Month: March 1998

Spring 1998 issue of the Expert Witness newsletter (volume 3, issue 1)

Posted on By economica

Contents:

  • The Role of the Expert Witness in Developing “New” Law
    • by Christopher Bruce
    • In this article Christopher Bruce explores the role of the expert witness. He delineates both the advantages and disadvantages to the legal system when an expert adopts a “constructive” rather than a “passive” approach. While recognising the pitfalls with either approach, he points out the potential benefits that may accrue when the specialist is allowed to bring his/her expertise to bear, shedding light upon the complexities of personal injury litigation.
  • Unresolved Issues in the Valuation of Estate Claims Under Survival of Actions
    • by Derek Aldridge
    • In this article Derek Aldridge expands upon previous articles in our newsletter which have arisen from the Duncan v. Baddeley court of appeal decision. He raises several questions concerning the calculation of losses in light of this decision, and suggests that it may not be possible to resolve these issues until it is determined whether the Court’s goal is one of compensation or deterrence.
  • BOOK REVIEW: The Expert: A Practitioner’s Guide, (Carswell) 1997
    • by Christopher Bruce
    • Christopher Bruce reviews this collection of 27 essays concerning expert testimony, each essay having been written by one or more experts in the relevant discipline. The purpose of the book, according to the foreword, is to provide trial lawyers with a basic understanding of both “… the role of the expert in the legal process … [and] … the fundamental concepts of the discipline within which the expert operates.”.
  • Outstanding Issues in the Valuation of Household Services
    • by Therese Brown and Christopher Bruce
    • In this article Therese Brown and Christopher Bruce wrap up the series of five articles on household services which have been presented in our newsletter. They deal with several of the issues which have not been dealt with specifically in previous articles. Included are the following: the suggested approach when a plaintiff is still able to undertake a particular household activity, albeit more slowly than previously; a discussion of how long to run the loss of household services; and the effect of retirement on the loss of household services.

Outstanding Issues in the Valuation of Household Services

Posted on By economica

By Therese Brown and Christopher Bruce

This article was originally published in the spring 1998 issue of the Expert Witness.

In this, the final in a series of articles on the estimation of the loss of household services we discuss a number of issues which have received relatively little attention from the courts. These include:

  • the estimation of loss when the plaintiff can complete all necessary household chores, but these tasks take longer to complete than before the accident;
  • determining the age at which the loss of household services should be presumed to end; and
  • the effect of retirement on the number of hours of household services.

The Efficiency Issue

A common problem is that the injured plaintiff is sometimes still able to complete all the household chores that he or she performed prior to injury, but these tasks now take longer to complete. For instance, a female plaintiff may be able to continue with meal preparation and washing up, but whereas she had previously required 10 hours a week for this task, she finds that it now takes her approximately 15 hours a week.

One approach would be to argue that, as the plaintiff is able to “produce” the same number of household services as before her injury, she has lost nothing. However, this ignores the fact that she has lost the use of five hours per week in some other activity. Those hours may have come, for example, from hours worked or from leisure time. If it is the former, her damages could be valued using her wage rate. More commonly, however, it is leisure time that suffers, and only very rough estimates of the value of this use of time are available

A third approach, which we prefer, proceeds in two steps. First, we determine how many hours of household chores would remain to be completed if the plaintiff was to work the same number of hours in the home as she would have before the accident. Second, the cost of hiring replacement workers to perform those “missing” hours is calculated.

In the example cited above, assume that the plaintiff was to perform 10 hours of meal preparation after the accident. As she is working at only 10/15ths the speed that she had been working before the accident, she will complete in those hours, 10/15ths as much as she would have prior to the accident. That is, she will complete as many chores as she would have previously in 6.67 hours. This implies that 3.33 hours worth of chores remain to be done. It is the cost of hiring a housekeeper for this number of hours that we suggest should be used to represent the plaintiff’s loss.

At What Age Does the Loss End?

Two alternative approaches have been suggested to determine the age at which individuals would normally cease to engage in household production. The first such approach simply assumes that individuals cease to provide household services after their retirement ages. This approach is generally unsatisfactory, however, as the evidence suggests that the vast majority of seniors, some of whom may exhibit mild to moderate disability, do not require assistance with activities such as shopping or housework, the instrumental activities of daily living. Eric Moore et al, in their publication Growing Old in Canada, point to Statistics Canada data which indicates that 90.4% of men and 84.5% of women from 65 to 74 years old are in this category. Neena Chappell, in her book Social Support and Aging, argues that, while the existence of chronic health conditions is not uncommon in seniors, such conditions often do not lead to functional disability or limitations in activity.

