Law of Tort and Law of Contract Essay Needed

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Tort Law Reading Notes

Week 1 Mon Sep 8 Damages pp697-729

- aim of damages: restore plaintiff to position he would have been had the wrong not occurred o as this is impossible in cases of personal injury, monetary compensation is used o total amount is the amount that will release the target amount over the given span of years - assessment is a matter if calculation, not impression (SCC 1978) - 3 probs:

o 1) what kinds of items must a defendant compensate for o 2) how does the court determine a present sum that will compensate into future o 3) what is the effect of insurance proceeds/other compensation on tort award

- non-fatal accident may have 3 economic consequences for victim – medical/related expenses, impaired earning capacity, pain/suffering - courts pay lump sums, not periodic payments
o but, lump sum equal to the price victim would have had to pay in order to purchase an annuity (income, allowance) calculated to yield the periodic payment for the expected duration of the disability, and no more o why lump sum? 2 reasons. 1) economizes on administrative expenses 2) avoids disincentive of continuing money tied to continuing disability

- re: future lost earnings, assumptions about future changes in victims income and choice of interest rate (discount rate) greatly affect size of reward - how to determine?
o Step 1 – age profile (remaining working years, etc) o Step 2 – foresee wage change, a) secularly rise in labour productivity b) secular rise in inflation ▪ Most other factors are unforeseeable

o Step 3 – multiply each years wages (steps 1,2) by actuarial probability he will still be alive the following year o Therefore to determine wages lost by a 25 year old truck-driver in his 35th year, we would multiple today’s wages of a 35 year old truck driver by 1.07 (0.3 expected productivity increase, 0.4 expected inflation rate), multiplied again by 1.07, repeating until compounded 10 times (for 10 years inflation). For each year do this (from 25-65) and then sum them. The total is future lost earnings. o But then, they must be discounted to present value ▪ 7% interest rate on long-term bonds means we could have just totalled using adjustments only life-cycle and mortality factors ▪ discount rate = long term interest rate minus inflation rate

- what about non-pecuniary (non-financial) income? Love, recreation, etc? o since wages compensate usually for these costs (forgone recreation, etc), should they not be deducted from net loss due to disability (now he has more time to pursue them, etc)? ▪ no: law ignores non-financial costs of work and treats losses of non-financial earning capacity under rubric of pain and suffering

- loss of limbs/vision reduces amount of satisfaction that can be bought per dollar, so large sum is often awarded - as people would not exchange there lives for anything, but an infinite sum cannot be the correct amount awarded o why? It implies optimum rate of fatal accidents is zero, or close, but obviously society is unwilling to incur the costs of reducing the rate of accidents to this level

- Andrews v. Grand & Toy Alberta Ltd. (1978), 83 DLR (3d) 456 (SCC). Text p. 700. o DLR= Dominion Law Reports
- Man became quadriplegic after a traffic accident. No question about liability. At trial awarded $1mil plus, on appeal down to $500k, appeal said he should live in hospital, not have home care (appeal court reduced original $4135/month expected care cost to $1000). SCC overturned appeal, set figure at $800k, man receiving 75% of that (he was 25% responsible for accident). Grounds: only argument against home care is high social cost, due to incr insurance premiums. Yet it is “monstrous” to keep premiums down by depressing damages...
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