summarized the challenges involved as follows:

“The nature of the “crystal ball gazing” required in this analysis is that there may be, and likely are, other contingencies that have not been taken into account by the experts. For example, if he had lived, [the plaintiff] might indeed have become a general manager of a five star hotel; he might have remained at a $40,000 position for the remainder of his working life; or he might have changed careers again at age 50.” 10

Interestingly, in the same decision, no additional specific contingencies of this type were argued, and no additional adjustments were made, perhaps reflecting that in the context of such actions, such additional considerations may be seen as petty for defendants or “gilding the lily” by plaintiffs. As an example of further considerations in loss of dependency claims, there is an issue as to whether the claim should be based on “cross” or “sole” dependency. These terms relate to whether the calculation of the dependency claim should be based on just the deceased’s income (sole dependency) or whether, and arguably more appropriately in a two-income household, reduced by what the surviving dependent would have spent on the deceased (cross dependency).

Conclusion

Quantification of the loss sustained by family members as a result of a death is one of the greatest challenges in assessment of damages. Starting from a statistical base, a court must assess all aspects of the deceased’s lifestyle and income pre-accident, and make projections on what would have been the case in the future. Compounding the difficulties, the overall family dynamics and consumption patterns must be considered. Examiners working on files with dependency claims should expect eventual expert involvement to properly assess such claims.

Randal Carlson is a partner and Danielle Bourgeois is an associate with the firm Field LLP.

1. Fatal Accidents Act, RSA 2000, c. F-8

2. FAA, s. 8(2)

3. An informa
tive history of fatal accidents legislation can be found in the Alberta Court of Appeal’s decision of Ferraiuolo Estate v. Olson 2004 ABCA 281.

4. Survival of Actions Act, RSA 2000, c. S-27.

5. Brooks v. Stefura (2000), 266 A.R. 239 (C. A.) at pp. 243-44

6. Keizer v. Hanna, [1978] 2 S.C.R. 342, cited in Chernetz v. Eagle Copters Ltd., 2006 ABQB 353 at para. 9

7. see, for example, Chernetz v. Eagle Copters Ltd., 2008 ABCA 265

8. (Toronto: Butterworths, 1999) at p. 210

9. Millott (Estate) v. Reinhard, 2001 ABQB 1100 at paras. 236-9.

10. Millott, supra at para. 228


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