IN
THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20100407

Docket:
M074325

Registry: Vancouver

Between:

Hourash Falati

Plaintiff

And

Marion May Smith

Defendant

Before:
The Honourable Mr. Justice Saunders

Reasons for Judgment

[1]            
The plaintiff, Hourash Falati, seeks damages
arising out of a motor vehicle accident which occurred on February 13, 2007. Liability
is admitted. The most contentious issue in this claim is the extent of the plaintiff’s
alleged pre-trial and future losses of earnings and earning capacity. The
plaintiff’s position is that he lost or suffered diminished opportunities to
earn income through various business ventures which he claims were delayed or
frustrated by his injuries, including a new restaurant venture which he was
about to get off the ground when the accident intervened.

I.        Background

[2]            
The plaintiff was 33 years of age at the time of
trial. He was born in Iran and lived there with his family until immigrating to
Canada at the age of 20; at that time, he had been studying robotics at Teheran
University. He is obviously of above-average intelligence, and seems to have an
entrepreneurial spirit. He had worked in a quick-service restaurant, as a
teenager. While still in his late teens, he wrote a book on computer assembly
language. He then invested the royalties from that book in a restaurant in
Dubai. He played no role in constructing or operating the Dubai restaurant; his
evidence, which was somewhat vague, is that he was involved in its concept and
marketing. He sold his interest in the Dubai restaurant at a profit.

[3]            
In the year 2000 he graduated from Simon Fraser
University with a B.Sc. in computer science. While studying at S.F.U. he did
some freelance computer programming work. Demand for his services in this area
declined after the dot-com bubble burst in 1999/2000. He then went into
business with his father, starting a company which wholesaled computer
peripherals; they wound down their business in about 2004.

[4]            
The plaintiff testified that he then took some
time off to consider his options. He was then 28 years old. He wanted to lay
the foundations for a stable career, which would allow him to get married and
start a family. He had found that he had some talent as a photographer, and
started a business doing glamour and commercial photography, and some
portraiture work such as weddings. He testified that he grossed $40,000 from
that photography business in 2006, much of which was reinvested into the
business.

[5]            
During 2006 and early 2007 the plaintiff
identified two other potential business opportunities, both in the food service
industry. One of these was an established business, a cafe in downtown
Vancouver, which was open mornings and lunch time. The plaintiff’s father, Mr.
Falati Sr., intended to purchase the business as an investment; the plaintiff
would manage it, at a monthly salary of $5,000. Mr. Falati Sr. and the cafe owners
signed a conditional contract of purchase and sale of the business assets, at a
price of $310,000, with a completion date of April 2, 2007. The lenders agreed
to provide the plaintiff with training. The contract was signed on February 7,
2007, just six days before the plaintiff’s accident.

[6]            
The plaintiff had also come up with the concept
for a “sharing plates” style restaurant featuring dishes from various regions. He
found an investor, an acquaintance named Morad Fouladirad. Mr. Fouladirad was
described as a ‘dot-com millionaire’ who had made a substantial amount of money
operating one of Iran’s first internet service providers. Mr. Fouladirad was to
be the principle investor in the restaurant, with the plaintiff taking
responsibility for construction and operation. The plaintiff also was to
contribute some capital of his own, which he had from the sale of his interest
in the Dubai restaurant. Even though he would have been managing the cafe
during the mornings and lunch hours, the plaintiff testified that his intention
was to act also as the restaurant’s floor manager during the afternoons and evenings.
His expectation was that he would continue to manage the cafe for at least five
years; if by then he had a young family, he would probably cut back on work at
the cafe, and concentrate on the restaurant.

[7]            
He and Mr. Fouladirad agreed to build the restaurant
together and to split the profits 50/50, and they became equal shareholders in
a corporate vehicle, Onyx Entertainment Inc. (“Onyx”). Mr. Fouladirad provided
no initial start-up capital, and there was no written agreement between them.
It was portrayed as more or less a ‘hand shake deal’.

[8]            
At the time of the accident, the plaintiff was
in the preliminary stages of undertaking construction of the restaurant. Onyx
had leased premises in Yaletown, with Mr. Fouladirad guaranteeing Onyx’s obligations
as tenant, through one of his own companies. A building permit had been issued
by the City of Vancouver. Some demolition of the previous tenant’s improvements
had been undertaken, and building plans had been drawn up by an architect, Mr.
Steve Palmier. The project had gone out to tender; the plaintiff and Mr. Fouladirad
were awaiting final bids from two general contractors. The intention was to
have much of the work done by a general contractor and its sub trades, though
Onyx would be directly supplying some specialized materials and decor items.

[9]            
On top of his plans to manage both the cafe and
the restaurant, the plaintiff intended to continue his photography work as much
as his schedule permitted. He testified that at the time of the accident he in
fact had some photography shoots scheduled. He thought he saw quite a bit of
potential in this line of work.

[10]        
These plans were, unfortunately, interrupted by
the accident of February 13, 2007. The deal to purchase the cafe was lost. The
restaurant did in fact open, but not until December 2008. The plaintiff claims,
as described below, losses associated with the delay in opening the restaurant,
and other losses of income.

II.       The Plaintiff’s Injuries

[11]        
At the time of the accident the plaintiff was a
pedestrian, walking on a sidewalk on Marine Drive in West Vancouver. The
defendant’s vehicle mounted the curb and drove across the sidewalk, pinning the
plaintiff against a building. He suffered a crush-type fracture to his left
tibia and a fracture of the fibula. He was hospitalized, and underwent surgical
stabilization of his fractures, with intermedullary nailing. He was discharged four
days after the accident, on February 17th. He moved into his parents’ apartment
and convalesced under the care of his mother, and underwent a course of
physiotherapy.

