20 Apr Proving Self-Employment Income

In 2007, our firm took a personal injury case called Adamson v. Charity, 2007 BCSC 671, to trial.  Our client, Mr. Adamson, was a highly talented finishing carpenter who worked on and co-managed his family’s rental investment properties.  Since he was essentially self-employed, he did not receive a stream of income which reflected the value of his work.  Although ICBC agreed that his tax returns did not reflect his true income, they did not agree with the value we placed on the work he did.

The Judge had to decide how to put a number on what Mr. Adamson earned, in order to determine Mr. Adamson’s loss of working capacity.  The Judge rejected the approach ICBC wanted to use.  Instead, he preferred the “cost replacement model” that we suggested on Mr. Adamson’s behalf.  This model was a calculation of what Mr. Adamson would have to pay on a continuing basis to replace his labour.

After considering all the evidence, the Judge concluded that although Mr. Adamson reported very modest annual incomes before the accident, his effort and business model had produced impressive capital gains in addition to significant monthly rental income.  The Judge stated, “Clearly, Mr. Adamson’s capital asset – his working capacity – has a very significant value”.

In the end, the Judge awarded Mr. Adamson $400,000 for loss of capacity prior to trial and $925,000 for loss of future capacity – approximately twice the amounts suggested by ICBC.