1991 S.K. No. 2978 IN THE SUPREME COURT OF NOVA SCOTIA TRIAL DIVISION BETWEEN; BOYD A. CORKUM ‑and- BARTLEY SAWATSKY and CHARLES SAWATSKY and SUN ALLIANCE INSURANCE COMPANY, body corporate Defendants HEARD: at Kentville, Nova Scotia, before the Honourable Mr. Justice Jamie W.S. Saunders, Trial Division, on September 29 and 30,. 1992 and at Halifax, Nova Scotia, on October and 13, 1992 DECISION: January 25, 1993 COUNSEL: Walter O. Newton, Q.C., Randall P.H. Balcome, Esq., and Scott A. Gillis, Esq., for the plaintiff David A. Miller, Q.C., for the defendants Sawatsky and Sawatsky 1991 S.K. No. 2978 IN THE SUPREME COURT OF NOVA SCOTIA TRIAL DIVISION BETWEEN: BOYD A. CORKUM ‑and BARTLEY SAWATSKY and CHARLES SAWATSKY and SUN ALLIANCE INSURANCE COMPANY body corporate J.: Proceedings: This is an assessment of damages. The plaintiff was seriously hurt in motor vehicle accident on May 26, 1989. He was 53 years of age at the time. The defendants, Bartley and Charles Sawatsky admit liability. They go further. They formally: "... accept the assertion of the Plaintiff that the injuries suffered ... rendered the Plaintiff totally and permanently disabled from the duties of his then employment and for all employment in which he was capable of engaging by reason of education, training or experience." (Exhibit No. being letter from David A. Miller, Q.C. to Walter O. Newton, Q.C. dated September 28, 1992) Mr. Corkum and His Work Boyd Corkum married when he was 19 years of age. He and his wife Edna had five children. One died in infancy. Another daughter, Julia, died from complications attributable to cystic fibrosis at age 22. Their son Tim and one daughter live in this community. second daughter resides in New Brunswick. Mr. Corkum was born in the house in which he now resides. He has lived his entire life in Scotts Bay, Kings County. He attended elementary school but left after completing Grade 7. He has no formal training or trade and his skills in mechanics, farming, logging and millwork are all self‑taught. From the time he was 14 years of age Mr. Corkum has devoted his life to the farm and the other business ventures which he managed to initiate or develop. His evidence was really shining example of the pride and benefit of long days and hard physical labour. Mr. Corkum worked six days week, from dawn until dark. In winter he was up at 4:00 an. and had left the house by 5:00 a.m. He would return home at 5:00 p.m. when darkness fell, but tending the cattle and maintaining equipment kept him up until 9:00 or 10:00 p.m. Even at meal time Mr. Corkum ate by the phone in order to deal with customers and tend to other business. Those long hours were only slightly reduced in spring and summer. There was not any spare time for hobbies or community activities. As Mr. Corkum put it: "I done whatever had to be done ... the idea was to keep moving ... to have that many more dollars ..." He thrived on hard work. Mr. Corkum described himself in "perfect" health prior to the accident. He sustained his various operations through continuous activity. Some thirty years ago Mr. Corkum bought the family homestead and surrounding lands from his father. He already owned 120 acres himself. Over the years he acquired other parcels including woodlots. At the time of the accident he had assembled 1,020 acres of property, all in the Scotts Bay area. Of that, approximately 40 acres were devoted to Christmas tress. As well, Mr. Corkum paid an annual stumpage fee for the use of other land owned by two Americans. Apart from his home, other buildings on the property included wood house, warehouse, storage barn, saw mill, planer mill, workshop and various barns. Over the years Mr. Corkum developed five different business operations on his property. The largest operations were his logging, milling and Christmas tree business. He also raised beef cattle. He has employed full‑time hired hand, Mr. Blaine Huntley since 1986. He has also employed number of seasonal, full‑time workers to assist in the logging and milling operations. As one would expect, Mr. Corkum was directly and personally involved in his various operations. All winter he drove the skidder. The very nature of this piece of machinery and the terrain over which it passes jostles the body. Mr. Corkum was strong enough to haul 100 feet of inch steel cable with 10 chokers attached to corral the foot lengths. He would then pile these lengths in stacks, each length weighing up to 100 pounds. This work was often done in deep snow. The plaintiff did his own fencing. He baled hay. He operated and maintained his own machinery including tractors, trucks, harvesters, and combines. He is proficient welder. He shovelled manure from the cattle stalls. He vaccinated and castrated his cattle. Seldom was veterinarian needed. Mr. Corkum started his own saw mill and developed regular and continuous market for his products. Some of this was custom work for boat and bridge builders. Prior to 1988 Mr. Corkum did all of the sawing in the mills. By 1989 he had started to train his son, Timothy in the operation. The plaintiff had to turn down orders because he simply did not have enough lumber to fill demand. By the end of the season he "wouldn't even have truckload of inventory left". Mr. Corkum also developed Christmas tree operation. Each year he supplied to markets in New York and New Jersey. He harvested from the first week of November to the first week of December. Mr. Corkum did all the pruning and cutting. His helpers dragged the trees out of the woods. The plaintiff developed regular pulpwood supply business. Since 1984 he sold pulpwood in foot lengths to Bowater Mersey in Liverpool. Mrs. Corkum prepared tally (Exhibit 6) showing prices paid for pulpwood, per cord at roadside. In May, 1987 the price per cord was $47.00. In 1988 it increased to $49.00. 1989 and 1990 showed increases to $52.00 and $56.00 respectively. The Corkums' financial records show an aberation in 1986. This was obviously due to their daughter Julia's progressing illness which required her lengthy and frequent hospitalization. Mr. and Mrs Corkum spent many days and weeks visiting her at the Victoria General Hospital in Halifax. Understandably Mr. Corkum's tireless physical efforts were diverted on account of his daughter's terminal illness. Mr. Corkum testified he thought things were starting to "turn around" and the future looked much brighter by May, 1989. He said he had more cash in hand and was paying down his farm loan and other debts incurred in acquiring his tractors. He had also sold some special veneer logs. He said he thought 1989 would have been one of his best years. Mr. Corkum had also just started silviculture operation. His hired hand had successfully completed power saw course so that Mr. Corkum then qualified as silviculture contractor Mr. Corkum's Injury and Treatment. Mr. Corkum sustained a very serious neck injury in the mishap. His automobile was struck by the defendants' in an intersection. He was driving. His wife was front seat passenger. Mrs. Corkum was not injured. Although the plaintiff was not hospitalized and never required surgery for his injury, he is by all accounts completely and permanently disabled for any type of employment for which he was suited by education, training or experience. He was sent to physiotherapy which he attended every day for almost year. There were no benefits. He was then referred to the Rehab Centre in Halifax where he spent six weeks. His condition worsened. Two nerve blocks were administered at the Pain Clinic, to no avail. One of them caused his ear to ring for six months. He could not get any sleep. He tried to sleep in chair, or on the floor, or leaning on the bed. He suffered headaches, blurred vision and vertigo. Depression and anxiety led to psychiatric counselling and heavy night sedations. Experimental injections with lethal toxins by noted neurologist David B. King failed to bring relief. His physiotherapist describes Mr. Corkum's case as: "... probably one of the most severe whiplash type injuries that have seen in practice." (Exhibit 12, Tab 4, Report dated April 2, 1992) In all he has been seen by 14 specialists and been prescribed regimen of treatment and medication. None has given relief. His neck and chest is tight. He cannot turn his head. He demonstrated the marked lack of rotation. In order to answer my questions he had to turn his body completely in the chair. Prior to the accident he had no trouble hoisting 165 pound barrels of potatoes. Now he experiences continuous pain in his left shoulder which prevents him from lifting anything. His left leg is not as strong as his right. He stumbles easily. He has many restrictions. He confines himself to driving in his community where he knows he will "be safe". His wife does most of the driving. Sadly, but not surprisingly there has also been an emotional component. His psychiatrist Dr. Brian Garvey writes: "... Mr. Corkum has suffered very seven whiplash injury to his back and neck, injuries so severe that he is almost certainly permanently incapacitated from returning to any form of gainful employment. His physical injuries are not my concern and am no specialist in them but have never met man whose injuries are so obviously severe, whose neck is so clearly in spasm and who has been so handicapped by his affliction. ... The emotional problem with which am dealing in Mr. Corkum's case and which is directly the result of the accident is his inability to adapt to the idea that he will not be able to work again. He is being called upon as result of his injuries to completely change his lifestyle and his value system; not only can he no longer do the work he enjoyed, he cannot look forward to ever doing it again even should he recover. have had great difficulty in convincing Mr. Corkum that he should not remain even living on the farm because any improvement he will show will encourage him to go out, look at his cattle, examine his trees, inspect his machinery and he will not be able to refrain from pulling, hauling, looking up at or jarring himself on the uneven ground and he knows very well that any such activity will set him back. In my attempts to encourage him to totally change his way of life have loaned him wood carving set which hoped would encourage him to do the only sort of work he will be able to do in future which is indoor sedentary work not requiring him to look up. So far have been unsuccessful. There is another aspect to Mr. Corkum's emotional distress that is worth mentioning. He has long been known as one of the area's most kindly employers and as he put it, 'I have the best hired men in the country. They will do anything ask. have never had to fire one, no one has ever stolen anything from me and never have had to lock anything up.' It has hurt Mr. Corkum greatly to have to let these men go and all he has left now on the farm is his son, Tim, who is doing his best to keep things going." (Exhibit 12, Tab 5, letter from Dr. Garvey dated January 6, 1992, pp. 1‑2) It was very obvious to me that the disabling effects of this mishap have dampened Mr. Corkum's spirit. He often had trouble keeping his emotions in check. He is not used to and doesn't especially like others having to do for him. Claims: The plaintiff claims under the following heads of damage: (1) Non‑pecuniary damages (2) Pecuniary Damages (a) Loss of Past Income (b) Loss of Future Income (3) Section "B" Benefits (4) Management Fee (5) Prejudgment Interest An assessment of these claims will necessitate an analysis of such issues as fair compensation for actual loss, mitigation, discount rates and contingencies. The Evidence: Carl Kent, C.A. was retained to provide an opinion on the plaintiffs loss of income claim. He had prepared the plaintiffs personal tax returns and financial statements since 1981. In preparing his report he relied upon the plaintiffs income tax returns. He visited the plaintiffs farm and mill to familiarize himself with the operations. He said they were not sophisticated. In February, 1991 the plaintiffs solicitor delivered to the defendants report prepared the month before entitled "Report on Special Damages" written by Mr. Kent (the "Kent report"). The Kent report purports to calculate the plaintiffs loss of income allegedly resulting from the injuries from the date of the accident until the normal retirement age of 65. The report was premised on the assumption that Mr. Corkum would not recover from his injuries so as to be able to resume working at the same level he had worked prior to the accident. At page of the report Mr. Kent writes: "Our understanding of Mr. Corkum's physical condition is that, as result of the accident, he suffers from pain on continual basis and is severely hampered in returning to his usual work routines since the date of the accident. Ordinarily, Mr. Corkum worked fairly long day at physical labour in respect to running his farm and mill operations. His injuries are such that he is now unable to attend to these same duties in the same manner as he was prior to the accident." Mr. Kent expressed the opinion that as result of Mr. Corkum's inability to work, as before, the business had suffered substantial losses to the end of 1990. In his opinion these losses were so severe as to not only wipe out the income which the plaintiff had made from the business prior to the mishap but, in addition, to generate large net losses. Mr. Kent then projected these losses as continuing until the plaintiffs retirement at age 65. He then put forward claim based on the combination of those losses as well as the income which in Mr. Kent's opinion Mr. Corkum would not earn until he reached age 65. Mr. Kent said he assumed that Mr. Corkum's income would show real growth after inflation during those years. In order to calculate the value of Mr. Corkum's contribution, Mr. Kent said key indicator would be wages and operating costs for the eight years prior to the accident. He looked at the extra wage costs that were paid following the mishap as suggesting value for the plaintiffs contribution before the accident. He thought business loans, taxes and insurance were related to the proprietor's value and should be part of the calculations of future pecuniary losses. Another approach he took was what he called the subsidy method. His third approach was to consider the rate of return on assets. His fourth calculation explored actual operating losses based on the farm's historical performance. Mr. Kent then took an average of these four methods which he then projected, using 10% growth rate. thought Mr. Kent's approach and conclusions were seriously weakened on cross‑examination. He often hedged and seemed very reluctant to commit to any one position. He said he obtained his rate for projecting 10% annual growth by looking at the data for Christmas trees and logs which he assembled as schedule of income and expenses (Identified at trial as Schedule "E" revised June '91, and which appears directly after page 11 of Mr. Kent's January 11, 1991 report). On cross‑examination Mr. Kent admitted that the percentage increases would be significantly different depending on how many years one included in the analysis. He agreed it would have been more appropriate to examine the period over which particular segment of the operation had been dominant, if one were serious about trying to predict trend. He also agreed that the net income fluctuated drastically, and that the net income figure could not support the 10% "growth rate" upon which he based his opinion. Mr. Kent was referred to Exhibit No. which Mrs. Corkum had prepared and introduced during her testimony. Kent had not seen it before but after reading it agreed on cross‑examination that there was nothing in it, with respect to Christmas trees, which confirmed any trend. Yet, when he prepared his report he had assumed trend, and an improvement. Further, Mr. Kent agreed the only way for the plaintiff to increase revenue would be to either work harder or charge higher prices which would at least exceed inflation rates. Since all persons agreed it would be impossible for Mr. Corkum to work any harder (or longer) and since Mrs. Corkum had testified that the price of $56.00 per cord, at roadside had not changed in the last two years, and because of rising inflation, Mr. Kent was forced to agree that one could not comfortably project any improvement. He admitted that he had not studied the Christmas tree market either in terms of quantity or prices. He restricted his analysis to discussions with the plaintiff. Mr. Kent acknowledged that he had not allowed for any depreciation. Had he done so, it would have had the effect of reducing earnings and consequently Mr. Corkum's net income would have been even lower than Kent showed it to be. He was confronted with Mr. Corkum's outstanding liabilities including his loan for $140,000.00 to the Farm Loan Board. After some initial hesitancy, he allowed that there "may have been an element of not having enough cash to meet financial obligations" and that this would have to be taken into account in assessing economic viability. find Mr. Kent's projection of 10.5% rate of growth in forestry income suspect in that in 1991 and in 1992 there was no increase in the price of pulp. At page of his report Mr. Kent assumed "a ... pre‑tax rate of return of 8% to 10% ..." but admitted that historically Mr. Corkum's rate of return was never close to the $51,800.00 $63,900.00 range projected in his report. And if one accounted for Mr. Corkum's own efforts there would be very little net income. reject Mr. Kent's approach which extrapolated projections from various costs and revenue factors in those four different scenarios. In none of those did Mr. Kent employ the proven net income earned by Mr. Corkum for the previous eight years when Mr. Kent served as his accountant. It is inappropriate and unreasonable to project income of $47,000.00 per year, indexed to inflation and compounded until retirement for plaintiff who only last year reported net income of $13,000.00. As its last witness the plaintiff sought to call Jessie Gmeiner, MSC, FCIA, FSA. She is well known and respected actuary, presently engaged as vice‑president of W.F. Morneau Associates in Halifax. Mr. Miller opposed the reception of Ms. Gmeiner's report. After considering submissions of counsel refused to give the plaintiff leave to call Ms. Gmeiner and introduce her report. It was late. wish to elaborate on my reasons for doing so. C.P. Rule 31.08 provides: "31.08 (1) Unless copy of report containing the full opinion of an expert, including the essential facts on which the opinion is based, summary of his qualifications and summary of the grounds for each opinion expressed, has been (a) served on each opposite party by the party filing the notice of trial at the time the notice is filed but otherwise served on each opposite party within thirty days of the filing of the notice of trial, and (b) delivered with the brief to the trial judge under Rule 28.07(1). the evidence of the expert shall not be admissible on the trial without leave of the court. Mr. Newton admitted that their decision to engage an expert actuary came late in the day. Ms. Gmeiner's report is dated September 10, 1992. The defendants' expert actuary was engaged in 1991. Mr. Burnell's reports are dated November 7, 1991 and June 12, 1992 and were delivered to the plaintiff in accordance with the Rules. As Mr. Miller said, had the plaintiff wished to counter this evidence, he could easily have engaged his own expert and furnished report long before this. No mention was made of the plaintiff's intention at the first pre‑trial telephone conference. When the subject was first broached by Mr. Newton at subsequent conference, Mr. Miller objected. It is not enough for the plaintiff to urge that leave be granted because defence counsel is sufficiently skilled, prepared and experienced to deal with its late introduction. The time prescribed by the Rule is there for reason. Margaret E. Miller v. Prest Brothers Limited (unreported, S.H. No. 82796, November 6, 1992). Fairness and predictability demand that the Rule be applied strictly and fairly to all sides, save in exceptional circumstances. There is burden of persuasion upon the defaulting party to show that the interests of justice would merit its late reception. heard no such submission during argument. Rather, Mr. Newton explained that it was decision come by lately and that Ms. Gmeiner's report might be "helpful to the court". That is not reason to grant leave to waive the clear requirements of C.P.R. 31.08. The Rule is intended to avoid surprise or costly delay brought on by request for an adjournment. Adherence to the Rule should promote settlement by giving each side sufficient time to address the content of an expert's report and obtain reasoned instructions which might lead to an early resolution. It was after all the plaintiff who pressed for trial during the term of the Supreme Court in Kentville. While much of the docket was taken with criminal jury trials assigned the last days available to this case. In his Notice of Trial, Mr. Corkum certified his readiness and certified that all interlocutory steps had been taken. It was for all of these reasons that I rejected Ms. Gmeiner\'s report. The defendants called Arthur Speed, AACI, P. App., M.A.I. who was qualified as an expert in the field of real estate appraisal. He has carried on business as an appraiser in Canada since 1960 and has also been engaged as realtor. He has frequently appeared as an expert in court. He has extensive experience appraising real estate of all descriptions including woodlands. His experience includes rural and urban areas. Mr. Speed was obviously quite familiar with the lands in this area. Mr. Speed was engaged to prepare an opinion of the current market value of the real and personal property, excluding furnishings, owned by the plaintiff at Scotts Bay, Kings County. The real and personal property consists of approximately 1,020 acres of land together with the plaintiffs residence and outbuildings, saw mill buildings, livestock and hay barns, potato storage building, and equipment maintenance and repair garage; mill machinery, agricultural machinery and equipment, vehicles and miscellaneous machinery and equipment. While admittedly title to certain portions of the property resides in the Nova Scotia Farm Loan Board or financial institutions, Mr. Speed appraised the total interest in the property and did not make any separate determination as to the interest of the owner or lending agencies. Mr. Speed relied upon other sub‑consultants