A second commonly used approach is to continue the loss of household services only to age 80. There is considerable evidence to support this type of approach. Reference to statistical information about the living arrangements of today’s seniors, as well as their participation in household activities, makes it apparent that increasing numbers of seniors live independently to this age, requiring little or no assistance.

Herbert C. Northcott, in Aging in Alberta, makes evident the growing trend for seniors to remain in private households. While 13.4% of seniors in 1976 were institutionalised, this proportion dropped to 9.0% in 1991. Possible reasons for this decline include the increasing ability and desire of seniors to continue to live independently, as well as the shortage of institutional beds. At any rate, there is reason to suggest that the trend toward decreasing institutionalisation will continue.

Many seniors living at home do not require help with household work. The Statistics Canada publication A Portrait of Seniors in Canada makes this apparent. Of those 65 and older living at home in 1991, only 36% required assistance with housework. Fewer still required assistance with grocery shopping and yard work (31.5% and 30.0% respectively). Only 26% of this group required help with meal preparation. By far the greatest proportion of this assistance (68%) came from the individual’s spouse.

Much of the research would indicate, therefore, that not only are most seniors remaining in their own homes, but also most of them are managing to do so with little or no assistance. For this reason, it would seem prudent to recognise the extent to which most seniors are able to continue with productive contributions in the area of household services.

After age 75, however, an increasing number seniors suffer from chronic health conditions which limit their activity. An example of such an indicator is reported in the Statistics Canada Publication A Portrait of Seniors in Canada. While only 36% of 65 to 74 year-old non-institutionalised seniors reported activity restricting health problems, 46% of their counterparts aged 75 and older reported such restrictions. In addition the rate of institutionalisation does increase with advancing age. Herbert Northcott reports that in 1991, in Alberta, the rate of institutionalisation was only 2.8% for those aged 65 to but rose to 18.3% for those 75 years of age or older.

For these reasons, our approach is to seek a middle ground. It would appear that to assume that household productivity or participation in household services will decline significantly at 65 or 70 years of age would be to discount the contribution that many seniors are willing and able to make long past that arbitrarily assumed time. On the other hand, to continue the loss of household services to life expectancy would ignore the evidence that seniors in later years do increasingly face the risk of institutionalisation and activity-limiting disability. We find the statistical evidence supports the continuation of the loss of household services until approximately age 80.

Does a Change Occur in Household Services Contribution at Retirement?

Intuition suggests that the number of hours devoted to household work will decrease at retirement. This, however, is not what the statistics suggest. In fact, the contribution to household activities tends to increase significantly at retirement. An excellent source of information concerning the number of hours thus contributed is available from the Statistics Canada publication, As Time Goes By…Time Use of Canadians. For example, a married, retired male’s contribution at age 65 (3.1 hours per day) is almost double that of the married, full-time employed male’s contribution at age 45 to 64 years of age (1.7 hours per day). These available statistics can be readily used to forecast the future household contributions of the plaintiff at retirement. Our approach is to consider the number of hours that the plaintiff contributed prior to the accident and then increase them by the same percentage that the average individual’s contribution would increase, as indicated by this resource.

There may be concern expressed about this type of approach, for the reason previously mentioned, that an increase in household services at retirement may not be intuitively obvious. In our view, the approach we take – to adjust the individual’s contribution to reflect what actually occurs with individuals of the plaintiff’s ilk – is the only responsible approach to take in the interests of accuracy.

leaf

From 1996 through February 1998, Therese Brown was a consultant at Economica.

Christopher Bruce is the President of Economica and a Professor of Economics at the University of Calgary. He is also the author of Assessment of Personal Injury Damages (Butterworths, 2004).

BOOK REVIEW: The Expert: A Practitioner’s Guide, (Carswell) 1997

Posted on By economica

Edited by Mr. Justice K. Matthews, J. E. Pink, A. D. Tupper, and A. E. Wells

Reviewed by Christopher Bruce

This article was originally published in the spring 1998 issue of the Expert Witness.