[12]        
The plaintiff was assessed by his orthopaedic
surgeon Dr. Jando in early April, mid-May and mid-July, 2007. On that final
assessment, Dr. Jando recommended that the plaintiff’s activities be limited
due to continuing pain in his left foot and ankle, which Dr. Jando attributed
to extra stresses from an abnormal gait pattern while the leg fractures healed,
with possible irritation from the locking screws at the fracture site. Specifically,
he recommended no continuous standing for more than 30 minutes; no walking for
more than 100 metres; no climbing of ladders, or repetitive stair climbing; and
no lifting of loads greater than 20 kg. Dr. Jando believed that the plaintiff
should focus on muscle strengthening and fitness. He noted an upcoming referral
to a foot specialist; if the locking screws were found to be symptomatic, Dr.
Jando would offer minor surgery to have them removed, with recovery involving
less than a week’s absence from work. The long-term prognosis was believed to
be favourable, with eventual full functional recovery, and no permanent
disability was anticipated.

[13]        
The plaintiff was assessed by an orthopaedic
surgeon, Dr. Penner, in November 2007. Dr. Penner noted that he walked with a
very mild limp, favouring the left leg. On examination, the plaintiff was able
to walk on his heels and toes without significant difficulty. Standing
dorsiflexion of the left ankle was very slightly reduced, though non-weight
bearing range of motion was normal. Mild tenderness was found on palpation of
areas of the leg and ankle. Dr. Penner diagnosed a possible residual left ankle
post-sprain syndrome, secondary to soft tissue scarring; and left plantar foot
subjective sensory alteration, possibly secondary to left tibial nerve injury. He
recommended obtaining new standing x-rays of the ankle so that a definite
prognosis could be given. In his Medical Legal Report of March 17, 2008, he
wrote:

“With respect to Mr. Falati’s foot pain,
some element of this may be related to subjective sensory alteration in the
plantar aspect of his left foot. This is possibly due to a minor injury to the
tibial nerve at the level of the left ankle. The sensory alteration certainly
appears mild. It is likely that this will gradually diminish further with
further passage of time.

“Overall, it is typical for patients who
sustain isolated tibia and fibula fractures to have some degree of residual
soft tissue complaints for at least a year following the injury. However, most
patients go on to achieve normal mechanical stability in their injured
extremity and are able to return to high level physical function, often to
their preinjury level. Usually, the ability to return to their full preinjury
functional level depends on additional associated injuries. This certainly may
be the case for Mr. Falati, who may have sustained an occult injury to the left
ankle area as well.”

[14]        
In response to certain questions raised by the
plaintiff’s counsel, Dr. Penner further stated:

“You have inquired as to the probability of
permanent disability. At this stage, Mr. Falati has only a mild amount of
identifiable impairment in the left leg, ankle and foot. He does have evidence
of pain symptoms in the leg and left ankle and left foot. However, he is noted
to have essentially near normal motor power function as well as near normal
range of motion. As such, his current impairment level is low. Nevertheless,
there is an impairment present and the exact diagnosis underlying this
impairment remains unclear. As a result, defining the likelihood of this
impairment remaining permanent is impossible. It is important to note that
disability represents the difference between what an individual is expected to
do or required to do, and what they are capable of doing, due to the presence
of a physical impairment. Since Mr. Falati still does have some evidence of
physical impairment, albeit mild, some element of disability does remain. The
probability of such disability remaining on a permanent basis seems very low
with respect to the left knee and left tibia specifically. However, with
respect to the left ankle, a more clear diagnosis would be required prior to
making any estimate of permanence.”

[15]        
The most recent medical assessment of the
plaintiff, prior to trial, was by his family physician Dr. Kates. In his
medical legal report of October 27, 2009, he reviews the findings of recent
x-rays and a bone scan of the plaintiff’s ankle, which were normal. He
describes the ongoing ankle pain as involving “. . . some element of permanent
left ankle disability which . . . could be due to scarring of the soft tissue
or possibly to the remaining hardware”. Dr. Kates advised the plaintiff to take
aggressive steps to increase his level of physical activity; he has gained 40
pounds since the accident, and Dr. Kates felt that losing weight might help
with the chronic ankle pain. If the ankle pain persisted after weight loss, a
referral back to Dr. Jando for removal of the hardware could be considered.

[16]        
The plaintiff testified as to the degree to
which his activities continue to be restricted by foot and ankle pain. He no
longer participates in pickup basketball games, and cannot jog. His fitness
level has deteriorated.

[17]        
The restaurant’s floor manager, Mr. Canuel,
testified that he has on occasion seen the plaintiff attempt physical work
around the restaurant – the kind of tasks which Mr. Canuel routinely performs –
and that he seems genuinely distressed after periods of physical exertion. His
time at the restaurant is largely spent seated on a chair or bar stool, where
he works on his computer.

[18]        
The plaintiff also suffered what Dr. Kates
described as a fairly significant anxiety reaction to the accident, and
reactive depression. When first seen by Dr. Kates on February 26, 2007, he was
tearful and appeared quite anxious and frustrated, in particular as to the
potential effect of his injuries on his plans to build the restaurant. Dr.
Kates tried to reassure him. Again, when seen on March 19, 2007 he was in
obvious emotional distress, and Dr. Kates made a referral for psychological
counselling. On April 27, the plaintiff reported that he had not seen the
psychologist, and Dr. Kates noted that his attitude seemed somewhat more
positive. In subsequent visits, the plaintiff complained of nervousness,
especially while driving; difficulty making decisions; and occasional
nightmares. Medication was prescribed.

[19]        
A psychiatrist, Dr. Riar, carried out a
psychiatric assessment of the plaintiff in October 2007, at the request of
counsel. The plaintiff gave a history of how his emotional condition had
progressed over the summer and fall, including his anxiety over delays in the
restaurant project. He recounted feelings of a lack of motivation and
enthusiasm, a lack of focus, and feelings of hopelessness. His plans to start a
business and get married had fallen apart; Dr. Riar writes, “the big plan for
his life did not work out”. He felt that he was cranky and angry, especially
with his father. Dr. Riar is of the view that the plaintiff’s symptoms were
suggestive of posttraumatic stress disorder, though not enough quantitatively
or qualitatively to classify as a full PTSD syndrome. In his report of March
18, 2007 he stated:

“As far as symptoms of generalized anxiety
and depression are concerned, I believe that they are the indirect result of
the accident where the accident caused various stressors in his life, which
translated into the symptoms of anxiety, which are still ongoing. The symptoms
of change in demeanour and problems with concentration and attention are part
in [sic] parcel of his depressed and anxious state of mind, rather than any
other reason.”

