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 Measuring Business
Interruption Losses and
Other Commercial Damages:
an Economic Approach
I wish to thank Sheck Cho, my editor at John Wiley & Sons, for all of his
support over the years.
 Measuring Business
Interruption Losses and
Other Commercial Damages:
an Economic Approach
Third Edition

PATRICK A. GAUGHAN
This edition first published 2020
© 2020 John Wiley & Sons, Inc.

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 Contents

CHAPTER 1 Introduction 1
Development of the Field of Litigation Economics 2
Development of the Field of Forensic Accounting 3
Qualifications of an Economic Expert 5
Qualifications of an Accounting Expert on Damages 8
Interdisciplinary Nature of Commercial Damages
Analysis 8
Difference Between Disciplines of Economics
and Finance 10
Finding a Damages Expert 11
Critically Reviewing a Potential Expert’s Curriculum
Vitae 12
Getting the Damages Expert on Board Early Enough 18
Courts’ Position on Experts on Economic Damages 19
Standards for Admissibility of Expert Testimony 21
Exclusion of Experts 25
Trends in Daubert Challenges to Financial Experts 25
Expert Reports 28
Defense Expert as a Testifying Expert, Not Just
a Consultant 33
Quantitative Research Evidence on the Benefits
of Calling a Defense Expert 35
Treatment of the Relevant Case Law 36
Legal Damage Principles 36
Other Types of Damages Cases 42
Summary 46
References 46

v
viContents

CHAPTER 2 Economic Framework for the Lost Profits

Estimation Process 51
Foundation for Damages Testimony 51
Role of Assumptions in Damages Analysis 52
Hearsay 53
Approaches to Proving Damages 55
Causality and Damages 59
Using Demonstrative Evidence to Help the Client
Understand Its Losses or Lack of Losses 67
Causality and Loss of Customers 68
Graphical Sales Analysis and Causality 69
Causality and the Special Case of Damages Resulting
from Adverse Publicity 71
Length of Loss Period: Business Interruption Case 72
Length of Loss Period: Plaintiff Goes Out of Business 77
Length of Loss Period: Breach of Contract 78
Methodological Framework 79
Summary 82
References 83

CHAPTER 3 Economic Analysis in Business Interruption

Loss Analysis 85
Economic Fluctuations and the Volume of Litigation 85
Macroeconomic Analysis 86
Definition of a Recession 86
Measuring Economic Growth and Performance 87
Business Cycles and the Movement of GDP Components 90
Business Cycles and Economic Damages 95
Varying Responses to Business Cycles Across Industries 97
Using More Narrowly Defined Economic Aggregates 99
Quantifying the Strength of the Relationship Between
Selected Economic Aggregates and Firm Performance 101
Implementing Inflationary Adjustments 104
Regional Economic Trends 108
Quality and Timeliness of Regional Economic Data 109
International Economic Analysis 111
Globalization of Supply and Demand 113
Summary 115
References 116
Contents vii

CHAPTER 4 Industry Analysis 119

Sources of Industry Data 119
North American Industry Classification System 125
Retaining an Industry Expert 132
Conducting an Industry Analysis 133
Relating Industry Growth to the Plaintiff’s Growth 136
Other Industry Factors 138
Yardstick Approach and Industry Analysis 141
Summary 144
References 145

CHAPTER 5 Projecting Lost Revenues 147

Projections Versus Forecasts: Economic Versus
Accounting Terminology 147
Using Graphical Analysis as an Aid in the Forecasting
Process 148
Methods of Projecting Lost Revenues 153
Curve‐Fitting Methods and Econometric Models 158
Understanding Regression Output and Diagnostics 161
Common Problems Affecting Regression Models 162
Confidence in Forecasted Values 167
Frequency of the Use of Econometric Techniques
in Commercial Litigation 169
Seasonality and the Forecasting Process 177
Capacity Constraints and Forecasts 179
Sensibility Check for the Forecasted Values 180
Projecting Lost Sales for a New Business 181
Projecting Losses for an Unestablished Business 186
Summary 188
Appendix 189
References 197

CHAPTER 6 Cost Analysis and Profitability 199

Presentation of Costs on the Company’s Financial
Statements 200
Measures of Costs 201
Profit Margins and Profitability 201
Appropriate Measure of Profitability for a Lost
Profits Analysis 202
viiiContents

Burden of Proof for Demonstrating Costs 206

Fixed Versus Variable Costs 207
Using Regression Analysis to Estimate Costs
as Opposed to More Basic Methods 212
Pitfalls of Using Regression Analysis to Measure
Incremental Costs 212
Possible Nonlinear Nature of Total Costs 213
Limitations of Using Unadjusted Accounting Data
for Measuring Incremental Costs 217
Treatment of Overhead Costs 220
Must a Plaintiff Be a Profitable Business to Recover
Damages? 224
Mitigation of Damages 225
Cash Flows Versus Net Income: Effects
on the Discounting Process 230
Recasted Profits 232
Firm‐Specific Financial Analysis 238
Cross‐Sectional Versus Time Series Analysis 240
Summary 240
References 241

CHAPTER 7 Time Value of Money Considerations 245

Determination of Interest Rates 246
Types of Interest Rates 246
Financial Markets: Money Market Versus Capital Market 247
Money Market Securities and Interest Rates 247
Capital Market 249
Real Versus Nominal Interest Rates 250
Determinants of Interest Rates 255
Prejudgment Losses 261
Components of the Cost of Capital 263
Discounting Projected Future Profits 269
Should the Risk‐Free Rate Be Normalized? 272
Common Errors Made in Discounting by Damages
“Experts” 276
Summary 282
References 283
Contents ix

CHAPTER 8 Business Valuations 287

Legal Standard for Business Valuations in Business
Interruption and Business Failure Lawsuits 287
Lost Profits Versus Lost Business Value 290
Business Valuation Framework 292
Public Versus Private Companies 293
Business Valuation Parameters 294
Revenue Ruling 59–60 and Factors to Consider
in Valuation 294
Valuation Concepts 298
Capitalization of Earnings 304
Adjustments and Discounts 308
Summary 314
References 316

CHAPTER 9 Intellectual Property 319

Patents 319
Computation of Damages for Patent Infringement 325
Legal Requirements Necessary to Prove Lost Profits 325
Royalty Arrangements 333
Copyrights 341
Measurement of Damages for Copyright Infringement 344
Trademarks 347
Trade Secrets 352
Summary 355
References 357

CHAPTER 10 Securities‐Related Damages 361

Key Securities Laws 361
Damages in Securities Litigation 366
Fraud‐on‐the‐Market 367
Comparable Index Approach 380
Event Study Approach 383
Examining the Variation in Abnormal Returns 386
Limitations of the Event Study Model 391
Broker Raiding Cases 394
xContents

Merger‐Related Damages 400

History of Mergers in the United States 400
Client‐Broker Claims 405
Churning 407
References 415

