23 Dec Assessing Loss of Earning Capacity Where Plaintiff Paid in Cash

Credibility is often an issue in personal injury cases. In Doberstein v. Zhao, 2020 BCSC 1788, the judge found the Plaintiff credible in general but was troubled by the fact that she had defrauded the government by not filing tax returns or reporting approximately 80% of what she earned for several years.

The Plaintiff claimed that her loss of earning capacity should be based on her total income, including her non-declared income. The Defendants disagreed. They said the Plaintiff’s credibility and reliability should be of concern and any loss of earning capacity should be based solely on the income she declared on her tax returns.

The courts have made it clear that even where a person does not properly declare income to the Canada Revenue Agency, that is not, in and of itself, the determining factor when assessing loss of earning capacity. There is no public policy reason not to include unreported income. The person would have the burden of leading evidence of wage loss and that would be a difficult (but not impossible) burden to discharge if there was no corroborating evidence.

In this case, one of the difficulties the judge had in attempting to calculate a fair assessment for loss of earning capacity was that there were no corroborating records of any kind. The judge had to rely solely on what the Plaintiff said her total income was in those years. The judge viewed her evidence with some skepticism and caution, given her failure to maintain or produce proper records. At the same time, the evidence of past clients supported the Plaintiff’s contention that she did in fact have undeclared cash income. How much was the question.

In the end, given the lack of any corroborating evidence and reservations as to the reliability of the Plaintiff’s evidence concerning her actual earnings, balanced by the fact there was no doubt she did take cash payments, the judge found that a fair and reasonable assessment for net past loss of earning capacity was $80,000.