mt_ignore
Legal Feeds
Canadian Lawyer
jobsinlaw.ca

Letter: Article on prejudgment interest missed a key point

Law Times recently published an article (see “Ontario courts differ on prejudgment interest,” Oct. 19) on the temporal application of the new prejudgment interest rate on non-pecuniary damages in motor vehicle accident cases.

The debate, as framed in the article and the conflicting case law, misses the point. It is founded on the misunderstanding that the immediate application of the new rate to ongoing actions would be retroactive.

On its face, the new s. 258.3(8.1) of the Insurance Act takes immediate and prospective effect with respect to all proceedings, including ongoing matters. The characterization of this as retroactive depends on the mistaken assumption that plaintiffs in ongoing proceedings have an existing right to prejudgment interest at a certain rate that is being taken away.

In fact, s. 128(1) of the Courts of Justice Act specifies that a right to prejudgment interest only arises once a plaintiff has become a “person who is entitled to an order for the payment of money.”

Plaintiffs are not entitled to an order for the payment of money merely by virtue of having commenced an action; they need to have obtained a judgment in their favour first. There is no right to prejudgment interest (at a particular rate or at all) until the condition of being a “person who is entitled to an order for the payment of money” is satisfied. Plaintiffs in ongoing actions do not have a vested right to prejudgment interest. They only have the contingent possibility of a right to prejudgment interest if they establish their claims for damages at trial or on a dispositive motion and if the law does not change in the interim.

Instead of addressing the foregoing, a great deal of the Law Times article is devoted to exposition of the idea that the immediate application of the new prejudgment interest rate would be incorrect because it would result in a windfall to insurers. This point is a red herring that requires rebuttal. Most importantly, the purpose of prejudgment interest is to compensate the plaintiff, not to prevent alleged windfalls to non-party insurance companies. Commentators who focus on the latter are engaged in low-level populist rhetoric, not legal argument.

We also ought to recall the genesis of the separate prejudgment interest rate on non-pecuniary damages. It was introduced following amendments to the Courts of Justice Act in 1989 as deliberately and substantially lower than the prevailing bank rate-based prejudgment interest rates of the time. The goal was to avoid double compensation to plaintiffs for the effect of inflation. Prejudgment interest is intended in part to compensate for the effects of inflation, but non-pecuniary damages are already adjusted for it.

The retention of the five-per-cent rate even as bank rates have plunged below that level resulted in an even more acute problem of overcompensation than the situation that prompted the adoption of the five-per-cent rate in the first place.

The real question is why the five-per-cent rate remains in place for non-pecuniary damages in personal injury actions not based on motor vehicle accidents.
Douglas Treilhard,
Buset & Partners LLP,
Thunder Bay, Ont.

Add comment



  • Access to Justice
    Access to Justice The Action Group on Access to Justice (TAG) strives to inform the public on the importance of the people having access to legal resources and…
  • Legal Aid lawyers rally for collective bargaining rights
    Legal Aid lawyers rally for collective bargaining rights Legal Aid Ontario lawyers held three protests in July to push the provincial government to support their attempts to unionize. The lawyers have been in…
  • Jane-Finch community gets employment law help
    Jane-Finch community gets employment law help Osgoode Hall Law School's Community Legal Aid Services Programme recently opened an employment law division for Toronto's Jane-Finch community.Phanath Im, review counsel for the division,…
More Law Times TV...

Law Times poll

Recreational marijuana use will be legalized, and lawyers say there will be an increase in terms of criminal charges and civil cases as a result. From the perspective on how this will impact the courts, do you support pot legalization?
Yes. While there will no doubt be an impact on the courts from this change, the overall social benefits of legalization are positive.
No. The move to legalize marijuana is short-sighted, and will lead to negative social results, including longer court delays.