Products & Services
Court Testimony from Experts @ BEC
Excerpt from Whitfield v. Calhoun ECONOMIC ANALYSIS
 A.J. No. 357 (QL) (Alta. Q.B.) [Paperny J., Judicial District of Calgary].
150 Ms. Cara Brown of Brown Economic Assessments gave evidence of Mr. Whitfield's post-accident loss of income as well as projected loss of income.
151 In her report, Ms. Brown considered Mr. Whitfield's pre-accident work history and concluded that Mr. Whitfield like many youths worked on an on-and-off basis until the accident occurred when he was 24 years old. She opined that during this period his labour market behaviour was similar to other youths and it was difficult to distinguish his periods of non-employment between non-participation (a voluntary choice not to work) and unemployment (involuntary). She also opined that young men typically display weak labour force attachment early in their careers.
152 In her report, she assumed that Mr. Whitfield's stated pre-accident career plans to be a welder would have continued if not for the accident. She based this statement on Mr. Whitfield's stated interest in welding and that he was working in the industry prior to the accident and had already obtained his level "C" certificate from B.C.I.T. She did not consider the fact that level "C" did not qualify in Alberta at that time, although Mr. Whitfield was working as a full-time welder for the Dreco Group of Companies Ltd. In her calculations, she concluded that Mr. Whitfield was earning a wage of $11.50 per hour during a regular 40 hour work week which implied an annual income of $23,920 in 1990-dollars exclusive of over-time. She also concluded that Mr. Whitfield could have earned $30,130 in 1990-dollars inclusive of over-time hours. She translated these into 1998-dollars to $29,250 and $36,844, respectively.
153 At the time of the report, Ms. Brown considered the part-time jobs Mr. Whitfield was then working (i.e. at the Canadian Airlines Saddledome as a janitor/maintenance worker, at the Panex Show Services as a labour and at his apartment building as a building maintenance manager). At Canadian Airlines, Mr. Whitfield earned a wage of $8.25 per hour and worked approximately 86.7 hours per month. That implied an annual salary of $8,927 in 1998-dollars. At Panex, Mr. Whitfield earned $7.00 per hour. On average he worked approximately 84.5 hours per month which implies a salary of $7,382 per year inclusive of vacation pay. She also attributed $2,100 representing approximately $175 per month for maintenance work around his apartment building. His combined annual income at the time of the report was $18,409 in 1998-dollars.
154 Ms. Brown estimated that, in the future, Mr. Whitfield will continue to earn a salary of $18,409 per year in 1998-dollars. A figure of $18,409 is similar to Mr. Whitfield's average income for the years 1991 to 1997 excluding 1996. Therefore, in her view, this most closely represents his post-accident earning capacity.
155 In doing her calculations, Ms. Brown incorporated a higher unemployment rate and non-participation factor to account for Mr. Whitfield's high job turn over rate exhibited through his work history since the accident. These were used to adjust his annual income for contingencies. She assessed the contingencies as follows: 3.4% for fringe benefits, 6.8% for unemployment and 10% for non-participation. She also assessed the effect of the nominal wage growth factors for each year between the accident and trial.
156 Ms. Brown calculated Mr. Whitfield's pre-trial income loss from 1990 to 1998 based on these assumptions and contingencies. Inclusive of overtime, his pre-trial loss of income is assessed at $132,604 ($154,826 with pre-judgement interest). Exclusive of overtime, she calculated his pre-trial loss of income to be $105,000 including pre-judgment interest.
157 Ms. Brown calculated Mr. Whitfield's future loss of income to be $279,000 including overtime and $153,500 excluding overtime. This was arrived at using the following assumptions. Mr. Whitfield's retirement age will be 61 years old, the productivity rate increase for the construction industry is 1.0% per year and 0.5% per year for the total economy, and the real discount rate is 4.5% for 5 years, then 3.5% thereafter. Based on these assumptions, the following formula is used to calculate future loss of income: (his annual income in 1998-dollars adjusted for contingencies x 19.1) less (his annual income in 1998-dollars working at his current salary (i.e. $18,409) x 18).
PRE-TRIAL LOSS OF INCOME
158 While Ms. Brown's analysis is interesting it does not account for the fact that Mr. Whitfield's post-accident employment history was also affected by the onset of Carpal Tunnel Syndrome which required him to leave work to have surgery and prevented him from continuing to weld. In my view, ascribing Mr. Whitfield an average annual income of $23,920 (i.e. exclusive of overtime) adjusted to 1998-dollars to reflect an annual salary of $29,250 is overstating Mr. Whitfield's likely base salary.
159 This situation requires an analysis similar to that in Penner v. Mitchell, supra. In that decision, the Alberta Supreme Court, Appellate Division, recognized that damages should be reduced where a non-tortious event, occurring after the accident but before trial, would have negatively impacted the plaintiff regardless of the defendant's negligent conduct. In my view, Mr. Whitfield's Carpal Tunnel Syndrome, which is admittedly not related to the motor vehicle accident, would have prevented him from working at certain types of manual labour, including welding. Furthermore, the pain resulting from the onset of Carpal Tunnel Syndrome in January 1994 and the subsequent surgery resulted in lost time at work.
160 Furthermore, Mr. Whitfield's pre-existing paranoid and schizoid personality traits suggest a difficulty in long term success with a single employer. There is a measurable risk that Mr. Whitfield would not have maintained long term employment with a single employer. As stated previously, Athey, supra, suggests that damages should be reduced accordingly. Furthermore, in Graham v. Rourke (1990), 74 D.L.R. (4th) 1 at 21 (Ont. C.A.), Doherty J.A. states: "Contingency deductions from lost income prior to trial are logically consistent with the theory of damage assessments based on fair and just compensation."
161 Accounting for these factors, it is my view Mr. Whitfield would have earned an annual salary of approximately $21,000 in 1990-dollars or $25,679 in 1998-dollars working either as a welder or in other non-skilled labour positions. I believe that he will continue to work at his current part-time jobs, or earn a similar annual salary at other employment, now that the accident has occurred.
162 Based on the nominal wage growth factors and contingencies applied by Ms. Brown, I find that Mr. Whitfield's pre-trial loss of income is $72,172, plus pre-judgment interest. I would also add to this $552 for the six days of work he missed following the motor vehicle accident, for a total of $72,724. I leave the calculation of pre-judgment interest to counsel, with leave to seek direction should they be unable to agree on the proper amount.
FUTURE LOSS OF INCOME
163 The factors considered above which reduce Mr. Whitfield's likely annual income, namely the development of Carpal Tunnel Syndrome and his inherent personality traits, also affect his future loss of income. Again there is a measurable risk that Mr. Whitfield's annual income will be less than what was assessed by Ms. Brown.
164 I am satisfied that the annual salary used to determine pre-trial loss of income can also be used to calculate Mr. Whitfield's future loss of income. According to the contingencies outlined by Ms. Brown and discussed above, Mr. Whitfield's annual income of $25,679 in 1998-dollars, adjusted for contingencies is $22,272. Using Ms. Brown's formula, Mr. Whitfield's future loss of income is ($22,272 x 19.1 - $18,409 x 18) which equals $94,033.