Canada: Clarity On Quantum Of The Statutory Deductible And Pre-Judgment Interest?

Last Updated: January 11 2016
Article by Talaal Bond

Vickers v. Palacious, 2015 ONSC 7647, December 8, 2015, James, J.

In this case, the Justice James was asked to address threshold, pre-judgment interest and the quantum of the statutory deductible. The plaintiff was a cyclist that was struck in the back by a mirror from a vehicle that passed her long before the amendments to the deductible and interest rates were enacted.

The quantum of the statutory deductible, the defence argued, was that the indexed quantum introduced on August 1, 2015 ($36,540) was appropriate. The plaintiff argued otherwise stating that it is a matter of substantive rather than procedural law and therefore it could not be applied to accidents that occurred prior to its introduction.

Justice James reviewed the 2003 legislation which stated in O. Reg. 221/14 that it was to apply "in respect of incidents that occur on or after October 1, 2003". The new amendments did not include a similar provision. Therefore, the legislature intended that the new deductible was to apply to all cases regardless of when the accident occurred. The judge also queried the logic of having a deductible that would only apply to 2015 (the indexed amount to change on December 31, 2015). Each year would have its own formula.

The judge also felt that an alternative reason would apply, namely the application of the cap on non-pecuniary general damages. Justice James cited Somers v. Fournier [2002] O.J. No. 2543 (C.A.). In short, entitlement was substantive, but quantum was procedural. The policy considerations favoured characterization of the cap as a procedural matter. Similarly the deductible was a result of the policy consideration that damages below a certain level should be subject to a significant deductible. The deductible is to be seen as a measuring or quantifying device (procedural) as opposed to the availability of a particular head of damage (substantive).

Justice James then reviewed Cobb v. Long Estate, 2015 ONSC 6799 ( see my blog of November 17 , 2015) which followed El-Khodr v. Lackie 2015 ONSC 4766 which held that the indexed deductible did not apply to pre-August 1, 2015 accidents. However, Justice James pointed out the El-Khodr never addressed the issue of which deductible should apply. There was no evidence that the use of an indexed deductible would result in a windfall for insurers. The judge then disagreed with Justice Belch's rationale for stating this case supported by law noting that Belch J used cases that addressed choice of law rule not the deductible directly.

This being the case, James, J. concluded that the legislative intent was clear in that it was to apply to all pending actions. The plaintiffs did not have a vested right that was interfered with. The deductible is a matter of procedural law and indexed quantum applied.

The judge also differed with Justice Belch in respect to the calculation of pre-judgment interest. Rather than use the Justice Belch's pragmatic approach which was to essentially set it at an amount between the previous Rule 53.10 amount (5%) and the amended amount (set by 128(1) of the Courts of Justice Act), Justice James set out similar rationale as was applied in respect of the statutory deductible. Specifically, the court referred to Cronk J.A. in Somers v. Fournier [2002] O.J. No. 2543 (C.A.) (and reference to Travelers Insurance Company of Canada v. Corriveau, [1982] 2 S.C.R.) in that pre-judgment interest was clearly held to be a substantive right, in contract to costs and the non-pecuniary general damages cap which were procedural matters. Cronk J.A. did not differentiate between the entitlement and quantification of pre-judgment interest which was only introduced in Cirillo v. Rizza 2015 ONSC 2440. Inasmuch as pre-judgment interest was concerned, Justice James agreed with the court in El-Khodr which said that this could not flow logically given the decision in Somers and as such Cirillo was wrongly decided. In the end, it was held that entitlement to a particular pre-judgment interest rate was established in law a substantive matter.

In conclusion, the court held that the quantum of the deductible was a procedural matter while the quantum of the pre-judgment interest was a substantive one. The indexed deductible applies to accidents that occurred prior to August 1, 2015, while the indexed pre-judgment interest rate applied to those after the time when it was amended, namely January 1, 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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