for the timber cruise; the replacement cost figures for the saw mill and planer mill buildings; the saw mill and agriculture machinery and equipment, and cattle, as set out in his report. The automotive and miscellaneous items of machinery and equipment were separately valued at $51,500. In the result, Mr. Speed's opinion of the market value of the real and personal property as of August 15, 1991 is $735,000.00 calculated as follows: Real Estate $532,200 Sawmill, Planer Mill and Agriculture $132,400 Machinery and Equipment Cattle 18,900 $683,500 Miscellaneous Machinery and 51,500 including Automotive TOTAL $735,000 Mr. Speed made repeated visits to the property to conduct his inspection and spoke with the plaintiff. He assembled very comprehensive report which incorporates several tables describing residential home sales, agricultural land sales, woodland sales, surveys of stumpage prices, and valuation summaries for cattle, equipment and structures. Various addenda include photographs of the property, building diagrams and descriptions, forestry cruise report and other valuations. The helpful land composition map drawn from aerial photographs and prepared by Mr. Dan Dorey captures the diversity of the lands including the fields, cutover sections, gravel pit, space occupied by the residents and farm buildings together with the commercial mill operation, the woodlands with marketable timber, and the Christmas tree areas. Having studied Mr. Speed's report and considered his testimony accept his opinion, his methodology, and the assumptions upon which it was based. In conducting his investigation he intended to estimate the market value of Boyd Corkum's real and personal property at their highest and best as of August 15, 1991. The principle of highest and best use is fundamental consideration and may be defined as: "that use which at the time of the appraisal is most likely to produce the greatest return to the property over given period of time." Market value is defined as: "The most probable selling price of the property if offered for sale on the open market for reasonable period of time." In preparing his report Mr. Speed assumed that all of these assets would be placed for sale. He predicted that at sale it would not be as likely that all of the assets valued could be sold at their market value to single purchaser. For example, someone interested in buying the woodlands might not be interested in purchasing the cattle or the agricultural buildings and equipment. Neither might that purchaser be interested in buying the sawmill. Clearly, an orderly disposition would be required so as not to impair the value of the remaining assets. As Mr. Speed noted: "One would not sell off the sawmill equipment, "that use which at the time of the appraisal is most likely to produce the greatest return to the property over given period of time." Market value is defined as: "The most probable selling price of the property if offered for sale on the open market for reasonable period of time." In preparing his report Mr. Speed assumed that all of these assets would be placed for sale. He predicted that at sale it would not be as likely that all of the assets valued could be sold at their market value to single purchaser. For example, someone interested in buying the woodlands might not be interested in purchasing the cattle or the agricultural buildings and equipment. Neither might that purchaser be interested in buying the sawmill. Clearly, an orderly disposition would be required so as not to impair the value of the remaining assets. As Mr. Speed noted: "One would not sell off the sawmill equipment, until the woodlands had been sold and every reasonable effort made to sell the sawmill land, buildings and equipment as an operating unit; or One would not sell off the frontage to the land or the home and home site as first item of business." Mr. Speed envisaged preparing colored brochure at reasonable cost which would contain series of aerial and ground photographs and list of the entire assets. Initially it would be offered as complete package. Because of its ideal location, surrounded by three well known geographical landmarks, Mr. Speed thought it might well be purchased as block. He thought he would test the market for three or four months and if no attractive offers were forthcoming then he would switch emphasis to parcel approach. As he said, some of the assets would require less time to sell than others. For example some of the equipment could be sold during the spring and summer months. Overall, Mr. Speed estimated that reasonable period of time to effect sale of all of the plaintiffs property would be two years. If the assets were sold in their entirety then Mr. Speed foresaw continuation of the operation under existing use of farmlands and woodlands. For something this size, he expected it all to be sold in two years. If on the other hand the assets were sold separately then he expected that to occur on progressive basis but completed after two years. Having examined comparable sales in Kings County and because the plaintiffs lands are within 75 miles of Halifax, Mr. Speed was confident that the offer would be well received. Mr. Paul Gervason, B. Comm. MA (Econ.) P. Ag. was called by the defendants. His qualifications were admitted. Mr. Gervason is professional agrologist, consultant and pan‑time lecturer in the School of Business and Department of Economics at Acadia University. His several memberships include the Agricultural Institute of Canada and the Canadian Agricultural Economics Society. He has appeared as an expert witness before various provincial Public Utilities Boards and has prepared and presented briefs to the Senate Committee on banking, trade and commerce and the House of Commons Committee on finance, trade and economic affairs. Mr. Gervason was asked to investigate the plaintiffs forestry products operation. His report is dated March 30, 1992. During the course of his investigation Mr. Gervason reviewed and critiqued the damage claim analysis prepared by the plaintiffs expert, Carl Kent, C.A.. While noting that the plaintiffs woodland/lumber mill business was "substantially altered" by his motor vehicle accident, .., an analysis of Mr. Corkum's operating results for the period before and after the accident, and examination of relevant information on the forest‑products industry in general, suggests clearly that number of influences were already well under way at the time of the accident, whose impact would have negatively influenced both 1989 and subsequent‑years operations of Mr. Corkum." (Gervason report, Exhibit No. 2, Tab 5, p. 1) Mr. Gervason was highly critical of Mr. Kent's projections of "average growth of 8.1% in total revenues" or forest‑products income "experiencing an average yearly growth of 10.5%". Mr Gervason said that in his opinion there was no basis for even approaching those projections. At best he predicted that the plaintiffs sawmill operation would be "flat". There was absolutely nothing in the historical data which he reviewed suggesting that the outlook could by any reasonable standard be described as "growth". There was nothing to indicate that Boyd Corkum had contemplated any modernization of the technology he used in his woodlot operation. The evidence disclosed that Mr. Corkum was committing all of his personal effort and energies to running his woodlot and lumber mill. It was unreasonable to expect that he could improve his levels of production. Mr. Gervason noted: "Further, the very modest level of returns earned from those efforts, and review of 1990 results where additional hired labour was used to replace now‑unavailable owner‑operator effort, suggest that such additional effort, at standard wage, would reduce the already precariously‑low level of income being generated by the Corkum woodlot operation. Such an increase in effort would likely have, as 1990 results demonstrate, reduced the operation from marginal one at best, to chronically money‑losing one. Thus, the argument of Increase in Effort should not be used to justify future output/earnings growth." (Gervason report, Exhibit No. 2, Tab 5, pp. 16‑17). In Table to his report Mr. Gervason analyzed annual volumes of certain forest products sold in Kings County and across the province from 1980 to 1990. The measure of lumber sales was expressed in million board feet (mfbm). Whatever growth might have been experienced in the province, was not shared in Kings County. accept Mr. Gervason's opinion. am satisfied that the major forestry products produced lumber, Christmas trees, pulpwood and logs in the years up to the time of this accident (1989) were all negatively affected by wide variety of market pressures including an erratic exchange rate and disease infestation in Christmas trees. doubt that Mr. Corkum could have maintained gross revenues for his woodlot and sawmill operations beyond 1988 and even modest rates of inflation would further erode the low level of net farm income which Mr. Kent recorded. Given the evidence of Mrs. Corkum and Mr. Jon Porter there was no basis for optimism that contractors would experience an increase in selling prices for the forest products sold. While Mr. Gervason refers to March, 1991 report to the Legislative Assembly of New Brunswick which confirms significant downturns in both paper‑products and lumber exports from Canada, his observations are equally apt in Nova Scotia. The force of his conclusions was not weakened on cross‑examination. Residential housing starts dropped dramatically both nationally and locally in 1990 and in 1991. Mr. Gervason has not seen growth to this point and in looking ahead over the next five years he was not optimistic. He described it as situation of crisis proportions, the "worst" he has seen in his lifetime. He didn't know of single economist in Canada who had predicted that the Canadian Dollar would have fallen, so far, in the few days before he testified. Mr. Gervason could find no support for the proposition that Mr. Corkum would experience growth in revenues from his woodlot/sawmill operations. In fact Mr. Gervason concluded that none of the potential for growth applied to Mr. Corkum's operations. He said he did not expect any improvement in housing starts and it would take an enormous turn‑around before anyone experienced return to 1989 levels. accept Mr. Gervason's evidence that fluctuating Canadian Dollar has had significant effect on trade in forestry and other products between Canada and the United States. An erosion in the value of the Canadian Dollar between 1981 and 1986 made it easier to sell Canadian Forest products on U.S. markets. Conversely steady improvement in the value of the Canadian Dollar between 1986 and 1991 has lessened the competitive edge of Canadian suppliers to U.S. markets. This pressure has reduced volumes of Canadian product sales in the United States. Increasing domestic prices of Canadian raw materials has added to the spiral. Mr. Gervason said that Mrs. Corkum's records (Exhibit 6) bore out the statistical information he collected in Table C. Prices have stagnated. He predicted little or no growth in the future. Similarly saw log reduction has flattened. Locally, the price has stayed the same. Until there was dramatic improvement in the economy, these pressures