Teichroeb v. Manitoba Public Insurance et al. Date:, 2014 BCPC 222

Citation: Teichroeb v. Manitoba Public Insurance et al. Date: 20140620 2014 BCPC 0222 File No: 39211 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: DAVID TEICHROEB and MAXINE TEICHROEB CLAIMANTS AND: MANITOBA PUBLIC INSURANCE CORPORATION, JAMES SHEARER and JOHN PODOLSKY DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE R.C. DICKEY Appearing on their own behalf: Mr. David Teichroeb and Ms. Maxine Teichroeb

Counsel for the Defendants: Mr. Tyson McNeil-Hay Place of Hearing: Kamloops, B.C. Dates of Hearing: January 22 and April 17, 2014 Date of Judgment: June 20, 2014 [1] The Claimants are seeking judgment for accelerated depreciation from the Defendant the Manitoba Public Insurance Company(“MPIC”). The Defendant accepts that accelerated depreciation is a valid head of damages but argues that in these circumstances theClaimants have failed to satisfy the onus of proving on a balance of probabilities that any accelerated depreciation has occurred.

TheClaimants’ only witness, and the only witness in this trial, was an expert qualified in the area of the appraisal or valuation of motorvehicles including accelerated depreciation. CIRCUMSTANCES [2] The Claimants own a 2006 Toyota Sienna four door passenger van. It was involved in a motor vehicle accident on April 29,2011. The expert Milton Cory is an appraiser of real estate, businesses and equipment. He has been employed in this capacity forapproximately 30 years. His experience in appraising motor vehicles has included 5 auto dealerships and 50 to 60 single vehicleappraisals.

Most of the vehicle evaluations occurred between 1978 and 1998. He has been qualified as an expert in vehicle evaluationnumerous times in both the Small Claims Division and in Supreme Court. He has authored three reports for accelerated depreciation onpassenger vehicles although these are somewhat dated. [3] The report of Mr. Cory was filed. Counsel for MPIC has challenged this report on a number of different grounds and arguesthat the opinion expressed should be given little if any weight. He argues, in

summary, that Mr. Cory has made an assumption that thereis accelerated depreciation and that his opinion is based on that assumption and not on the evidence before me. LAW [4] The Defendants rely upon the following cases: Reinders v. Wilkinson, 1993 CanLII (B.C.S.C.); Reinders v. Wilkinson, [1994] BCJ No. 2476 (C.A.); Miles v. Mendoza, (B.C.S.C.); Parsons v. Zagrodzki, 2005 BCPC 384 , 2005 B.C.P.C. 384; and Mazur v. Lucas, 2010 BCCA 473 , 2010 B.C.C.A. 473. [5] In the B.C.S.C. decision of Reinders Mr.

Justice Preston says that accelerated depreciation must be proven by appropriateevidence and cannot be simply implied from the fact that there has been damage and repair to a vehicle (p.8). This failure to prove byappropriate evidence affects the reliability of the opinion evidence. This decision was appealed and upheld. Taylor, J.A., for the Courtconcluded that the trial court had not erred in its assessment of the evidence.

Taylor, J.A., also stated that the quantification of the lossmust be assessed at the time of the accident, and that the vehicle does not need to be sold for accelerated depreciation to be allowed(para. 13). [6] In the case of Miles v. Mendoza the Plaintiff made a claim for accelerated depreciation. Madame Justice Newbury found thatit made common sense that a car that has been in an accident necessitating major repairs carries a “stigma”. Despite this, she concludedit does not amount to the proof required for accelerated depreciation (p.25).

She concludes that the case law makes it clear that “itcannot be “assumed”, by virtue of the occurrence of an accident requiring extensive repairs, that a properly repaired vehicle has sufferedaccelerated depreciation”(p.25). [7] In Parsons v. Zagrodzki, on the issue of accelerated depreciation, Judge Tweedale found that the expert had made anassumption that there was structural damage when the evidence indicated this was incorrect. He also made an assumption that a vehiclewith a declaration of damage over $2,000 would have a lesser value than a car that does not carry such a declaration.

He based some ofhis opinion on discussions with five different Honda dealers who held similar opinions to confirm his own opinion. In thesecircumstances Judge Tweedale found that he could not rely upon the opinion of the expert. [8] The decision of Mazur v. Lucas deals with the admissibility of expert reports containing hearsay evidence. It is in relation tomedical expert reports and not specifically with accelerated depreciation. The law on this issue was summarized by the court andincluded the following: ….

The weight the trier of fact places on the opinion of the expert may depend on the degree to which the underlying assumptions havebeen proven by other admissible evidence. Where the hearsay evidence (such as the opinion of other physicians) is an accepted meansof decision making within the expert’s expertise, the hearsay may have greater reliability. Page 14 [9] The correct judicial response is not to rule the hearsay evidence inadmissible but “…rather to address the weight of the opinion

and the reliability of the hearsay” (p. 14). [10] The court also noted that Rule 11-6(1) of the Supreme Court Rules does not alter the general principle that it is essential for thecourt to know the basis of an expert opinion so that such opinion can be evaluated. [11] The Claimants rely on the following cases: Vollans v. Nijjar, (BCSC); Abrahams v. Birrell, [1995] BCJ No. 1393; Caleta v. Honaizer, 2001 BCSC 1726; Fraser v. Richmond Imports Ltd. et al, 2001 BCPC 211 , 2001 BCPC 0211; Butterfield v. Choufour, 2005 BCSC 179; Frank Ryan Contracting Ltd.

