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LAw times • August 8, 2011 Harper's Wild West crusade between Canadians. It's his best wedge yet, way ahead of the abor- tion issue, Senate reform, the gun registry, and capital punishment. Harper has gone vigilante on P us by putting up wanted post- ers everywhere of 30 undesirable refugee applicants against whom nothing criminal has ever been proven in a Canadian court. An Immigration and Refugee Board hearing found them to be undesirable immigrants. But the fact that a court hasn't convicted them under the Criminal Code doesn't matter to Harper and his cabinet pals who have branded them war criminals. Harper wants them rounded up and shipped back to where they came from. He doesn't want them tried before a Canadian court. So far, the roundup is working as he wants. Six people have been nabbed so far, and more are com- ing. Some of them will be getting medals when they get back home, depending on who's in power. Others will be tortured or mur- dered. Some just might get a fair trial. Th ere's no way of telling. In the meantime, Harper has a campaign going against the CBC led by Heritage Minister James Moore for not running the want- ed posters on TV. In addition, the Internet is alive right now with many rather ugly racist remarks from readers who are buying into Harper's vigilante scheme. What they write as commentary goes beyond merely attacking the suspects. It targets lawyers, judges, and the entire justice system. Noted Toronto immigration lawyer Lorne Waldman is repre- senting one of Harper's suspects, Arshad Muhammad. Writing online, a person identifi ed as An- onymous 1759 asks, "What proud Canadian citizen could represent scum like this? Deport both of them!! Th ey should not even be al- lowed to be represented by a law- yer. You're obviously not a citizen of this country . . . therefore you should not have any rights under Canada's laws." Carl from Toronto chimes in as well: "Deport both the criminal and the lawyer as well." Remember, we only have Harper's word that Muhammad is a criminal. As for Waldman, he's a Canadian. Deporting a lawyer for defending a client might not go over too well with the bar associations. Money seems to fi gure in all of this. Ian Clunas, for example, points out that "when these crim- inals have to start paying for their lawyers — they will leave faster." In Canada, everyone has a right to a legal defence. If they can't aff ord a lawyer, they have options to get help. But as Ken Banner notes on- line, some lawyers will work for show and to look good in the newspapers. He adds, however, that many are "too busy with lost luggage suits from Greyhound." A person called Dragonlen rime Minister Stephen Harper's latest judicial scheme has driven a wedge The Hill By Richard Cleroux has another suggestion: "Put all the militants on a boat in Lake Ontario and torpedo the thing. Case closed." Some courts might call that murder, of course. At the same time, people are taking the opportunity to attack judges. As ACSial writes, "Can- ada's judiciary is an arrogant, dan- gerous joke. We need legislation stripping judges of the power of imposing publication bans." But Schick has a plan: "Send all the left wing to Pakistan, then we will have real Canada back. Left wing has raped us enough with their stupid rules." Th en Anonymous 1759 is back again: "Why are we even giving these people hearings? To decide what? Th ey're wanted for deporta- tion. Send him packing now!!!" So that's it. We can end all im- migration hearings. What a great country. Harper would be proud of these people for their repeated runs at the judiciary. Todd Di- onne writes: "Lawyers, judges, immigration cops only care about their overtime and job security." He explains that he knows this because his cousin "used to work for immigration" but is retired now. Who needs Statistics Canada when you've got anecdotal evi- dence? None of the dozens of people who write in have any criticism of Harper or his ministers Vic Toews or Jason Kenney. At the same time, they have nothing good to say about our lawyers, judges or the justice system. Th en it's time for Moore to take another run at the CBC, always a favourite target for Conservatives. Moore says he "just can't explain why they've done the things they have done." Actually, the answer is quite simple. Th e CBC has refused to broadcast names or photos of the people that Harper, Moore, and others on the Conservative front- benches keep calling war crimin- als because they haven't been con- victed of anything. Until they're found guilty or at least there's some substantial evidence against them, they're innocent until prov- en guilty in our system. But Goodshot 1950 sums the issue up nicely for the conserva- tive side: "I hate the CBC. Th ey are nothing but a biased left-wing, taxpayer-sucking, bleeding heart, Liberal crock of crap. Th e sooner it gets privatized, the better." Actually, that's being discussed within the Harper government right now. Richard Cleroux is a freelance re- porter and columnist on Parliament Hill. His e-mail address is richard cleroux@rogers.com. I COMMENT Clarity needed on discount rate BY EPHRAIM STULBERG AND MATTHEW MULHOLLAND For Law Times n the past two years, the Superior Court has issued contradictory rulings on the proper interpretation of Rule 53.09 of the Ontario Rules of Civil Procedure related to the discount rate used in quantifying the pres- ent value of future pecuniary losses. Th e fi nancial impact of these rulings is potentially quite large. Indeed, it is unusually signifi cant at the present time given the his- torically low short-term rate of 0.5 per cent currently applied for 2011 trials. A review of the history behind the development of Rule 53.09 is therefore par- ticularly timely. Rule 53.09 of the On- tario Rules of Civil Proce- dure states that "the dis- count rate to be used in determining the amount of an award in respect of future pecuniary dam- ages, to the extent that it refl ects the diff erence between estimated investment and price