What are Pecuniary and Non-Pecuniary Damages?

By Matt Lalande in Hamilton Personal Injury Lawyer, Personal Injury on September 09, 2024

Have you ever heard your lawyer mention “pecuniary damages” or “non-pecuniary damages” when discussing your legal case? While these terms may sound complex at first, understanding the difference between pecuniary and non-pecuniary damages is important for anyone pursuing a claim for compensation. Pecuniary damages, also known as economic damages, refer to the quantifiable financial losses you’ve incurred due to the wrongful actions of another party. On the other hand, non-pecuniary damages are the intangible harms you’ve suffered that don’t have an easily determined dollar value. Knowing the difference between these two types of damages can help you better understand your case and what you might recover in compensation.

What are Non-Pecuniary Damages?

In Canadian law, non-pecuniary damages refer to compensation awarded for losses that are not easily quantifiable in monetary terms.

These damages are meant to compensate individuals for non-financial harm, such as:

• Pain and suffering
• Emotional distress
• Loss of enjoyment of life
• Loss of companionship or relationships (often called “loss of consortium”)

The Supreme Court of Canada set a limit on non-pecuniary damages in personal injury cases in the 1978 “trilogy” of cases. As of 2024, the cap for non-pecuniary damages is around $430,000, adjusted for inflation, although this amount is typically awarded only in the most severe cases. Courts use various factors, such as the nature of the injury, its impact on the individual’s life, and the extent of emotional or physical suffering, to assess the appropriate award.

How are Non-Pecuniary Damages Assessed?

Non-pecuniary damages, particularly general damages for pain and suffering, aim to compensate plaintiffs for difficult-to-quantify losses, such as pain and suffering, loss of enjoyment of life, and emotional distress. These damages are a crucial aspect of personal injury cases in Ontario, and their assessment involves a combination of legal principles, case-specific facts, and a non-mathematical evaluation.

According to Canadian case law, non-pecuniary damages are meant to compensate for the suffering experienced up to the trial date and future suffering that the plaintiff is likely to endure due to the defendant’s negligence. This encompasses both physical pain and the impact of injuries on the plaintiff’s ability to enjoy life​ from a psychological or emotional perspective.

Non-pecuniary damages are not just about the severity of the injury itself but also the way it affects the plaintiff’s personality and lifestyle. This means that each case is unique and requires a tailored approach, as no two plaintiffs will experience the same loss in the same way​.

Several factors guide the courts in assessing non-pecuniary damages. These include:

• The plaintiff’s age: Younger individuals may receive higher awards because their injuries could affect them for a longer period.
• The nature of the injury: Some injuries may have more profound and long-lasting impacts than others.
• The severity and duration of pain: Chronic or enduring pain can result in higher awards.
• Disability: If the injury results in a permanent disability, this significantly impacts the amount awarded.
• Emotional suffering: Psychological effects such as depression, anxiety, or trauma play a role in the assessment.
• Loss of lifestyle: Any reduction in the ability to engage in activities previously enjoyed, including family, social, or marital relationships, is considered.
• Plaintiff’s stoicism: Interestingly, a plaintiff’s ability to endure pain without complaint (stoicism) does not reduce the award. The law recognizes that the impact of suffering is not necessarily correlated with outward expressions of distress​.

While previous case awards can guide the determination of damages, our Courts have been clear that it is neither possible nor desirable to create a fixed “tariff” or formula when calculating damages for pain and suffering. The focus should be on the individual’s unique loss, specific circumstances and their need for compensation rather than simply comparing injuries across cases​. This individualized approach aims to ensure that the compensation is fair and reasonable for both the plaintiff and defendant, reflecting the real impact of the injury rather than just the severity of the injury itself.

What are Pecuniary Damages?

In Canadian personal injury law, pecuniary damages are intended to compensate for financial losses that an injured person experiences as a result of an accident or injury caused by someone else’s negligence.

These damages are designed to cover losses that can be calculated with some degree of certainty based on actual expenses or projected financial needs.