would continue and prices would stay flat. Mr. Gervason foresaw no change in the next couple of years. His review of building permits issued by the Municipality of the County of Kings bore out these projections. Whatever gains were achieved in 1989 have dropped off in 1990 and 1991. For small mills like Mr. Corkum's, residential construction is the primary market. These sizeable reductions on the local scene over the last three years have paralleled the national experience. accept Mr. Gervason's opinion that one could not possibly project any growth greater than that seen in 1989 and it would take tremendous improvement in 1993 and in 1994 before anyone could confidently predict favourable trend in the foreseeable future. The Christmas tree segment of Boyd Corkum's operations naturally attracted Mr. Speed's attention. The factors which negatively impacted on the industry in this province are addressed at p. 60 of his report. In addition, specific investigation of the 40 acres used to grow Christmas trees was undertaken by Dan Dorey, forester who completed the timber cruise. His report dated October 18, 1991 is found at Addendum to Mr. Speed's Report. This letter details his recent inspection. Mr. Speed revisited the Christmas tree areas accompanied by Paul Gervason which resulted in Gervason's subsequent report dated November 18, 1991 appended as Addenda to Exhibit 2). Mr. Gervason also attacked Carl Kent's forecast that the plaintiff could expect forest product income growth of 10% per annum, with particular reference to Boyd Corkum's Christmas tree operation. In particular Mr. Gervason noted the rise and fall of the Nova Scotia Christmas tree industry. marked increase in the number of U.S. Christmas tree growers has cut into the Nova Scotia industry. fluctuating dollar has increased the risk for Nova Scotia growers. Changed customer preferences has downsized export markets of certain tree species. Tighter inspection controls have held up trans‑border deliveries. The trend away from natural trees has eroded the potential market demand. The appearance of U‑Cut Christmas tree operations in Nova Scotia over the last two years has come in response to the eroding U.S. market available to Nova Scotia Christmas tree growers. All of this against the reality here that the commercial market for Christmas trees in this province does not exceed 80,000 trees annually. Mr. Gervason thought that in the 1990's Mr. Boyd Corkum would do well to "stay even" with his performance in the 1980's. While the figures assembled by Mrs. Corkum (Exhibit 6) show change in approach and diversification in the 80's, Mr. Gervason doubted that such product‑mix changes would have brought about any sustained improvement: "... all of the main wood products sold were experiencing at least similar market constraint, suggesting that more of one or less of another would not have significantly altered income potential. For these reasons then, change in product mix cannot be used as justification for projecting an increasing income stream." (Gervason Report, supra, p. 18) On cross‑examination Mr. Gervason was shown Exhibit 13 which is table dated April 30, 1992 by Statistics Canada showing Christmas tree exports from Nova Scotia between 1981 to 1991. agree with Mr. Gervason that Exhibit No. 13 is not compelling statistical data. It is simply bar graph purporting to show, in millions of dollars, export sales in that decade. Without knowing volume and price per unit one cannot say that the chart reflects growth. Mr. Gervason remained convinced that the number of trees sold flattened in 1986. There were two other factors which signalled future difficulty in Mr. Corkum's forest products operations. The absence of any capital cost allowance provisions from 1981 to 1990 spelled trouble ahead in modernizing or even maintaining structures and equipment. Secondly, many of the tasks in which Boyd Corkum was personally involved were dangerous. He was getting older. Mr. Gervason said: "... it is troubling to contemplate the ongoing level of effort required of Mr. Corkum, to maintain his woodlot/mill operations up to the 'normal' time of retirement had the accident not occurred. Should any other factor natural or accidental intruded (sic) which had the effect of reducing Mr. Corkum's customary level of effort, the impact would very likely have been to reduce the already‑marginal operation to loss position, and force permanent resolution to its underlying problem of inadequate income potential" (p. 19) These fluctuations of markets, exchange rates, economic cycles and prices were given practical support by Jon Porter, assistant woodlands manager for Bowater Mersey, called on behalf of the defendants. He explained the modernization techniques and changed strategies employed by his company, forced to cut costs and maintain its position in today's economy. The pulpwood price of $56.00 per cord, at roadside has not changed since May, 1990 (Exhibit 6). Bowater Mersey divides its territory (both corporate owned or in the hands of others) into four districts. The Medway district covers Annapolis and Kings Counties. Boyd Corkum's lands are within the Medway district. In November, 1989 Mr. Porter's company replaced its pulpmill with new thermo‑mechanical pulpmill (TMP). This is much more efficient in its use of wood. The new mill uses 20% less wood to produce the same volume of newsprint. He produced memorandum (Exhibit 19) which analyzes deliveries of spruce pulpwood to their mill in 1989, 1990, 1991 and projected for 1992. Deliveries of total fibre cords and total pulpwood cords have dropped markedly in the space of three years. In fact cords delivered by private suppliers has dropped from 186,300 cords in 1989 to projected 100,000 cords in 1992. Even though Mr. Corkum had supplied to Bowater Mersey in other years, there was no guarantee that he would be asked to continue to supply Bowater's needs. The company changed its requirements as of January 1, 1992. Time requirements for allowing cutting in advance have been slashed. Suppliers are obliged to acquire tickets confirming their adherence to these regulations. The days of contractors delivering wood cut months in advance are over. The defendants called Brian L. Burnell, FCIA, FIA, ASA. For more than 20 years Mr. Burnell has appeared as an expert actuary in cases in this and the other Atlantic Provinces. He has published in his field and has served as secretary‑treasurer of the Canadian Institute of Actuaries. The Atlantic Canada office of The Wyatt Company operates in Halifax under Mr. Burnell's direction. His qualifications were admitted by the plaintiff. Mr. Burnell was asked to do two things: calculate present value "multiplier" based on $1,000.00 per annum for the plaintiff's future loss of income; and calculate the present value of the plaintiff's future Section benefits. In his first report dated November 7, 1991 Mr. Burnell made those calculations as of December 1, 1991. In calculating the multiplier he used net interest rate of 2.5% per annum as prescribed by Civil Procedure Rule 31.10. Mr. Burnell assumed that Mr. Corkum would retire at age 65 and that he would survive to that age. He made no allowance for employment income after age 65. The probability of Mr. Corkum surviving to age 65 was 86.25%. Mr. Burnell calculated multiplier, based on $1,000.00 per annum, of $7,359.00. He testified that at the time he prepared this report he did not think that net interest rate of 2.5% reflected the difference between estimated investment and price inflation rates. He did not think it an appropriate figure to use, but did so by virtue of C.P. Rule 31.10(2). He was then asked to review Armstrong v. Baker and McCrindle (1992) 11 N.S.R. (2d) 239. Through his inquiries and studies Mr. Burnell said he confirmed that 2.5% was not realistic, especially for the short term. Consequently at the request of counsel Mr. Burnell prepared second report dated June 12, 1992. He analyzed yields obtained from Government of Canada Bonds and certain Provincial Guarantee Bonds and compared these yields to the rate of increase in the Consumer Price Index over the last twelve months. This proved real rate of return of approximately 7%. The computer printout attached to Mr. Burnell's report summarizes the rate of increase in the C.P.I. and yields available on Government of Canada Bonds over the past 10 years. This proved that the ten year average real rates of return ranged between 5.71% and 6.20%. In his report to David A. Miller, Q.C., counsel for the defendants Mr. Burnell wrote: "Your (sic) have drawn my attention to the comments made by Mr. Justice Saunders in the Armstrong vs. Baker case with particular reference to determination of an appropriate rate of interest to be used in valuing future loss of income when the term of payment is relatively short ... In the case of Mr. Corkum, we are dealing with working life expectancy of 8.16 years calculated as of December 1, 1991. Clearly, this is situation of the type where the considerations involved are very different to those involving long term of payments ... Accordingly, in the circumstances, I am satisfied that the use of a net rate of interest (i.e. a real rate of return) of 5% per annum is reasonable in placing a value upon Mr. Corkum\'s future income loss, between now and the date he attains age 65. On this basis, the multiplier to be used in respect of loss of future employment income for an amount of $1,000 per annum, would be $6,674." (Exhibit 2/Tab 4) Mr. Burnell also referred to new investment vehicles available and in particular the so‑called Real Return Bond issued by the Government of Canada late in 1991. These are intended for the long term, upwards of 30 years. It is unique in Canada in that it provides complete protection against inflation. sample was introduced as Exhibit 20. The interest rate is indexed, as is the maturity date at the end of term. To the extent that it is traded, recent yields have been in the 4.65 to 4.70 range. Such rates for bond with 30 year maturity satisfied Mr. Burnell that he was justified in applying net rate of interest of 5% per annum in Mr. Corkum's case with working life expectancy of 8.16 years. He had reviewed John Carter's reports and confirmed that Mr. Carter had made appropriate use of Mr. Burnell's rates and figures. The defendants called John B. Carter. Mr. Carter is managing partner with the chartered accountancy firm Ernst and Young in Halifax. He has testified as an expert witness in the courts of this province and before Government regulatory bodies. His qualifications were admitted by the plaintiff. Mr. Carter explained his reports, the first dated January 7, 1992 (Exhibit 2/Tab 1) and subsequently June 22, 1992 (Exhibit 2/Tab 2). Certain revised schedules were prepared by Mr. Carter and these schedules were introduced together with his letter to defence counsel dated September 28, 1992 as Exhibit 21. He concurred with the comments of Brian Burnell that rather than the 2.5% prescribed in C.P.R. 31.10(2), 5% rate was much more reasonable over an year term. Mr. Carter was engaged to review the calculation of loss of income as prepared by the plaintiff's expert, Carl Kent, CA. After criticizing Mr. Kent's methodology and conclusions, Mr. Carter went on to provide his own determination of