In a decision that will be of interest to anyone involved with fatality claims, the New Brunswick Court of Appeal has ruled that the loss of the income that a deceased person could have earned had he or she survived is not recoverable by the deceased person’s estate.
The recoverability of damages representing the income that a deceased person could have earned had he or she not perished in a fatal accident had been a matter of some doubt in New Brunswick until the Court of Appeal settled the law in the recent decision in the case of Higgins Estate v. David A. Arseneau, 2014 NBCA 65, released on November 6, 2014.
The case arose out of a motorcycle-pedestrian collision in which Caroline J. Higgins, a lawyer in Saint John, New Brunswick, was struck and killed by a motorcycle while she was jogging. Her estate claimed against the driver of the motorcycle for the loss of income that Ms. Higgins would have earned had she not died as a result of the collision.
On a motion by the defendant to determine a question of law before trial, a judge of the Court of Queen’s Bench ruled that the deceased’s post-death loss of income was not recoverable by the estate, a decision which the Court of Appeal has now upheld.
Some background regarding damages recoverable in fatal injury cases may assist in appreciating the interpretive question that the Court of Appeal has resolved. At common law, an action for personal injuries did not survive the death of the injured party. However, that rule has been modified in New Brunswick by the Survival of Actions Act (which is similar to legislation in force in the other provinces and territories). The Survival of Actions Act permits the estate of a deceased person to sue a wrongdoer for a cause of action that vested in a deceased person before death. It is uncontroversial that a fatal injury caused by the negligence of another would vest a cause of action in the fatally injured person in the moment before death. The estate of the deceased person would therefore be entitled to sue the wrongdoer.
Thus, the survival of actions legislation has reformed the common law rule that formerly prevented survival of actions after death. However, the reform only goes so far: the legislation places explicit limits on the damages that the estate of a deceased person is entitled to recover. The Survival of Actions Act only permits the estate to recover damages that have resulted in “actual pecuniary loss” to the deceased person or the estate, together with punitive or exemplary damages in appropriate cases. The Court’s recent decision turned on the correct interpretation of the words “actual pecuniary loss”, and whether they should be interpreted to include the category of damages claimed by the Higgins Estate for loss of the income that Ms. Higgins was expected to earn but for her untimely death. The Court concluded that such damages were not an “actual pecuniary loss” and therefore not recoverable by the estate.
Critical to the Court’s determination was the evidence of the New Brunswick Legislature’s intention when it enacted the current wording respecting damages recoverable under the Survival of Actions Act in 1969. The legislative debates reveal that the Legislature intended to adopt the uniform Survival of Actions Act as proposed by the Conference of Commissioners on Uniformity of Legislation in Canada. In the reports of the Conference in which the uniform survival of actions legislation was discussed, the Commissioners chose not to recommend wording expressly excluding damages for loss of expectancy of earnings after death because they thought that it was obvious that such damages were not an actual pecuniary loss recoverable in a survival action. The Court placed great weight on this uncontradicted evidence that the New Brunswick Legislature passed the uniform Survival of Actions Act into law with that understanding of its effect.
The Court held that the words “actual pecuniary loss” effectively expressed the Legislature’s intention to exclude damages for loss of expectancy of earnings after death. “Actual”, as used in the legislation, means “existing in fact”, and is the opposite of “possible” or “contingent”.
The Higgins Estate had argued that the reasoning of the Alberta Court of Appeal in the 1997 case of Duncan Estate v. Baddeley should be adopted in New Brunswick. In that Alberta case, the Court had interpreted that province’s similarly-worded survival of actions legislation as permitting a claim by the estate for post-death loss of income. However, the New Brunswick Court of Appeal rejected the reasoning of the Alberta Court and noted that the Alberta legislature had quickly intervened] to explicitly bar recovery of such damages. The Court also noted that the Alberta Court was clearly influenced by its dislike of the policy choice that would result in compensation for the loss of physical property of a deceased person (for example, an expensive watch, which would clearly be an actual pecuniary loss to the estate) but not the loss of a working person’s earning capacity. However, the New Brunswick Court held that any discomfort with that policy choice could not be allowed to influence the Court’s interpretation of validly enacted legislation.