Whether, and to
what extent, the stressor of the delays in the restaurant’s construction were
in fact caused by the accident, is a subject I will explore below in some
detail.

[20]        
Both the plaintiff’s parents, and his fiancé,
testified as to his changes in moods, which came on that summer, and which have
persisted to some extent. They no longer find him to be the engaging,
optimistic person he was before the accident; instead, they describe his as
unhappy, angry, and argumentative; his mother used the word “disrespectful”. These
changes in his demeanour led to a breakup of his relationship with his fiancé
in the summer of 2007, though they have since reconciled.

[21]        
The plaintiff testified that he feels his mood
is now much improved. Dr. Kates’ report of October 27, 2009 records the
plaintiff as having reported that his anxiety was “more or less resolved by
early 2009”.

III.       The Alleged Loss of Earnings/Loss of Earning Capacity

[22]        
The plaintiff seeks damages for past net income
loss (after taxes) of $250,000 – which includes loss of income from the cafe,
the restaurant and the photography business, the added expense of the salary of
his floor manager, Mr. Canuel, and thrown-away leasing costs during the period
in which construction was delayed. The plaintiff also claims damages for a loss
of earning capacity of a further $325,000, the assessment of which, it is
argued, should be made with reference to those businesses and to the
limitations which his injuries place on alternative forms of employment. In
addition, the plaintiff has incurred certain special damages related to the
storage of restaurant fixtures which were not used, due to him having to pursue
a lower-cost design.

[23]        
The plaintiff’s position with respect to the
losses associated with each of these business ventures is as follows. With
respect to the cafe, the plaintiff’s father and the plaintiff testified that he
was unable to undertake the training offered by the vendors, as a result of his
injuries. This led Mr. Falati Sr. to notify the vendors that he would not be
completing the purchase. Accordingly, the plaintiff claims the loss of the
$5,000 per month salary he would have been paid for managing the cafe.

[24]        
With respect to the photography business, the
plaintiff’s intention prior to the accident, as noted, was to continue
accepting occasional assignments. He estimates that in addition to running both
the cafe and the restaurant, he would have earned approximately $10,000 per
year through pursuing this business. He says that he can no longer perform
“shoots” due to the physical demands – carrying heavy equipment and standing
for long periods of time place too much stress on his leg and are too painful.

[25]        
The most complex aspect of the plaintiff’s claim
relates to the restaurant business. The plaintiff contends that but for the
accident, he would have commenced construction of the restaurant as planned and
would have had it open for business by July of 2007, or, at worst – given the possibility
of some additional delay due to the strike by City of Vancouver employees over
that summer – by September of that year.

[26]        
It is claimed that the accident impacted
construction of the restaurant in several respects. First, the plaintiff claims
that though bids were received from qualified contractors by late February –
which bids were in evidence – he was not in a position to sign a construction contract
because his injuries would have precluded him from attending at the
construction site, overseeing the project and attending to matters such as the
choice of materials and finishes.

[27]        
Second, it is claimed that due to uncertainty
over when the plaintiff would be able to return to work following the accident,
the plaintiff’s investor Mr. Fouladirad gradually lost interest in the project,
and began to delay making payments towards the lease. Ultimately he backed-out
altogether. Once Mr. Fouladirad lost interest, there is alleged to have been a
delay while the plaintiff tried to find other investors. The plaintiff’s
counsel asked me, in the course of argument, to find that Mr. Fouladirad’s
enthusiasm for the project dried up or diminished within weeks of the accident,
because of uncertainties surrounding the plaintiff’s injuries.

[28]        
Third, the plaintiff says that he lost
motivation to undertake construction of the restaurant while he recovered from
his injuries.

[29]        
Fourth, due to financial constraints imposed by
Mr. Fouladirad’s diminished commitment, the plaintiff alleges that he was
unable to afford a general contractor for the project, as any general
contractor would have required a 50% deposit of the contract price. After Mr.
Fouladirad “officially” backed out of the project in October 2007 – the exact
meaning of the term “officially” in this context was not explained, but I
assume it means that some type of formal written notice was given – the plaintiff
turned to his father for financial assistance. Through drawing on his own
savings, taking out a mortgage, and borrowing from friends, Mr. Falati Sr. was
able to raise cash to lend to Onyx to assist in financing construction; I was
told by both of them that Mr. Falati’s loans to Onyx eventually totalled
approximately $1 Million, although this sum only became available gradually in
instalments. In addition, the plaintiff contributed approximately $300,000 of
his own money.

[30]        
The plaintiff then proceeded with construction,
acting as his own general contractor, working to a lower-cost design. He had estimated
that construction would cost about $400,000, with another $100,000 for finishing
and decorative items. However, he now says that due to his inexperience the
project cost more than originally planned, approximately $1 Million;
construction also took longer than planned, and the restaurant did not open its
doors until December 2008.

[31]        
These complications, and the resulting delay in
opening of the restaurant, are said to have had two significant consequences. First,
the restaurant lost more than a year of operation, including the possibility of
participating in promotional events undertaken by local Yaletown restaurants. Second,
the restaurant opened in late 2008 into a general economic downturn; an earlier
opening, it is claimed, would have enabled the restaurant to establish a
reputation and better withstand the effects of the recession. It is also
claimed that the need to control staffing costs has led to a decision not to
open the restaurant for lunch, thereby also limiting the business’ revenues.

[32]        
With respect to measuring the loss arising out
of the delay, the plaintiff testified that in developing the concept of the
restaurant, his review of statistics obtained from the Yaletown Business
Improvement Association and of information gleaned from acquaintances in the
hospitality industry had led him to project operating revenues of approximately
$1.5 Million per year. He testified that if the restaurant manages to gross $1
Million in 2010, he would anticipate a profit of $300,000.

