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Court Testimony From Experts @ BEC
Excerpt from Millott v. Reinhard
[Complete text of all excerpts] (for ease of printing).Complete text of reasons for judgment available from Quicklaw.
DAMAGES
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Facts Relevant to Damages
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Future income scenarios - Defendants' economic expert
Conclusion on James Millott's projected future income
Employment History and Future - Lauretta Millott
Financial Arrangements of the Millott Family
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Retirement and Part-Time Employment
Negative Contingencies
Fringe Benefits
Productivity
Discount Rate
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Dependency rate
Sole/Cross/Modified dependency Housekeeping
Dependency rates
Cross dependency
Replacement cost Transportation
Application to the Present Case
Conclusion of Estate Claim
---------- Facts Relevant to Damages
Discussion on James Millott's projected future income
(iii) Future income scenarios - Defendants' economic expert
[189] The Defendants' expert, Brown, presented different statistics, with a completely different interpretation. Her figures attempt to take into account positive and negative factors in the accommodation industry, which includes the hotel industry (transcript p.2213). more detail
[190] Brown testified to using four sources to establish Millott's future projected income: (a) industry overview; (b) labour market statistics; (c) hotel manager occupation overview; and (d) salary survey. She also took his past income into consideration in several ways. more detail
[194] In her view, the census data on "Occupational Service Managers" (includes hotel managers and assistant managers) and "Restaurant and Food Service Managers" (includes banquet managers) shows that the maximum salary for hotel managers is $38,735... more detail
Conclusion on James Millott's projected future income [more detail]
Employment History and Future - Lauretta Millott [more detail]
Financial Arrangements of the Millott Family
[208]Both Millott and Lauretta deposited their income into a joint bank account... Brown (the Defendants' economic expert) prepared "actual expenditure" figures for the Millott family...
[209]...I would, because of Brown's evidence, decline to treat him differently than the average statistical married father of two. more detail
---------- Critical Assumptions & FindingsRetirement and Part-Time Employment
[213] Both parties and their respective expert witnesses agreed that the statistically applicable retirement age for Millott is 62 years. more detail
Negative Contingencies [more detail]
Fringe Benefits [more detail]
[222] Productivity is the amount by which wages historically grow at a higher rate than inflation... The Plaintiffs use 1 per cent, but give no specific reasons. The Defendants use 0.75 per cent,... specifically based on the accommodation and food sector...
[223] As the Plaintiffs' reasoning is unclear, I prefer the Defendants' reasoning,... more detail
[224] The discount rate is used to convert future amounts to a present sum,...
[225] The Defendants' expert, Brown, submitted a discount rate of 3.85 per cent...
[227] ...I accept 3.85 per cent as an appropriate discount rate in this case. more detail
---------- Analysis of Issues Relevant to the Quantum of DamagesDependency Rate [more detail]
Sole/Cross/Modified Dependency
[240] One of the most contentious issues between the parties was the issue of sole or cross dependency.more detail
[242] The Defendants' expert, Brown, testified that she had two main reasons for preferring cross dependency. First, Millott and Lauretta pooled their incomes, and Millott consumed 20 to 30 per cent of that total family income. In Brown's view, it is, therefore, fair that the rest of the family would still have access to the 70 to 80 per cent they did while Millott was alive. Second, she understood from Brooks, supra, that it is necessary to consider both the financial loss and the financial gain of the survivors (transcript pp.2251-52; also see September 27, 2000 Report, "Wrongful Death" Supplement).