Adopting the reasoning of appeal courts in Nova Scotia and Prince Edward Island that likewise rejected the Alberta Court’s interpretation, the New Brunswick Court of Appeal held that to interpret the phrase “actual pecuniary loss” in a manner that would allow recovery of the deceased’s expected earnings after death would render the word “actual” redundant. It is a fundamental rule in the interpretation of legislation that the Legislature is presumed not to speak in vain. If the word “actual” did not exclude the “possible” or “contingent” loss of earnings of the deceased after death, then its use served no purpose, as the other heads of damages to which the word “actual” may arguably refer are expressly dealt with in the legislation: non-pecuniary damages for pain and suffering are expressly excluded, and punitive or exemplary damages are expressly allowed.
The Court’s reasoning also took into account New Brunswick’s wrongful death legislation, and the potential for double recovery that would exist if the survival of actions legislation were interpreted in the manner proposed by the estate. New Brunswick’s wrongful death legislation is called the Fatal Accidents Act, the modern version of which was introduced in the New Brunswick Legislature on the same day as the Survival of Actions Act in 1969. The Fatal Accidents Act reforms another common law rule: at common law, a third party had no cause of action for damages arising out of the wrongful death of another person. For example, a surviving wife could not sue for the wrongful death of her husband. Under the Fatal Accidents Act, however, the spouse, parent, child, brother and sister of the deceased may now sue a tortfeasor for wrongful death and recover damages for the “pecuniary loss resulting from the death”.
The Legislature has thus named a limited class of persons (narrower than all those persons that a deceased may have chosen to benefit from his or her estate), who will be entitled to recover for losses they have suffered as a result of the wrongful death of the deceased. Typically the most significant head of damages claimed under the Fatal Accidents Act is for “loss of dependency”, which consists of what the deceased would have spent during a natural lifespan on the dependants’ costs of homemaking and family.
The Court of Appeal noted that an award to the estate for post-death loss of income would in some cases duplicate the damages awarded to dependants under the Fatal Accidents Act. Both awards would be based on the income that the deceased would have earned had she lived. For example, a spouse named in the deceased’s Will would benefit from an award to the estate for loss of income of the deceased, while also benefiting from a loss of dependency award under the Fatal Accidents Act. The Court found it unlikely that the Legislature, in enacting the Survival of Actions Act and the Fatal Accidents Act, would have intended to create the possibility of such double recovery without also setting out a mechanism to harmonize awards under both pieces of legislation.
In the result, the Court of Appeal held that post-death loss of income or earning capacity of the injured party is not an “actual pecuniary loss” and is therefore not recoverable by the estate.
WHAT THIS DECISION MEANS FOR INSURERS:
Until the Court of Appeal’s decision in Higgins Estate v. Arseneau, there had been uncertainty under New Brunswick law as to whether a deceased person’s estate could recover for post-death loss of income. This issue has now been conclusively resolved, subject to any appeal of the decision to the Supreme Court of Canada (for which the Higgins Estate would have to seek leave of the Supreme Court early in 2015). Court actions and settlement discussions with respect to fatal injury claims in New Brunswick can now proceed in the knowledge that such damages are not recoverable. Had the Court concluded that such damages were recoverable in fatal injury cases, the increase in financial exposure of defendants would have been significant, as claims arising out of the death of a young person without dependants would have increased from a relatively modest sum to an amount based upon the deceased person’s future earnings over their expected natural lifespan.
This decision has the greatest impact on those fatal injury cases in which the deceased has no dependants who would be entitled to claim under the Fatal Accidents Act: for instance, in the case of a young person or an adult with no spouse or children. In such cases, the estate of the deceased person will not be able to use a claim for post-death loss of income to circumvent the Legislature’s policy decision to limit the class of dependants who are entitled to recover for their pecuniary loss under the Fatal Accidents Act.
Perhaps echoing the old law school question as to whether it is less expensive for a wrongdoer to cause another’s death rather than merely injuring them, the Court remarked that it is well aware that its narrow interpretation of “actual pecuniary loss” will occasionally limit the wrongdoer’s liability to relatively insignificant pecuniary damages; however, the Court confirmed that is a policy decision of the Legislature, and courts must respect such choices even if they may consider them to be insufficiently claimant-friendly.
The successful respondent on the appeal in Higgins Estate v. David A. Arseneau was represented by David G. O’Brien, Q.C. and Patrick J.O. Dunn of Cox & Palmer’s Saint John, New Brunswick office.