CHAPTER 11 Antitrust 419

Antitrust Laws 421
Antitrust Enforcement 423
Economics of Monopoly 425
Interpretation of Antitrust Violations: Structure
Versus Conduct 429
Changing Pattern of Antitrust Enforcement 429
Antitrust and the New Economy 434
Monopolization and Attempts at Monopolization 436
Market Definition and Microeconomic Analysis 440
Market Power 440
Measures of Market Concentration 442
Areeda and Turner’s Marginal Cost Rule
of Predatory Pricing 452
Summary 461
References 462

CHAPTER 12 Economics of Punitive Damages 467

Evolving Position of the U.S. Supreme Court
on Punitive Damages 467
Frequency of Punitive Damages 470
Frequency of Punitive Damages and the Shadow
Effect of Punitive Damages 471
Purposes of Punitive Damages 473
Compensatory Versus Punitive Damages 474
Criminal Penalties and Punitive Damages
in Civil Lawsuits 475
Punishment of Corporations and Corporate
Governance 475
Spillover Effects and Punishment of Corporations 476
Deterrence Theory and the Changing Litigation
Environment 487
Contents xi

Deterrence and Regulatory Processes 490

Typical Financial Measures Used in the Determination
of Punitive Damages 493
Net Worth 494
Market Capitalization 497
Uncertain Litigation Environment 503
Summary 508
References 508

Index 513
 CHAPTER 1
Introduction

T his book is designed to provide a methodological framework for how

lost profits should be measured in business interruption litigation. Such
a framework is provided so that a standard approach can be followed in the
measurement of such damages.
In following the discussion, readers will notice the interdisciplinary
nature of commercial damages analysis. Depending on the type of case, the
expert who seeks to measure a plaintiff’s lost profits needs to possess a
well‐rounded knowledge of the research and practices in various areas of
expertise. In some cases, the issues are more limited and defined. Other
cases are complex and require broad areas of expertise. These may include
certain major subfields of economics (macroeconomics, microeconomics,
econometrics, and forensic economics), several subfields of finance (invest­
ment analysis, capital market theory, and corporate finance), and account­
ing. Given the broad range of expertise that ultimately may be needed and
that few individuals would be experts in all of these fields, a team of experts,
such as economists working with accountants, is often the optimal solution
for complex cases.
While we recognize, and we will elaborate on, that a reliable economic
loss analysis may require expertise of experts from disciplines (such as
economics, finance, and accounting), this edition will endeavour to focus
more on the important economic issues that are relevant to so many different
types of cases.
This book is not meant to present an exhaustive review of all the issues
relevant to commercial damages analysis. Rather, it is meant to discuss those
issues that are the most important and fundamental. It is necessary to bear
in mind, however, that each case brings with it a unique set of factors that
need to be considered on an individual basis. No broad‐based book, such
as this one, can anticipate all of the unique circumstances that may be

Measuring Business Interruption Losses and Other Commercial Damages: an Economic Approach,
Third Edition. Patrick A. Gaughan.
© 2020 John Wiley & Sons, Inc. Published 2020 by John Wiley & Sons, Inc.

1
2 Measuring Business Interruption Losses and Other Commercial Damages

encountered. For this reason, this book focuses on those circumstances that
are most commonly encountered and attempts to present a general damages
evaluation framework capable of handling most of them.

Development of the Field of Litigation Economics

The field of litigation economics, which is sometimes referred to as foren­
sic economics, has developed significantly over the past two decades.
During this time period, the National Association of Forensic Economics
(NAFE) was formed. It is a national body of economists who work in the
field of litigation economics and who may provide expert testimony in
court proceedings. The organization is composed primarily of PhD econ­
omists, many of whom have academic affiliations. In addition to the advent
of NAFE, two well‐received, refereed (peer‐reviewed) academic journals
devoted to the field of litigation economics have been created. They are
the Journal of Forensic Economics and the Journal of Legal Economics.
These journals have given litigation economics an academic stature similar
to other subdisciplines in the field of economics. In addition to this forum
for respected scholarly work in the area, most of the major meetings and
the leading professional conferences of economists in the United States,
including the annual meetings of the American Economics Association
and various regional associations, now have several sessions, sponsored
by NAFE, devoted exclusively to litigation economics. Such conferences
have allowed an exchange of ideas that has further developed the
methodologies in the field.
At present, the leading use of damages experts, often economists, is in
personal injury and wrongful death litigation. This is not surprising, since
this type of litigation is the most common.1 While there are some similarities
between lost profits analysis and the estimation of damages in personal
injury and wrongful death litigation, there are major differences that cause
them to be two separate fields, often including different groups of practi­
tioners. Most economists who do personal injury damages analysis have a
background in labor economics but may not have a background in finance.
Many of these experts are sole practitioners who often have a full‐time aca­
demic position. Experts in business interruption matters, however, tend to
be a more diverse group. Some of them work for large firms, including
some public companies. They come from a variety of backgrounds, the
most common of which are accounting, economics, and finance.

1
Lance Bachmier, Patrick Gaughan, and Norman Swanson, “The Volume of Litigation
and the Macroeconomy,” International Review of Law and Economics, 24(2) (2004):
191–207.
Introduction 3

Development of the Field of Forensic Accounting

Forensic accounting has undergone great development and has become a
well‐defined specialization in the accounting profession. Part of this devel­
opment was due to the competitive pressures that were placed on tradi­
tional accounting work such as auditing and taxation. However, the most
fundamental reason has been the growth in demand for this very special­
ized expertise. Some of this development has been focused on the detec­
tion of fraud. Other work has been directed toward the development of
standard methodologies for the valuation of businesses. Various organiza­
tions have sought to market training and offer certification programs in
these areas.
As noted, economists are often called on to provide testimony on dam­
ages in personal injury and wrongful death litigation. These cases utilize a
methodology that does not vary significantly among cases. This methodol­
ogy has been well developed in the forensic economics literature.2 In addi­
tion, a concise statement of many of the generally accepted steps in the
damages measurement process for personal injury cases has been set forth
in Economic Expert Testimony: A Guide for Judges and Attorneys.3 The meth­
odology usually involves projecting lost earnings and fringe benefits (net of
mitigation in personal injury cases) over the work‐life expectancy of the
plaintiff, as well as valuing lost services over a time period that may approach
the life expectancy (or, more accurately, the healthy life expectancy) of the
plaintiff/decedent. The worklife is the generally accepted standard for the
terminal date of lost earnings estimates, while the life expectancy is often
used as a guide to establish the length of the loss period for the valuation
of lost services. (The life expectancy may be reduced to reflect the dimin­
ished ability to provide services due to the aging process, and this may be
reflected in the healthy life expectancy.)4 Both the life expectancy and the
worklife expectancy are based on statistical data that establish averages
from demographic and labor market characteristics. This contrasts with lost
profits analysis in which the loss period is usually determined by a different
set of circumstances, such as a time period set forth in a contract. Naturally,
there may be differing interpretations of this contract and what it means
about the length of the loss period.

