What Are Pecuniary and Non-Pecuniary Damages?

What are compensatory damages?

The definition of compensatory damages is “money awarded in a court of law to a plaintiff to compensate for damage, injuries, or other losses.” In Ontario, you can sue for compensatory damages if you are physically or emotionally injured as a result of someone else’s wrongdoing or negligence.

These damages are intended to make the complainant “whole” again, i.e., as close as possible to the condition they were in before the accident and injury.

Compensatory damages occur as a direct result of the injury sustained and may include the following:

• Ambulance and emergency expenses
• Medical treatment costs
• Hospital bills
• Rehabilitation expenses
• Physical therapy bills
• Nursing home care costs
• Medical equipment costs
• Damage to property
• Lost earnings

Note that “injury” in personal injury cases can refer to bodily injuries and also damage to personal property (for instance, in a car accident, motorcycle accident or bicycle accident, both may occur).

Compensatory damages can be general or actual and the majority of personal injury cases in Ontario involve both types. 

General compensatory damages

General compensatory damages are an estimate of the loss the plaintiff suffered, not the actual amount. Most of the time, general damages are filed alongside actual damages, and are a way to help quantify the pain and suffering a plaintiff experienced because of the accident.

General compensatory damages are also known as non-pecuniary damages.

Actual compensatory damages

As the name perhaps implies, actual damages are the quantifiable cost that a plaintiff has occurred since their injury. These can be things like hospital bills, rehabilitation expenses, lost wages, and more. Often plaintiffs are awarded both actual and general damages.

Actual compensatory damages are also known as pecuniary damages.

Difference between compensatory, nominal, and punitive damages

The simplest way to understand the difference between the three types of damages is:

• Compensatory damages compensate for actual damage that occurred to the plaintiff (injuries, damage to property, etc.).
• Nominal damages compensate for a legal wrong that didn’t result in damage.
• Punitive damages are awarded above the compensatory damage amount, and are generally designed to punish the defendant and discourage a repeat offense.

Compensatory

Compensatory damages, which are often sought in personal injury cases, are intended to financially compensate a person for injuries caused by the wrongful or negligent act of another person or party.

Nominal

Nominal damages are generally a small sum of money awarded to a plaintiff in the case that a legal wrong has been committed against them, but no actual financial or physical loss. An example would be if someone trespassed on your land, but didn’t damage any of it, you may file a claim for nominal damages against the trespasser.

Punitive

Punitive damages may be awarded over and above the actual damage and loss incurred. These are intended to be a warning to the wrongful or negligent party against repeating the acts that caused the losses.

What are pecuniary damages?

Pecuniary damages or losses are the compensatory damages that are directly linked to the incident that caused your injury. They are sometimes called actual damages. They are easily quantifiable and can be readily measured in financial terms (dollars and cents).

Examples of pecuniary damages

For instance, if you or your family incurred medical expenses as a direct result of your injury, these are pecuniary damages. They are normally relatively simple to prove with bills, receipts, statements, payslips, tax returns and other documented proof of payment related to your personal injury case.

Some common pecuniary damages in personal injury cases include:

• Ambulance and emergency care bills
• Hospital bills, doctors’ bills, medication costs, etc.
• Lost wages (including losses incurred by a claimant’s inability to work as a result of their injury)
• Loss of earning capacity – if an injury precludes a person from continuing to do their job or follow a chosen career
• Future medical care costs (including long-term disability or chronic illness care and therapy)
• Damage to property owned by the claimant, such as a motor vehicle that needs to be repaired

Pecuniary costs may extend to the care provided by a family member, who may need to stop working and earning an income to look after the injured party.

To help your personal injury lawyer claim pecuniary damages, you will need to keep all the relevant documentation, such as receipts, accounts or statements relating to any expenses paid.

How are pecuniary damages calculated?

As mentioned above, pecuniary damages are the actual amount that an injury or accident has cost the plaintiff, so often that amount is what is awarded to them, calculated off of their thorough records and receipts.

