On January 1, 2015, the Insurance Act was amended to
include a new provision regarding pre-judgment interest. The
effect of the change was that the 5% interest rate under the Rules
of Civil Procedure no longer applies to amounts awarded for
non-pecuniary general damages. Rather, pre-judgment interest
would be calculated pursuant to the Courts of Justice Act,
that is, the bank rate.
Insurers have taken the position that the change to the
Insurance Act is procedural in nature and thus applies
The first case that was decided on this amendment, Cirillo v
Rizzo, accepted that the changes were procedural and thus
applied retrospectively. The plaintiff in that case appealed
the decision but subsequently abandoned the appeal.
The second decision of El-Khodr v Lackie, released July
28, 2015, concluded that Cirillo was wrongly
decided. In El-Khodr, Madame Justice Roccamo, determined that
the amendment to the Insurance Act was substantive and
accordingly did not apply retrospectively.
Accordingly, the plaintiff was entitled to interest at 5% per
annum, which resulted in an interest award of some $90,000.00,
compared to the sum of $45,000.00 that would have been awarded if
the change was retrospective.
Justice Roccamo noted in her decision as follows:
The 5% pre-judgment interest rate for
general damages was a known risk factor and insurance companies
took this into account in setting their premiums.
At the time of preparation of this blog a decision had not yet
been made on an appeal on the El-Khodr case.
If the case does not go to the Court of Appeal for
clarification, all interested parties will be left with two
conflicting decisions on the entitlement to prejudgment interest
for motor vehicle accidents occurring before January 1, 2015.
Under B.C.'s former and current Limitation Act, the limitation period for a Plaintiff's claim can be extended on the basis of a Defendant having acknowledged in writing some liability for the cause of action.
Automobile drivers, like fine wine, tend to get better with age. Older drivers can draw on a wealth of experience from their years on the road to assist them when faced by a variety of dangerous conditions.
The insurance industry will be interested in Ledcor Construction Ltd v. Northbridge Indemnity Insurance Co because of principles the Supreme Court of Canada applied to the "faulty workmanship" exclusion in a Builders' Risk policy.
For the first time in BC, a Court has decided that an insured is entitled to special costs, rather than the lower tariff costs, solely because they were successful in a coverage action against their insurer.
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