2
Stanley P. Stephenson, David Macphearson, and Gerald Martin, Determining
Economic Damages, Revision 25 (Costa Mesa, CA: James Publishing, 2016).
3
Thomas Ireland, Stephen M. Horner, and James Rodgers, “Reference Guide for
Valuing Economic Loss in Personal Injury, Wrongful Death and Survival Actions,” in
Economic Expert Testimony: A Guide for Judges and Attorneys (Tucson, AZ: Lawyers
and Judges Publishing, 1998), pp. 1–108.
4
Michael Brookshire and Frank Slesnick, “A 1990 Survey Study of Forensic Economists,”
Journal of Forensic Economists 4(2) (Spring–Summer 1991): 125–149.
4 Measuring Business Interruption Losses and Other Commercial Damages

In personal injury litigation, the monetary amount that is presented is

often derived from the historical earnings of the plaintiff or decedent. For those
who have not yet had much of an earnings history, lost earnings may be
derived from government statistics, which list earnings as a function of age,
sex, and education. Where appropriate, historical compensation data may
allow the expert to measure the value of fringe benefits. Once the total com­
pensation base has been established, the expert constructs a projection by
selecting a proper growth rate. The projected values are then brought to
present‐day value terms through the application of an appropriate discount rate.
In employment litigation, the expert may project damages using similar
methods as those employed in personal injury cases. In this type of lawsuit,
the issue may not be losses over a plaintiff’s worklife but may involve losses
over the expected amount of time the plaintiff would have remained at a
given employer. In such cases, the economist may utilize databases and
probabilities that allow him or her to estimate that time period. Sometimes
these probabilities are referred to as “Baum factors.”5
The role of the economist can be expanded when there are claims of bias
or other discriminatory practices. Here, in addition to possibly measuring the
damages of the plaintiff, the economist may be called on to utilize his or her
econometrics background to render an opinion on the liability part of the case.6
Business interruption loss analysis tends to exhibit more variability than
that of those other types of lawsuits. Although some of the evaluation tech­
niques used may be similar, the circumstances often vary more widely from
case to case. In addition, the industries involved can be very different and
may each present unique issues. Given this wide variability, business inter­
ruption cases often exhibit a greater degree of complexity than the two
types of litigation mentioned previously. They typically involve significant
time demands for the expert who must conduct a thorough analysis. These
time demands often are greater than those associated with a typical per­
sonal injury or wrongful death loss analysis, thereby making an expert busi­
ness interruption analysis a more expensive proposition for clients.
Another important difference between business interruption analysis and
personal injury or wrongful death loss analysis is the role of cost analysis. The
losses of a worker are typically wages and benefits; job‐related expenses usu­
ally are not a significant factor. In business interruption analysis, however,
costs related to lost revenues are generally quite important. It is here that the
skills of an accountant may be most useful in measuring the appropriate costs
that would have been incurred in order to realize certain lost revenues. This
is why we have devoted an entire chapter to cost analysis.

5
Charles L. Baum II, “Employee Tenure and Economic Losses in Wrongful Termination
Cases,” Journal of Forensic Economics, 24(1) (2013): 41–66.
6
Michael Piette, “Economic Methodology and the Analysis of Employment
Discrimination,” Journal of Forensic Economics 4(3) (Fall 1991): 307–316.
Introduction 5

Qualifications of an Economic Expert

It is important that the business interruption expert possess a well‐rounded
background in order to measure the damages reliably and withstand the
criticisms that will come during cross‐examination. While courts are gener­
ally somewhat lenient in whom they accept as an expert, the “expert must
possess requisite skill, training, education, knowledge, or experience from
which it can be assumed that the opinion is reliable.”7 Given that these are
generic attributes, it is important to evaluate the expert’s specific credentials
relevant to measuring economic damages.
The desirable qualifications of an economic expert witness are given in
various publications in the field of litigation economics. Examples can be
found in Stuart Speiser’s Recovery for Wrongful Death and Injury, Michael
Brookshire and Stan Smith’s Economic/Hedonic Damages, Gerald Martin’s
Determining Economic Damages, and Baker and Seck’s Determining
Economic Loss in Injury and Death Cases.8 The qualifications listed in these
publications focus on applications in personal injury and wrongful death
litigation. The requisite qualifications for competently estimating business
interruption lost profits and rendering an expert opinion are similar.
However, the expert qualifications in business interruption matters are
normally broader. These have also been set forth in the forensic economics
literature.9
A list of the desirable qualifications of an economist who could provide
expert witness testimony on business interruption losses includes:

■■ PhD in economics or finance

■■ Background in finance or financial economics
■■ University teaching position, preferably at the graduate level
■■ Scholarly publications in economics, finance, or accounting
■■ Professional presentations in economics, finance, or accounting
■■ Experience in industry analysis and forecasting
■■ Experience in commercial damages analysis

7
Mattott v. Ward, 48 N.Y. 2d 455, 423 N.Y.S. 2d 645 (1979).
8
Stuart Speiser, Recovery for Wrongful Death and Injury, 2nd ed. (Lawyer’s
Cooperative Publishing, 1988); Michael L. Brookshire and Stan V. Smith,
Economic/Hedonic Damages, The Practice Book for Plaintiff and Defense Attorneys
(Cincinnati, OH: Anderson Publishing, 1990); Gerald Martin, Determining Economic
Damages (Santa Ana, CA: James Publishing, 1995); W. Gary Baker and Michael K.
Seck, Determining Economic Loss in Personal Injury and Death Cases (Colorado
Springs, CO: Shephard’s/McGraw-Hill, 1987).
9
Patrick A. Gaughan, “Economics and Financial Issues in Lost Profits Litigation,” in
Litigation Economics, Patrick A. Gaughan and Robert Thornton, eds. (Greenwich,
CT: JAI Press, 1993).
6 Measuring Business Interruption Losses and Other Commercial Damages

The qualified witness may not possess all of the above but may have
strengths in one area that outweigh deficiencies in other areas. Courts and
juries should consider such factors when weighing the testimony of indi­
viduals who have been presented as experts but who may lack many of
these attributes or who only possess minimal levels of the listed qualifica­
tions. Other individuals who are strong in most or even all of the areas may
“bring a greater level of expertise to the table.”