infl a- tion rates is, for the 15-year period that follows the start of the trial, the average of the value for the last Wednesday in each month of the real rate of interest on long-term government of Canada real return bonds (Series V121808, formerly Series B113911), as published in the Bank of Canada weekly fi nancial statistics for the 12 months ending on August 31 in the year before the year in which the trial begins, less one per cent and rounded to the nearest quarter per cent, and for any later period covered by the award, 2.5 per cent per year." Th ere have been two diff erent interpreta- tions put forth with respect to how the last part of the rule is to be implemented. Th e position that has been consistently advanced by our fi rm is that the discount rate to be applied to all lost cash fl ows beyond the 15th year is 2.5 per cent per year. In Greenhalgh v. Douro-Dummer (Township), the court ac- cepted this interpretation of the rule. Conversely, the position often advanced by other experts has been that cash fl ows beyond the 15th year are discounted by the short-term rate for the fi rst 15 years and by 2.5 per cent for all subsequent periods. Th is blended approach to the discount rate tends to produce a signifi cantly higher present value calculation in the current interest envi- ronment. In Slaght v. Phillips and Wicaartz, the court accepted this blended approach. Th e fi nancial signifi cance of such a di- vergence of interpretation can be illustrated through an example. Consider a young pro- fessional who is catastrophically injured in an accident and is 26 years old at the date of trial. Based on projected annual income of $100,000, the blended approach would calculate a future income loss of $3.03 mil- lion, while our fi rm's position would result in a future loss of $2.62 million for a diff erence of $410,000 or 17 per cent. Clearly, this is a fi nancially signifi cant issue. Given the current state of the judicial de- bate over this issue, a review of the historical background and economic theory underlying the rule is of assistance. Ontario's search for a universally applicable discount rate began in 1980 with the report to the committee of the Supreme Court of Ontario on fi xing capital- ization rates in damage actions. Th e commit- tee sought to determine a real risk-free rate in computing future pecuniary losses. Th e committee's conclusion was based on a simple insight. It reasoned that while real risk- free yields on government bonds in Canada historically had experienced signifi cant fl uc- tuations, over the long term they had tended www.lawtimesnews.com to converge at an average of between two and three per cent. It was on that basis that a dis- count rate of 2.5 per cent was adopted in the Rules of Civil Procedure. Th e 1980s witnessed high levels of real returns on government bonds not seen since the Great Depression. As a result, in the 10 years following the introduction of Rule 53.09, there were several attempts by experts to deviate from the prescribed rate of 2.5 per cent on the grounds that it was not refl ective of the reality at the time. In 1990, a committee sought to determine Speaker's Corner if Rule 53.09 should be updated. It recom- mended using a rate of 4.25 per cent until Dec. 31, 1999, with a rate of three per cent thereafter. Th is proposal was not accepted. Th e current two- tiered incarnation of Rule 53.09 is based on recommendations from the 1998 report to the subcommittee of the civil rules committee on the discount rate and other matters. Th e formula adopted was not a repudiation of 2.5 per cent as the expected long-term average rate appropriate for use in long-term future- loss calculations. Rather, the purpose was to provide a fl exible formula that accounted for both the historical long-term average rate of 2.5 per cent and the inevitable short-term deviations that rendered the long-term num- ber inappropriate for computing short-term future losses. Th e implication of this background to Rule 53.09 is reasonably clear. Over an ex- tended period of time, the overall eff ective discount rate should tend to converge at the long-term average of approximately 2.5 per cent. For example, an award for future loss of income involving a child ought to result in an average discount rate of approximately 2.5 per cent per year consistent with past his- torical experience. While a diff erent rate may prevail over the short term, eventually rates will reverse themselves such that the overall average should be 2.5 per cent. Under our interpretation, this is indeed what occurs. Over a period of 50 years, Rule 53.09 will equate to a uniform discount rate of 2.16 per cent per year, even with the low dis- count rate of 0.5 per cent used for the fi rst 15 years for 2011 trial dates. Th is is well within the range of two to three per cent suggested by the original 1980 committee report. On the other hand, under the blended ap- proach, the overall discount rate over a 50- year loss period equates to an average of 1.39 per cent for 2011 trial dates. Th is appears to be inconsistent with the rationale behind the rule and the economic theory that the long- term rate will approach 2.5 per cent. Within Canada, the other provinces with a statutorily defi ned discount rate have prescribed single-tier rates, all of which are within a range of 2.5 to 3.5 per cent. Cana- dian jurisdictions where there is no manda- tory discount rate have often used a rate of 2.5 to 3 per cent. Ontario's two-tiered discount rate is no ex- ception. It, too, recognizes that over the long term, the real risk-free rate of return will be approximately 2.5 per cent. In light of the re- cent judicial debate over the proper interpreta- tion of Rule 53.09, perhaps it is time to revisit the rule's wording to more clearly refl ect the intentions of the original committee. Ephraim Stulberg is a supervisor and Matthew Mulholland is a senior manager with Matson Driscoll & Damico Ltd. Th eir practice is focused on personal injury and other economic damage quantifi cation matters. PAGE 7