Often Forgotten Heads Of Damages – Part 2: Diminished Value/Accelerated Depreciation

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If you haven’t already, feel free to read the first part of this article.

NOTE TO PUBLIC: This is NOT meant to provide legal advice or a substitute for legal advice.  That should be sought directly from a competent lawyer in our office.  The information contained herein is just that: information.  At Assiff Law Office, our goal is to obtain maximum compensation while helping our clients get the best treatment possible for their injuries. We leave no stone unturned and do our very best in every case to obtain maximum and full compensation for our clients.  This brief paper will discuss some of the less obvious and often forgotten head of damages that can be pursued in certain cases.  This paper is not meant to be “legal advice”.  Kindly consult one of our lawyers for that.

Introduction

Personal injury and negligence law follows a rather simple maxim: “The plaintiff is entitled to be put back in the position he or she had been in, had the collision not occurred.” Unfortunately, this is not always strictly adhered to.  Often, lawyers not practicing regularly or exclusively in the area personal injury litigation, fail to consider or even argue for heads of damages that are not always obvious or, more frequently, not always applicable in every case.  When they are applicable, they are often not on the radar but certainly should be pursued.  If applicable to their case, the injured plaintiff must make it known to his or her lawyer at the outset that they may have sustained one of these losses such that they can be properly represented and the damage can be effectively pursued and proven at trial.  Nothing epitomizes this notion more than 2 head of damages: Loss of consortium and accelerated depreciation or “diminished value” of a plaintiff’s vehicle following a collision.  While the latter is not a true “injury” and the former applies to the spouse of a married person, they are certainly important factors in overall compensation in many cases. 

Part 2: Diminished Value/ Accelerated Depreciation

Often, injured victims will have a vehicle that has been repaired after a collision, but once it is repaired, it is not quite the same.  It drives differently, it brakes differently, etc.  Other times, the vehicle is “written off” and the insurer provides a cheque for the black-book value, which, almost invariably, is less than the actual value to the plaintiff.  Can anything be done?

At Assiff Law Office, we advise our clients on injury matters and sequelae arising therefrom.  While we are not “property damage” lawyers per se, we realize that damage to one’s vehicle is sometimes inextricably linked to the case as a whole and as such, will assist our clients in collecting full value for their damaged vehicle and have done so several times in the past.  We have been successful in arguing for diminished value over the years.

There is not a whole lot of case law on point but here are some of the ways Alberta courts have handled the issue in recent years:

Kuehnemuth v. Edmonton (City)

2014 CarswellAlta 1297, 2014 ABPC 121, [2014] A.W.L.D. 4448, 244 A.C.W.S. (3d) 89, 590 A.R. 120, 60 C.P.C. (7th) 147, 8 Alta. L.R. (6th) 258

Kenneth M. Kuehnemuth, Plaintiff and City of Edmonton, Defendant

J.L. Skitsko Prov. J.

Heard: April 23, 2014

Judgment: June 10, 2014

The court awarded $7500 but only for deficient “repair-related” diminished value.  But this case is useful in that it breaks down the  types of diminished value:

The evidence from all the witnesses with expertise in auto repair satisfied me that there are three types of diminished value:

1. Insurance Diminished Value

This occurs when an insurer chooses to replace “name brand’ parts on the vehicle with generic parts. An example given was the replacement of a BMW windshield with a generic one. The BMW would no longer exhibit BMW glass products and arguably exhibit less market value. This is not the case here. I mention it only as both sides viewed this as a separate category of DV. This type would usually arise in the context of a contract of insurance between insured and insurer.

2. Inherent Diminished Value

When a vehicle has been in an accident, it is maintained that this factor alone has the effect of lowering that vehicle’s fair market value. This is sometimes referred to as “stigma” diminished value.

The “stigma” argument is best summarized as follows. When faced with two identical vehicles for sale, one accident free and one with a prior accident, the informed consumer will pick the former unless the price of the latter is sufficiently discounted to accommodate the sale. The owner of the second vehicle will have to drop his price to make it saleable. While this approach may make common sense, for reasons stated later, this does not translate into damages without further reliable evidence.