Overview of the U.S. Court System

In the United States there are two different court systems: federal courts and
state courts. Civil lawsuits are typically heard in state courts, although many
large commercial lawsuits are heard in federal court.
Federal courts are organized on three levels. The first level consists of
94 federal districts. District courts are the main trial courts of the federal
system. Above the district courts are 13 circuit courts which, in turn, are
below the U.S. Supreme Court, which is the highest court in the land.
These circuit courts handle appeals that may arise from a district court.
These circuits correspond to various geographical areas, which may include
various states.
Sometimes state court claims can be brought in federal court based
upon a claim of diversity jurisdiction where the parties reside in different
states. For example, a defendant who is located in a different state may
pursue the removal of a case to federal court by citing such diversity. One
reason a defendant may want to do this is that he or she may believe they
might receive more favorable treatment in federal court. Sometimes this is
due to the fact that some states tend to give high verdicts for plaintiffs in
certain types of cases.
Judges in federal courts are selected by the president and are confirmed
by the advice and consent of the U.S. Senate. Such judicial positions could
be held for life (barring misconduct), even though many federal judges
often resign at some point.
The other part of the U.S. court system is the state courts. The trial
courts of the state system are referred to as superior courts. These courts
tend to be organized at the county level. Appeals of state court decisions
are brought to state appellate courts. In appellate courts, the appeal issues
are argued before a panel of judges where decisions are rendered through
majority rule. In such decisions the panel can decide to let the original
verdict stand, reverse the verdict, or call for a new trial. The state court
system also has a state supreme court where appellate court decisions may
be brought.
State court judges can be appointed or elected. State courts enforce
state laws and handle the bulk of civil disputes such as breach of contract
claims.
Introduction 7

Example of How Courts Weigh and Compare Credentials of Experts

When hearing the opinions of two opposing damages experts, courts will
naturally consider the credentials of the experts when deciding how much
weight to give their opinions. This was very clear in United Phosphorous,
Ltd. v. Midland Fumigant, Inc. In discussing the respective credentials of
two economists put forward as damages experts, the courts summarized
their backgrounds in this way:

Hoyt received a B.S. degree in Milling Technology from Kansas State

University in 1962, and a PhD in Agriculture and Applied Economics
from the University of Minnesota in 1972. Hoyt previously held a teach-
ing position at the William Mitchell College of Law in St. Paul, Minnesota
and served as a guest lecturer at the University of Minnesota and at St.
Olaf College. Hoyt has published a total of seven articles in his entire
career, two of which appear in agricultural economics journals, and
two of which were published in law reviews, and were therefore not sub-
ject to peer review by economists.
In contrast, Dr. John Siegfried is a professor of economics at Vanderbilt
University and has served as a professor there for 24 years. Siegfried
earned a bachelor’s degree in economics from Rensselaer Polytechnic
Institute in 1967, a Master of Arts degree in economics from Penn State
University in 1968, and a PhD in economics in 1972. At Vanderbilt,
Dr. Siegfried served as chair of the department of economics from 1980
to 1986. He taught numerous courses at Vanderbilt, including
undergraduate and graduate courses on industrial organization and
antitrust economics.

The court continued with a discussion of Dr. Siegfried’s credentials and

then addressed his publication record:

Siegfried has authored over 100 articles, which have been published in
economics journals or as chapters in various books on economics.
Siegfried currently serves on the editorial board of three economics jour-
nals, and frequently “referees” articles submitted for publication as a
contribution to scientific knowledge in the field of economics.10

It is interesting to note that the court put particular emphasis on the

relative publication and scholarship records of the two experts. One had a
more limited publication record, a record that was not focused on the areas
on which he was testifying. The other had an extensive publication record

10
United Phosphorus, Ltd. v. Midland Fumigant, Inc., 173 F.R.D. 675, 1997.
8 Measuring Business Interruption Losses and Other Commercial Damages

and was also a referee for such publications. The court seemed impressed
with these credentials, and it is not surprising that it put more weight on that
expert’s opinions.

Qualifications of an Accounting Expert on Damages

In lost profits litigation, the courts have consistently ruled that both econo­
mists and accountants are appropriate expert witnesses to testify on dam­
ages. Like economists, the background of accountants can vary considerably.
Sometimes we find that attorneys hire accountants to do lost profits analysis
assuming that by virtue of the training and experience in accounting, they
have the requisite expertise to conduct such an analysis. As with econo­
mists, such general assumptions often are wrong. Lost profits analysis is a
unique area requiring specialized expertise and experience.
The typical accountant possesses a bachelor’s degree in accounting and
often is a certified public accountant (CPA). Some accountants may not have
passed the CPA exam and lack this certification, but it is unusual to see such
individuals presented as litigation experts – especially when there is such
an abundance of accountants who are CPAs. Many CPAs also possess a
higher degree – often a Master’s in Business Administration. This degree
may feature a specialization in certain relevant areas such as accounting or
finance. The characteristics of an MBA degree and what it implies about an
expert’s credentials will be discussed later in this chapter.
As the practice of accounting has gotten increasingly competitive,
accountants have branched out into more lucrative areas of consulting such
as expert witness work. Some accountants have also been able to bring
specialized knowledge such as what they may have acquired from training
as a certified fraud examiner (CFE). They also may bring to bear their expe­
rience working with clients and matters in industries that may be related to
the lawsuit in question.

Interdisciplinary Nature of Commercial Damages Analysis

Most commercial damages analysis is performed by an expert from one
discipline – economics, finance, or accounting. However, when the analytical
demands of the case require diverse skills and knowledge, expertise in just
one of these areas may not be enough. When experts go outside of their
own fields and dabble in areas for which they have little training or
expertise, this may yield a bad result. For example, if an individual, such as
an accountant who has little or no training in statistics or econometrics,
constructs a projection of lost revenues using multiple regression or time
series analysis, the projection may be replete with flaws. Such flaws could
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Tim enjoyed his walk exceedingly, and, before it was at an end, he

had found out a great deal about his companions—that Mr. Glanville
was a retired tea-planter, and that both Bob and Kitty had been born
in Ceylon; that Bob now attended the B— Grammar School, and that
Kitty went to a private school for girls. In return, he told what a very
dull time he was having with his uncle, who kept him all day by
himself.

"What do you think of him, Bob?" whispered Kitty to her brother

when Tim was talking to her mother after tea.

"I don't fancy he's a bad sort," was the unexpected reply.
"Don't you?" she questioned dubiously.

"No. He improves upon acquaintance. I say, you might show him

your rabbit, I think."

"Have you told him about it?"

"No. I'll ask him to come into the garden; shall I?"

"If you like."

Kitty's manner was not gracious. She considered her brother fickle
because he seemed inclined to like Tim Shuttleworth, and she
marched off into the garden by herself. She was watching her new
pet contentedly munching a tender young lettuce when the boys
joined her.

"Isn't she a beauty?" she said, addressing Tim, who had been rather
surprised he had not been told of the rabbit before.

"Yes," he answered, colouring; adding, somewhat awkwardly, "I'm

glad you like it."

"Of course I like it. I've called it Fluffy. I hope I shall be able to keep
this one safer than the last."

"I—I hope so," Tim faltered. "I don't think it can come to any harm
here. Fluffy is a very good name for it."

"By the way, Kitty, the Hatches are gone," said Bob. "We passed
their house this afternoon, and it was shut up; they must have gone
early this morning. Tom told me he should come to B— for the
Grammar School Sports next month, though; so perhaps you'll be
able to speak to him about the rabbit then."

