Introduction

On January 6, 1999, the Honourable Mr. Justice T.P. O’Connor released Reasons for Judgment in the matter of Rachel Osborne (plaintiff). The trial was held in Owen Sound, Ontario. I testified as to economic loss. Counsel was Mr. Jerome Morse of Lerner & Associates.

Mr. Justice O’Connor awarded $125,000 for Loss of an Interdependent Relationship (LOIR). Rachel, who was near 20 years at the time of trial, was a paraplegic with minimal brain function. She would not benefit from the earnings of a future spouse.

Mr. Justice O’Conner found that Rachel would not likely have completed high school (and would have earned at that level). IN the calculations for LOIR, the earnings of a similar educated hypothetical future spouse were used.

Background

Mr. Justice O’Connor notes an award of $50,000 for LOIR in the case of Reekie v. Messervey (1986), 4 BCLR (2d) 194. The British Columbia of Appeal upheld this. There have, since, been many awards for LOIR in British Columbia.

I testified on the matter, in the Supreme Court of Newfoundland, a few years ago. At trial, an award was granted for past LOIR. I understand that the Newfoundland Court of Appeal continued such into the future.

The award for LOIR, in the Osborne matter, is the first trial judgment, which I am aware of, in Ontario. I understand that the matter is concluded - no appeal continuing.

Concept/Methodology

As an analogy, I regard LOIR as the ‘flip’ side of a fatal situation. In a fatal analysis, an actual spouse and the economic benefit derived from the earnings of that spouse are lost. In LOIR, the probability of forming a spousal relationship and benefiting from the earnings of that spouse is diminished (100% in Rachel’s case).

As with a fatal analysis, family income is considered. Then, a percent of the family income is allocated - to spouse/children in a fatal analysis and to the injured plaintiff in LOIR.

In LOIR calculations, it has been assumed that both spouses work/earn. The injured plaintiff is assumed to benefit from 64.5% of total family income. Then, the earnings of the injured plaintiff are deducted. This is known as the ‘joint family income sharing’ approach. The ‘joint family income sharing’ approach has been used in some analyses of fatal situations.

The earnings calculations, for LOIR, are in terms of gross income. In fatal analyses, net incomes are used and a tax gross up is, then added to the future dependency support loss amount.

For younger persons, the spousal relationship is assumed to commence at age 26 of the female and age 28 of the male. I calculated to age 65 of the male that results in the female retiring at age 63.

Some 75% of eligible Canadians are in a spousal relationship. Accordingly, a 25% contingency deduction may be applied to the results.

Example

Consider the spousal relationship to be with respect to a couple whom did not complete high school, as in the Osborne case. Referencing 1996 Census of Canada data, average lifetime earnings are $18,000 for females and $30,000 for males.

The present value of total family income is $960,000 ($360,000 for the female and $600,000 for the male). 64.5% of total family income is $619,200. Subtracting the earnings of the injured plaintiff ($360,000), the benefit of the family income, to the injured plaintiff, is $259,200. A 25% contingency lowers $259,200 to $194,400.

If the injured plaintiff is deemed to be at, for example, a 50% risk of not being able to form a spousal relationship, the loss is reduced. At 50%, the loss is $97,200.

Comments

I have addressed the matter of a younger female. This fact situation is probably the most common to trigger an identification of the issue (scarring, brain injury, prior abuse, physical limitations, etc.) However, the head of damage is applicable to older females (the Newfoundland case noted prior) and males.

With respect to males, an economic loss will not be as large as compared to a female since male earnings significantly exceed female earnings. The use of the joint family income sharing methodology further reduces the loss amount. Perhaps, the loss should never be calculated at less than 50% of the income of the other spouse as, societally, a 50/50 characterization seems basic. This is an issue for another day.

With respect to the above, the probable increase in the use of male earnings for females will ameliorate the impact of the use of the joint family income sharing methodology. This will be an interesting meeting of developing issues in economic loss quantification.

To date, this issue of household services has not been integrated in a comprehensive manner. In a situation such as that of Ms. Osborne, a cost of care award would seem to encompass the matter. However, for those who do not require household services replacement for themselves, are they not missing out on the household services that would be provided by a spouse?

By Peter Ross

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