the plaintiffs loss of earnings. Having studied both opinions and considered the testimony of both accountants, the assumptions and data upon which they relied, theft approach and methodology, much prefer and accept the evidence of the defence expert, John Carter. It is evident from the schedule of income and expense attached to Mr. Kent's report of January 11, 1991 that both the revenue generated and the net income resulting from the revenue fluctuated dramatically from year to year. Mr. Kent himself wrote: “We also have compared Mr. Corkum's income and expenses for the ten year period (1981‑1990) schedule A. This graph shows that Mr. Corkum\'s operation is marginally profitable at the best of times; and, on average, has provided him with a net income of 4.6% to 5.2% of gross ‑ sales." (Exhibit 3/Tab 4, p. 3) It is clear that Mr. Corkum was involved in all facets of his business and normally worked 12 to 16 hour day, days week. Despite this formidable effort Mr. Corkum was only earning about $7,000.00 year (which equates to $2.00 per hour). Mr. Corkum was born August 13, 1935 and is currently 57 years of age. If one assumes normal retirement age of 65 then Mr. Corkum would have about years of earning potential remaining. agree with Mr. Carter that past results are often very good indicator of future results. In the case of Boyd Corkum they are the best indicator. It is misleading to find at page of the Kent report: "... while there have been wide fluctuations in both income and expenses over the years, the years which were not in keeping with the trend were 1989 and 1990 in which income was level or decreased, but expenses rose sharply, 1989 was the year of the accident, and 1990 continued this declining trend." careful reading of Mr. Kent's own Chart confirms that total income declined markedly in 1983 and 1986 in addition to 1990 and net income declined sharply in 1982, 1984 and 1986 as well as in 1989 and 1990. This shows that Mr. Corkum's business was subject to earnings fluctuations throughout the previous ten years of operations. am not satisfied that there were any obvious, positive trends for Mr. Corkum's future operations. Like Mr. Caner, reject Mr. Kent's use of flat 10% rate of growth in revenue for all future years. reject each of the four methods employed by Mr. Kent for the reasons stated by Mr. Carter in his critique. As an example of the weakness of Mr. Kent's approach mention his third approach which calculated Mr. Corkum's loss of future income based on possible rate of return on the assets invested in the business operations. He used fair market value for the land and the net book value for fixed assets in arriving at net asset investment of $639,816.00. Mr. Kent then assumed 9% pre‑tax rate of return in order to arrive at an annual rate of return of $57,917.00. At page of his report Mr. Kent wrote: "... Mr. Corkum would have to have an income of $51,852 to $63,982 annually to justify maintaining ownership of these assets. Prior to his accident, it would appear that Mr. Corkum's farm and forestry operation generated the necessary income to maintain ownership of these assets." There is nothing in the evidence to suggest that the plaintiff ever received anything approaching an 8‑10% rate of return. On the contrary Mr. Corkum only ever received about 1% rate of return on the fair market value of his assets over the decade that Mr. Kent represented him. accept Mr. Carter's submission that this illustration: "... continues to underscore the nominal amount of income Mr. Corkum was receiving from the assets invested in his business and the purely economic common sense of liquidating his operations and earning substantial investment rate of return on his proceeds." (Exhibit 2/Tab 1/p. 5) In preparing his own quantification of the plaintiff's claim for loss of earnings Mr. Carter kept three dates in mind: May 26, 1989 as the date of this accident; December 1, 1991 as benchmark for the calculation of current and future loss of earnings; and December 31, 1992 as notional date by which the orderly disposition of assets would be completed. In taking an approach which would most conservatively affect the plaintiff, Mr. Carter has applied the net income determined by Mr. Kent for 1989 and 1990 as representing the actual losses from operations and has added to those amounts the expected net income for those years (as calculated based on weighted average net income adjusted for 5% inflation factor) in order to determine the overall costs of maintaining the operations for 1989 and 1990. This led to total loss of past earnings from which he deducted the Section automobile insurance benefits actually received by the plaintiff. Mr. Carter went on to assess the plaintiff loss of future earnings. He used both four year and eight year history of earnings and weighted both periods to accurately determine Mr. Corkum's average historic earnings. To ensure the most conservative impact upon Boyd Corkum, Mr. Carter chose four year weighted average earnings. After deducting the present value of future Section automobile insurance benefits, and taking into account the interest income generated by the disposition of business assets (as detailed in Schedule 8, revised by Mr. Carter while testifying) Mr. Carter is of the opinion that the plaintiffs net proceeds on disposition of the business assets would be $493,762.00 (page of Mr. Carter's report, Schedule 8, Exhibit 2/Tab 1). Mr. Carter said that there were approximately 3/4 of million dollars worth of assets available for disposition. While never choosing to categorize the plaintiff's standard of living as "subsistence level" Mr. Carter didn't budge from his opinion that Boyd Corkum never had more than subsistence level of income, (emphasis mine). If he were called upon to give business advice to Boyd Corkum, he said the only recommendation he could possibly make would be that the plaintiff sell the assets and live well off the interest income generated. REASONS: Non‑Pecuniary Damages: need not repeat my description of the very significant and disabling injuries suffered by Mr. Corkum in this motor vehicle crash. have considered all of the cases cited by counsel. Principally the plaintiff relies upon three decisions: Brown v. Matheson and Von Kintzel (1990), 1990 CanLII 2473 (NS CA), 97 N.S.R. (2d) 428 (N.S.S.C., AD.); Benson v. Jamieson (1991), 1991 CanLII 4259 (NS SC), 106 N.S.R. (2d) 335 (N.S.S.C., T.D.); and King v. Briand's Cabs Limited (1984), 64 N.S.R. (2d) 210 (N.S.S.C., T.D.). In Brown, supra, Mr. Justice Kelly awarded the plaintiff $75,000.00, which was upheld on appeal. Her most significant injury was neck muscle disfunction. She was still suffering chronic pain four years after the mishap and at the time of trial was unemployable. The plaintiff also suffered chronic post‑traumatic stress disorder requiring psychiatric counselling. Her fiancé had been killed in the mishap. Benson v. Jamieson is easily distinguishable. There, 20 year old plaintiff suffered whiplash in 1987 accident which aggravated very serious injuries suffered in motorcycle crash two years earlier. King v. Briand's Cabs Limited is 1984 case and provides little comparison or assistance in assessing Mr. Corkum's situation. While it is true that the plaintiff in Brown, supra was much younger than Mr. Corkum, that is not reason enough in the circumstances presented here to discount the amount which Mr. Corkum ought to receive. Non‑pecuniary damages are intended to provide some measure of solace and compensation for pain, and suffering, and loss of enjoyment of life. All of the circumstances must be considered in order to arrive at fair and reasonable level of compensation for the level of suffering or loss of enjoyment sustained by that particular claimant. Here is man who has worked 16 hours day for more than 40 years. As Mr. Newton eloquently stated on his behalf: "The motor vehicle accident caused him an injury to his neck, which was very painful, and which persists today without any probability of improvement. The most meaningful diagnosis of his injury did not come until 1992, when Dr. David King, well known neurologist of Halifax, diagnosed him as having locked neck. The medical name for this is cervical dystonia or torticollis. Dr. King even recommended to Mr. Corkum an innovative and risky procedure involving potentially toxic medication which was injected in the base of the neck and, unfortunately, ... did not improve the symptoms. Mr. Corkum has pursued every avenue of therapy and treatment which modern medicine can provide or recommend without any improvement to his physical injury. He has suffered depression as result of his condition ... and has not been able to accept the recommendation of his psychiatrist, Or. Brian Garvey, that he sell his property. The result of his injury is that his day‑to‑day existence is fraught with pain and discomfort, and the frustration that arises from being unable to involve himself in the operation of the substantial real estate which he has acquired and developed over his lifetime. On one day Mr. Corkum was in excellent physical health and the next day he became permanently unable to do the hundreds of physical activities which were normal to him, which helped him create and maintain his estate and which, without any doubt in the world, provided sheer pleasure to him from seeing the results of those efforts." Mr. Corkum's pleasure in life was inextricably wrapped up in his family, home, work style, workplace and work ethic. With respect cannot agree with Mr. Miller for the defendants when he argues that there is prospect for some recovery. At least the first injection of botulinum toxin administered by Dr. King brought absolutely no improvement. In his most recent report dated September 14, 1992 to Dr. Garvey, Dr. King writes: "The question is whether anything more can be done to help him." How can say it is more likely than not there will be some relief from pain, which will then go to relieve his depression? While there is no evidence that Mr. Corkum's condition will worsen, neither am prepared to infer that he will experience any real, tangible improvement. Mr. Corkum's "loss" in terms of enjoyment of life, is huge. Dr. Garvey stated that the idea Mr. Corkum must relinquish his former way of life is "by far the most grievous stress he will ever face". Mr. Corkum had enjoyed quality of life which would inspire all those who sought to emulate it. The fact that he will now be denied the opportunity to benefit from long hours of outdoor, hard physical labour is of great importance to me as assess his claim for non‑pecuniary damages. This award also takes into account and is intended to reflect Mr. Corkum's inability to increase, or seek to increase the value of his holdings. For Mr. Corkum, his work was his life. However, each is so inextricably tied to the other that this is case where it would not be useful to segregate one facet of the award from another. It is different than the situation which faced the Saskatchewan Court of Appeal recently in Fobel v. Dean (1991), 1991 CanLII 3965 (SK CA), C.C.L.T. (2d) 87. There, in writing for the majority, Vancice, J.A. held that the trial judge erred in not segregating, in those circumstances, the component of the non‑pecuniary damage award which was attributable