"Oh, yes," agreed Kitty; "that will do very well. No one has come for
the basket, Bob; it's still hanging up in the scullery; I noticed it just
now."
Tim started, suddenly remembering the covered basket, which, until
this moment, he had entirely forgotten he had left behind him the
night before when Snip had startled him into flight. Could that be the
basket to which Kitty referred? Yes, it must be. He stood pondering,
turning over in his mind the best way of letting his companions know
that this new pet was his present, and at length, by way of leading up
to the point, he asked, with a twinkle of amusement in his eyes:

"When did you get the rabbit?"

"Last night," Kitty responded. "It's a present from one of Bob's school
friends."

"Oh!" gasped Tim, utterly astounded at this statement.

"Yes. I was going to buy it from Tom Hatch, but he has given it to me
instead," the little girl explained. "He sent it last night."

"And we don't in the least know who brought it," said Bob with a
laugh; "for Snip scared whoever it was off the premises."

"But—are you sure it was Tom Hatch who sent it?" Tim inquired.

"Of course," answered Kitty, a trifle impatiently. "Who else could it

have been?"

"Oh, yes; it was Tom right enough," Bob agreed.

For a minute Tim was tempted to tell them they were wrong; but
would they believe him if he did? He doubted if they would; and,
upon reflection, he decided to hold his tongue and let them think the
donor of the rabbit had been Tom Hatch. How different his plan for
ingratiating himself with his companions had turned out from what he
had expected, and how vexed and disappointed he felt!
 CHAPTER VI.
CONCERNING THE COVERED BASKET.

AFTER Tim Shuttleworth's formal introduction to the Glanville family

his time no longer hung on his hands, for he was now always sure of
a welcome next door; and, during the remainder of Bob's holidays,
the two boys were constantly together. Bob, who had certainly been
prejudiced against Tim at first, soon grew to like him, for he proved a
congenial companion, being very good-natured; and, although he
owned a passionate temper, it could not be called a bad one, as Bob
was not long in finding out.

Kitty watched the growing friendship between her brother and Tim
with anything but approval. She could not overcome her prejudice
against the plain-faced, red-headed boy, and, perhaps, she was a
little jealous of him, too, for monopolising so much of Bob's society;
besides which, she still believed he was not guiltless concerning the
death of her first rabbit—for, though two years the junior of her
brother, she was far more observant than he was, and she had
noticed something strange in Tim's manner when he had been
shown Fluffy on the night when he had first seen their guest. Tim
could not help perceiving that Kitty was not altogether well-disposed
towards him, so he tried to propitiate her, and frequently with such
success that she forgot her suspicion against him and treated him
with the same good-comradeship she exhibited towards her brother.

It made Tim very happy to be on friendly terms with the family next
door, and before the time came for Kitty and Bob to return to school,
he was as much at home in their house as in his uncle's. On several
occasions he had noticed the covered basket he had dropped by the
rabbit hutch hanging on a peg behind the scullery door, and had
heard Kitty and Bob wondering why it had not been fetched; but, of
course, he could not lay claim to it, and it was not until, one day, he
heard Deborah—his uncle's elderly servant, who was housekeeper
as well—grumbling because she could not find it, that the thought
occurred to him that he ought to try to get it back.

"I suppose you've not seen my basket by any chance, Master Tim,"
Deborah said, coming out of the tool-house, where she had been
searching for the missing article. "It's a covered basket—the one I
take to market every Saturday." It was Saturday afternoon, and
Deborah, wearing her bonnet and cloak, was ready to start to make
her weekly purchases.

"I believe I did see it a few days ago," Tim replied evasively, turning
red as he spoke. "Do you want it particularly now, Deborah?"

"Why, yes, Master Tim, I do. I always keep it in one place—on the
shelf just inside the tool-house door—so someone must have moved
it." She regarded Tim accusingly, noting his heightened colour.

"Perhaps I did," he admitted. "I—I tidied the tool-house yesterday."

"Didn't you see it then?" she inquired.

"No; but I'll promise to have a look for it and try to find it by-and-by. I
—I can't stay now, for I'm going in town with Bob Glanville, Can't you
manage to do without it for once, Deborah?"

"I suppose I've no choice, Master Tim, as it can't be found; but I

haven't another basket so suitable for carrying butter and eggs in.
However, I must do the best I can." And Deborah went into the
house muttering something about boys being always meddlesome.

"I believe she thinks I've had the basket—and, of course, I have,"
thought Tim, uneasily. "I'm glad she didn't ask me what I'd done with
it. Somehow or other I'll have to get it back."

But how? That was the question occupying his mind all that
afternoon which he spent in company with Bob Glanville. He could
not ask for the basket, he did not like to take it, and he was sorely
puzzled what to do. He was aware that Kitty still suspected him of
knowing how her first rabbit had met with its death; and now he was
friendly with the Glanvilles, he was more than ever anxious that they
should not learn the truth, which, he believed, if they knew, they
would never speak to him again. He was appeased to see how fond
Kitty was growing of her new pet, and thought regretfully of the
circumstances which had prevented his acknowledging that he had
bought it for her. But he still hesitated to set the matter on a right
footing, doubting if his word would be taken against that of Tom
Hatch, of whom Kitty now always spoke with the deepest gratitude,
which made it all the more difficult for Tim to undeceive her and
declare that Bob's school-fellow, on whose kindness and generosity
she was continually harping, had gone from his promise.

Saturday was always the busiest day of the week at B—, and on this
afternoon the streets were thronged with farmers who jostled good-
naturedly against each other as they discussed cattle and crops,
whilst their wives and daughters stood behind the long rows of stalls,
in the butter and poultry market, gossiping and doing business by
turns.

"I always like the town best on a market day," remarked Bob to Tim,
as they stood watching a cheap-jack selling umbrellas, and
marvelling at his flow of words, which never seemed to fail. "It's fun
watching the country people; they seem to be having such a good
time. Oh, I say, Shuttleworth, do look at that old chap over there with
those white rats. You haven't seen him, have you? Let us go and
watch what he is doing. He's here every week."

They elbowed their way through the crowd until they found
themselves close to a stall, behind which a hook-nosed old man,
whom Tim recognised at once as Mr. Jacob Dottin, was haranguing
several young farmers who were listening and laughing. Out of a box
he had taken several white rats, one of which had perched itself on
his shoulder, whilst another had hidden in his sleeve and the head of
a third peeped out of the breast pocket of his coat; and ranged
before him on the stall were scores of little blue paper packets.

"Isn't he a queer old chap?" whispered Bob. "His name is Dottin, and
he has a shop in the place—in a back street it is."

"I know," Tim responded. "I've seen it. I suppose he is trying to see
those rats?"

"Yes; and he sells rat poison, too—some patent stuff he makes

himself. See, that farmer is going to have several packets. I'm not
afraid of rats, but I shouldn't care to let them run over me like that,
should you?"

Tim was about to reply when Mr. Dottin caught sight of him and
recognised him with a most affable nod.

"You know him?" Bob exclaimed in surprise, as Tim, colouring,

returned the old man's salutation.

