Malinowski v. Schneider, 2011 ABQB 260

Court of Queen ’ s Bench of Alberta Citation: Malinowski v. Schneider, 2011 ABQB 260 Date: 20110414 Docket: 0403 01160 Registry: Edmonton Between: Ireneusz Eric Malinowski Plaintiff - and - Murray Schneider and Murray Schneider carrying on business under the firm name and style of Fort Chiropractic Centre Defendants _______________________________________________________ Supplementary Reasons for Judgment (Damages Calculation) of the Honourable Madam Justice D.L. Shelley _______________________________________________________ [ 1 ] On November 24, 2010, I concluded that Dr.

Schneider caused serious injury to the lower spine and spinal nerves of Mr. Malinowski: Malinowski v. Schneider , 2010 ABQB 734 , 79 C.C.L.T. (3d) 36 (the “Trial Judgment”). [ 2 ] On that basis Dr. Schneider owed damages to Mr. Malinowski in an amount which would return Mr. Malinowski to where he would have been, had he never been injured by Dr. Schneider’s negligence. The Trial Judgment does not award Mr. Malinowski a total sum as damages, but in certain instances provides factual guidelines which the parties were to then apply to calculate the amount due to Mr.

Malinowski. [ 3 ] In paragraph 350 of the Trial Judgment, I noted that, if my findings were not an adequate basis on which to calculate Mr.

[ 3 ] In paragraph 350 of the Trial Judgment, I noted that, if my findings were not an adequate basis on which to calculate Mr. Malinowski’s damages, the parties could return to seek clarification or to establish other facts to allow re-calculation of Mr. Malinowski’s losses. On March 24, 2011, the parties returned to address three issues. 1. Half-time vs. Alternating Work and Unemployment [ 4 ] The first clarification concerns the meaning of the projected ‘half time’ work habits of Mr. Malinowski: [325] The suggestion that Mr.

Malinowski was changing his lifestyle is simply not supported by his pre-injury history, nor his post-injury conduct. Mr. Malinowski preferred a less strenuous work schedule, and I conclude that he would most likely have continued his pattern of ‘breaks’ between jobs . I therefore conclude that if Mr. Malinowski had remained able to work, he would probably have continued to work less than full-time, more likely to have worked closer to half-time. [ 5 ] Mr.

Malinowski’s expert has calculated his employment loss on the basis that he adopted a work habit where he worked three months, then collected EI for three months. Dr. Schneider’s expert has calculated Mr. Malinowski’s employment loss by calculating what income would result if Mr. Malinowski had worked half time each week, but worked every week in the year. This calculation eliminates any EI benefit. [ 6 ] I confirm that the instruction in paragraph 325 meant Mr. Malinowski’s probable future was alternating periods of employment and unemployment (with EI benefits). That would be consistent with Mr.

Malinowski’s history of ‘taking advantage’ of whatever benefits were available (Trial Judgment, at paragraphs 323-325). In short, to clarify, Mr. Malinowski’s approach is the appropriate one. [ 7 ] There is a related question. Dr. Schneider suggests that, if Mr. Malinowski’s model for calculating Mr. Malinowski’s employment loss is correct, and Mr. Malinowski would spend time outside of work and collecting EI, then Mr. Malinowski’s income should be reduced by his EI premiums. [ 8 ] Mr. Malinowski acknowledges that deducting EI premiums is reasonable, and I agree. Therefore, Mr.

Malinowski’s employment income loss should be calculated on a three month on, three month off schedule, with employment income reduced by the appropriate EI premiums. 2. Future Investment Return Rate and Rate of Inflation [ 9 ] The second point on which the parties have sought clarification is the “discount rate”, the projected investment return rate for funds used to pay Mr. Malinowski’s damages. At paragraph 353 I concluded: [353] I invite the parties to re-calculate Mr.

Malinowski’s past and future income losses, and to assist that calculation I make the following findings of fact: ... 2. future return rates are assumed to be 6%, a rate that reflects a cautious investment strategy; [ 10 ] I subsequently explained the basis for the 6% amount: [356] Counsel for the Defendant noted that Mr. Malinowski’s investment knowledge falls to the lower end of the spectrum, and that

a more sophisticated mutual fund based investment return rate is less suitable for a person with Mr. Malinowski’s characteristics. Given the size of Mr. Malinowski’s damage award and that he is assisted by experienced legal counsel, I conclude that the damages in this case will be invested with the assistance of financial planners who will provide a balanced and conservative investment scheme, probably involving a mix of mutual funds and other conservative investments . On that basis I conclude Mr.

Malinowski’s award for lost future income should be calculated using a 6% return on investment. [Emphasis added.] [ 11 ] The parties now inquire on whether the 6% investment return rate takes into account inflation (a “real rate of return”) or is a ”nominal return”, as that term was used by Defence expert Darren Benning, in his March 30 testimony. “Nominal return” means the investment return, irrespective of inflation. [ 12 ] I rejected the analysis of Mr. Malinowski’s expert (Trial Judgment, at paragraph 355), which projected a very low investment return in the foreseeable future.

I preferred the long-term analysis applied by Mr. Benning (Trial Judgment, at paragraph 356). I observed at paragraph 355 that Mr. Benning had reviewed highly secure and longer-term ‘strategic’ investment strategies and their historic returns: ... Dr. Schneider’s expert also provided average investment return values for mutual funds in Canada, and for income that flows from Canada Savings Bonds. The 50 year average return for Canada Savings Bonds is 3.5%, while over the past 20 years bond mutual funds have returned income at a rate of 6.94%. [ 13 ] Mr.

Benning explained that some of these values were adjusted for inflation, which for example reduced a 5.5% bond return by 2% to a 3.5% “real rate of return”. In his expert report he explained that the TD Canadian Bond Fund, Canada’s largest bond fund, had a return over the last 10 years of 6.42%, which after inflation amounted to a real return of about 4%. [ 14 ] The 6% value in paragraph 353 is a “nominal rate of return” and should be reduced to 4% to account for inflation.

This reflects an improved and more flexible investment strategy above the 3.5% real rate of return provided by very secure long-term bond investments. 3. Employment Benefits - Pension and Other Non-Statutory Benefits [ 15 ] The parties had initially disagreed as to how to apply the ‘fringe benefits’ referred to in paragraph 353 of the Trial Judgment. At the application the parties indicated they did not require further assistance from me on this point. 4. Costs [ 16 ] Each party shall be responsible for its own costs of this application, as each party was partially successful. Heard on March 24 th , 2011.

Dated at the City of Edmonton, Alberta this 14 th day of April, 2011.

D.L. Shelley J.C.Q.B.A. Appearances: Alan R. Gray Weir Bowen LLP for the Plaintiff Richard Secord Ackroyd LLP for the Defendants