How is a plaintiff's investment management fee calculated?

Historically, courts have calculated management fees only with reference to the award for future financial loss. The rationale for this approach was addressed at some length by Bouck J. in Lewthwaite v. Godin, [1984] B.C.J. No 2938 (S.C.), at paras. 21-23: In my view, an award to compensate an injured plaintiff for the anticipated expenses he will incur by way of investment management fee should be confined to a consideration of the amount given with respect to his future loss. If there is no future loss, either by way of cost of future care or loss of future income, there can be no management fee. The reason for this is relatively simple. Future loss claims are based upon the plaintiff recovering compensation from a diminishing fund. It is anticipated he will invest the money and get back a certain rate of return. From time to time he may sell off securities to pay for the cost of his care or to produce the income he needs. It is presumed he will be wise enough to make the correct investments so that the fund will earn the sums contemplated in the judgment. At the end of the relevant period the fund will be exhausted. If a mistake is made during the investment process, the amount the plaintiff is supposed to recover may be diminished. On the other hand, damages for pain, injury, suffering and loss of enjoyment of life and past loss of income are not predicated on any sort of actuarial basis. As for pain and suffering, the award mostly involves discomfort suffered from the date of the injury to the date of trial although there is frequently an ingredient of pain, suffering and loss of amenities from the date of trial into the future. Damages for past loss of income represent an amount due the plaintiff to the time of the trial. Neither have anything to do with the prospective loss, or a diminishing fund based upon actuarial evidence. Therefore, the law does not anticipate the plaintiff should have the use of this money over any future period. He may spend it at once, or invest it in perpetuity. The option is entirely up to him and the award is made on that understanding. For these reasons, a management fee is only an item of damages applicable to a plaintiff’s future financial loss. If he has to pay an investment consultant a fee to help manage the fund, then he will not be getting all the money anticipated by the actuarial calculations. He should not be out of pocket for the costs he incurs in managing that part of the award since it is intended to provide complete compensation over a future period of time. It is the defendant who must pay all the reasonable expenses in order to put the plaintiff in as good a position as he was before the accident so far as money can provide.

This decision was affirmed on appeal (see Lewthwaite v. Godin, [1986] B.C.J. No. 370 (C.A.)), although the question of management fees was not addressed.