The Expert is a collection of 27 essays concerning expert testimony, each essay having been written by one or more experts in the relevant discipline. The purpose of the book, according to the foreword, is to provide trial lawyers with a basic understanding of both “… the role of the expert in the legal process … [and] … the fundamental concepts of the discipline within which the expert operates.”

Measured against this goal, the book must be considered to be a success. Although the chapters are of extremely variable quality, anyone wishing to obtain an introduction to the role, and basic methods of analysis, of disciplines as widely diverse as forensic psychology, accounting, engineering, toxicology, and photography will find this book of value. I was fascinated, for example, by the scientific description of how a fire spreads (Chapter 24, “Forensic Fire Investigation”) and by the differences between the expert’s “model” of memory and that of the layman (Chapter 11, “Eyewitness Evidence Identification and Testimony”).

Nevertheless, the book suffers from two major weaknesses. First, from the point of view of civil litigation lawyers, the book focuses too narrowly on the experts who appear in criminal trials. Although one can imagine uses in civil trials for drug experts, pathologists, DNA experts, fire investigators, and handwriting analysts, their fields of specialty are not the everyday stuff of litigation. Furthermore, while concentrating on experts such as these, the book excludes many of the experts commonly found in civil litigation, particularly vocational psychologists, economists, therapists, and cost of care experts.

Second, in my view, the editors misunderstand what it is that lawyers would find useful in such a book. It is clear that each author has been asked to provide a 10 to 15 page summary of the role which an expert in his or her discipline can play in court, along with a brief outline of the basis of the scientific approach which characterises that discipline.

But consider: how often is it that a lawyer will not know what type of expertise is required for a particular circumstance? If photographic evidence is in dispute, it is not necessary to read a book on experts to know that it might be useful to hire a photographic expert. And if a claim has been made that an individual was abused as a child, most legal practitioners are knowledgeable enough to realise that they should seek out a psychologist with some expertise in “recovered memory.” Even if the field of expertise was sufficiently arcane that most lawyers would be unfamiliar with it, (forensic odontology is covered in Chapter 7), a single chapter listing the various disciplines and providing a one or two page summary of their areas of expertise would have been sufficient.

Furthermore, when an expert has been hired, one of the functions of that individual will be to educate the lawyer concerning the methodologies used by the expert’s discipline. It is not necessary to provide detailed descriptions of these methodologies in a book such as this.

Rather, it is my view that the primary function of a book on experts should be to provide two types of information:

  • a discussion of the law concerning expert witnesses; and
  • a critical analysis of the weaknesses of the methodologies employed by the various disciplines – in order to help you to avoid flaws in your own case and to find flaws in your opponent’s case.

With respect to the former goal, the first two chapters in this book – Mr. Justice Sopinka’s “The Use of Experts” and Richard Scott’s “Judges Instructions Re: Experts” – provide useful introductions. Justice Sopinka’s discussion of hearsay evidence will be particularly valuable to most litigators.

With respect to the identification of weaknesses in expert testimony, the book was disappointing. Only two chapters were of real value. The first of these was Earl Cherniak’s chapter on “Examination of the Expert Witness” which contains a number of useful tips from one of Canada’s foremost litigators.

I also found Dr. Reginald Yabsley’s chapter, “The Medical Expert,” to be refreshing. All of the other experts in this book merely described the fundamental methodologies employed by their disciplines and provided examples of testimony. At virtually no point did they turn a critical eye on their areas of expertise. Most of these chapters were little more than advertisements for their various disciplines. Dr. Yabsley, on the other hand, added two important elements to his chapter. He identified a number of weaknesses that are often found in medical testimony and he provided detailed analyses of two expert medical reports. Hence, unlike the other chapters in this book, his chapter provides a considerable amount of assistance to the cross-examiner.

In short, I would recommend this book only to those law firms with large practices in both civil litigation and criminal law. Until the editors restructure the book to provide a more balanced, critical review of each discipline, it is only the first four chapters which most litigators will find of value.

leaf

Christopher Bruce is the President of Economica and a Professor of Economics at the University of Calgary. He is also the author of Assessment of Personal Injury Damages (Butterworths, 2004).

Unresolved Issues in the Valuation of Estate Claims Under Survival of Actions

Posted on By economica

by Derek Aldridge

This article was originally published in the spring 1998 issue of the Expert Witness.