"Yes," Tim answered, moving away from the stall, for he did not wish
to give Mr. Dottin an opportunity of speaking to him, fearing he might
refer, in Bob's presence, to the purchase of the rabbit. "I was
standing outside his shop one day last week when he came out and
invited me to look at his 'little family,' as he called his animals."

"That was really very jolly of him! He has quite a menagerie, I've
heard."

"Yes, he has."

"Some of the Grammar School boys buy pets from him, but they say
he's a regular old sweep—will take them in if he can, you know.
What an oddity he looks, doesn't he?"

"Yes; but I don't think he's a bad sort of old fellow."

"I dare say not; he must be good-natured or he wouldn't have had

you in to look at his stock. Wouldn't Kitty have liked to have been in
your shoes! She's just crazed about animals."

"Mr. Dottin said I was welcome to have a look round his shop any
time, and bring my friends," Tim explained, "so perhaps you and Kitty
would like to pay the old fellow a visit with me, would you?" As he
made this suggestion, he reflected that he could easily make a point
of seeing Mr. Dottin beforehand, and ask him not to mention that
there had been a business transaction between them.

"We should both like to have a good look at his animals, I'm sure,"
Bob rejoined eagerly, "but it can't be for a bit. You know the schools
reopen next week—the Grammar School on Monday and Kitty's
school on Thursday. We might go and see Mr. Dottin one Saturday
afternoon."

"All right," agreed Tim.

Accordingly the plan was left in abeyance.

"I wish I was going to have a term's holiday, like you," said Bob a
short while later, as they left the market-place and turned
homewards. "It's so jolly to be able to do just what one likes, and Mr.
Shuttleworth doesn't interfere with you in any way, does he?"

"Oh, no," Tim rejoined. "Sometimes I wish he did. He spends most of

his days shut up in his study. He's writing a book—a tremendously
clever book it is, I expect—but what about I haven't the least notion.
He was always very learned even when he was a boy, I've heard
father say. And he hasn't got to work for his living, so he can please
himself how he spends his time."

"Is he better off than your father, then?" asked Bob, somewhat
diffidently, for he did not know how his companion would take the
question.

"Yes," Tim answered calmly, "he has money which an uncle left him.
It was very kind of Uncle John to ask me here, but I wish he was
more like father," he concluded with a regretful sigh.
"You are to have tea with us," announced Bob, as they came within
sight of home. "Mother said I was to bring you in. You'll come, won't
you?"

"But I had tea with you yesterday," demurred Tim, his face flushing
with pleasure, "I seem to be half my time in your house now."

Nevertheless he was easily persuaded to enter the Glanvilles' door

instead of his uncle's. Kitty met the two boys in the hall, curious to
ascertain where they had spent the afternoon; she herself had been
shopping with her mother. Bob explained where they had been, and
told her that Tim was acquainted with the vendor of rat poison who
attended the weekly market, and that she was to be taken to see the
old man's collection of animals and birds one Saturday afternoon "if
she was a good girl, and behaved herself."

"If I behave myself, indeed!" she cried, with a toss of her fair head. "I
dare say he would show them to me if I went alone."

"Mother wouldn't like you to do that," returned Bob, "for he lives in a

very poor part of the town, in a back street."

The children were obliged to content themselves in the house after

tea, for a drizzling rain came on; they managed to enjoy themselves,
however, and at eight o'clock Tim went home.

Half an hour later, when Kitty ran upstairs to tidy herself before
supper, she opened her bedroom window—her room was at the
back of the house—and leaned out to ascertain if it still rained. It was
dry now, and the moon, a silver crescent, was shining between the
clouds. The little girl was about to draw in her head when a faint
movement below caused her to pause and listen attentively. Some
one was close to the back door, apparently leaning into the scullery
window, which had been left open.

"Why, it's a boy!" thought Kitty; "I wonder what he can be doing
here? Perhaps it's Bob. No, Bob's in the dining-room. Why,
goodness, I believe it's Tim! And yet, I suppose it cannot be, for he
went home ages ago."

At that instant the figure began to move stealthily away, carrying

something which looked, Kitty thought, like a basket. Fascinated, she
watched it as it cautiously hurried round the side of the house; then,
rushing downstairs, she passed like a whirlwind through the kitchen
and into the scullery beyond.

Yes, the idea which had flashed upon her had been right—it was the
unclaimed basket which had gone, and that horrid, cheeky boy next
door, she felt certain, was the thief.

Full of indignation at his daring and dishonesty, she dashed into the
dining-room to her parents and Bob, and amazed them by a panting
and excited account of the discovery she had made.

CHAPTER VII.
KITTY'S ACCIDENT.

KITTY'S statement that Tim Shuttleworth had stolen the covered

basket was received with incredulity by the family generally; but she
led the way to the scullery, and pointed triumphantly to the empty
peg behind the door as witness to the proof of her tale.

"There!" she cried. "See for yourselves! What do you think now?"
"That the basket has certainly been taken," her father rejoined. "But
calm yourself, Kitty, and don't jump to a conclusion which may be
quite wrong. You say you saw a boy reaching into the scullery
window, and afterwards carry away a basket. Are you sure it was
Tim? May it not have been another boy of about his height and size?
Moonlight is very deceptive, remember."

In her own mind the little girl was confident that it had been Tim
whom she had seen, though she had caught no glimpse of his face.

But whilst she momentarily hesitated over her reply, Bob exclaimed
impatiently: "Of course she's not sure; she's made a mistake, I'm
positive of it! Tim Shuttleworth wouldn't steal the basket! Why should
he? What good would it be to him? Depend upon it the rabbit was
brought the other evening by the same boy who fetched the basket
to-night; he merely helped himself to his own property, and, being
afraid of Snip, did it as quietly as possible."

"But how could he tell the basket was behind the scullery door,
Master Bob?" asked Cook, dubiously.

"Perhaps he's an errand-boy who comes to the house, and noticed it

there," suggested Mary.

"Very likely," agreed Mrs. Glanville; "but if so, he might have asked
for it in a proper manner instead of helping himself to it after dark. I
wish, Kitty dear," she continued, addressing her little daughter with a
note of reproach in her voice, "you would not be so ready to think
evil of Tim Shuttleworth. He strikes me as a particularly nice boy,
certainly not one who would do a dishonest action. Depend upon it,
you have made a mistake."

"I don't believe I have," declared Kitty. "I didn't see his face, but I am
sure—that is, almost sure—it was Tim."

"Absurd!" Bob cried. "What will you accuse him of doing next, I
wonder? First you thought he killed your rabbit, and now you believe
him to a thief. You're utterly silly."
"I'm not," retorted Kitty, looking deeply mortified and vexed that she
could get no one to credit the charge she had brought against the
boy next door. "I think he's a horrid boy," she declared hotly, "and I
believe he'd do anything—so there! I shall tell him the next time I see
him that I was watching him to-night, and hear what he has to say."

