There are two types of damages that may be recovered in a personal injury action. These are pecuniary losses and non-pecuniary losses. Pecuniary losses are losses of income, cost of care and other expenses. These losses include those incurred before trial and those that will occur in the future. Non-pecuniary losses are pain and suffering, loss of amenities and loss of enjoyment.
In awarding damages a court in its decision must distinguish between compensation for pecuniary loss and non-pecuniary loss. This is so even in a trial by jury. Typically the jury will be asked to identify what it assesses for non-pecuniary losses and for each of the subcategories of pecuniary losses both past and future.
Generally speaking an injured person is entitled to full compensation for pecuniary loss. This is not the case for non-pecuniary losses.
Damages for non-pecuniary loss such as pain and suffering cannot be calculated. This fact makes awards of these damages arbitrary to some extent. Amounts awarded for these damages are to be fair and reasonable. In determining what is fair the courts are guided by earlier decisions. The reliance on precedent results in conventional awards.
In the modern day the courts take a functional approach to the assessment of non-pecuniary damages. Awards are not made out of sympathy. Rather than attempting to set a value on lost happiness the court assesses the compensation required to provide the injured person with reasonable solace for his misfortune. Solace in this sense means physical arrangements which can make life more endurable. The award of money is to provide some substitute for the amenities that have been lost by the injured person. An appreciation of the individual’s loss is key and the need for solace will not necessarily correlate with the seriousness of the injury.
Each award for pain, suffering and loss of enjoyment of life must be custom-made for each individual plaintiff. An award will vary in each case to meet the circumstances of the individual case. Although it is unrealistic to give complete compensation, the court must try to award an amount that is fair and reasonable and bears some reasonable relation to the losses and injuries claimed, as shown in the evidence.
While the award must be fair to both parties, the ability of the defendant to pay is not a relevant consideration. The assessment of damages should not include an element of punishment of the defendant. The focus must be on the injuries of the innocent party. An award must be moderate, fair to both parties, and not determined on the basis of sympathy or compassion. Fairness to the defendants is achieved by assuring that the claims raised against them are legitimate and justifiable.
A consideration of what is an appropriate award of damages should take into account inflation that has occurred since prior decisions being relied upon for precedent.
In 1978 in a famous trilogy of cases the Supreme Court of Canada set a general ceiling on non-pecuniary awards of $100,000.00. This monetary limit is also adjusted for inflation since the time of the decisions. As of 2017 this upper limit is $368,946.00
Threshold and Deductible
In cases involving claims for damages arising out of a car accident the right to receive compensation has been modified by statute. In order to receive compensation for non-pecuniary losses an injured person must be impaired to an extent that meets a verbal threshold as defined in the Insurance Act. In order to satisfy the car injury threshold injured persons must have either died, or sustained permanent serious disfigurement, or permanent serious impairment of an important physical, mental or psychological function. This issue is discussed in greater detail in our car injury threshold article.
Additionally the Insurance Act also creates a deductible for non-pecuniary damage awards in car accident cases. When first introduced this deductible was $30,000.00. It was not applied if the award for non-pecuniary damages exceeded $100,000.00. These amounts are also now to be adjusted for inflation. For 2017 the monetary threshold beyond which the deductible amount does not apply is $124,616.21. The deductible itself is $37,385.17.