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Court Testimony from Experts @ BEA

Excerpt from Bisheimer v. Bryce

[1991] S.J. No. 85, (Sask C.A.) [Vancise J.A., Saskatchewan Court of Appeal].

Although the Saskatchewan Court of Appeal did not disturb McLellan, J.'s finding of Mr. Steininger's pre-trial loss in the amount of $62,000, it did set aside the future loss of income award of $104,000 and substituted $179,000. The Court of Appeal noted the following with respect to Ms. Brown's evidence on the future loss of income award:

Steininger claims $180,000.00 loss of future income. That amount was calculated by Ms. Cara Brown, an economic consultant. She examined Steininger' employment income for the period 1980 to 1988 to establish an economic framework. His earnings, Unemployment Insurance, and total earnings for the period were as follows:

Year	Employment Earnings	UIC Benefits	Total Income
1988	$0	$0	$0
1987	$12,585	$5,698 (31%)	$18,283
1986	$13,032	$8,289 (39%)	$21,321
1985	$11,767	$3,332 (22%)	$15,099
1984	$4,487	$3,504 (44%)	$7,991
1983	N/A	N/A	N/A
1982	$33,684	$1,930 (5%)	$35,614
1981	$33,694	$0 (0%)	$33,694
1980	$25,022	$0 (0%)	$25,022

She then examined the economic factors at play in the pipefitter industry. His accident occurred at a time when there was an upturn in the petroleum and natural gas industry and an opportunity for a significant amount of work. However, in calculating the loss one must have regard for the long term. An examination of the evidence submitted by Ms. Brown reveals that in the four years prior to the accident capital expenditures in the oil and gas industry were extremely depressed. Gas pipeline construction declined 49% between 1982 and 1985. Oil pipeline construction declined 88% between 1984 and 1986. Thus, Steininger's income immediately prior to the accident was subject to downward pressure. Nevertheless, his average total income was $22,432.00 for the seven years prior to the accident. If one excludes the two recession years of 1984 and 1985, his average total income was $26,787.00 per year.

If one examines the wage rates which were in effect after the accident, it is apparent that the amount of income that he could have expected to earn was more than $26,787.00. Ms. Brown examined the level of construction in the pipeline industry, the wage payable, and concluded that someone could have worked throughout the year and could have earned approximately $52,000.00 in the first year after the accident. She took a number of contingencies and economic factors into account, such as the seasonal nature of the business and economic fluctuations in the oil and gas sector, and concluded that the figure should be reduced by 35% to $33,830.00. She then employed a discount factor of 4% because of the relatively short period of time that she was considering, an inflation factor of 4% and a real growth in wages of 1.5% to a retirement age of 65, and found the discounted value of his loss of future income to be $211,000.00. That was reduced to $179,000.00 at the date of the trial.

The trial judge arrived at a loss of $104,000.00, but in doing so he made a fundamental error in calculation. He stated:

• Using a base year salary for Steininger of $30,000.00 rather than $52,000.00 and adopting the contingencies set forth in the report filed by the economist I arrive at the following:

  30 / 52 x $180,000.00 = $104,000.00 (rounded).

  Thus he appears to have established a base salary of $30,000.00. However, in calculating the amount of loss he simply took 30/52 of the $180,000.00 and arrived at $104,000.00. With respect the $180,000.00 loss calculated by the economist was predicated upon a base salary of $33,000.00, which was adjusted downward at trial to $29,000.00. The economist applied a further discount fact or for contingencies and a positive inflation factor and arrived at a figure of $29,000.00 for loss of income. She then calculated the discounted value of a sum sufficient to produce this income to age 65 as $179,000.00.

  The trial judge gave no reasons for determining a base salary of $30,000.00 per annum. However, it would appear from an examination of the evidence that this base salary is based on a composite of the income of Staininger prior to the accident and the evidence of work prospects over the ensuing years. If this the basis for the trial judge's conclusion, then a further contingency factor ought to be applied. There is nothing in the judgment to indicate that the trial judge took into account any negative or adverse contingencies in establishing the base salary. That negative contingency factor is calculated having regard to the fact that in our society adverse contingencies are softened by many private and public income protection schemes, and therefore the loss of income should be scaled to reflect a real loss of income. In my opinion a contingency factor of 4% is appropriate.

Cooper-Stephenson and Saunders have proposed just such a contingency factor at p. 259 of their book, Personal Injury Damages in Canada:

• Our own suggestion is that the average for negative contingencies be taken at approximately 7% . . . . We then feel that positive contingencies may be taken as a counterbalance of at least 3%, on the average. We therefore suggest that the figure of 4% be used as a matter of practice, if no particular circumstances are presented at trial to vary that estimate.

  This Court adopted that position in Joubert and am of the opinion that it should be continued here. The result is that annual income figure is not significantly different from the $29,000.00 annual income used by the economist in calculating the damages as $179,000.00.

  In the result I fix the damages at $179,000.00, the award of the trial judge is set aside and the sum of $179,000.00 substituted therefore.

In contrast to McLellan J.'s finding that Mr. Steininger would have earned an income similar to his counterpart at the union hall, Richard Bisheimer, the court of appeal used the analysis in Ms. Brown's report regarding employment opportunities in the pipefitter industry and activity in the gas pipeline construction sector¹.

[1] Note that it appears McLellan, J. rejected the pre-trial loss of income calculation because he believed it used a salary of $52,000 but in fact contingencies would have reduced this to $29,000, just as they did in the future loss of income claim. There may be confusion as to the basis for the pre-trial loss of income calculation that was left intact.