It has been nearly a year since the Duncan v. Baddeley court of appeal decision (Alberta Appeal #9503-0408-AC) allowed the estate of the deceased to claim for loss of income on behalf of the deceased. In that time we have been involved in estimating the estate’s losses in several of these cases. Discussions among our own staff (at Economica) and with our clients have raised numerous questions about the correct economic approach to valuing these losses.

As most of our readers know, the Duncan decision allowed the estate of a deceased individual to make a claim for the loss of the deceased’s income, under the Survival of Actions Act. This is in contrast to the usual claim under the Fatal Accidents Act in which it is only the surviving dependants who can make a claim for loss of dependency on income and household services.

Unfortunately, it remains quite unclear exactly how an estate’s loss is to be calculated. The guidelines offered in Duncan suggest that we should estimate what the deceased’s lifetime income likely would have been, deduct an amount for tax, and deduct a further amount representing what the deceased would have spent on necessities – or expenses incurred in the course of earning an income (The latter deduction is often referred to as the lost years deduction). However, although this general approach is outlined in Duncan, there remain many uncertainties.

First, consider the situation in which a deceased has left no dependants to make a claim for loss of dependency under Fatal Accidents. (Later I will address the situation in which there are dependents, leaving open the possibility of overlapping claims under Fatal Accidents and Survival of Actions.)

Fatal accident cases without dependants

The most important unresolved issue concerns the appropriate deduction from the deceased’s potential income. What should the size of this deduction be? Why is there a deduction at all?

It appears that the courts have endorsed the idea that a deduction should be made for cost of “necessities” that the deceased would have purchased, in the course of living and earning an income. This is similar to the “lost years” deduction that has been accepted in personal injury cases in which the plaintiff’s life expectancy has been reduced. (In these cases, the plaintiff is compensated for the income that he would have earned in the years that he is now not expected to be alive, less the portion of income that would have gone toward his basic necessities.) However, under Survival of Actions claims, we are not compensating the income-earner, so the logic behind this deduction is unclear. By allowing these estate claims, the court seems to have the goal of deterrence, rather than compensation, in mind. If so, then perhaps there should be no necessities deduction at all. Presumably if an “income-generating machine”, owned by the deceased, was destroyed in the same accident which killed the deceased, the estate would receive full compensation for the value of the income-generating machine – without any deduction.

If the goal is to compensate the estate for the deceased’s “lost pleasure” (analogous to compensation for “lost years” in a personal injury case), then we should deduct an amount corresponding to the basic necessities of living. Expenses beyond this surely would have provided pleasure to the deceased.

Without a goal of compensation in mind, it seems that any calculation of a lost-years deduction (and hence, the fraction of income payable to the estate) is arbitrary. In my view, it sounds equally reasonable to compensate the estate for half of the deceased’s income; or the amount by which his income would have been above-average; or the amount by which it would have been above the “poverty-line”; or any other amount.

Are we attempting to compensate the estate for what the deceased’s economic contribution to the world would have been, as if he had been an income-generating machine? If so, then we should be measuring something quite different than after-tax income less some deduction. And of course, the deceased’s economic contribution would have included non-market household services.

Household services is an issue that has not been addressed in these estate claims. So far it seems that only an amount corresponding to the deceased’s potential income is claimable, and the value of his or her services is not. However, it may be found that the deceased would not have ever been employed in the labour force, never would have earned a salary, but would have made significant labour contributions within his or her own home. The traditional homemaker role for women immediately comes to mind as an example. If it is believed that a deceased woman would have worked strictly as a homemaker, does her estate have a claim for a loss? From an economic standpoint it seems that it might. If the woman would have worked exclusively in the home, then she most likely would have had a spouse who was employed outside the home. There would be an implicit transfer of the spouse’s employment income to the homemaker (the homemaker is, to some extent, trading her household services for a share of her spouse’s employment income), and this income might be claimable.

Another way of looking at it is this: Suppose two young unmarried women died in an accident. The court finds that the first woman would have eventually worked as a full-time homemaker and mother in her own home, but would not have worked outside the home. The court also finds that the second woman would have worked for someone else, as a full-time nanny and homemaker, and would have earned $30,000 per year. Even though both of these women would have added similar economic “value” to society, the current economic approach which compensates for the lost labour market contribution would only allow a claim by the estate of the second woman.

