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Tag: Contingencies

Lies, Damn Lies and Statistics: Present Value Tables and Your Personal Injury Claim

No this post isn’t meant to take a swipe at economists, I just needed to get your attention since I’m discussing the ever exciting topic of positive and negative contingencies in creating present value tables.
Economic evidence often plays an important role in personal injury trials.  Competing experts often have different opinions as to which statistics should be used in valuing the present value of future losses.  Reasons for judgement were released this week by the BC Court of Appeal discussing these contingencies.
In today’s case (Towson v. British Columbia (Public Safety and Solicitor General)) the Plaintiff was involved in a 2002 BC motor vehicle collision.  Her vehicle was struck by an RCMP officer who ran a red light.  While fault was disputed at trial the RCMP officer was found fully responsible for the collision.
The Plaintiff suffered various injuries including a traumatic brain injury resulting in a post-concussion syndrome.  This in turn was largely disabling.   The $1.1 million damage assessment included non-pecuniary damages (money for pain and suffering and loss of enjoyment of life) of $185,000 and a diminished earning capacity assessment of $725,000.
The Government appealed for various reasons although they were unsuccessful with the trial award being largely upheld.   Among the unsuccessful arguments was an allegation that the trial judge erred in her assessment of diminished earning capacity.  In rejecting this argument the Court  provided the following comments about the different contingencies used by competing economists:

[30] The parties each called a witness to give expert opinion evidence in economics and both expert witnesses provided present value tables based on assumptions each specified.  The experts, Mr. Pivnenko for the respondent, and Mr. Hildebrand for the appellant, were both qualified to give opinion evidence in the area of economics.  Mr. Pivnenko provided present value tables regarding the cost of future care which were very similar to the figures Mr. Hildebrand provided.  However, the evidence given by the two experts diverged on the present value tables each provided for use in arriving at future loss of earning capacity.  The difference is readily explained by the assumptions each took into account.

[31] Mr. Pivnenko provided present value tables which took into account the survival rates for B.C. women but did not take into account any other contingencies.  Based on that assumption only, Mr. Pivenko stated that the present value of an annual sum of $1,000 per year from the trial date to the respondent’s 65th birthday was $22,716.

[32] Mr. Hildebrand’s present value tables took into account not only survival rates, but also negative labour market contingencies based on an average B.C. female high school graduate.  The latter contingencies he took into account included the individual’s propensity to participate in the labour force, part-time work, and unemployment.  Mr. Hildebrand applied a 40.1% discount for those contingencies, and, on that basis, he arrived at a present value of an annual sum of $1,000 per year from the trial date to the respondent’s 65th birthday of $13,609.  Mr. Hildebrand also testified that the overall contingency applicable to B.C. men with the same degree of education would be 20% to 25% rather than 40.1%….

[37] A review of Mr. Hildebrand’s evidence in cross-examination shows that in using a 40.1% negative labour market contingency, he was reflecting only negative contingencies and he agreed that the individual circumstances of a claimant would have to be considered in arriving at any percentage contingency adjustment.

[38] It is plain from her reasons that the judge did not accept that Mr. Hildebrand’s 40.1% negative labour market contingency ought to be applied, without modification, to a projection of the respondent’s likely income from employment to age 65.  The judge found, among other things, that the respondent was “in a better position than the average B.C. high school graduate at the time of the accident, because of her job at the [Justice Institute]”.  The judge also found “a realistic chance” that the respondent “would have attained promotions, and that she would have continued to work despite having children”.

[39] It is also plain from her reasons that the judge did apply a negative contingency discount well beyond the survival rates for B.C. women, which Mr. Pivnenko had used to arrive at the present value of an annual sum of $1,000 per year from the trial date to the respondent’s 65th birthday of $22,716…

[41] For the trial judge to arrive at the present value figure to be applied in this case, taking into account both positive and negative contingencies, could not be an exercise in precision.   To the extent that such an exercise is susceptible of explanation, the trial judge provided more than adequate reasons.  From her reasons, it is plain that she considered the respondent’s chances of recovery to be poor.  In view of that finding, and the legal principles she set out by reference to relevant case authorities, I see no reason to conclude that the trial judge overlooked the slight chance of the respondent recovering to the point of being able to seek some employment.