to an impaired housekeeping capacity. Wakeling, J.A., in dissent, found that while it would have been helpful for the trial judge to divide his assessment of general damage into various sub‑categories, its absence did not prevent realistic assessment of the adequacy of the award. However, he would have increased the non‑pecuniary damage award from $60,000.00 to $100,000.00 because it: ... does not appear to have adequately included factor for the additional inconvenience, pain and suffering which will be involved as result of the appellant's intention to continue to perform her household responsibilities ... [and] ... bearing in mind the significant nature of the injury she has suffered, that the prospect of recovery is unlikely, and that she will continue to perform both household and business activities despite the pain and suffering this involves." (at p. 140) Obviously Mr. Corkum would be foolhardy if he were to make any attempt to perform his pre‑accident duties. By all accounts such efforts would be impossible and would most certainly ignore the very clear advice from his doctors. Thus, his non‑pecuniary damages need not be extended to accommodate additional suffering in the continued performance of duty, but should and do include component (assuming he follows the best advice to dispose of the assets) for his inability to increase or seek to increase the asset value of his operations. While difficult to measure and not forming large part of this award, it is real loss and compensable. For pain and suffering, past, present and future, and for loss of amenities and the permanent adverse impact on his quality of life I award Boyd Corkum non‑pecuniary damages of $60,000.00. Pecuniary Damages (a) Loss of Past Income Subject to confirmation explained at page 49 of these reasons, accept Mr. Carter's calculation showing loss of past earnings owing to the plaintiff of $70,624.00. simply leave it to counsel to verify that figure as accurately reflecting deduction for Section "B" automobile insurance benefits actually received by the plaintiff. will deal with the settlement reached by Mr. Corkum shortly before trial for future Section benefits separately in these reasons. (b) Loss of Future Income This is by far the most difficult aspect of the case. Mr. Corkum argues that he has earned the right to stay on his farm and asks that the defendants be obliged to finance the continued operation of his business for almost eight years, in other words to retirement age of 65. This request is vigorously contested by the defendants. They say such demand is patently unreasonable and unfair because to do so would compel them to pay the combined annual loss from the costs of maintaining this property together with loss of income which would then total something of the order of $47,000.00 per year, increasing annually. All this allegedly to compensate Mr. Corkum for an annual pre‑accident income of only $7,000.00. Counsel advise that they have thoroughly canvassed authorities across the country and there is paucity of jurisprudence in the field. Here am faced with what appears to be very unusual situation where substantial capital business assets acquired over lifetime are in the hands of sole proprietor and provider who has been completely disabled from all forms of work for which he is uniquely suited. The evidence at trial has satisfied me that many of the liabilities and significant debt load were incurred before the plaintiffs accident on May 26, 1989. By the same token much of the added value of his business assets came about over the years and arose on account of inflation. find that but for this accident Mr. Corkum's operations would have continued much the same, or worse, but not better as they had before May, 1989. The plaintiff did not have any more time or energy to invest, and further borrowings would have added to his debt load and reduced the already minimal margin of profitability. There is no evidence that Mr. Corkum's properties and assets had increased in value over the last few years before the mishap, or that they would increase in value at any greater rate than inflation. must assess the plaintiff’s loss in real terms based on the most persuasive evidence led at trial. Taking into account all of the contingencies identified by the defendants' experts conclude that it is only reasonable to assume retirement age for Boyd Corkum at 65. Even his own accountant used that time frame as cutoff point. Whether or not Mr. Corkum was injured in this accident, it is implicit in his own accountant's analysis that at some time, sooner or later, he would be required to sell his business assets when because of advancing age, or ill health or some other unforeseen eventuality he would be unable to apply his own physical labour and managerial skills to the business. Mr. Newton argues that because of the plaintiffs dedication and hard work he has earned the right to "enjoy the fruits of his labour" and that the defendants should be called upon to subsidize the plaintiffs business for another eight years. With respect, cannot agree. To do so would provide Mr. Corkum with huge sum of money and at the end of the day Mr. Corkum would still own all of his assets and presumably retire living off the interest earned on investing that capital. He could simply do nothing, hold onto the assets until age 65 thereby incurring very substantial costs, at the expense of the defendants, while earning no income whatsoever. Alternatively, if Mr. Corkum were awarded the sums of money he claims, he could take the award, sell the farm and all other business assets thereby eliminating loans to the Bank and Farm Loan Board, property taxes, carrying charges and all other liabilities. In that event Mr. Corkum would be doubly enriched. victim is entitled to compensation. These defendants are obliged to compensate Mr. Corkum for the damage he has suffered, but no more. Thus, the plaintiff's demands may be challenged on two grounds: true compensation, and mitigation. Mr. Corkum asserts that his assets can no longer generate income because of his disabling injuries. While that is true, it has been proved that Mr. Corkum would be able to convert those capital assets to another form which will then produce income, in the form of interest, without any requirement that the plaintiff expend physical labour or managerial skills. In the case of Warkentin v. Sandy (unreported, Manitoba Court of Queen's Bench, December 11, 1989) an injured plaintiff who was unable to continue operating her business was said to have acted reasonably by selling the business. Her damages were assessed after taking into account the effect of the earlier than anticipated liquidation of the business. The defendants' expert Mr. Carter also took this circumstance into account in preparing his report. While the point has not been the subject of any elaborate discussion in Canadian case law, the comments of Dr. Christopher Bruce, Professor, Department of Economics at the University of Calgary in Assessment of Personal Injury Damages, 2nd edition (Toronto: Butterworths) are helpful. Dr. Bruce has focused on the distinction between the injuries for which the tortfeasor is obliged to compensate, and invested capital which has not been impaired by the accident. In particular, at pp. 103 108 of this text, the author explains that in firm with significant assets, nothing happens to the "investment" portion of the firm's earnings in the event that the owner is incapacitated. The owner then has the option of selling the company and investing the proceeds, thereby maintaining the imputed investment income portion of the company's assets. Dr. Bruce writes at p. 104: "These earnings are not affected by the presence or absence of the owner and, therefore, do not form part of the claim for damages." On this analysis, as Mr. Miller has noted in his brief, the issue is in fact not one of mitigation. If the plaintiffs holdings have value as an investment (and they clearly would) and if there is no loss because the investment can be made in another form, then there should be no duty on the defendants to provide compensation in that regard. am also persuaded that the duty to mitigate assists the defendants here. Any plaintiff is required to act reasonably and to take all reasonable steps to mitigate the loss which is suffered at the hands of the defendant. If he fails to do so, he cannot claim damages for any such loss which he ought reasonably to have avoided: 12 Halsbury's Laws of England, 4th edition, para. 1193. See as well the helpful analysis by Paul J. Bates in Mitigation of Damages: Matter of Commercial Common Sense" (1992) 13 Adv. Q. 273. case with some factual similarities is Kellar v. Estate of Genereux (unreported: No. 8801‑14247, Moshansky, J., June 28, 1983, Alta. Q.B.). There, the plaintiff owned forest products processing business which was dependent on his ability to fly his own aircraft. Due to the injuries he received in motor vehicle accident, the plaintiff was unable to continue flying and was forced to close the plant. As the court stated at p. 11 of the decision: "As in all damage claims there comes point in time beyond which there is duty on an aggrieved party to mitigate damages. One cannot charge business losses to wrongdoer ad infinitem. The problem here as see it to arrive at an equitable interval during which losses should be charged to the wrongdoer." (underlining mine) Mr. Corkum had the option and, find, the duty, after it became clear in his own mind that he was permanently disabled, to take all reasonable steps to cease business operations and to sell income producing assets so as to convert them to assets which would then produce investment income. Mr. Corkum's financial returns were never of the size or consistency forecast by his accountant. In spite of his sacrifice and endless toil Mr. Corkum's annual income was low. By all accounts, his operations were marginal. Yet it provided standard of living which satisfied Mr. Corkum and his family. They were proud, content and self‑sufficient. These qualities brought their own rewards. Mr. Newton has argued that Mr. Corkum is not without aspirations. accept that. He will have to change his outlook. While he may choose to continue to live in his community, he must adjust his focus and learn to develop other pastimes and interests. cannot order Mr. Corkum to sell his assets. But am able to relieve the defendants of the obligation to financially sustain the plaintiffs operations. accept Mr. Miller's key submission that the defendant should not be expected to subsidize the plaintiffs ongoing losses simply so that he might be permitted to hold onto those assets until age 65, all the while earning no income whatsoever from his capital. The Kent report is prepared on the assumption that the plaintiff will maintain his business assets until age 65, thereby sustaining an annual loss in the order of $47,000.00. This proposal leads Mr. Corkum to claim very large sums as "compensation", yet at age 65 the plaintiff would still own the assets and presumably could retire living off the interest earned on investing the capital. Mr. Corkum is entitled to full compensation for his injuries and losses, but no more. The award must be fair, both to the plaintiff and the defendant. Mr. Corkum is not