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Case Summary: Baker v Poucette
Defence + Indemnity

A. Where a plaintiff is held to suffer a negative loss (i.e. has had a “gain”) under one head of damage, that gain is not to be offset or deducted from another head of damage where the plaintiff has suffered a loss.

Baker v Poucette, 2017 ABCA 344, per McDonald, J.A. [4251] 

I. FACTS AND ISSUES

Mr. Baker died after a truck driven by the appellant struck the motorcycle that he was riding, in November 2010. Mr. Baker’s wife, Mary Baker, brought an action for liability in negligence and sought an award of damages under the Fatal Accidents Act, RSA 2000, c F-8, claiming for both herself and her young son:

  • Damages for sorrow and bereavement;
  • Loss of income for the widow (Mrs. Baker) while she was on long term disability due to grief;
  • Special damages;
  • Past and future economic contributions to the Baker household by the deceased including past and future loss of housekeeping; and
  • Loss of dependency for household income and financial services.

At the time of his death, Mr. Baker had been involved in a number of business ventures and was operating an investment firm. Following his death, Mrs. Baker discovered that the company had almost no money in its accounts and it was ordered into receivership. Between 1998 and 2010, Mr. Baker’s reported earnings had ranged between $0 and $20,100 per year. Prior to 1998, Mr. Baker had worked as a junior high school math and science teacher where he earned approximately $60,000 per year before taking early retirement. This made the calculation of the loss of dependency complicated.
 
Trial:
At trial, the appellant argued that Mr. Baker’s income was less than the amount of his household consumption. Accordingly, the calculation for loss of income dependency showed that Mrs. Baker had received a net pecuniary gain as a result of Mr. Baker’s death. The appellant relied on MacKinnon v Tremere, 2000 BCSC 743, and argued that the pecuniary gain calculated under Mrs. Baker’s dependency claim should off-set against any damage award for loss of household services.
 
The trial judge refused to “set off” this “gain” from the loss of household services award and declined to award any amount for loss of income dependency. When calculating damages, the trial rejected the appellant’s argument that the positive dependency amount should be deducted from the loss of household services award. Rather he accepted the principle of fairness articulated by the Alberta Court of Appeal in Chernetz v Eagle Copters Maintenance Ltd, 2008 ABCA 265 and held that fairness required the headings of loss of income dependency and loss of household services to be considered separately. He found that allowing set-off implied “a degree of mathematical accuracy that did not exist in the estimation of income loss.”
 
Issue: Did the trial judge err in refusing to offset the “gain” realized by the respondents with respect to their claim for loss of income dependency against their claim for loss of household services?
 
II. HELD: For the Plaintiff; appeal dismissed.

1. The issue was whether a negative loss under one head of pecuniary damages can offset or reduce an award made under another head of pecuniary damages. The Court found:

a. An award of damages should only be interfered with where the trial judge applied a wrong principle of law or the overall amount is a wholly erroneous estimate [para 11].
 
b. The Court acknowledged that the Supreme Court of Canada had decided that the appropriate method to assess damages is under separate heads since that is the only way in which a meaningful review of an award is possible on appeal and the only way of affording reasonable guidance in future cases: Andrews v Grand & Toy (Alberta) Ltd. [1978] 2 S.C.R. 229, 1971  [para 18]:

i. The Court held that the MacKinnon decision’s conclusion that the Supreme Court had off-set heads of damages in Ponyicki v Sawayama [1943] SCR 197 was erroneous. Nowhere did the majority of the Supreme Court in Ponyicki state that the law requires set off between different awards of damages, such as loss of income dependency and loss of household services.
 
ii. The Court held:

[26]   The proposition that a tortfeasor should receive, in effect, a credit from the widow and children of a deceased owing to an arithmetic gain under a pecuniary head of damages is repugnant and contrary to any principle of fairness. Put another way, if a plaintiff fails to establish a recoverable loss under a pecuniary head of damages (in this case loss of income dependency), then no award is to be made under that pecuniary head of damages. However, in a situation where there is a negative loss under one head of pecuniary damages no credit or offset is to be afforded a tortfeasor where the plaintiff has established a claim under another pecuniary head of damages (in this case loss of household services). MacKinnon is not binding on this court nor is it persuasive. I decline to follow it as a matter of law as it, inter alia, offends the principle of fairness.

c. The Court focused on “fairness”, stating that “the failure to prove a loss of income dependency when there has been established on the evidence a negative loss or “gain” does not abate nor reduce the award for loss of household services. It simply means that there will be no recovery for the loss of income dependency”:

[27]   This court considered and endorsed the principle of fairness, albeit in a somewhat different context, in Chernetz v Eagle Copters Maintenance Ltd. In Chernetz, this court upheld the trial judge’s decision not to offset a dividend paid to the widow of the deceased that had originated as the proceeds of a life insurance policy held by the deceased’s private corporation. Specifically, this court stated at para 112:

The trial judge did not rely upon the statute [section 6 of the Fatal Accidents Act] but simply upon the principle of fairness. Whether or not the statute is applicable, we agree that this is an additional ground for not deducting the payment in question from the award.

[28]   I hold that the trial judge was correct at para 184 of his judgment where he stated, in part, “as a matter of fairness, there should be no set-offs as between the income loss (gain) and household services”. Furthermore, I agree with the trial judge where he stated, in part, at para 185, “they [Mrs. Baker and her son] should not be denied full compensation for [household services] simply because they were unable to satisfy the court that Mr. Baker would have made a net financial contribution to the household, had he not lost his life in an accident”.
 
[29]   To reiterate, the failure to prove a loss of income dependency when there has been established on the evidence a negative loss or “gain”, does not abate nor reduce the award for loss of household services. It simply means that there will be no recovery for the loss of income dependency.