Understanding Dependency Loss Claims
Dependency Loss
Oftentimes, a person who is injured or killed as a result of an accident is not the only victim. A family member who was dependant on that person at the time of the accident also indirectly suffers harm by way of no longer receiving the financial support they came to rely upon. The law recognizes this loss and ascribes a term to it: dependency loss. There are different forms of dependency loss, including loss of household services, childcare, and inheritance, but for the purpose of this article, we will focus on the loss of financial support.
“Family Law Act Claimants”
The starting point for any indirect loss suffered by a family member is section 61 of the Family Law Act. This section provides that if a person is injured or killed as a result of the negligence or wrongful acts of others, certain family members – including the spouse, children, grandchildren, parents, grandparents, and siblings of that person – are entitled to claim economic compensation for financial losses. Eligible family members are often referred to as “Family Law Act claimants” or “FLA claimants.”
For the purpose of determining the economic loss suffered by FLA claimants, an expert in the field of economic loss will customarily be retained. The value of the loss will depend on the facts of the particular case and the quantum of income earned by the injured or deceased individual. Assumptions are applied to construct this individual’s likely earnings throughout the rest of their probable life, which will provide a reasonable projection of what the FLA claimant would have expected to receive had the accident not occurred. An appropriate dependency factor is then applied to calculate the dependency loss, as well as a termination date (e.g. a child who is dependant on their parent may not be expected to be dependant on their parent past the age of 20). Both positive and negative contingencies may also be taken into consideration, e.g. the possibility of marriage breakdown, unemployment, promotion with associated salary increase, otherwise shortened life expectancy or disability, retirement age, etc.
When calculating loss of income upon the death of the spouse, the courts have accepted certain methodologies. Again, the appropriate approach will depend on the facts of the particular case and the quantum of income earned by each spouse. One such methodology is the modified sole dependency approach, which can be used when the household is a two-income family with children. Under this approach, a 60% dependency rate for the surviving spouse is used, with each child receiving 4%. Another methodology is the cross-dependency approach, which combines both spouses’ income and applies a 70% dependency ratio to their combined earnings. The resulting amount is then subject to the further deduction of the surviving spouse’s income. This approach is often appropriate where both spouses were employed on a full-time basis.
Importantly, the standard of proof that an FLA claimant must meet for future losses is the standard of a “real and substantial possibility” of the future economic loss claimed. In other words, you need not prove the future loss beyond a reasonable doubt or even on a balance of probabilities.
In summary, a person dependant on a family member who fell victim to an accident may have an independent claim for damages for indirect losses suffered. Given the complexities in calculating the loss suffered, it is advisable to retain counsel as well as an economic loss expert to prove the claim.