Even if we ignore the issue of what deduction to make and assume that only employment income is to be considered, we still face uncertainty regarding tax. Under the Fatal Accidents Act, the award is based on the deceased’s after-tax income, to reflect that the dependants would have benefited from a share of after-tax income. Then the total award is “grossed-up” for tax that the dependant will pay, so that in every year of the future, he or she will have available the same income that he or she would have benefited from if the deceased had lived. The Duncan judgment suggests that we should also deduct tax, but there is no mention of a gross-up. Of course, the estate (whoever that might be) will face an increased tax burden due to the interest generated by the award and will therefore receive insufficient compensation without a gross-up. However, how do we gross-up an award to the estate? That would require that we know who (and how many) will benefit from the award, and we would need to make assumptions regarding their future income and tax situation. However, if the award is paid to the estate, then it seems that the court may not even know who will eventually receive the award, so a gross-up at the time of judgment would be impossible.

In an earlier Expert Witness article (“Implications of Duncan v. Baddeley“, The Expert Witness 2[2]) Christopher Bruce argued that a tax gross-up is not necessary for estate claims if there is no presumption that the estate is expected to invest the award in order to replace a future stream of lost income. However, without a gross-up, the estate will need to spend the entire award almost immediately in order to avoid tax-attracting interest, which would result in under-compensation. And if compensation is not the goal, then what is the purpose of deducting tax at all? Why not base the estate’s claim on gross income?

Fatal accident cases with dependants

In circumstances in which there are surviving dependants after a fatal accident, two additional questions arise. First, “What sort of claim would be more valuable, one under Fatal Accidents or one under Survival of Actions?” The second obvious question is, “Can there be two claims, one under Fatal Accidents and one under Survival of Actions?” The answer to the first question, under most (if not all) circumstances is that a loss of dependency claim under Fatal Accidents would be more valuable (see Christopher Bruce’s “Implications of Duncan v. Baddeley“, The Expert Witness 2[2]). The answer to the second question may seem clear, but is not.

Most would probably not expect that the courts will allow surviving dependants to receive compensation for their loss of income and household services dependencies, and at the same time allow the estate to receive compensation for a portion of the income that the deceased would have earned. However, it may be possible for these two claims to co-exist if they do not overlap. That is, the survivors could be compensated for their loss of dependency, and the estate could be compensated for its loss, to the extent that the estate’s loss has not already been claimed by the dependants. For example, under a sole-dependency claim (where, say, there is only a dependant spouse), the spouse receives compensation for approximately 70 percent of the deceased’s after-tax income. The 30 percent that the spouse does not receive is the component of the deceased’s income that benefited the deceased exclusively. However, not all of that 30 percent would have been for necessities and therefore a portion may be claimable by the estate.

Also, if the court decides to apply a divorce (or remarriage) contingency to the dependant spouse’s loss, his or her award may be reduced dramatically. The part of the spouse’s award that is “lost” due to the divorce/remarriage contingency may be claimable by the estate. Taking this a little farther, it is possible that the estate could claim the component of the dependant’s award that is “lost” due to the application of a contingency for the survivor’s probability of survival.

If there is no surviving spouse but there is a surviving child, then under Fatal Accidents, we usually see that the surviving child’s claim only extends to his or her age of financial independence (usually age 18-22). Since the deceased may well have continued to earn income after this point, it seems plausible that for the period after the child’s “independence age”, the estate may be able to make a claim under Survival of Actions. For example, we could observe a case in which a surviving child claims an income and household services dependency loss over the period during which the deceased would have been age 35-45; and then the estate claimed a loss of income from the deceased’s age 46 to retirement.

Despite the difficulties involved in calculating the estate claim under Survival of Actions; from an economic (and, I would hope, logical) standpoint, it seems reasonable that we should be able to incorporate these estate claim “add-backs” after determining an appropriate award for loss of dependency.

Conclusion

The Duncan decision has left us with many questions about how to deal with estate claims. Before these can be answered, it seems that the Court will need to determine whether the goal of these claims is one of compensation or of deterrence. If compensation is the goal, then our task is to determine how to fairly compensate a deceased person’s heirs (the estate), when their financial loss due to the death is (in many cases) minor. If the goal is one of deterrence, then damages should reflect what the deceased’s contribution to society would have been – still a difficult task.

leaf

Derek Aldridge is a consultant with Economica and has a Master of Arts degree (in economics) from the University of Victoria.