"You will do nothing of the kind, Kitty," her father admonished her;
"for that would be tantamount to accusing him of having stolen the
basket. I forbid you to mention the matter to him; it would naturally
make him feel most uncomfortable if you did. We have not known
the boy many days, it is true, but quite long enough to know that he
is not a thief."

"Yes, indeed, father," agreed Bob. "I believe he's the sort of boy who
wouldn't do anything dishonourable or mean for the world. Since I've
known him I've liked him—though I admit before that I'd rather taken
sides against him. I suppose Kitty, you've no objection to my
changing my mind?"

Kitty made no response, but her eyes flashed resentfully at her

brother, and she was conscious of a jealous feeling against Tim
which did not soften her heart towards him. She had not calculated
that Bob would become so friendly with the enemy next door.

"I don't see why you need persist in thinking of Shuttleworth so

suspiciously," Bob proceeded. "I'm sure he's as nice as possible to
you now; and he told me only yesterday how sorry he was that he
spoke to us so rudely over the wall that day Snip ruined his garden;
but he thought we had made Snip do it on purpose, so it was no
wonder he was mad."

"Oh, you may try to make excuses for him now," Kitty said,
scornfully; "but I don't forget all he said and how he looked (ugh! he
is an ugly boy!); and I believe he meant every word he spoke."

"I dare say he did at the time," admitted Bob; "but I'm sure he didn't
afterwards."
"Come, children, don't wrangle," said their mother. "I am sure, Kitty,
when you were playing with your brother and Tim this evening you all
seemed the best of friends. Come and have supper, and don't
trouble about the basket. It's gone, and I've no doubt the rightful
owner has it. I am glad Snip did not frighten him to-night."

"Snip was in the dining-room," said Bob. "By the way, Kitty, had you
not better see that your rabbit is all right? Perhaps your enemy next
door has stolen Fluffy too."

Although quite aware that her brother was laughing at her, Kitty took
his advice, and assured herself that her pet was safe before she
joined the others at supper, during which meal she was unusually
silent and preoccupied, by no means convinced that she had
mistaken another boy for Tim. And, as a matter of fact, the little girl
was quite right in her belief that Tim had taken the covered basket;
for, after returning to his uncle's house, he had waited until the rain
had ceased, and then had quietly gone out again and stolen round to
the Glanvilles' back door and purloined the basket through the
scullery window. He had been unable to think of any better way of
regaining Deborah's property; and having placed it on the shelf
inside the tool-house door, he went to bed with an easy mind, little
guessing that Kitty had seen and recognised him.

On Monday Bob went to school at nine o'clock. It was a beautiful

morning in the first week in May; the air was fragrant with the scent
of lilac and hawthorn, and the big apple tree at the bottom of the
Glanvilles' garden was one mass of bloom.

Kitty, as soon as she had seen her brother depart and had attended
to the needs of Fluffy, strolled down to the apple tree, and perched
herself on her favourite branch in the midst of a mass of blossoms.
She wondered what Tim would do now Bob had gone to school, and
if he would be very dull; she had been congratulating herself upon
the fact that she had three days more holiday than her brother, but
she scarcely knew how she would pass the time without a
companion. By-and-by, when Tim appeared in Mr. Shuttleworth's
garden, her face brightened, and she half hoped he would speak to
her, so that she was rather pleased than otherwise when he came
closer and suddenly glanced up. He caught sight of her immediately,
and a friendly smile crossed his countenance.

"Hullo!" he cried by way of greeting. "I say you're in a regular nest of

flowers," he proceeded. "Even Uncle John noticed that tree this
morning—he said he had never seen it so full of bloom before. You
will have a fine crop of apples later on."

"Yes, if all's well," Kitty responded; "and they are such nice apples—
Blenheim oranges; we gather them early in October, and hoard them
—they don't get properly ripe till nearly Christmas."

"Then I shan't taste them," said Tim. "What a pity!" He was looking
up at Kitty with rather a wistful expression on his face, wishing she
would invite him to join her in the tree; but as that was evidently not
her intention, he fetched the ladder and perched himself on the wall
close by. "Do you remember the first time I looked at you and Bob
over the wall?" he asked.

"Yes," nodded Kitty.

"I was hoping you would speak to me, and you didn't."

"We thought it rather a cheek of you to stare at us," she informed

him.

"I didn't mean it for cheek," he replied. "Really, I didn't."

"You made an ugly face at Bob; you couldn't call that good
manners."

"I did it because he called Snip away; that wasn't very nice of him,
was it?"

"No-o-o," she admitted, for that had been her opinion at the time.
"Bob's gone to school," she observed presently.
"I know; I saw him start. I shall miss him. But your father says I may
join him in his walks: isn't that kind of him? And he's going to take
me fishing; I haven't a rod, but Bob says I can use his. Do you get a
whole holiday on Saturday, like Bob?"

"Oh, yes."

"Then we must make the most of Saturdays," said Tim, regarding the
little girl with a smile. "Are there many girls at your school?" he
inquired.

"About twenty—none over twelve years old, and some are as young
as five. There's a kindergarten class."

Tim nodded. He had heard Bob speak of the school Kitty attended
somewhat disparagingly, as "a school for kids."

"I'm ten years old, you know," she proceeded to explain, "and I've
been at school since I was six."

"Then I suppose you're the head in class by this time?" he

suggested.

"No," Kitty answered sharply, with a slight show of confusion in her

manner; for, truth to tell, she was rather a dunce. Meeting the glance
of Tim's eyes, she saw they were twinkling humorously. "I suppose
Bob's been telling tales of me, saying that I'm at the bottom of the
third class?" she cried, with sudden wrath.

"No, no; indeed he hasn't," he assured her. "Don't be cross! I expect

you're like me, and don't care for lessons much."

She nodded, mollified at once. After that there was silence for some
minutes. Tim kicked his heels against the wall and whistled light-
heartedly whilst Kitty longed to speak to him of the covered basket;
but remembering what her father had said in reference to the
suggestion she had made of doing so, she kept silent upon the
subject.
"Are any of the seeds you planted in your garden coming up?" she
asked by-and-by.

"Oh, yes, I think so," he answered. "There's something springing—

mignonette, I expect; I sowed a lot of that. How do you manage to
keep Snip off your flower-beds? I see he doesn't do any damage in
your garden."

"No, because he knows it's ours; and that's why he doesn't interfere
with Fluffy. If he saw a rabbit anywhere else he'd kill it in an instant.
Snip's very sharp; he always was, even as a tiny puppy. I believe he
knows all we say to him; and see how excited he gets if we ask him
if he's going walking. I'm afraid he has rather a dull time when we're
at school, though father takes him out in the afternoons; but he likes
going with Bob and me better than with father, because we let him
do as he likes," Kitty confessed ingenuously.