entitled to profit at the expense of the Sawatskys. The basic principle in assessing damages in claims arising out of personal injuries was stated by Viscount Dunedin in Admiralty Commissioners v. S.S. Susquehanna (Owners), 1926] A.C. 655 (H.L.), adopted in Andrews v. Grand and Roy Alberta Limited, 1978 CanLII (SCC), [1978] S.C.R. 229. The most recent affirmation of the principles which form the basis for awarding compensation in personal injury cases came in Ratych v. Bloomer (1990), 1990 CanLII 97 (SCC), 69 D.L.R. (4th) 25 where, McLachlin, J., writing for the Court, held: "In the trilogy this court affirmed that the purpose of awarding damages in ton is to put the injured person in the same position as he or she would have been in had the ton not been committed, in so far as money can do so. The plaintiff is to be given damages for the full measure of his loss as best as can be calculated. But he is not entitled to turn an injury into windfall. In each case the task of the court is to determine as nearly as possible the plaintiff's actual loss. With respect to non‑pecuniary damages the task is necessarily imprecise, and resort must often be had to conventional figures. But where pecuniary damages are at issue, it is the actual pecuniary loss sustained by the plaintiff which governs the amount of the award. The functional rationale for the award of damages adopted in the trilogy of Andrews v. Thornton and Teno underlines the necessity of using the plaintiffs actual loss as the basis of his or her damages. The award is justified, not because it is appropriate to punish the defendant or enrich the plaintiff, but because it will serve the purpose or function of restoring the plaintiff as nearly as possible to his pre‑accident state or alternatively, where this cannot be done, providing substitutes for what he has lost." (at p. 40) The Kent Report purports to calculate the plaintiff's loss of income allegedly resulting from his injuries, from the date of the accident until the normal retirement age of 65. Mr. Kent premised his report on the assumption that Mr. Corkum would not recover from the injuries so as to be able to resume working at his original. level. The Report states, at p. 1: "Our understanding of Mr. Corkum's physical condition is that, as result of the accident, he suffers form pain on continual basis and is severely hampered in returning to his usual work routines since the date of the accident. Ordinarily, Mr. Corkum worked fairly long day at physical labour in respect to running his farm and mill operations. His injuries are such that he is now unable to attend to these same duties in the same manner as he was prior to the accident." As Mr. Miller demonstrated during his cross‑examination of Mr. Kent, the accountant projected the plaintiff's losses as continuing until his retirement age 65 and then put forward claim based on the combination of those large net losses as well as loss of income. Mr. Kent assumed that Mr. Corkum's income would show real growth after inflation during those years. On the evidence find that as of early 1991 Boyd Corkum must be taken to have adopted the position that he was totally disabled from employment and would remain so for the balance of his working life. In January 1991 the Kent Report was prepared. This report was delivered to the defendants in February, 1991. find that the plaintiff must be taken to have agreed with the contents of his own expert's report. No one would expect that on the day following the motor vehicle accident Mr. Corkum should have put his assets up for sale. He was entitled to wait reasonable period of time to evaluate the effects of his injuries. After the mishap he was told by his doctors that he might expect recovery within about six months. That time frame was later changed to year. During the period within which Mr. Corkum thought there was chance of recovery, he hired extra help and turned over greater responsibility to his son. Nonetheless, the 1990 fiscal year was not success. By early 1991 Mr. Corkum's financial and medical experts came to believe that he would never return to his former work level. Accordingly find that it was reasonable and appropriate for Mr. Carter to use January 19, 1991 as the trigger date from which the plaintiff should have begun his efforts to dispose of his assets and mitigate his loss. This was, after all, just slightly less than two years after the motor vehicle mishap, during which time the plaintiff had undergone considerable medical treatment which, he now says, did not result in any substantial improvement in his condition. In his analysis, Paul J. Bates, supra, writes that there are, generally, three rules of the law of mitigation: "(1) The plaintiff will not recover for those losses which can be avoided by taking reasonable steps. The plaintiff is expected to conduct himself as though there is no claim in which to expect recovery of losses. (2) The plaintiff will recover as damages all costs and expenses incurred in taking reasonable steps in mitigation of damages. (3) The plaintiff claim for damages must be adjusted to take into account the amount of any losses avoided or, in exceptional cases, the amount of losses incurred in taking reasonable steps in mitigation of damages. (at p. 274) Applying the analysis to Mr. Corkum's situation, is it reasonable to have expected him to begin to minimize his loss by selling off assets when he realized he could not return to work? Put another way, was Mr. Corkum's failure to take those steps unreasonable? The plaintiffs choices, and obligation may be distinguished from the situation addressed in Stoddard v. Atwil (1991), 1991 CanLII 4329 (NS SC), 105 N.S.R. (2d) 315. That was "repair" case where found the plaintiffs were justified in waiting to establish the builder's liability without borrowing $60,000.00 to effect full program of repair. In effect, did not oblige the plaintiffs to spend more in order to risk less. Mr. and Mrs. Stoddard would not be prejudiced by their financial inability to do anything more than they already had. On the contrary, the situation which faced Mr. Corkum was when did it become reasonable to accept the urgings of those who counselled him and get on with his life? There are no extraordinary circumstances here which would cause me to engage in anything other than an objective assessment. There are no factors peculiar to Mr. Corkum which would alter the test. ... distinctive attributes of the plaintiff's personality and mental composition are ignored in favour of an objective assessment of the reasonableness of his choice. So long as he is capable of choice the assumption of tort damages theory must be that he himself assumes the cost of any unreasonable decision ..." (per Wilson, J. in Janiak v. Ippolito (1985), 1985 CanLII 62 (SCC), 31 C.C.LT. 113 at pp. 126‑7) As explained by Bates, supra at p. 277: “When there are mitigatory measures that .are less costly than the amount of the projected losses, mitigation is necessary ... This cost‑benefit analysis is at the foundation of the law of mitigation. Reasonable steps in mitigation of damages are those which are consider efficient on considered risk assessment of all feasible options." accept Mr. Carter's allowance of period of two full years for disposition of those assets in order to realize the appraised values set out by Mr. Speed in his report. As noted previously, Mr. Speed's opinion was that period of one to two years is reasonable time to sell these assets. Giving Mr. Corkum the full benefit of the doubt, Mr. Carter has assumed that two full years would be necessary for the sale and that none of the proceeds of disposition would be applied to the calculations until the expiry of that two year period, namely this month. This then adopts calculation most favourable to the plaintiff. Mr. Carter's report, which accept, has allowed real estate commission of five percent and has excluded the value of the Corkum residence from the total appraised value of the other assets so that the plaintiff might re‑establish himself in other suitable accommodation. This has produced net capital sum of $433,762.00 which the plaintiff will then be able to invest and earn income. Discount Rate Having considered the evidence of Messrs. Carter and Burnell am satisfied that this is case where the spread between interest rates and general price inflation should be pegged at other than the 2.5% provided for by C.P.R. 31.10(2). As said in Armstrong, supra, it is open to the parties to lead evidence to show whether or not the mandated capitalization rate is reflective of the difference between the criteria stipulated in the Rule. Here find that the defendants have succeeded in persuading me that this is an appropriate case to apply different rate. Mr. Corkum's claim for loss of income to the date of retirement is something in the order of eight years from the time of trial. As Messrs. Carter and Burnell have said, this is time frame during which reasonable forecasts can be made. I am confident that a higher discount rate should be used and I accept Brian Burnell\'s supplementary report dated June 12, 1992 where he expressed the opinion that it was appropriate to use "a net rate of interest" (i.e. a real rate of return) of 5% per annum in valuing Mr. Corkum\'s future income loss to age 65. On the same basis accept Mr. Carter's supplementary report dated June 22, 1992 which incorporates the discount rates recommended by Mr. Burnell. Mr. Carter's calculations provide for both mitigation of the plaintiffs losses and protection of his capital against inflation until the normal retirement age. Having accepted Mr. Carter's assumptions and applying real interest rate of 5%, have concluded that (but for an adjustment will make on account of Section benefits) Mr. Corkum does not have loss of earnings. The evidence convinces me that the plaintiffs business operations were significantly below market rates of return on even the safest forms of investment. find that the sale of the plaintiffs property and re‑investment of the sale proceeds would earn higher income than the business operation was generating. Accordingly the loss as result of Mr. Corkum's accident and alleged inability to continue to operate his business would be nil. (Exhibit 22). Section Automobile Insurance Benefits By Originating Notice (Action) and Statement of Claim amended September 11, 1991 Mr. Corkum sued his Section "B" insurer, Sun Alliance, for re‑instatement of his no‑fault benefits on the ground that he was and continues to be totally disabled from employment. He had received 104 weeks' worth of benefits before Sun Alliance cut him off. Sun Alliance filed its defence on October 28, 1991 alleging that it had fulfilled all contractual requirements and denying the plaintiffs, claim for any future benefits. At the pre‑trial conference held September 15, 1992 Mr. Newton presented an order for dismissal of the plaintiff's action against Sun Alliance advising that settlement had been reached. The defendants claim that their rights were prejudiced by the unilateral action of the plaintiff. The defendants argue that at the pre‑trial conference Mr. Newton for the plaintiff asked the defendants to admit that Mr. Corkum was totally and permanently disabled from his employment by reason of the injuries