[33]        
A somewhat more conservative approach is
suggested in the evidence of Mr. Darren Benning, an economist whose expert
opinion was tendered by the plaintiff. Mr. Benning notes that on a gross of
approximately $1.5 Million, and at a 5% profit margin – a ratio based on
statistics pertaining to the profit levels generally in the restaurant industry
in Canada and the U.S. – the restaurant would be yielding a net profit annually
of more than $70,000 after adjusting for seasonality and other factors.

[34]        
Instead, the evidence is that the restaurant
grossed only approximately $480,000 in its first year of operations, and has
more or less been breaking even, without any payments having been made on the
loan amounts.

[35]        
In addition to the loss of profitability of the
restaurant, the plaintiff claims that but for the accident, not only would he personally
have managed the cafe his father had agreed to purchase, but he also would have
actively managed both the construction and then the daily operations of the
restaurant, on a salary. He has drawn a gross salary of $6000 per month from
Onyx since beginning construction for undertaking various management functions relating
to the restaurant that are within the range of his physical abilities, e.g. financial
and marketing tasks, and he is at the restaurant every day doing this work. However,
due to his physical disability he has had to hire a floor manager – an
experienced sommelier, Mr. Canuel – at a monthly salary of $5000, and this is
claimed to be a cost which but for the accident would not have been necessary.

IV.      Assessment of Damages

A.       Non-Pecuniary Damages

[36]        
The defendant’s counsel submits that an
appropriate award of non-pecuniary damages would be in the range of $50,000 to
$70,000; the plaintiff’s counsel, relying on decisions awarding damages in the
range of $85,000 to $152,000 (after adjusting for inflation), submits that an
appropriate award would be in the amount of $110,000.

[37]        
In my view, the fact patterns in the cases
relied upon by the defendant do not mirror the degree of disability experienced
by the plaintiff. On the other hand, the cases relied upon by the plaintiff
deal with symptoms or sequelae which were found to be permanent. Neither of the
orthopaedic surgeons whose reports are in evidence, Dr. Penner and Dr. Jando, have
expressed an opinion that the plaintiff’s foot pain and resulting limitations
are likely to be permanent; Dr. Jando has offered the option of further surgery
to remove the hardware. The plaintiff’s general practitioner, Dr. Kates, has
pointed to both surgery, and weight loss, as possible means of addressing the complaints
of persistent pain. Dr. Kates does use the phrase, “some element of permanent
left ankle disability”, but as he goes on to point to the remaining hardware as
a possible cause, I do not take him to mean “irreversible”. Although there is
some possibility of a permanent disability in the present case, the evidence
does not establish this to be a probability. Taking such possibility into
account, I award the plaintiff non-pecuniary damages of $85,000.

B.       Loss of Earning Capacity

1.       Principles Governing Assessment

[38]        
The plaintiff is entitled to be restored to the
position he or she would have been in but for the defendant’s negligence, so
far as that can be done with a monetary award. This may involve “a comparison
of the likely future of the plaintiff if the accident had not happened with the
plaintiff’s likely future after the accident has happened” – Rosvold v.
Dunlop, 2001 BCCA 1 at para. 8.

[39]        
Though pre-trial losses are often spoken of as
if they are a separate head of damages, e.g. “past loss of income” or “past
wage loss”, it is clear that both pre-trial and future losses are properly
characterized as a component of loss of earning capacity – Rowe v. Bobell
Express Ltd., 2005 BCCA 141. The principles governing the evaluation of capacity
claims have been articulated most clearly in judgments dealing with future
losses, that is to say, loss of future earning capacity:  for example, the
recent decision of the Court of Appeal in Perren v. Lalari, 2010 BCCA
140, in which the alternative “real possibility” and “capital asset” approaches
to assessment are reviewed and discussed.

[40]        
The full assessment of damages for such losses
may involve, at least to some extent, consideration of hypothetical situations
and contingencies – what might have happened, or what might yet happen, had the
accident not occurred, as distinct from what actually has happened. However,
particularly where the claimed losses are derived from something other than a
measurable, conventional income stream, the determination of a plaintiff’s
prospective post-accident, pre-trial losses can involve considering many of the
same contingencies as govern the assessment of a loss of future earning
capacity: “The only difference is that knowledge of events occurring before
trial takes the place of prediction” – Prof. Waddams, The Law of Damages,
Looseleaf Ed. (2008) para. 3.360. When considering hypotheticals and
contingencies in the context of a pre-trial loss, the same general principles
which govern the assessment of lost future earning capacity may be equally
applicable – Waddams, ibid. As stated by Rowles J.A. in Smith v.
Knudsen, 2004 BCCA 613, at para. 29,

“What would have happened in the past but
for the injury is no more ‘knowable’ than what will happen in the future and
therefore it is appropriate to assess the likelihood of hypothetical and future
events rather than applying the balance of probabilities test that is applied
with respect to past actual events.” 

[41]        
Those general principles involved in the process
of assessment include the following:

·      
The task of a court is
to assess damages, rather than to calculate them mathematically – Mulholland
(Guardian ad litem of) v Riley Estate (1995), 12 B.C.L.R. (3d) 248 at para.
43;

·      
The standard of proof
is not the balance of probabilities; the plaintiff need only establish a real
and substantial possibility of loss, one which is not mere speculation, and
hypothetical events are to be weighed according to their relative likelihood – Athey
v Leonati, [1996] 3 S.C.R. 458, 140 D.L.R. (4th) 235, at para. 27;

·      
Allowances must be made
for the contingencies that the assumptions upon which an award is based may
prove to be wrong – Milina v. Bartsch (1985), 49 B.C.L.R. (2d) 33 at 79
(S.C.), aff’d (1987), 49 B.C.L.R. (2d) 99 (C.A.);

·      
Any assessment is to be
evaluated in view of its overall fairness and reasonableness – Rosvold,
at para. 11.

