Family Compensation (Death) Claims

The right to claim for the loss of a family member is a statutory right coming from the Family Compensation Act

The law in British Columbia provides limited compensation arising out of the death of a family member.  The right to claim for the loss of a family member is a statutory right coming from the Family Compensation Act. Otherwise, in common law, there are no rights to claim due to the loss of a loved one.

The compensation is essentially limited to:

  1. Damages for loss of love, guidance and affection (generally for infant children of the deceased only);
  2. Damages for the loss of services that would otherwise have been rendered by the deceased to the remaining family members;
  3. Damages for the loss of financial support to the remaining family members because of the death. The deceased’s take-home income is reduced by the portion of that income that would have been used to cover the deceased’s own personal expenses with the balance left over being for the support of the remaining family members;
  4. Limited out-of-pocket expenses incurred as a direct result of a death (funeral and related expenses);
  5. Damages for loss of inheritance; and
  6. Tax gross-up and management fees on the future loss award.

Additionally, court order interest is payable on loss of love guidance and affection, on past services, on past financial support and on out-of-pocket expenses.

Our law does not allow any recovery for the grief and sorrow caused by the death of a family member. The award must be based on pecuniary (money) losses and not non-pecuniary (pain and suffering) losses

  1. Class of Claimants

The family members that are entitled to compensation are limited, under the Family Compensation Act, to the following:

  1. Children of a deceased;
  2. Parents of the deceased; and
  3. Grandparents of the deceased who have taken over the role of the parent.

The action must be brought by the personal representative of the deceased on behalf of all claimants (Family Compensation Act, s. 3(1)). In that case, there is a 2-year limitation period to start the lawsuit or settle with ICBC.

However, if there is no personal representative or if the action has not been commenced within six months of the death, the claimants may themselves commence the action in their own names (Family Compensation Act, s. 3(4)). In that case, the limitation period does not commence running until after six months have passed since the death.

Only one action for all claimants may proceed (Family Compensation Act, s. 6), and if more than one lawsuit has been commenced, the lawsuits ought to be combined into one legal action.

  1. Loss of Love, Guidance and Affection

An award made for loss of love guidance and affection is meant to provide monetary compensation for the loss of the guidance, companionship, care, and training that the family member would have received from the deceased on the theory that the claimant’s prospects are now worse without the guidance of the family member. Age and degree of dependency are factors to consider.

The Courts of British Columbia have held that children are entitled to an award under this head of damage but unfortunately, a spouse is not. In some instances, a parent may receive an award, but the award is usually under $5,000 and only awarded in rare situations.

The accepted range of damages is usually between $30,000.00 and $35,000.00 for younger children and $20,000 to $25,000 for teenagers.  When a child reaches the age of majority and becomes independent, limited compensation is allowed ($0- $5,000.00) but only in unusual situations.

  1. Loss of Services

The claimant is entitled to compensation for the loss of household services that the deceased had previously provided, including housekeeping and handyman services. The court will consider the cost of replacing the services with hired help but will not normally award the full replacement cost. It doesn’t matter if replacement services are obtained or another person provides them gratuitously. However, when the services are replaced by a surviving parent’s new spouse, there will be a substantially reduced award to the children of the deceased.

  1. Loss of Financial Support

The award for loss of financial support is determined based on the cost to the claimant of maintaining a similar lifestyle as he/she had with the deceased living and supporting him/her.

You need to present enough evidence regarding the income earning and spending history of the deceased and the likely future earnings had there been no death. Typically, the court is presented with actuarial evidence in support of the claim. That evidence is of assistance, but the overriding principle is that the claimant is to receive no than is necessary to provide a reasonable approximation of the lifestyle that he/she would have enjoyed, but for the death.

To determine the award for loss of a stream of income, the court determines the present value of a lump sum that, if invested, would provide payments of enough over a given number of years in the future, extinguishing the fund in the process (Keizer v. Hanna). The typical approach in calculating the award is to assess the deceased’s after-tax income stream, deduct an amount for the deceased’s personal consumption, factor in various contingencies, and then, with the assistance of actuarial evidence, determine a present value lump sum for that net stream of income.

If both the deceased and the surviving spouse had been employed prior to the death, the Courts in British Columbia do not deduct from an award the amount of the surviving spouse’s income that is no longer spent on the deceased.

Note that where financial support formerly provided by the deceased family member is replaced by another, there may be a reduced award for loss of financial support. For instance, where a parent dies and the child has a step-parent, that step-parent has a legal obligation to provide those replacement support payments in favor of the child, thus offsetting the claim for loss of financial support by the child.

  1. Out of Pocket Expenses

The law has evolved such that the only out-of-pocket expenses that can be recovered relate to funeral and expenses surrounding the funeral.

  1. Loss of Inheritance

An award for loss of inheritance, also described as “loss of wealth”, represents an amount the deceased would have bequeathed to his/her family had he/she lived to a normal life expectancy, reduced to present-day value. The amount the claimant would have later inherited, had there been no premature death, is adjusted for any offsetting benefit the claimant receives from the acceleration of the inheritance. That is, because of the death, the claimant receives the immediate benefit of the capital assets that were previously controlled by the deceased.

In many cases, there is no award due to the significance of the offset.

  1. Contingencies/ Reduction in Claim

In a death claim, the courts will consider negative and positive contingencies.  Negative contingencies include the chances of remarriage, the chances of divorce, the chances of early death, etc.  Examples of positive contingencies include the chance that the deceased would have received a promotion at work, consideration for the fact that the deceased would have greater employment opportunities over time and the expectation that the deceased would have increased the level of services provided to the family members over time.

  1. Tax Gross Up

This claim is since if a family member gets an award now for a future loss, the family member will have to pay taxes on the investment income over time. The amount of the tax gross-up award is basically compensation for having to pay taxes on the investment income.

  1. Management Fees

The Courts may award money to a family member for that person to hire an investment manager to manage the award, especially if the family member has little or no investment experience.  The reason for this award is that a family member receiving a large future award needs to invest it to ensure it lasts a lifetime.

  1. Punitive and Aggravated Damages

You might have read or heard in the US that there are large punitive and aggravated damage awards for death claims. However, in British Columbia no such award can be granted.

  1. Death of a Child

If the law every needed a change this is the situation.

Unless parents can prove that they were or would have been financially supported or provided with valuable services by their deceased child, the parents will not be seen to have sustained pecuniary loss from the death. However, if there is evidence that, had the child not died, the child would reasonably have been expected to contribute support to the parents in an amount more than the amount of money that the parents would have spent on the child, an award compensating the loss of that financial support is appropriate.

For very young children, this loss is mostly offset by the cost of raising the child if it had survived.

There’s no award to the parent simply for loss of love and affection of a child.

In summary, the loss of a child has a surprisingly low value, often $20,000 or less, under the current law.

  1. Summary

In summary, there are only a limited number of family members that can receive compensation for the loss of a loved one. To determine the loss suffered by the claiming family member, a complicated set of calculations needs to be done which invariably means that a lawyer and economist must be involved in the claim.  It’s important that the lawyer has extensive experience in death claims because this is a specialized area of ICBC law.