The Role of the Expert Witness in Developing “New” Law

Posted on By economica

by Christopher Bruce

This article was originally published in the spring 1998 issue of the Expert Witness.

One of the most exciting aspects of working in civil litigation is that participants in the legal system have the opportunity to influence the evolution of the law. Although some changes in tort law are imposed by legislatures, most developments are litigation-driven.

This raises a question which I have not seen asked anywhere else: Should arguments about changes in the direction of the common law be left to those trained in the law – judges and lawyers – or is there a role in this process for the testimony of “expert witnesses?”

I raise this issue as a result of my experiences with the evolution of two principles in damage assessment: the calculation of the dependancy rate in fatal accident actions and the calculation of the lost years deduction in serious personal injury claims.

Briefly, the two issues are these: In the case of the calculation of the dependancy rate, it is commonly accepted that the surviving spouse would have benefitted from approximately 70 percent of the (after-tax) incomes of each of the deceased and the survivor – with the remaining 30 percent having benefitted the deceased alone. What is not agreed, however, is whether the 30 percent of the survivor’s income which would previously have benefitted the deceased should now be deducted from the survivor’s loss of dependancy. (When this deduction is made, it is said that a “cross dependancy” approach has been used; whereas when the deduction is not made, it is said that a “sole dependancy” approach has been used.)

In the case of the calculation of the lost years deduction, the argument is that a plaintiff whose life expectancy has been shortened will not need to be compensated for the full value of the income lost during the years which he/she will not now live. Numerous theories have been put forward for the determination of the deduction which should be made – ranging from the deduction of only those components of income absolutely necessary to the maintenance of life to the deduction of the entire value of the plaintiff’s projected expenditure on consumption (i.e. deduction of the entire value of income except savings).

My purpose here is not to argue in favour of one or the other of the approaches to each of these issues. I have done that at length elsewhere*. Rather, my purpose is to ask what the role of economists – and other financial experts, such as accountants and actuaries – should be in the presentation of these issues to the court.

The Role of the Expert: Two Approaches

At least two contrasting approaches to the role of the expert can be defended. The first, which I will call “constructive” (but which others might call “interventionist”), recognises that legal arguments are often informed by developments in other disciplines – notably, philosophy, sociology, accounting, psychology, and economics. Where the arguments being made rely on sophisticated applications of these other disciplines, therefore, there may be a role for experts from those disciplines to testify concerning recent developments in the relevant literatures.

Some proponents of the constructive approach would go so far as to argue that such experts should be allowed to testify concerning what the law “should be.” A more appropriate role, I would argue, is that experts would merely be allowed to explain how the tools of their disciplines could be used to cast light on the issue facing the court.

The second approach, which I will call the “passive” approach, suggests that it is only those with formal training in the law who should be allowed to present arguments concerning potential changes in, or interpretations of, the common law. Hence, the opinions of non-legal experts should not be heard in court. The expert’s only role is to apply the existing law as best as he or she can.

The Constructive Approach

The primary advantage of the constructive approach, as I indicated above, is that theoretical and statistical developments in other disciplines will often be of value to the court in making its decisions. If extensive knowledge of these disciplines is required in order to fully understand the nature of the arguments, it may be preferable to have the presentation made in court by experts.

With respect to the lost years deduction, for example, economists, sociologists, and statisticians have considerable expertise with respect to both the definition and measurement of concepts such as “consumption” and “basic necessities.” And with respect to the measurement of dependancy rates, economists, sociologists, and psychologists have all written extensively about interpersonal relationships between spouses within marriage.

The primary danger associated with the constructive approach is that the expert will be tempted to stray beyond his or her area of expertise and begin to comment on matters requiring legal training. The first step in avoiding this problem is for the lawyer who has retained the expert to recognise that certain types of expert testimony can be construed as legal argument. Much of the testimony of experts in Canada concerning dependancy rates and lost years calculations, for example, has implicitly represented an argument concerning what the law “should be” – not because the expert saw that as his or her role but because the expert (and the retaining lawyers) had not recognised that that was what the expert’s testimony implied.