3. Repair Related Diminished Value

This classification of diminished value damages is described as follows. After a vehicle has sustained damages and the completion of the repair of those damages, one must take into account the extent of those repairs. Some of these factors include:

  • Age of vehicle
  • Location of the damages
  • Nature, type and severity of the damages sustained
  • Quality of the repairs
  • “Prestige” or unique nature of the vehicle

Brown v. Hermann

2014 CarswellAlta 1323, 2014 ABPC 122, [2014] A.W.L.D. 4173, 244 A.C.W.S. (3d) 90

William Stanley Brown, Plaintiff and Natalie Hermann and Veneta Isfeld, Defendants

J.L. Skitsko Prov. J.

Heard: April 28, 2014; April 29, 2014

Judgment: June 10, 2014

Plaintiff had purchased vehicle new for $24,000.00 five months before accident .  The  vehicle did sustain some degree of structural damage and had not been returned to its pre-accident state.  For example, new welding was more susceptible to corrosion.   In awarding $6000 for diminished value, teh Court held that Damage was required by law to be reported to vehicle history websites and took both parties’ expert evidence into account.

It should be noted that courts are not always willing to award this head of damages, as was the case in the following decision:

Gordon v. Elves

2014 CarswellAlta 1194, 2014 ABPC 147, [2014] A.W.L.D. 3823, 242 A.C.W.S. (3d) 994

John M. Gordon, Plaintiff and Janet Elves, Defendant

N.R. Hess Prov. J.

Heard: June 12, 2014

Judgment: June 27, 2014

Plaintiff did not meet the onus of proving loss and the expert was not accepted

The opposite finding can be seen in the following decision (headnote produced):

Bottom’s Up Drilling Fluids Consulting Ltd. v. Zelema

2016 CarswellAlta 759, 2016 ABPC 99, [2016] A.W.L.D. 2930, [2016] A.W.L.D. 2931, 266 A.C.W.S. (3d) 116

Bottom’s Up Drilling Fluids Consulting Ltd. and Michael Rae Hemeyer, Plaintiffs and Ganivia G. Zelema, Defendant

J.D. Holmes Prov. J.

Judgment: April 26, 2016

Docket: Red Deer 1302900447

Residual deficiency in market value — Plaintiff owned 2010 Dodge Viper (“Viper”) — Viper was limited production collector vehicle that retailed new for $108,455, and to which plaintiff had added approximately $35,000 worth of aftermarket parts and upgrades — Defendant admitted that she negligently collided with rear end of Viper — Plaintiff took position that repairs paid for by defendant’s insurer did not restore Viper to its original condition due to inadequate matching of paint and also due to stigma of previously damaged vehicle — Plaintiff brought action for damages against defendant — Action allowed — Damages awarded in amount of $10,000 — Quantum awarded was adequate to compensate plaintiff for residual deficiency in market value of Viper — Plaintiff established that it most likely suffered financial loss resulting from stigma which exceeded cost of remediation and that would continue even with adequate repair — Opinion of plaintiff’s expert was accepted that previously damaged automobiles, including Viper, had lower market value notwithstanding adequate repairs being completed — This opinion was preferred to opinion of defendant’s expert that if paint matching process happened to be successful, there would be no market value loss.

Conclusion

As can be seen from the aforementioned cases, “diminished value”, or “accelerated depreciation” is a real head of damages that can be pursued.  It is a relatively new head of damages for our courts and will no doubt evolve over the years.  Our courts have taken a rather cautious approach to accepting expert testimony on point but the fact remains that the onus is on the plaintiff to prove the loss.

Norm Assiff

Norm Assiff

Norm was awarded the Alberta Civil Trial Lawyers Association (ACTLA) President's Award for 2012--awarded to a member of the Alberta bar who has distinguished himself or herself by his or her contribution to the profession or the community, the advancement of the law or their service to ACTLA. He has appeared at all levels of court in Alberta (Provincial Court, Queen's Bench and the Alberta Court of Appeal) as well as the Supreme Court of British Columbia and the Federal Court of Appeal.

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The information presented on this post is not legal advice. We encourage you to perform further research on the topics described here, and if you have any questions or would like to speak to one of our personal injury lawyers, please do not hesitate to contact us.

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