[243] Bruce made a strong "economic theory" argument for the sole dependency approach,...more detail
[245] There is little direct discussion in the cases on this point. Rather, there are implied assumptions. Often, a court will neither discuss the rationale in detail nor use the labels. The difference is that some cases apply a dependency rate to family income (cross), while some apply a dependency rate to the deceased's income (sole). Occasionally, a court will find the dependency rate to be a certain number, then apply a lower rate (modified).more detail
[253] Returning to the parties' submissions, I conclude that Bruce's argument in favour of sole dependency is illogical in circumstances in which both spouses have incomes. In addition, his underlying assumption is still that the survivor loved the deceased and wanted to spend money on the deceased; therefore, the fact of that spending should be overlooked in assessing damages. However, the court cannot, in my view, fall into the trap of deciding which marriages were "for love", thus qualifying for sole dependency, and which were "for money", thus qualifying for cross dependency. It would be inappropriate to make the court a forum for parties to call evidence as to the type of marriage a given case involved, or for the court to base an award on the presence or absence of love and affection. As difficult as it may be, the Court must attempt to recognize actual net economic loss.
[254] Bruce, in Assessment of Personal Injury Damages, supra, at 58, also outlines the inherent absurdity in the cross dependency approach when the survivor's income is higher than the deceased's income. For example, if Lauretta had been earning $60,000 per year and Millott $20,000, then a cross dependency approach (assuming just the two of them and a 70 per cent dependency rate), would mean Lauretta had lost a $14,000 contribution from Millott (.70 x $20,000), but "gained" $18,000 she would no longer have to spend on him (.30 x $60,000). She would, therefore, not be entitled to damages for the loss of his income, because in theory there would have been no loss. While this is certainly a consequence of using cross dependency (and would arguably be a reason for rejecting cross dependency in some circumstances), this rationale is irrelevant in the present case as it does not accord with the income patterns here.more detail
Housekeeping [more detail]
[266] The expert's disagree on the dependency rate to apply to household services.[more detail]
[270] I agree with Brown that some deduction must be made to account for those household services provided by Millott which were for his sole benefit... more detail
[273] A related issue is cross dependency.more detail
[278] In my view, this is logical, and I accept Brown's contention that the economies of scale offset the fact that Lauretta is "saving" time on housework because Millott is no longer alive. Therefore, there is no significant cross dependency issue in these circumstances. Of course, as mentioned, I have found that the amount of Millott's housekeeping services that need to be replaced is 90 per cent (a deduction of 10 per cent), not the 75, 67 and 50 per cent figures used by Brown in the above excerpt.
Replacement Cost [more detail]
[327] For the reasons stated earlier, I prefer the calculations that incorporate mortality and disability contingencies (and divorce and remarriage contingencies for Lauretta). I am using Brown's calculations as the base amount, because she explicitly broke down the transportation calculations, and because she used the 3.85 per cent discount rate. Brown calculated Lauretta's transportation damages as $122,500, inclusive of pre-trial loss, post-trial loss, and pre-judgment interest calculated as of November 13, 2000. Brown calculated Samantha's transportation damages as $14,000, again inclusive of pre-trial loss, post-trial loss, and pre-judgment interest calculated as of November 13, 2000.
Application to the Present Case
[337] The Plaintiffs' expert assumed a personal expenditure rate (the expenses discussed in Brooks) of 35 per cent, for no other reason than that is the rate used by the Court of Queen's Bench (and not disturbed by the Court of Appeal) in Duncan No.2. The Defendants' expert, Brown, proposed a "life cycle approach"...more detail
[339] In my view, the Plaintiffs' contention for a flat rate is unacceptable.more detail
[340] ...Accordingly, the best guide I have is the life cycle approach set out by Brown for the Defendants...I accept Brown's numbers as fairly representing that approach in these circumstances. more detail
[343] Based on these figures, I leave it to the parties' experts to perform the necessary calculations, bearing in mind the assumptions accepted in these Reasons. Millott's personal living expenses, including his share of the family's joint living expenses, are to be deducted as set out above (35/44/50 per cent rates). Taxes must also, of course, be deducted from the gross income figures before other deductions are made. The Estate Claim must then be divided among the beneficiaries (as indicated below) in order to reconcile the Estate Claim and the Dependency Claim.