[42]        
A trial decision of Finch J., as he then was, Brown
v. Golaiy, 1985 CanLII 149, 26 B.C.L.R. (3d) 353, which has been frequently
cited, sets out a list of further specific considerations which may be taken
into account in making an assessment:

“The means by which the value of the lost,
or impaired, asset is to be assessed varies of course from case to case. Some
of the considerations to take into account in making that assessment include
whether:

 1.
The plaintiff has been rendered less capable overall from earning income from
all types of employment;

 2.
The plaintiff is less marketable or attractive as an employee to potential
employers;

 3.
The plaintiff has lost the ability to take advantage of all job opportunities
which might otherwise have been open to him, had he not been injured; and

 4.
The plaintiff is less valuable to himself as a person capable of earning income
in a competitive labour market.”

[43]        
Having said that, one cannot lose sight of the
rule that the determination of what has in fact happened in the past is on the
basis of the balance of probabilities – Steenblok v. Funk, [1990] 5
W.W.R. 365, 46 B.C.L.R. (2d) 133 (B.C.C.A.); see also Smith v. Knudsen,
at para. 36. In the present case the plaintiff must prove that each of the
various claimed losses of opportunity by which he says the loss or earning
capacity is to be evaluated was, more likely than not, actually caused by the
accident. If the plaintiff succeeds on that issue, then the potential value of
each of these opportunities, adjusted for various contingencies, may be weighed
in determining the value of the plaintiff’s lost earnings capacity, both past
and future.

2.       Assessment of the Loss
of Earning Capacity

[44]        
The plaintiff alleges that he has been unable to
work as a photographer, due to the physical demands of shooting, and his
ongoing leg pain. He has earned no income from his photography business since
the accident.

[45]        
The financial records concerning the photography
business are scant. Still, to the extent that Mr. Falati’s injuries may limit
his ability to earn income from this business in the future, his losses are
compensable. I find that the plaintiff’s injuries have continued to place some
limitations on his capacity to earn income from this venture.

[46]        
I accept, as a starting point, his target of
earning up to an additional $10,000 per year, and I include the potential for a
loss of this magnitude, over the period of his disability, in assessing the
plaintiff’s overall loss of earning capacity claim. With respect to
contingencies, I note below the possibility that if the accident had not
happened, the restaurant may never have been built, or its construction may
have been delayed even more than it actually was; those scenarios give rise to
the possibility of the plaintiff attempting to increase his income through
photography, and I have accounted for this possibility. Conversely, there are
also negative contingencies to be applied to this potential income stream: the
plaintiff’s injuries may heal; he may be able to undertake “shoots” which are
not so physically taxing; and, given the technological advances taking place in
this sector, he may have found a drop in demand for his services, or more
competitive pricing, or may have found it necessary to undertake further
investments in equipment.

[47]        
With respect to the cafe, I accept that this
loss of a potential income stream was causally related to the accident, and I
account for this loss in the overall assessment of the Plaintiff’s damages. I
accept his evidence of the cafe’s profitability – based on his and his father’s
analysis of the cafe’s revenues – in particular its ability to generate enough
revenue to sustain a monthly management salary of $5,000. No evidence to the
contrary was tendered by the defendant. I am not persuaded, however, that the plaintiff’s
goal of essentially holding down two full-time jobs – managing both the cafe, and
the restaurant – would have proven to be realistic. I find there is a
substantial possibility that the plaintiff would have had to make alternative
arrangements for management of the cafe; or would have found management of the
cafe, and handling of the financial and business aspects of the restaurant to
be so time-consuming that hiring a floor manager for the restaurant, such as
Mr. Canuel, would have been required in any event.

[48]        
However, with respect to the restaurant, I
cannot find on the evidence that there has been any loss attributable to a delay
in its opening because of the accident. Nor – with the exception of
factoring-in the cost of Mr. Canuel’s salary, which would have reduced the
plaintiff’s share of any profit earned – am I able to find that the accident
has had an ongoing impact on the restaurant’s profitability.

[49]        
The most definite evidence of the plaintiff’s
actions with respect to the restaurant in the weeks preceding and subsequent to
the accident came in the form of a volume of e-mail correspondence – introduced
into evidence through the project architect Mr. Palmier – which had passed
between Mr. Palmier, the plaintiff and Mr. Fouladirad, in January – April 2007.
I understand from counsel that the existence of these saved copies of the e-mail
messages came as a surprise to both parties until shortly before Mr. Palmier
testified, and that there had been no disclosure, by the plaintiff, of such
e-mail communications as part of pre-trial discovery. (I was told, in the course
of argument, that such disclosure had been precluded by technical problems with
the plaintiff’s computer; there was no evidence, however, of what steps, if
any, were taken to determine whether there was any data that could have been
resurrected.)

[50]        
Because of the sequence in which the evidence
was tendered, the content of the e-mail messages could not be put to the
plaintiff on cross-examination. However, no objection was taken by the
plaintiff to copies of these e-mail messages being put into evidence, and no
application was made for rebuttal evidence to be allowed from the plaintiff as
to the context of these communications. Plaintiff’s counsel referred to the
e-mails in argument, and encouraged me to draw inferences from their contents,
including positive inferences as to the plaintiff’s credibility. While it is
possible that the content of the emails may have come as a surprise to the
plaintiff’s counsel – as they did the defence – I note that the content, of
course, would have been known to the plaintiff himself. Plaintiff’s counsel did
have the opportunity to review Mr. Palmier’s file, including the e-mails,
before cross-examining him.

[51]        
I find that the contents of some of these e-mail
messages significantly qualify and in some cases contradict the plaintiff’s
testimony on several key points, and cast doubt on the plaintiff’s position
respecting lost revenues from the restaurant operations in several respects.

[52]        
First, the plaintiff testified that for the two
months following the accident he was on a lot of painkillers, and spent a lot
of time in bed. He said that he was “pretty much out of it”, on “very heavy
drugs in terms of sedatives and painkillers”, that he did the best he could to
communicate by e-mail, but that he didn’t think that amounted to much. He
testified that it was hard to do work and to focus until about six months after
the accident. Despite his injuries, however, it is evident from the e-mails
that by March 2 the plaintiff was able to and did in fact undertake detailed
review and analysis of the bids, and thereafter engaged in detailed and focused
e-mail correspondence with Mr. Palmier. No doubt, there was a period of time
following the accident in which the plaintiff was in acute pain and distress,
but I find that the plaintiff’s testimony of the duration of that period of
acute disability was somewhat exaggerated.