Here’s a breakdown of the key components of pecuniary damages:

1. Loss of Income: If the injury causes the person to miss work, pecuniary damages will compensate for the income they lost during their recovery. Additionally, if the injury has long-term effects that reduce the person’s ability to earn in the future, compensation is awarded for the loss of future earning capacity. For example, if an individual can no longer perform their job or must take on lower-paying work due to their injury, the damages are calculated to cover this difference in earning potential.
2. Cost of Future Care: In cases where the injury leads to permanent disability or long-term medical needs, pecuniary damages cover the anticipated future expenses. This could include the cost of ongoing medical care, specialized home care, modifications to the person’s home (like wheelchair ramps), or assistive devices (such as prosthetics or mobility aids). The compensation is based on expert assessments of what care and support the person will need in the future due to the injury.
3. Out-of-pocket Expenses: These are costs that the injured person had to pay directly because of the injury. For example, if someone has to hire help for household chores they can no longer do, or if they need to pay for transportation to medical appointments, these expenses can be recovered as pecuniary damages. Receipts and documentation are often required to prove these out-of-pocket costs.

The aim of pecuniary damages is to place the injured person in the same financial position they would have been in if the injury had not happened. This involves looking at both the costs they’ve already incurred (like medical bills and lost wages) and those they are likely to face in the future due to their injury.

Since these damages are based on measurable financial losses, they typically require evidence, such as medical records, pay stubs, and expert testimony, to calculate the appropriate amount of compensation. The process is thorough, as the courts want to ensure the injured person receives fair compensation for both their current and future financial needs.

How are Pecuniary Damages Calculated?

In personal injury cases, when a plaintiff seeks compensation for future pecuniary losses, they are asking for financial recovery to cover expected losses, such as future income they will no longer earn or medical care they will need due to their injury. Importantly, it is the plaintiff’s responsibility (or onus) to prove these future losses. However, unlike most legal matters, where proof is required on a balance of probabilities (meaning “more likely than not”), the burden here is to show that the future losses are possible. This means the plaintiff must demonstrate that it’s reasonably possible they will face these future financial costs, even if it’s not guaranteed.

To meet this burden and accurately estimate future losses, lawyers must rely on the expertise of professionals known as actuaries. Actuaries specialize in analyzing data and making financial projections based on assumptions about the future.

Here’s how actuaries help in proving future pecuniary losses:

• Assessing Future Loss of Income: Actuaries will look at the injured person’s career, earning history, and potential future promotions or raises. They estimate how much the person would have likely earned over their lifetime if they had not been injured. By analyzing this data, actuaries provide a figure that represents the possible future earnings the plaintiff has lost due to their injury.
• Estimating Future Medical and Care Costs: If an injury requires ongoing medical treatment, therapy, or home care, actuaries calculate the costs associated with these needs. This includes long-term expenses, such as future surgeries, rehabilitation, or modifications to the home, like wheelchair ramps. Actuaries factor in inflation and other economic changes to ensure these costs are accurately reflected in today’s terms.
• Present Value Calculations: Since future expenses won’t be paid all at once, actuaries determine the present value of these future financial needs. This means they calculate how much money needs to be paid today, based on current interest rates and inflation, so that it will be sufficient to cover all future expenses. For instance, a large future expense might only require a smaller amount now if it’s invested or earns interest over time.

By working with actuaries, lawyers can provide detailed, expert-backed estimates of future financial losses, giving the court a clearer picture of what the plaintiff will need to be fully compensated. This ensures that, even though the future is uncertain, the plaintiff is awarded a fair amount to cover their probable future expenses.

If you’ve been Hurt, Call our Hamilton Personal Injury Lawyers Today for your Free Consultation.

If you’ve been injured due to someone else’s negligence, you may be searching for a “personal injury lawyer near me,” which is how many of our clients first find us. At Lalande Personal Injury Lawyers, we have decades of experience handling complex personal injury and long-term disability cases for victims of various accidents, including car crashes, slips and falls, and workplace injuries. Our team is highly skilled in navigating every aspect of the legal process, ensuring that all paperwork, documents, and deadlines are taken care of—so you can focus on your recovery, treatment, and spending time with your family.

Remember, our consultations are always free. We’re happy to meet with you and your family in person at our office, via Zoom, or even in the hospital or rehabilitation unit—wherever is most convenient for you.

No matter where you are in Ontario, call us at 1-844-LALANDE, or locally throughout Southern Ontario at 905-333-8888 to schedule your free consultation. Alternatively, you can email us through our website, and we’ll respond promptly.