Thompson and ICBC, 2006 BCPC 202 , 2006 BCPC 0202; Cummings v. 565204 BC Ltd., 2009 BCSC 1009; and Signorello v. Khan, 2010 BCSC 1448. [12] I will not detail each of the cases as I find that they generally are fact specific which involve a weighing of an expert opinion onaccelerated depreciation in assessing the reliability and proof of the report. In the cases of the Claimant the court accepted the opinionand found that accelerated depreciation had been proven. I do note that in the case of Signorello v. Khan, Mr.

Justice Grauer found thatthe expert report of the Claimant was based in large part on information obtained from sales managers and their experience with suchcircumstances. The defence argued that the expert was relying on hearsay evidence to arrive at his own opinion. Further the expert didnot relate the conversation he had although he did set out the persons with whom he had discussed this issue. Mr. Justice Grauer foundthat the expert had little choice in obtaining hearsay evidence on this issue because of the rarity of the car.

He also stated that it wouldhave been preferable if he had set out the specifics of the conversation. ANALYSIS [13] The Defendants argue that the opinion of the expert is not reliable for the following reasons: 1. The expert made an assumption that in the circumstances there would be accelerated depreciation; 2. Facts on which the opinion was based were not proven; 3. The expert omitted important information from his report on which his opinion was based; 4. His opinion was biased in his use of numbers from the Claimants’ cases; 5. He used numbers and formulas from American databases and applied to Canada; 6.

The comparative sales approach used by the expert failed to include any details, including numbers, and therefore isunreliable. [14] On the issue of an assumption of accelerated depreciation, the expert appears to accept that “the asset appraisal industrygenerally accepts that accelerated depreciation is incurred when an asset is damaged and then subsequently repaired” (p.7). [15] The expert used the comparative sales approach to determine an opinion on whether there was accelerated depreciation with thevehicle in question. The report refers to having conversations with “dealers, brokers and others” (p.21).

In “Addendum A” the expertsays he spoke with six vehicle retailers and all agreed that accelerated depreciation would be a factor. He says that he was advised thatthe value of a damaged vehicle would be adjusted based on the severity and type of damage and the type of purchaser. [16] The expert then appears to have used the American data bases to determine the amount of accelerated depreciation. In this casethe expert has valued the repairs at $10,900 and has then separated that amount between the body, power train, drive system and other.

The expert then applied the estimated damage to each of the damaged areas and from this determined the “adjustment” to the value. With respect to the repair data and his conclusions on damage to both the power train and drive system the expert’s evidence was lessthan convincing. I do find however that there was at least some damage to the power train and drive system, and that the damage in totalwas close to half the value of the vehicle.

His evidence at trial was that the subject vehicle is a family vehicle and would not likely beattractive to anyone other than families, and that families are less likely to purchase significantly damaged vehicles. [17] The expert concluded that the accelerated depreciation added up to 35% of the estimated value of the vehicle on March 3, 2011(it’s not clear why this date was selected as the date of the accident is April 29, 2011). The report was prepared two years after theaccident. The expert stated that it was difficult to find information on the value of this vehicle two years prior.

As a result he used theage of the vehicle (approximately 3 years old) at the time of the accident, and then used a similar aged vehicle at the time of writing thereport (a 2008 vehicle) to determine a value of $22,000. The expert calculated 35% of the value of the vehicle at $7,700. [18] The calculation of the amount of accelerated depreciation was based on American data. Mr. Cory admitted that he was notknowledgeable of the appropriate data to assess accelerated depreciation in Canada. He also stated that the use of American data had

been criticized in Canada. In an attempt to reflect this criticism Mr. Cory says he reduced the amount of depreciation found using the American data from 44.8% to 35%. The Defendants argued that the expert’s use of American data was fatal to the reports reliability. [ 19 ] The expert indicated that because of the amount of information that is reviewed in forming an opinion he is not able to refer to all such evidence in the report itself. This is made clear in the report itself which emphasizes that this is a “summary”.

I find that this is a reasonable approach for the expert. [ 20 ] The question for this court is to determine what weight should be given to the opinion of the expert and specifically whether based on the weight I assign to the opinion has the Plaintiff proven on a balance of probabilities that accelerated depreciation has occurred. [ 21 ] I place no weight on the comparison to other cases provided by the Claimants as decisions in one case have no probative value to the case before the court. What I am left with is the experts report and his evidence at trial.

Clearly the assumption of accelerated depreciation is not enough; the expert’s opinion must be based on more. The evidence that the expert spoke with dealers and brokers and they were of the opinion that accelerated depreciation could be a factor also does not assist me in determining whether it’s a factor in the circumstances before me. [ 22 ] There are clearly many weaknesses with the report of the expert. There is some evidence, however, as noted above, which has some probative value.

I place some weight on the expert’s evidence that in determining whether there is accelerated depreciation the dealers and brokers were of the opinion that the two main factors to be considered include the severity and type of damage and the type of prospective purchaser. These two factors were then divided into three different levels of damage, and three types of purchasers. I find that that there was significant damage to the subject vehicle relative to its estimated value.

I find that there was also some damage to the drive system and power train, although clearly most of the damage occurred to the body. [ 23 ] I find in all the circumstances that the opinion, based on the type of vehicle, prospective purchaser, and the severity and type of damage, and the expertise of Mr. Cory, proves on a balance of probabilities that accelerated depreciation has occurred. I also find that although the quantification of the damages by Mr.

Cory is less than ideal, for the reasons noted above, I find that on a balance of probabilities his assessment proves the amount stated. [ 24 ] There will be Judgment on behalf of the Claimants against the Defendants in the amount of $7,700 and costs as determined. __________________________ R.C. Dickey Provincial Court Judge