Loss of competitive advantage real head of damage and there's increasing guidance on how it works

In many personal injury cases, the loss of income claim is straightforward. Counsel looks at real numbers such as pre-injury earnings, income tax returns, hours worked and hourly rates and compares those figures to what the client is doing post-injury to put a number on loss of income that’s easy to understand. But that approach doesn’t work where someone is able to return and work the same number of hours at the same or even greater salary, but the work they’re doing is now vastly different.

“They may still earn a living but there’s a lost asset of what they’re capable of doing, the opportunities they’re able to take advantage of, and what they’ll be able to do in the future,” Aidan Vining, associate at McLeish Orlando LLP, says. “It isn’t always as black and white as simply comparing the numbers, and courts must grapple with that. In cases where the loss is not as clear cut, plaintiff counsel must be more creative to prove the existence of a loss and its impact. We’re very conscious of what we need to do to build that argument.”

How do courts view loss of competitive advantage?

The basic concept of loss of competitive advantage is that the injured individual is less capable overall from earning an income and is therefore less marketable in the workplace. Due to the injury and changed abilities, they’re a less attractive option to future employers or might not be able to advance their career the same way they once would have. They have lost an asset. For example, there’s a limitation on what they can physically do, or they can’t take advantage of opportunities that may give rise to future advancement.

A few recent decisions highlight the key principles of these claims, including Ali v. Irfan, a case where the parties dealt with all issues prior to trial except loss of competitive advantage. The plaintiff didn’t lead any expert evidence, but testimony came from the plaintiff themselves, their father, and a supervisor from work. They spoke to the change in her role that the plaintiff, a teacher, had undergone since her injury. The defendant moved for a non-suit and argued the issue of loss of competitive advantage should not be left to the jury on the basis that the plaintiff didn’t satisfy their evidentiary burden.

“The court in this decision was clear that loss of competitive advantage is a question of fact and there’s no need for expert evidence on the issue,” Vining says, adding the judge did note that the evidence was “admittedly thin.” However, “the claim isn’t defeated on that basis. The trier of fact can look at the evidence given and make that decision for themselves.”

The other highlight is that since a loss of competitive advantage is a prospective loss, the standard of proof on the plaintiff is different than the balance of probabilities. The decision was clear that the plaintiff doesn’t have to show that it’s more likely than not they’re going to have a specific amount of loss: they need to show there’s a real and substantial risk of the loss occurring, which is an important distinction, Vining notes. The defendant’s motions were dismissed and the claim for loss of competitive advantage was left to the jury.

In another decision, Lyng v. Ontario Place Corp., the plaintiff required reconstructive knee surgery on their ACL. They were originally awarded $100,000 for loss of competitive advantage as the trial judge accepted evidence of the treating orthopedic surgeon who testified a repaired ACL lasts 10-15 years and there’s a risk the person will need revisional surgery at that time, likely impacting their ability to work.

The defense appealed and argued that the loss of competitive advantage award was purely speculation. The plaintiff worked a physical job as a plumber at the time of the injury but had since shifted to a more sedentary office job doing sales. Therefore, future surgery wouldn’t impact them the same way in their current role.

The Court of Appeal restated a key principle of these claims — namely that the award is meant to compensate the plaintiff for a component of future income loss — and agreed with the trial judge that while not a certainty, the plaintiff met the threshold of showing a real risk. The possibility of further surgery would likely impact income or impede the plaintiff’s return to a physically demanding job, and the award was upheld.

“This is another helpful decision to show that these claims are not just speculation,” says Vining. “If you can satisfy the court that there’s a real risk of impact on earning capacity, that loss should be compensated for.”

Key takeaways for plaintiff counsel

These analyses are case-by-case driven and fact specific, but it’s on plaintiff counsel to know what can be claimed and be aware of the approach the court takes. Even if the plaintiff is making the same amount of money or more, is still able to work full time, or has even returned to their original job, it doesn’t mean there’s no current loss of an asset, or the real risk of a future loss. Whether expert evidence is led or not, plaintiff-side lawyers need to provide an evidentiary basis for these claims.

“On both sides of the table, remember it’s a real head of damage, it’s a legitimate claim, and there’s increasing guidance on how it works,” Vining says. “Just because it’s not clear cut doesn’t mean it’s not a real loss that should be pursued — advocate for it.”