[53]        
Second, as noted above, two general contractors
submitted final bids for construction of the restaurant, shortly after the
accident. The e-mail messages demonstrate that both the plaintiff and Mr. Fouladirad
found those bids to be too high. Even the lower of the two bids was deemed
unacceptable in view of the proposed pricing of sub trades’ work. There was
some further negotiation with at least one of the contractors, but it apparently
came to nothing. These e-mails support Mr. Palmier’s evidence of it having been
his impression that Onyx did not proceed with the project at that time because the
bids were too high. Therefore, even though the plaintiff would have been physically
unable to participate in overseeing construction for some period of time
following his accident, there does not appear to have been a substantial
possibility, and certainly not a likelihood, of the work proceeding in any
event. I cannot find a causal connection between the accident, and the work not
proceeding with either of the first two potential contractors.

[54]        
Third, the plaintiff gave evidence of a yet
another contractor, M&F, having presented a bid outside the tendering
process. As discussions with M&F were proceeding, the plaintiff testified
that M&F, acting without his authorization, sent a sub trade into the
premises in late April to do drywall work. He says that at the time, he felt
that M&F was trying to take advantage of his situation in order to get the
contract, and he felt that M&F was not acting in his best interest. He
decided not to contract with M&F. His e-mails to Mr. Palmier, however, refer
to negotiations with a contractor, which would likely result in a contract
being signed within 3-4 days (April 11); a later e-mail confirmed that he would
be signing a contract (April 26). The plaintiff’s counsel acknowledged in
argument that these were references to M&F. No mention whatsoever was made
by the plaintiff, during his testimony, of his discussions with M&F having reached
the stage that he had been on the verge of signing a contract with them.

[55]        
I also note that the e-mails indicate that Mr.
Fouladirad was continuing to be actively involved in evaluating aspects of the
project, at least up until March 27.

[56]        
In considering the plaintiff’s evidence as a
whole, in light of the aforementioned e-mails, I was left with a concern as to
whether the plaintiff had been completely candid in his testimony as to the
circumstances of the project throughout the months of March and April 2007. Where
I can fairly draw specific inferences from the e-mails, I believe that it is appropriate
to do so, in determining whether the plaintiff’s case has met the required onus
of proof.

[57]        
I infer from the e-mails that the plaintiff,
notwithstanding his injuries, was willing to hire a general contractor – at the
right price – at least up to late April 2007, even though, on his own
testimony, a contractor would have required a 50% deposit up front. I accept
that if a suitable contractor had been identified soon after the accident, and
a contract signed, the process of recovering from his injuries may still have
precluded the plaintiff’s direct overseeing of construction for a period of
some weeks. I accept that the plaintiff would have wanted to be physically
present on the construction site as much as possible; this, however, would have
been of particular concern in the project’s latter stages, when there may have
been critical decisions to make as to finishes, materials etc. Even if construction
could have commenced in the spring of 2007 – that is to say, even if an acceptable
contractor, ready to work at an acceptable price, had been found – I am not
persuaded that the construction could not, if necessary, have been delayed for
a short period to accommodate the plaintiff’s further recovery, so that when
his attendance on site was most critical, he would have been physically able to
do so. Indeed, I can only conclude that such must have been the plaintiff’s
intention, if his injuries were in fact still an issue by mid- to late-April,
given his apparent desire to contract with M&F.

[58]        
In short, I do not find that the plaintiff has
discharged his burden of proving on a balance of probabilities that the delay
in commencing construction of the restaurant came about as a direct result of
the his injuries.

[59]        
Furthermore, I cannot find, on the evidence,
that there was even an indirect connection between, on the one hand, the
plaintiff’s injuries, and on the other, Mr. Fouladirad’s waning enthusiasm for
the project, the plaintiff’s difficulties in obtaining funds from him, and his ultimate
withdrawal from the project. Mr. Fouladirad did not testify. Wholly aside from
whatever inferences I draw from the e-mail messages, I am troubled by the
vagueness of the plaintiff’s evidence on the subject of Mr. Fouladirad’s loss
of interest, in particular its timing.

[60]        
The plaintiff testified that Mr. Fouladirad was
initially quite supportive following the accident, but shortly began “hinting”
that he might pull out of the project because he wasn’t certain when the
plaintiff would recover and be able to go back to working on the construction. The
plaintiff also testified as to difficulties he then began to encounter in
securing funds from Mr. Fouladirad. The plaintiff’s evidence of the chronology
of these events, in relation to his recovery and in relation to other
interactions with the architect and with contractors, was vague, and was not
corroborated by any documentary evidence. It is clear that the plaintiff
conducted a good deal of his communications through e-mail – his photography
business had its own domain name which served as an e-mail address – but no e-mails
or any other form of written communication between the plaintiff and Mr.
Fouladirad on this subject were put into evidence. There were points when under
cross-examination where the plaintiff was argumentative and unresponsive. I do
not believe I was given the whole story. If there had been any real question of
the plaintiff’s condition jeopardizing the project, I would have expected the
plaintiff to obtain, for Mr. Fouladirad’s benefit, some clear guidance from his
doctors as to his prognosis. Further, as noted above, this supposed uncertainty
surrounding the plaintiff’s ability to return to working on the project appears
inconsistent with the evidence of the plaintiff’s desire to pursue a contract
with M&F.

[61]        
If I were satisfied that the plaintiff genuinely
believed that Mr. Fouladirad had lost interest in the project because of the
his injuries, I would still be left with the inherent difficulty of accepting
his unsupported hearsay evidence of Mr. Fouladirad’s “hints”, as proof of their
truth. The plaintiff did not attribute to Mr. Fouladirad any kind of clear,
unequivocal statement; thus, what I am left with is the plaintiff’s inferences
or impressions, which may or may not have been correct. But, even if Mr.
Fouldadirad had explicitly offered up the plaintiff’s injuries as a justification
for withdrawing, that would not mean that it was in fact so; it might simply
have been a pretext.

