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Pecuniary Damages and Non-Pecuniary Damages


The goal of the law of torts is to provide compensation for harm caused to others, whether from deliberate or negligent actions; it is not retribution against the tortfeasor: Andrews v. Grand Toy Alberta Ltd, [1978] 2 SCR 229 p 242; Lindal v. Lindal, [1981] 2 SCR 629 p 634; Hall v. Hébert, [1993] 2 SCR 159. In order to achieve that objective, it is necessary to define the nature and extent of the injuries suffered by the victim. While some may be easily identified, others are invisible to the naked eye. Once all the injuries are properly listed, then it is necessary to assess their effect on the person who has to endure and live with them. Only after the full impact is known that it is possible to address what the indemnity should be.

In law, the victim of a tortfeasor is entitled to a full compensation, the purpose being to return him or her to the condition he or she would have enjoyed but for the wrongdoing. As explained in Andrews, supra p 243:

An award must be fair to both parties but the ability of the defendant to pay has never been considered a relevant consideration in the assessment of damages at common law. The focus should be on the injuries of the innocent party. Fairness to the other party is achieved by assuring that the claims raised against him are legitimate and justifiable.

That compensation will typically take the form of an award of money to reimburse expenses incurred, replace unearned income or provide some type of solace for ongoing afflictions that interfere with a person’s quality of life. Thus, judges will typically consider the damages under separate categories: there will be past and future losses (as of the date of the judgment); there will be loss of income and coverage of expenditures according to various types; and there will be monetary losses versus non-monetary losses. The various categories are not mutually exclusive.

As the name suggests, pecuniary and non-pecuniary losses are concerned with the last distinction. They separate losses that are monetary and quantifiable, from losses that are subjective and difficult to quantify.

What are Pecuniary Damages?

These types of damages are the ones that are monetary in nature. Because of a wrongdoing, the injured person is no longer able to earn an income, or has to spend money for additional goods and services, and will be compensated accordingly. This loss can be experienced for a period both preceding and following the trial. When related to the time period before the trial, courts speak of a special damage, usually subject to fairly precise calculation; when related to the time period after the trial, the judges will speak of general damages, as depending on projections, statistics and contingencies. As explained by the New Brunswick Court of Appeal, in Turnbull (Litigation Guardian) v. Hsieh (1990), 108 NBR (2d) 33 para 11:

In my view […] a claim may be characterized either as special damages or as pecuniary general damages, according to when they were incurred. Necessary expenses incurred for, or services provided to, an injured person […] up to the time of trial are […] claimed as special damages. On the other hand, the estimated cost of services to be provided after the trial are an element of pecuniary loss when assessing general damages.

Either way, the award can normally be computed objectively with the assistance of formulas and expert evidence.

In the category of pecuniary damages, there are losses associated with the ability to earn a living, like lost salaries, pension and other benefits, cost of retraining, etc. There are losses associated with medical treatments, like medication, physical therapies, psychological counseling, prosthesis, rehabilitation, etc. There are also additional service costs that will be required because of the injuries, like house cleaning and maintenance, financial advisors, transportation, etc. Other types of awards may be available (see for example “Claiming Interest Incurred on Loans”). In any particular case, the damages will obviously vary according to the nature, type, extent and effect of the injuries on the livelihood, independence and well-being of the victim.

What are Non-Pecuniary Damages?

This type of damages also covers the period preceding and following the trial. However, because it is greatly subjective and difficult to assess, the award is known as general damages notwithstanding that it relates to the pre or post-trial period. It seeks to provide solace to the victim whose lifestyle and quality of life may have been shattered by the injuries. For example, a skydiving rock-climbing daredevil will likely have to adjust his or her lifestyle when confined to a wheelchair. Although he or she may be able to find alternatives, his or her adventurous spirit may suffer greatly as a result of a wrongdoing. The inevitable question is how to adequately compensate what may be a drastic change in a lifestyle?

It is generally accepted that an accident with little effect on a person’s lifestyle will not warrant as great a compensatory award as one at the other end of the spectrum. However, because of the subjective nature of the matters involved, this type of damages could fluctuate considerably between individuals suffering from relatively similar injuries. “Pain and suffering and loss of amenities are intangibles. They are not possessions that have an objective, ascertainable value”: Lindal, supra p 635. It is to address such concerns that the Supreme Court of Canada, in Andrews, supra pp 261-262, adopted the functional approach to awards of non-pecuniary damages:

But the problem here is qualitatively different from that of pecuniary losses. There is no medium of exchange for happiness. There is no market for expectation of life. The monetary evaluation of non-pecuniary losses is a philosophical and policy exercise more than a legal or logical one. The award must be fair and reasonable, fairness being gauged by earlier decisions; but the award must also of necessity be arbitrary or conventional. No money can provide true restitution. […][…] The sheer fact is that there is no objective yardstick for translating non-pecuniary losses, such as pain and suffering and loss of amenities, into monetary terms. This area is open to widely extravagant claims. It is in this area that awards in the United States have soared to dramatically high levels in recent years. […][…] The third, or “functional” approach, accepts the personal premise of the second, but rather than attempting to set a value on lost happiness, it attempts to assess the compensation required to provide the injured person “with reasonable solace for his misfortune.” “Solace” in this sense is taken to mean physical arrangements which can make his life more endurable rather than “solace” in the sense of sympathy. To my mind, this last approach has much to commend it, as it provides a rationale as to why money is considered compensation for non-pecuniary losses such as loss of amenities, pain and suffering, and loss of expectation of life. Money is awarded because it will serve a useful function in making up for what has been lost in the only way possible, accepting that what has been lost is incapable of being replaced in any direct way.

Thus, the award of damages for non-pecuniary loss is to provide the victim with alternatives to the lost quality of life and lifestyle deriving from the wrongdoing. “Money is awarded, not because lost faculties have a dollar value, but because money can be used to substitute other enjoyments and pleasures for those that have been lost”: Lindal, supra p 634. While the skydiving rock-climbing daredevil may no longer be able to engage in his or her favorite activities, the damages are intended to allow him or her to explore other ways to fill the void left by the tortious act. The same principle applies to the chronic pain victim who can no longer enjoy long walks or road trips.

The inherent difficulties in assessing non-pecuniary losses led the Supreme Court to limit the amount that can be awarded under this head of damages. In Andrews, supra p 263-265, dealing with a severely injured young male, the bench set a ceiling of $100,000, but subject to ulterior adjustments for cost-of-living increases: see Lindal, supra pp 640-641 & 643. One of the important tenets of the limit rests on the premise that a victim has already been fully compensated for the other losses, like income, treatments and valuable services: Lindal, supra pp 637 & 639. Of course, the value of $100,000 has considerably eroded since 1978, and as directed courts have adjusted the value to account for cost-of-living increases, being worth around $400,000 nowadays.

The functional approach and limit have been confirmed in subsequent cases, namely in Lindal, supra.Introduction