ARTICLE
13 October 2017

Pre-Judgment Interest In The Court Of Appeal

MT
Miller Thomson LLP

Contributor

Miller Thomson LLP (“Miller Thomson”) is a national business law firm with approximately 500 lawyers across 5 provinces in Canada. The firm offers a full range of services in litigation and disputes, and provides business law expertise in mergers and acquisitions, corporate finance and securities, financial services, tax, restructuring and insolvency, trade, real estate, labour and employment as well as a host of other specialty areas. Clients rely on Miller Thomson lawyers to provide practical advice and exceptional value. Miller Thomson offices are located in Vancouver, Calgary, Edmonton, Regina, Saskatoon, London, Waterloo Region, Toronto, Vaughan and Montréal. For more information, visit millerthomson.com. Follow us on X and LinkedIn to read our insights on the latest legal and business developments.
The Ontario Court of Appeal decisions of Cobb v. Long Estate 2017 ONCA 717 and El-Khodr v. Lackie 2017 ONCA 716 now provide clarification on the application of the amendment to the rate of...
Canada Insurance

The Ontario Court of Appeal decisions of Cobb v. Long Estate 2017 ONCA 717 and El-Khodr v. Lackie 2017 ONCA 716 now provide clarification on the application of the amendment to the rate of pre-judgment interest in s.258.3(8.1) of the Insurance Act which came in to force on January 1, 2015. The amendment effectively provides that the rate established through s.128(2) of the Courts of Justice Act does not apply to claims for non-pecuniary damages arising from a car accident.

The question which arose is whether the amendment applied only to accidents which took place after the enactment or whether it included claims arising from accidents which took place prior to the enactment.

As section 130 of the Act allows the court to alter the rate of pre-judgment interest, the Court of Appeal held that the Act did not create a vested right to a particular rate of pre-judgment interest. The amendment affected a procedural rather than substantive right. Therefore, the amendment applied immediately to both pending and future cases.

The Court went on to discuss the policy reasons which reinforce the need to consider altering the rate of interest. Interest rates fluctuate over time and it makes sense that the interest rate set by the court should reflect these changes as well. Pre-judgment interest is meant to compensate an injured party for the loss of use of money's worth from the date when the injury is sustained to the date of judgment. The provisions of s.130 of the Act recognize that interest rates must keep pace with economic realities to ensure that plaintiffs are not overcompensated or undercompensated for the lost value of the damage award over time.

The pre-judgment interest rate has been 1.3% since 2011. In Cobb the trial judge exercised his discretion to adjust the rate of interest to 3%. The Court of Appeal upheld this ruling. In El-Khodr the Court of Appeal awarded 3% to account for the fact that the accident took place in 2007 when interest rates were above 1.3%.

Moving forward, it is now open to defendants to use the rate of 1.3% for claims arising from accidents in or after 2011, bearing in mind that a higher rate may be available for accidents prior to 2011. The policy considerations discussed by the Court make the adjustment of interest rates equally applicable to injury claims arising from incidents other than car accidents.

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.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More