[62]        
To accept such hearsay evidence under the “principled
approach” to the hearsay rule, as first formulated by the Supreme Court of
Canada in R. v. Khan, [1990] 2 SCR 351, and in R. v. Smith,
[1992] S.C.R. 915, I would have to be satisfied that admission of
the hearsay was necessary, and that the declarant’s statement was reliable,
i.e. that the circumstances in which the statement was made “substantially
negate the possibility that the declarant was untruthful or mistaken” – Smith,
para.33. If the plaintiff had given evidence of having taken sufficient steps to
locate Mr. Fouladirad, I may have been in a position to rule that acceptance of
the hearsay evidence was “necessary”. But I would still have been unable to
accept it as reliable. There could have been, potentially, any number of other
possible explanations for Mr. Fouladirad eventually losing interest in the
project: the realization that construction costs were going to be higher than
expected; a re-evaluation of the project’s profitability; a lack of funds; or
the availability of better investment opportunities. For all we know, he may even
have lost confidence in the plaintiff personally. In such circumstances it may
have simply suited Mr. Fouladirad to say to the plaintiff, “with your injury, circumstances
have changed”, rather than “I have changed my mind about the project”.

[63]        
There is no evidence of the plaintiff and Mr.
Fouladirad having arrived at a budget for design, construction and furnishing
of the restaurant, prior to the tendering process. I note that the October 2007
contract between Onyx and Mr. Palmier states that the construction budget “. .
. is unknown, but it is to be as economical as possible”. The plaintiff would
have me believe that before the accident, Mr. Fouladirad was essentially
offering a blank cheque – willing to underwrite the restaurant at any price – and
that this all changed because of his injuries. I cannot accept this. I am not
prepared to find, on the evidence, that construction of the restaurant would
have proceeded any more quickly, but for the accident. The plaintiff has not
proven this aspect of his claim.

[64]        
If the delay in construction had been proven to
be related to the plaintiff’s accident, then it would have been open to the
plaintiff to establish a past and future loss of opportunity to earn income
from the restaurant’s profits; this would have entailed the assessment of hypothetical
scenarios shown, on the evidence, to be significant possibilities. There are however
numerous difficulties with this aspect of the plaintiff’s case, as well, which
include the following.

[65]        
First, the plaintiff is asking that the losses
associated with the restaurant’s operations be assessed on the basis of his
pre-accident projections of gross revenue of $1.5 Million annually. As noted by
the plaintiff’s economist Mr. Benning in his report, this is equivalent to
average nightly sales of $41.50 per seat per night, if the restaurant did a
two-times per night turnover. An alternative calculation was also put forward,
on the basis of gross revenue of $1 Million. The plaintiff’s projection was based
on his own research, and was given to Mr. Benning as an assumed fact.

[66]        
I was presented with no means of testing whether
the plaintiff’s projection was in fact reasonable. The plaintiff’s experience
in the hospitality business was negligible, and he had no experience in the
industry in Vancouver. The data on which he based his projections is not in
evidence. There is no evidence of Onyx having had a formal business plan. No
expert evidence was tendered as to the customer traffic, and average
expenditures per patron, reasonably to be expected at a new start-up restaurant
of this type in the Vancouver market, and none as to the adequacy of any
marketing planned. In short, there is no evidence that the plaintiff’s
projections are anything more than speculation.

[67]        
Second, Mr. Benning’s report analyzes the
potential profitability of the restaurant by reference to the revenues,
adjusted for capacity or size, of the restaurants of two publicly-traded U.S.
companies, P.F. Chang’s China Bistro Inc., and  Darden Restaurants, Inc., the
latter being the owner of chains such as Olive Garden and Red Lobster. The
plaintiff’s counsel repeatedly referred to these companies, in his
examination-in-chief of Mr. Benning and in his argument, as “comparables”. Mr.
Benning was clear that he was not opining as to the degree to which these
companies are in fact comparable to the plaintiff’s restaurant. Rather, he
described these companies as “benchmarks”. He acknowledged, in his report and
in his testimony, the many limitations in using these companies as comparables.
He selected these companies as benchmarks because they track their management
expenses and, being publicly traded, they publish their results.

[68]        
Mr. Benning’s opinion was based on the
assumption that the plaintiff’s restaurant would operate at the same output per
square foot, or output per seat, as the benchmark operations. Nowhere in his report
is there an analysis or even an assertion of the reasonableness of this
assumption.

[69]        
Mr. Benning acknowledged that comparisons to P.F.
Chang’s and Darden are not “perfect”. The comparisons need not be perfect; but
they must be useful. This aspect of Mr. Benning’s opinion was of almost no use.
This is not a criticism of the witness’ skill or professionalism. He is not an
expert in restaurant operations; he is an economist. He was given only a
limited assignment with limited information, and he is not responsible for the
assumptions he was asked to make. Those assumptions have not been proven, and
therefore his evidence cannot bear the weight which the plaintiff’s counsel
assigns to it.

[70]        
Third, Mr. Benning attempted to account for the
potential impact on the restaurant of the general 2008-2009 economic downturn
by presenting data from Statistics Canada on the monthly revenues of
full-service restaurants in British Columbia. I am unable to determine what weight
if any may appropriately be placed on this data in judging the effect of the
downturn on a start-up restaurant serving a more particular clientele in the
competitive Vancouver restaurant industry. It would have been helpful to have
the opinion evidence of an accountant, economist or consultant with specific
experience in the economics of operations much more similar to the plaintiff’s,
and with specific knowledge of how such operations have faired over the last
two years. On the evidence before me, the most I can do is find that this restaurant
may possibly have been profitable if it had opened in 2007, and may possibly
have been more profitable now; but these are possibilities, not probabilities.

[71]        
I digress at this point to return briefly to the
subject of the plaintiff’s symptoms of depression as reported to Dr. Riar in
October 2007, and the changes in the plaintiff’s personality as described by
his parents and by his fiancé. It follows from the above findings that to the
extent that those issues are related to the difficulties with the restaurant’s
construction and its failure to achieve the plaintiff’s optimistic
profitability projections, that cannot be laid at the feet of the defendant. The
plaintiff has entered into a challenging business. His dreams of success have
not been realized – at least, not yet. It is not surprising that he has found
the business stressful. And in reacting to that stress, it is not surprising
that he would blame the accident for his difficulties. But this connection has
not been established on the evidence.