suffered in the motor vehicle accident. As previously noted, that admission was given, formally, on September 27, 1992 (Exhibit No. 1). It is the position of the defendants that as Mr. Corkum is in fact totally and permanently disabled from all employment for which he is reasonably suited by education, training or experience, then the Sawatsky defendants are entitled to deduct not merely the amounts actually received by the plaintiff from his Section insurer, but also the present value of all future Section payments to which the plaintiff is entitled. It is sizeable amount. Mr. Burnell calculated the present value of Mr. Corkum's future Section benefits at the rate of $140.00 per week ($7,280.00 per annum) to be $64,065.00 (Exhibit No. 23). While not without some hesitation, am not persuaded that the defendants' position is sound. In his search for authorities Mr. Miller has advised that there is only one reported decision in Canada touching upon the situation where plaintiff has entered into settlement with the no‑fault insurer. He relies upon Cattapan et al v. Mitchell et al (1978), 1978 CanLII 1264 (ON SC), 105 D.L.R. (3rd) 508 where the Ontario Supreme Court considered case where the plaintiff was entitled to and had been paid no‑fault benefits and was further entitled to receive similar benefits as long as his injuries incapacitated him. Before trial of the main action against the defendant, the plaintiff settled his future entitlement to benefits and accepted lump sum payment of $8,300.00 from his own Section insurer in exchange for release. am not prepared to extend the result of Cattapan, supra to accrue benefit to the defendants here. Section 140(1) of the Insurance Act, R.S.N.S. 1989, c. 231 provides that every motor vehicle liability policy shall provide loss of income benefits as set out in Schedule "B" to the Automobile Insurance Part of the Act. These are the so‑called no‑fault benefits provided for by Section "B" of the policy. Section 140(2) provides: "Payment constitutes release Where an insurer makes payment under provision of contract of insurance referred to in subsection (1), the payment constitutes, to the extent of such payment, release by the insured person or his personal representatives of any claim that the insured person or his personal representatives or person claiming through or under him or by virtue of the Fatal Injuries Act may have against the insurer and any other person who may be liable to the insured person or his personal representatives if that other person is insured under contract of the same type as is specified in subsection (1), but nothing in the subsection precludes an insurer from demanding, as condition precedent to payment, release to the extent of the payment from the person insured or his personal representative or any other person. Section 146(2) of the Act provides as follows: Entitlement constitutes release of Claim Where claimant is entitled to the benefit of insurance within the scope of Section 140, this, to the extent of payments made or available to the claimant thereunder, constitutes release by the claimant of any claim against the person liable to the claimant or the insurer of the person liable to the claimant." Mr. Miller argues that were this section designed to merely prevent double recovery then the legislation would have specifically used the word "recovery" and not "entitlement". He says that because Section 146(2) makes specific reference to "(w)here claimant is entitled ...", and the plaintiffs own Section insurer was party to the action and where (so the defendants complain) the plaintiff has settled for less than 15% of what he was claiming, that the defendants should not be expected to give up credit for the difference. find that Cattapan, supra does not assist the defendants and no other authority has been put forward in support. In MacKay v. Rovers (1987), 1987 CanLII 130 (NS CA), 79 N.S.R. (2d) 237 (N.S.S.C., A.D.) Hart, J.A. said at p. 250: If it alleged by defendant that the damages he would otherwise have to pay would be reduced by the amount the plaintiff could have recovered under the no‑fault provisions of an insurance policy, the burden rests firstly with the defendant to show that such policy exists. If the defendant is able to show that such payments have been made or that they are available to plaintiff entitled thereto then the defendant should succeed unless the plaintiff is able to establish that such payments have been claimed and refused. It is not necessary for the plaintiff to show that the issue between the plaintiff and the insurance company has been litigated but only that the insurer has taken the position that the plaintiff is entitled to recover. In this case the defendant ceases to be entitled to deduct the Section benefits from the damage award against him." (emphasis mine) At pp. 248‑50 Mr. Justice Hart referred to the remarks of Zuber, J. in Stante v. Boudreau (1981), 1980 CanLII 1875 (ON CA), 112 D.L.R. (3d) 172 (Ont. CA), and the reasons therein attributed to Wilson, J.A. (as she then was) in Brown v. Bouwkamp (1976), 1976 CanLII 740 (ON CA), 12 O.R. (2d) 33 (CA) at p. 36: "Nor, in our opinion, can person whose claim has been rejected be stated unequivocally to be person who is 'entitled' to the benefits. To so describe him would be to prejudge the merits of the grounds on which the insurer had rejected his claim." Here Mr. Corkum was entitled to and did receive some benefits. Sun Alliance then refused him further benefits beyond the 104 week period. As is made clear in MacKay, supra, Mr. Corkum was under no obligation to pursue his no‑fault Section insurer any further. However, he did sue Sun Alliance and shortly before trial they reached settlement of about $9,000.00, which the defendants now argue grossly undervalues Mr. Corkum's true entitlement. If the defendants' submission were accepted, it would lead to the anomalous result that his decision to pursue some action against his own insurer might actually result in reducing his total recovery by almost $64,000.00 (using the defendants' revised figures). In this context the remarks of McMahon, J. in Cudmore v. Seaman (1987), 62 Nfld PEIR 123 (P.E.I.S.C.) are apt where at p. 128 he reached the conclusion "without elation" that plaintiff, who made no claim at all against the insurer, must have the benefits he ought to have received, deducted from his award. In this case, unlike the situation where plaintiff has made no claim, it may be suggested that the defendants have not really been prejudiced by Mr. Corkum's settlement. While it is true that had he pursued his litigation against Sun Alliance, he might have recovered more than $9,000.00, the law is clear that he was not obliged to do so in the face of his own insurer's refusal to pay the claim. Having sued, and settled, the defendants at least are given a credit for all benefits paid, including the amount negotiated as a lump sum. From policy perspective, plaintiffs ought be encouraged to settle claims against their own Section insurers, and not be thwarted by having to obtain the consent of the defendants' (presumably, insurers). Whether it was wise for Mr. Corkum to buy out his claim for only $9,000.00 is not the point. If, as it has been said, no‑fault insurance was promoted by insurance companies to avoid litigation and reduce the cost of insurance to policy holders then, in the absence of clear legislative amendments, any such "loss" should be borne by the defendant and not the plaintiff. see no basis in law or on policy grounds to refuse to shift that loss where, as here, the net result of Mr. Corkum's settlement is to give the defendants credit of $9,000.00 which they would not otherwise have received. Summary For clarification will reproduce the table prepared by Mr. Carter and marked Schedule and introduced during his direct examination (Exhibit No. 22, p. 1) Using 2.5% Using 5% Discount Rate Discount Rate Loss of past earnings $70,624 $70,624 Cost of maintaining business property 40,161 40,161 until disposition Loss of future earnings 60,550 54,914 Gross Loss 171,335 165,699 Present value of future Section Automobile Insurance Benefits (72,143) (64,065) Present value of additional sources of future funding (Schedule B) (69,521 (126,658) Net loss of earnings 29,671 $(25,024) NIL Mr. Carter calculated loss of past earnings of $70,624.00. That calculation was based on the assumption that the plaintiff had received Section automobile insurance benefits totalling $18,293.00. However, do not believe any deduction was made to include the settlement reached by Mr. Corkum shortly before trial. am not certain whether the lump sum settlement was exactly $9,000.00. therefore leave it to counsel to verify the sums actually paid and received by the plaintiff so that his gross loss might be confirmed. Assuming the totals of such payments are accurate then Mr. Corkum's gross loss would be $156,699.00 ($165,699.00 less $9,000.00). From this must be deducted$126,658.00 (Exhibit 22, Schedule B) leaving a net loss of earnings to Mr. Corkum of $30,041.00 for which the defendants are liable. Had found in the defendants' favour on this point would have accepted Mr. Burnell's calculations thereby resulting in credit to the Sawatskys of the present value of future Section automobile insurance benefits in the amount of $64,065.00. Had that been the case, no loss of earnings would have been suffered by Boyd Corkum. MANAGEMENT FEE No evidence was put forward by the plaintiff and the subject was not addressed in argument. There is nothing to support such claim and reject it. PREJUDGMENT INTEREST In final argument counsel agreed to rate of 7%. CONCLUSION The plaintiff will have judgment for the amounts ordered together with costs. will be pleased to hear counsel at their convenience on the subject of costs if they are unable to reach agreement. J. Halifax, Nova Scotia 1991 S.K. No. 2978 IN THE SUPREME COURT OF NOVA SCOTIA TRIAL DIVISION BETWEEN: BOYD A. CORKUM and BARTLEY SAWATSKY and CHARLES SAWATSKY and SUN ALLIANCE INSURANCE COMPANY, body corporate Defendants DECISION OF SAUNDERS, J.
The 53-year-old plaintiff suffered a neck injury (cervical dystonia) in a car accident. After undergoing treatment from 14 specialists, the plaintiff had little relief four years following the accident. He was rendered permanently disabled from all work for which he was trained and could no longer work the farm, sawmill or Christmas tree operation he had developed. Assessing non-pecuniary damages at $60,000. In assessing pecuniary damages, the court accepted the defendant's expert evidence which led to the conclusion the plaintiffs businesses were marginally profitable. The defendants were ordered to pay $30,000 as real, net loss of future income. The court approved a 5% capitalization rate as being appropriate where there was an eight year term to age 65. The plaintiff settled his future Section B benefits just before trial. The court rejected the defence argument that they were entitled to a credit for present value of those benefits which represented a figure over seven times the settlement figure. The defendants were only entitled to a credit for sums actually paid to the plaintiff. The court rejected the plaintiff's actuarial report as being late and in breach of Civil Procedure Rule 31.08.