Claims for speculative business losses in personal injury claims.

This is an issue that arises somewhat of often in my practice. Can an injured party make a claim for a small business that they have not actually started yet. This issue was dealt with in this recent Supreme Court of British Columbia case:

http://www.courts.gov.bc.ca/jdb-txt/sc/17/06/2017BCSC0644.htm

The plaintiff in this case was a 59 year old woman who had hoped to start her own cosmetics business. She had been injured in a motor  vehicle accident and was claiming that these injuries were preventing her from running a successful multi-million dollar cosmetics business.

The plaintiff in this action had taken a number of steps towards starting their business, including:

  1. Incorporating their business;
  2. Acquiring stock;
  3. Labeling and branding her stock;
  4. Getting approval for sale from Health Canada; and
  5. Applying for trademarks.

Approximately 2 years prior to their injury the plaintiff held a private seminar, where she successfully sold various beauty products. Her stated goal was to hire a team of salespeople to sell her products via future private seminars.  The judge, unfortunately for the plaintiff, found various deficiencies in the plaintiff’s claim, including that:  her goal of having seminars with a sales team was vague; the plaintiff’s evidence about market conditions was inadequate; the plaintiff’s previous lack of success with this business should be taken into consideration;  the plaintiff had not devouted full time hours to her business prior to her injury; and the plaintiff, although partially, was not totally disabled from running her business as a result of her injuries.

As a result, the plaintiff was not given an award for past nor future loss of earnings for her proposed business. She was, however, given an award of $100,000 for loss of her “entrepreneurial spirit”. This amount was considerably less than the several million dollar claim that the plaintiff was advancing for loss of profits from her proposed cosmetics business.

This case illustrates the difficulty that many plaintiffs will face when making a claim for income losses, particularly when there is a high degree of uncertainty concerning their potential earnings.