[72]        
There is a further complication with the
plaintiff’s loss of earning capacity claim, which arises from my inability to
find a connection between the accident, and Mr. Fouladirad’s non-participation
in the restaurant. If the plaintiff and his father had proceeded with the
purchase of the cafe – which I have concluded likely would have happened, but
for the accident – the father would have had approximately $300,000 less to
invest in the restaurant. If the plaintiff had not been injured, and Mr. Fouladirad
pulled out of the restaurant project for other reasons, there is no evidence
that Mr. Falati Sr., having purchased the cafe, would still have had the means
to finance the restaurant’s construction, and no evidence that other financing
would have been available to take his place. Consequently, I find there is a
significant possibility, in that hypothetical situation, that construction
would have been delayed even further than was actually the case, with the additional
possibility that the restaurant still to this day may not have been built. In
that event, the plaintiff would not have earned the monthly salary of $6,000 which
he has been drawing from Onyx since construction began.

[73]        
As noted above, the hiring of Mr. Canuel does
appear to be related to the plaintiff’s physical limitations, and as such I do
account for it in assessing the plaintiff’s damages. However, as noted above,
the demands on the plaintiff’s time, in managing both eateries, may have led
him to hire a floor manager such as Mr. Canuel in any event. Furthermore, I
must recognize the possibility that Mr. Canuel’s degree of experience in the
industry has in fact added to the restaurant’s “bottom line”, i.e. his hiring
may very well have been a benefit to the operation, rather than a cost.

[74]        
Taking all of the above considerations into
account, I assess the gross value of the claim for loss of earning capacity
prior to the date of judgment at $180,000.

[75]        
As the subject accident arose out of use and
operation of a vehicle, under what is now s.98 of the Insurance (Vehicle)
Act, R.S.B.C. 1996, c.231, the defendant is liable only for the net income
loss, as defined in the statute, from the date of the accident to the first day
of trial. Calculation of the net income loss requires the
deduction of such income tax and employment insurance premiums as would have
been payable on that amount the year prior to the year in which the gross
income loss was suffered. Following the decision of this court in Hudniuk v.
Warkentin, 2003 BCSC 62, for a number of years that legislation was interpreted
as requiring that the entire amount of a loss of income award be taxed as a
lump sum, as if it had been earned in one single year. Hudniak was
overturned by the B.C. Court of Appeal in Lines v. Gordon, 2009 BCCA
106, in which it was held that “it was the intention of the Legislature to give
a discretion to the judge to determine what period or periods are appropriate
for the determination of net income loss in all of the circumstances.”

[76]        
Given the various contingencies that may have
arisen, I exercise my discretion as follows. For the purpose of determining the
net income loss of the plaintiff prior to trial, the sum of $170,000, out of
the pre-judgment loss of capacity of $180,000, is to be treated as if it would
have been earned from May 1, 2007 up to the commencement of trial on December
14, 2009, and would have been earned in the following increments: $40,000 in
2007; $75,000 in 2008; and $55,000 in 2009. The balance of $10,000 is
attributed to the time period since the trial of this action commenced.

[77]        
In assessing the potential for future loss, I
repeat that what is to be assessed is the loss of capacity. In my view, the
plaintiff’s physical condition, talents and abilities give him the capacity to
earn a greater income in the future than he is currently deriving from the
restaurant. The plaintiff made a decision to continue to pursue his vision for
the restaurant after the accident. Apart from the factor of the manager’s
salary, its lack of profitability has not been established to have been caused
by the defendant’s negligence, and the plaintiff’s future losses cannot be
measured with respect to the restaurant’s probable or possible future profits
or losses.

[78]        
At the beginning of this judgment I described
the plaintiff as intelligent and entrepreneurial. It is unfortunate that in his
conception, construction and operation of the restaurant, his reach may have
exceeded his grasp. At the time of trial the future of the restaurant was
uncertain. The plaintiff has ventured into a very competitive field, and is
operating in a challenging economy; his business has not met his optimistic
expectations, and in this venture he has suffered what may have been the first
serious setback in his life. These circumstances will test his resilience. But
even if he continues to suffer some degree of physical disability as a result
of the accident, my assessment is that his income potential was not as likely,
in any event, to have been dependent so much on his physical condition, as on
his drive and imagination. With his talents and energy there is every reason to
believe that he will ultimately make a success of himself.

[79]        
I assess the loss of future earning capacity at
a further $75,000.

C.       Special Damages

[80]        
The plaintiff has not demonstrated that the
restaurant would probably have opened earlier than it actually did, had the
accident not occurred, or that he would have avoided the loss of Mr.
Fouladirad’s participation. It follows from these findings that the claim for
those special damages related to storage costs of restaurant fixtures which
were not used in the final design, is disallowed. The special damages claimed
in respect of medical treatment, and loss of a deposit on a vacation package, are
awarded.

V.       Summary

[81]        
The plaintiff will have judgment against the defendant
as follows:

Non-Pecuniary
Damages:                                $  85,000.00

Gross
Past Loss of Earning Capacity:              $180,000.00

Future
Loss of Earning Capacity:                     $  75,000.00

Special
Damages:                                           $    1,102.44

[82]        
The gross past loss of earning capacity has two
components: the pre-trial loss of $170,000, which is subject to a net income
loss calculation; and a further $10,000 allocated to the period of time between
commencement of the trial, and the date of judgment. The net income loss
deriving from the pre-trial loss of earning capacity of $170,000 is to be
assessed. If the parties cannot agree on the final calculation, they may appear
before me to make submissions on this point.

[83]        
Prejudgment interest will apply to the pre-trial
net income loss; to the aforementioned amount of $10,000; and to the special
damages.

[84]        
The plaintiff is awarded costs on Scale 3.

“Mr. Justice A. Saunders”