The Passive Approach

There are two advantages to the passive approach. First, it avoids the problem that the expert will stray outside the boundaries of his or her discipline. Second, if the law is well established, the expert will be able to avoid unnecessary testimony concerning possible alternative scenarios which have previously been ruled to be irrelevant. (For example, no Canadian economist would consider “wasting” the court’s time arguing that a tax gross up should be allowed on a loss of income claim, as the Supreme Court has clearly ruled that such a gross up will not be allowed.)

On the other hand, if the law is still evolving, the passive approach encounters two debilitating problems. First, any attempt to extract a straightforward rule from the decided cases is virtually doomed to failure. This is clear in the cases of both the dependancy and the lost years calculations. In both cases, there have been virtually as many different rulings as there have been judicial decisions. For anyone, lawyer or expert witness, to suggest that they can identify what “the” law is on either issue is presumptuous, if not preposterous. Nor would it be useful simply to adopt a “median” position. In issues like the dependancy rate there is no median position; and in issues like the lost years deduction there is no compelling reason to assume, ex ante, that the median position will prove to be the “correct” one.

Second, as a review of the decided cases on both dependancy rates and lost years deductions will reveal, when litigants first attempt to convince the courts to adopt a new legal principle, they often do not concern themselves with the finer details of those principles.

It is clear in the decided cases with respect to lost years, for example, that litigants and the courts have focussed primarily on the questions of whether such a deduction is required and, if so, whether it is “necessities” or the “costs of living” which should be deducted. Virtually no consideration has been given to the deeper issues of what the terms “necessities” and “costs of living” mean, nor of how one might measure those concepts. In the path-breaking Supreme Court case of Toneguzzo-Norvell v. Burnaby Hospital, the only evidence given by the plaintiff’s expert was as follows:

Q. …But would you agree that your average person … would spend something between 50 to 75 percent of their income on necessities…

A. Surely

No attempt was made to define the word “necessities” for the expert, nor was the expert asked to undertake any statistical research into the issue. Similarly, in another case which is widely quoted, the judge indicated that he had based his decision (concerning the lost years deduction) on the testimony of an expert economist. But when I contacted the economist in question he informed me that his entire testimony on that issue consisted of a brief response to a question put to him in cross-examination – a question to which he had not turned his mind prior to that time.

In the early stages of the development of new legal doctrines, it is common for “loose ends” to be left in this way. It would be inappropriate in my view for subsequent courts to rely too heavily on the “precedents” thereby established. Only when it can be shown that a superior court has turned its mind specifically to an issue, and ruled on it, would it be advisable for lower courts to rely on previously-made decisions in a developing area of law.

Furthermore, until the law has been clearly enunciated, it would seem inadvisable to insist that the expert rely strictly on “precedent” if that expert’s discipline has developed tools which would be of value to the court. Provided the expert testimony is presented as an aid to the court, rather than as an exposition of how the court “should” rule, that testimony may have a legitimate role to play.

Conclusion

It is not uncommon to find areas in the common law in which no clear precedent has yet been established. In some situations, like that of the argument concerning cross versus sole dependancy, this is because very few cases have been taken to court. In others, it is because the issues are so complex that the courts simply have not been able to turn their minds to all of the possible nuances. In these situations, I would argue that it would be irresponsible for an expert to argue that she or he had based a damage assessment on the “decided cases.”

At the same time, the expert must also recognise that his or her role in court is not to identify what the law “should be.” Rather, the expert must restrict her or his role to the presentation of theories or facts drawn from her/his disipline which can be expected to assist the court in making an equitable decision.

Footnotes

*On cross- versus sole-dependency, see Assessment of Personal Injury Damages, 2nd Edition (Butterworths, 1992); “Calculation of the Dependancy Rate in Fatal Accident Actions” Expert Witness, Winter 1996; and “Determination of Personal Consumption Expenditures in Fatal Accident Actions: A Note” Journal of Forensic Economics, 10[3], 1998.

On the lost years deduction, see “Shortened Life Expectancy: The ‘Lost Years’ Calculation“, Expert Witness, Spring 1996; “The ‘Lost Years’ Deduction” The Barrister, December 1996 issue (number 42); and “The ‘Lost Years’ Decuction” Lawyers Weekly, March 28,1997. [back to text of article]

leaf

Christopher Bruce is the President of Economica and a Professor of Economics at the University of Calgary. He is also the author of Assessment of Personal Injury Damages (Butterworths, 2004).