While “Accelerated Depreciation” or, as it has been more recently referred to “Diminished Value”, is not a new concept; the number of claims for these damages has spiked significantly in the last year and a half. The plaintiffs in these types of claims allege that following a motor vehicle accident, their vehicles have (despite being repaired appropriately) suffered an intrinsic loss of value. Simply put, they argue that a consumer on the open market would pay less for their vehicles because of the fact that they have been involved in an accident.
Given the relatively small quantum of these claims, the only published cases involving Diminished Value in Alberta have been before the province’s Provincial Court. Judges in these decisions have approached the quantification of Diminished Value in a number of ways. The Hon. Judge Skitsko (who has authored three decisions on this subject) has awarded damages for diminished value based on a trifurcation of this head of damages into three distinct types of damages: inherent diminished value; repair-related diminished value; and insurance diminished value. While he has rejected claims for inherent diminished value and insurance-related diminished value, Judge Skitsko has awarded repairrelated diminished value in all of his reported decisions. Those repair-related damages have been assessed in each case based on Judge Skitsko’s consideration of a plurality of factors, including the severity of the damage done to a vehicle in an accident, the nature of the repairs performed to that vehicle and that vehicle’s actual cash value.
In Brown v Hermann, 2014 ABPC 122, Judge Skitsko, relying on the above-described approach to calculating diminished value, held that the Plaintiff, Mr. William Brown, was entitled to $6,000.00 in repair-related diminished value. Judge Skitsko found that while the expert evidence provided by the Plaintiff’s expert, Mr. Ed Grieve, did not justify an award for diminished value, the totality of the Plaintiff’s circumstances supported an award for same. The Judge, in coming to the figure of $6,000.00, relied heavily on testimony from the Defendants’ expert, Mr. Steve MacFadzen; more particularly, he relied on Mr. MacFadzen’s alleged inability to say that the Plaintiff’s vehicle, a Nissan Juke, had not suffered structural damage in its C Pillar Post (a structural beam in the back of the vehicle that connects the roof to the body).
Both the Defendants and the Plaintiff appealed Judge Skitsko’s decision (Action No. 1403 10053). That appeal was heard by the Hon. Justice Crighton on November 13, 2014, in Edmonton. Justice Crighton overturned Judge Skitsko’s award for repair-related diminished value, and dismissed the Plaintiff’s appeal. She also held that the Plaintiff, in light of the evidence presented at trial concerning repair deficiencies to his vehicle, was entitled to approximately $1,400.00 for same.
In her oral decision, Justice Crighton explained that Diminished Value is a single head of special damages that must be proven by appropriate expert evidence. Those damages cannot, as is the case with general damages, be calculated by a judge based on a consideration of a plurality of factors. As such, it was inappropriate for Judge Skitsko to quantify the Plaintiff’s damages based on a factor-based approach.
The Justice went on to affirm Judge Skitsko’s finding that Mr. Grieve’s evidence was not appropriate expert evidence for quantifying these damages. She stated that Mr. Grieve’s opinion was not grounded on any factual basis that was within his scope of expertise.
Interestingly, Justice Crighton also suggested that a plaintiff would have to provide some evidence regarding his/her intent to sell a vehicle in order to crystalize any claim for Diminished Value to that vehicle. This suggestion runs contrary to a number of recent British Columbia cases which state that the damages for Diminished Value can be quantified notwithstanding the fact that the plaintiff may not wish to sell a vehicle.
Finally, the Justice held that there was no evidence on the record to suggest that the Plaintiff’s vehicle had suffered structural damage to its C Pillar Post. She noted that the experts put forward by both parties were not able to testify regarding a vehicle’s structural integrity, and that, accordingly, it was impossible to make a finding concerning the C Pillar Post.
This decision is significant, as it creates some certainty vis-à-vis the adjudication of these claims. Judges are no longer able to pick a number they believe to be appropriate based on a plaintiff’s circumstances. Rather, any award for Diminished Value will now have to be based on figures presented by the parties’ expert(s). Accordingly, without proper expert evidence, plaintiffs will not be able to succeed in their claims.
The decision does not outright eliminate the possibility that a plaintiff could still advance a claim for diminished value. If, for example, a plaintiff was able to find another expert appraiser with appropriate credentials to testify as to the quantum of his/her loss, then a court may be willing to accept that evidence and award damages accordingly. Determining whether the expert’s expertise is sufficient will depend on a number of factors, including how that expert quantifies a Diminished Value claim.
Furthermore, the decision establishes a clear distinction between Diminished Value and repair-related deficiencies. While the latter may (to certain experts) be relevant to the quantification of the former, damages for those deficiencies are a separate quantifiable claim. While in this case, the Defendants’ insurer was required to reimburse the Plaintiff for these damages, insurers may, in the future, wish to seek contribution from the auto body repair shops who have completed these deficient repairs.