In Lines v. Gordon et al. and ICBC, the Plaintiff was injured in a motor vehicle collision, and consequently brought an ICBC claim for damages for pain and suffering, past wage loss, diminished earning capacity, out of pocket expenses, and the cost of future care. At trial, the Plaintiff was awarded over three million dollars for all damages. One of the issues for the Court to decide was if the damages award was to be paid out on a lump sum basis, what amount would be awarded for tax gross up for cost of future care, as well as committee and management fees. The Court heard differing methodologies, namely the “survival probability” model and the “life certain” model adjusted for survivability, from the competing experts, ultimately favoring the latter which was used by the Defendant‘s expert, and awarded tax gross up fees of $430,000.
[44] I have awarded the plaintiff tax gross-ups for both the award for future care, and for committee and management fees.
[45] Although the parties agree that an income tax gross-up is appropriate in the case of a lump sum award, they vary wildly in their assessment of the appropriate quantum for such an award. The plaintiff’s expert, Mr. Carson, estimates the tax gross-up at $489,500.00. The defendants’ expert, Mr. Gosling, submits that the gross-up and committee fees combined should be $581,288. This significant deviation can be explained by the fact that the experts’ assumptions varied greatly.
[46] The experts’ assumptions diverged significantly with regard to the following four items:
1. Treatment of disability tax credits;
2. Period of drawdown;
3. Inclusion of CPP disability and retirement benefits in first dollar income; and
4. Methodology
[47] In general, I prefer the evidence of Mr. Carson regarding the first two issues, and the evidence of Mr. Gosling regarding the latter two items. Each of these assumptions will be discussed briefly below.
[56] Finally, the two experts disagreed with respect to the proper methodology to apply. Mr. Carson favours what he calls a “survival probability” model, while Mr. Gosling prefers a version of the “life certain” model adjusted for survivability.
[58] Although I do not necessarily agree that Mr. Gosling’s method is more accurate based upon the testimony of both experts, I note that this court has favoured Mr. Gosling’s approach in all three cases where the two have both been considered. For that reason alone, I am bound by comity to follow the authority laid down in the cases noted above.