However, the courts may also award you an amount for future damages you incur after the time of your court decision. The Ontario Rules of Civil Procedure outline a discount rate to calculate how much you’ll receive. The rate represents the difference between inflation and the interest rate that you can invest the money you’re awarded. You’ll also get an additional amount, known as a Gross Up rate, to make up for the future income taxes you’ll owe off of the pecuniary amount you were awarded.

What are non-pecuniary damages?

Non-pecuniary damages are compensatory damages that cannot be quantified in monetary terms. They are sometimes called general, intangible or non-economic damages. This can be things such as pain and suffering, or loss of quality of life, or other things that cause the plaintiff pain but aren’t measurable in monetary terms.

Examples of non-pecuniary damages

Non-pecuniary damages are often more subjective and more open to interpretation than pecuniary damages. Some good examples of non-pecuniary damages awarded in personal injury cases in Ontario include:

• Pain and suffering experienced by the claimant as a direct result of the incident
• Emotional distress such as depression or anxiety resulting from the incident
• Impairment in quality of life, meaning a long-term reduction in quality of life due to injuries
• Impairment of relationships, when the claimant’s relationships with family, friends, etc. are negatively impacted by the injury
• Mental impairment, if the claimant’s mental capabilities are negatively affected by the incident
• Physical impairment, which may apply if the claimant’s physical abilities are reduced by their injuries
• Loss of future earnings – if future ability to work is affected by the injuries

Virtually all personal injury cases in Ontario will involve pecuniary damages. Many also involve non-pecuniary damages.

How are non-pecuniary damages calculated?

You cannot claim non-pecuniary losses with receipts or statements. The calculation of these damages is not an exact science and is open to interpretation.

Some courts calculate the amount of non-pecuniary damages by multiplying the pecuniary damages by a number that’s meant to stand for the seriousness of the injury they sustained. Others will use a “per diem” method, which basically assigns a dollar value to the days that pass since the injury, and then adds those to the amount of actual damages. Some courts use a combination of those two methods to calculate the general damages that should be awarded to a plaintiff.

Generally, the Ontario courts consider the following factors when awarding non-pecuniary damages:

• The severity of the injury – the worse the injury (and the greater its duration) the higher the compensation will generally be paid
• The age of the claimant – awards are generally higher for younger claimants
• Whether there is loss of life or disability – higher amounts may be awarded for temporary/permanent disability or loss of life

The judge or jury may need to exercise considerable discretion when deciding on the outcome of cases involving non-pecuniary losses.

Each personal injury case is unique and considered on its own merits but reference may be made to previous cases as guidelines for compensation award amounts. Because of the relative difficulty in proving these damages compared to pecuniary damages, it is advisable to discuss your case thoroughly with an experienced personal injury lawyer who is familiar with the Ontario civil justice system before filing a personal injury claim.

Cap on non-pecuniary damages

In 1978, the Supreme Court decided in the case of Andrews v. Grand & Toy Alberta Ltd. that moderation is needed in the case of non-pecuniary damages awarded, since it’s possible to make broad claims and there was no particular cap on what could be claimed.

“However, if the principle of the paramountcy of care is accepted, then it follows that there is more room for the consideration of other policy factors in the assessment of damages for non-pecuniary losses. In particular, this is the area where the social burden of large awards deserves considerable weight. 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. Statisti­cally, it is the area where the danger of excessive burden of expense is greatest.” ([1978] 2 SCR 229)

Since in the case of Andrews, the young person in question became a quadriplegic, the case used that ruling as a benchmark to assume no one could lose more than them. The cap was established at $100,000 but has since been adjusted for inflation and is now $400,000.

There’s also an Alberta-specific regulation for “minor injuries” of motor injuries. This is stated in the Minor Injury Regulation, and the cap in question (after adjustment for inflation) is about $6,000.