People often come to me, after having been in an accident or after having being wronged by another person or business, with the expectation that they are entitled to a substantial amount of money as compensation for what has happened to them.

Their expectations are driven in part by the message delivered by American media.  We have all heard the story about the McDonald’s cup of coffee that was “too hot,” with the result that the woman who purchased it received a $1 million in “damages” from the court.   Quasi trial courts  like Judge Judy abound on American television, with the message that inconveniences, hurt feelings and diminished expectations are all compensable in lawsuits.

The reality is far removed from popular expectations. 

What are “Damages”?
Our civil litigation process is compensatory, rather than punitive, in nature.  “Damages” form the basis of our compensatory system where a claim has been advanced in negligence, breach of contract and other civil actions or lawsuits.  The legal system refers to “damages” to describe what you have suffered as a result of a wrong committed against you – through negligent conduct or breach of contract, for example – and the resultant compensatory award that a court will award to you if you are successful in a civil lawsuit.

In my practice, I represent people who have claims in negligence against other parties.  The types of damages these people are entitled to fall into several categories. 

Civil liability for negligence is established if you prove person “A” owed a duty of care to “B”, “A” failed in that duty and “B” suffered damages as a result.  Damages can be pecuniary or non-pecuniary.  Pecuniary damages include Lost Income, Lost Profits, Future Health Care Costs, and Out of Pocket expenses.  Non-Pecuniary damages consist primarily of pain and suffering awards, but also include loss of care, guidance and companionship by the injured person’s family members.

Non-Pecuniary Damages for Pain and Suffering
Non-pecuniary damages offer a measure of consolation or comfort.  Contrary to popular belief, damages for pain and suffering will not at any time reach the $1 million mark in Canada.  In fact, a judicial “cap” on the amount that can be recovered in this category has been established, and presently it is approximately $325,000.00 (it is adjusted annually for inflation).  This cap is reserved for individuals who have sustained catastrophic injuries, i.e., quadriplegics and individuals with severe disabling brain trauma.  Various factors are considered when we assess a person’s damages for pain and suffering; the medical evidence usually drives the assessment, as well as medical and lay evidence about the person’s ability to function and return to a normal life.

Pecuniary Damages
Court-awarded damages can reach astronomical sums when the Plaintiff (the person who has commenced the lawsuit) has sustained, or will sustain in the future, economic or pecuniary losses.  Pecuniary damages aim to restore the person to the same financial position they were in, and would remain in, had the negligence and resulting injury not occurred.  The most frequent type of economic loss is loss of income.  Loss of income is in fact a fairly broad category that includes loss of working capacity, loss of competitive advantage in the workforce, and, in the case of a self-employed or business person, loss of profits and/or dividends.  If a person is injured, are they able to return to work?  Must they be retrained to do something different and if so will their new career result in a lower income stream over their lifetime?  Will the Plaintiff only ever be able to work part time?  Has the Plaintiff lost the ability to progress in her career?  Will s/he have to take early retirement?  Has the Plaintiff’s retirement pension been affected?

These are all questions that lawyers address when we represent an individual who has been seriously injured.  If their ability to work post-accident has been compromised in any way, we assess for a potential loss of income claim. 

The analysis includes a review of a person’s employment and education records, and their pre-injury earning capacity.  Often a “vocational” expert, accountant and actuary may be enlisted to determine and identify the types of economic opportunities that may have been lost, conduct aptitude and cognitive testing to determine the person’s residual earning capacity, and calculate the person’s potential income loss to age 65.  When we represent children, this analysis becomes even more specialized as we consult with pediatric neuropsychologists, pediatric occupational therapists, etc.

The other type of economic loss that also inflates an award is the cost of future care for a person who is seriously injured.  For many individuals, OHIP-funded health care is insufficient.  They may require physiotherapy, medications, occupational therapy, assistive and ambulatory devices for the rest of their lives.  These services are not covered by OHIP.

Finally, out-of-pocket, or “special” damages, can also be claimed in a civil action for negligence.  As long as these damages are not remote, they are compensable.  For example, damaged or specialized clothing, housekeeping expenses, childcare expenses, property losses, educational expenses, and transportation/travel expenses, are some examples of out of pocket expenses that are not caught by the category of loss of income or non-pecuniary damages.

Final Comments Regarding Damages
The law of damages is actually more complex than described in this article.  Establishing fault or liability, evidentiary problems in proving damages, causation (i.e. to what extent did the negligence as opposed to other factors cause the damages), remoteness, foreseeability, are all legal concepts that must be considered when assessing damages, and are beyond the scope of this article.  Also, a civil claim for damages can be based not only on negligence but also on  breach of contract; where a breach of contract is alleged, the starting point to determine what your “damages” are is the contract itself and the expectations generated by the contract.  Often the contract may specify restrictions on the type of remedy you can seek before the court.  Unless a breach of contract results in a personal injury, non-pecuniary damages will not be awarded, including compensation for inconvenience or frustration.   Economic losses, out of pocket expenses, and court-ordered performance of the contract, are all forms of damages available in breach of contract actions.

Najma M. Rashid is a lawyer and partner at Howard Yegendorf & Associates and its sister firm, BrazeauSeller.LLP.  She practices in the areas of civil litigation, personal injury and insurance. For more about Najma and her practice, please visit www.YegendorfLawFirm.ca or www.brazeauseller.com.  Najma can be reached at [email protected] and (613) 237-5000 ext 243.