Tim laughed. "Do you know that your mother has asked me to go to
the grammar school sports with her next week?" he asked. "Yes, she
has," he continued, as the little girl shook her head. "Isn't it jolly and
thoughtful of her? Bob said he could get a card of invitation for Uncle
John; but sports aren't in his line, he says; and I'm glad they're not,
for I'd far rather go with Mrs. Glanville. I suppose you'll be there too,
won't you?"

"Oh, yes, and father. You know Bob's going in for several races
besides the high jump. I wouldn't miss the sports for anything. Oh, I
must go in, for there's mother at the back door beckoning to me. I
expect she wants to send me on an errand," and Kitty began to
descend the apple tree as she spoke.

"Take care!" cried Tim warningly, as the little girl, eager to impress
him with her agility, swung herself somewhat recklessly from one
branch to another.

"All right," she replied. "I shan't fall. I could climb this tree when I was
six years old."
The words were scarcely out of her mouth when her foot slipped,
and her whole weight was thrown upon the slight bough to which she
was clinging. A moment later the bough snapped off, and Kitty, with
a terrified shriek, fell heavily to the ground.

CHAPTER VIII.
KITTY IS MYSTIFIED.

TIM'S first idea on witnessing Kitty's accident was that she had killed
herself; but before he had time to move the ladder from one side of
the wall to the other and descend to her assistance, which he set
about doing at once, she had struggled into a sitting posture, and as
he reached her side she was trying to get up. That, however, she
found she could not do, for she had injured her right foot in her fall;
and her face was colourless and drawn with pain, and her blue eyes
full of frightened tears as she raised them to Tim's scared
countenance.

"Oh, Kitty, are you hurt much?" he inquired anxiously, extending a

hand to help her to rise.

"Don't touch me," she almost shrieked. "I believe I'm bruised all over,
and my foot is hurting me dreadfully—I think all the bones in it are
broken! Oh, dear, what shall I do? Please fetch father—fetch him at
once!" And the little girl burst into a storm of tears and sobs.

Tim, pale as a sheet himself, rushed to the house to do Kitty's

bidding; and a few minutes later he returned, followed by Mr. and
Mrs. Glanville and the two servants. Mr. Glanville carried his little
daughter indoors, and laid her on the sofa in the dining-room; then
he suggested sending for a doctor.

"Yes," assented his wife, who was carefully withdrawing the shoe
from poor Kitty's injured foot. "There, dear, it's off," she said,
soothingly, as Kitty moaned with pain.

"Let me go," said Tim, who was hovering about the doorway, deeply
concerned. "Ah! Do let me go; I'll run all the way."

"There's no need for such hurry as that—" said Mr. Glanville "at
least, I think not. But if you will go and ask Dr. Richards to come
round and see Kitty, I shall be very glad. I dare say you'll catch him
before he starts on his morning round. You know where he lives?"

"Oh, yes—just round the corner," Tim replied. "Bob pointed out the
house to me, and said your doctor lived there. I'll be back in a jiffy."

In spite of what Mr. Glanville had said Tim ran all the way, for he
thought most seriously of Kitty's condition; and, as it happened, it
was fortunate he did, for Dr. Richards was on the point of stepping
into his gig when the little boy rushed up to him—a moment later he
would have been gone.

"Oh, please," panted Tim excitedly, "will you go to Mr. Glanville's first
of all? There's been a dreadful accident. Kitty's fallen from a tree,
and is so injured! She's bruised all over, and has broken every bone
in her right foot. I'm afraid she's very bad."

"I'll go and see her at once," the doctor replied, not looking nearly so
impressed as Tim had expected he would; and, getting into his gig,
he drove away.

The little boy retraced his footsteps soberly, and found the doctor's
gig outside the Glanvilles' house on his return. He went round to the
back of the house and discussed Kitty's accident with Cook in the
kitchen; and when he heard Mary opening the front door for the
doctor to depart, he begged Cook to go and ascertain what was the
medical opinion of the patient, which she was very willing to do.

"She's more frightened than hurt, Master Tim," Cook told him
reassuringly, coming back after a short absence from the kitchen.
"Dr. Richards has bandaged her sprained foot, and he says she
must be kept quiet; but there's no need to be alarmed about her—
she'll soon be all right again."

"Oh, how glad I am to hear that!" cried Tim thankfully; "I quite
thought she had killed herself!" he added, with a shudder.

"Young bones fall light," remarked Cook. "I hope this will be a lesson
to Miss Kitty not to be so hoydenish in future; why she hasn't fallen
from that apple tree before I really don't know."

Meanwhile, Kitty, according to the doctor's order, was being put to

bed by her mother and Mary. She was bruised and shaken, and her
foot was giving her a great deal of pain, so that altogether she was
feeling very low-spirited and unwell.

Bob, on his return from school at mid-day, was greatly concerned on

hearing of his sister's accident; but she would not tell him how it had
happened. Accordingly, he sought Tim, and learnt from him that the
little girl had been climbing down from the tree very carelessly, when
she lost her footing, and thus brought about the mishap.

"I suppose she was showing off because you were watching her,"
observed Bob, jumping at once to the right conclusion.

"Yes," nodded Tim, "that was it; but please don't tell her I said so," he
added hastily.

"All right," agreed Bob, "I won't. Poor Kitty, she'll be tied by the leg for
a bit, I suppose. I wonder if she'll be well enough to come to the
sports?"
That was the thought which troubled Kitty herself. Dr. Richards kept
her in bed only two days, after which she lay on the sofa in the
dining-room. Of course there was no question of her returning to
school on Thursday. She did not mind that in the least; but it worried
her to think she might not be well by Saturday week, which was the
day fixed for the grammar school sports. Dr. Richards would not say
she would be able to go, and when questioned upon the point merely
answered evasively, "Oh, we'll see."

"I suppose Bob is taking good care of Fluffy?" the little girl remarked
to her mother one morning after she was comfortably settled on the
sofa, with Snip on the rug at her feet.

"Oh, Tim's seeing to Fluffy," Mrs. Glanville replied. "He cleans out the
hutch every day, I believe. He offered to take charge of your pet, and
we were glad he could do so; for, you know, Bob has little spare
time, what with his lessons and practising for the sports."

"It's very kind of Tim," admitted Kitty, rather grudgingly.

"Tim is kind," said Mrs. Glanville, in a tone of decision; "and he has

been greatly concerned about you, my dear; he continually calls to
know how you are. I hear his voice at the door now. Wouldn't you like
to see him?"

"Yes, I think I should," Kitty answered. "It was very good of him to
fetch Dr. Richards so quickly the other morning—I thought so at the
time. Please, mother, ask him to come in."

So Tim came in, his plain, freckled face very bright, and told Kitty
how very glad he was she was better, and reported that Fluffy was
doing well under his care. Kitty thanked him for looking after her pet;
and then, as she expressed a desire to see Fluffy, Tim fetched the
rabbit, and she kissed its pink nose and fondled it, until Snip,
watching her from the corners of his eyes, began to show symptoms
of jealousy, and it was deemed advisable to restore Fluffy to the
hutch.