Ontario Court of Appeal sets prejudgment interest rates at 8.46 percent in personal injury case

The Ontario Court of Appeal recently allowed the appeal of an injured party and her spouse, overturned the trial judge's decision, and set the prejudgment interest rates for both non-pecuniary damages and past pecuniary damages at 8.46 percent.

In January 2015, a government lawyer suffered a serious head injury after slipping on a worn and peeling anti-slip strip and fell down the stairs at the Soloway Jewish Community Centre in Ottawa. In November 2022, the jury awarded the injured party and her wife $3,602,839.83 in total damages.

This amount included $216,000 for the injured party’s non-pecuniary damages for pain and suffering and $665,595 for past pecuniary damages. Her spouse was awarded $85,000 in non-pecuniary damages under Ontario’s Family Law Act, 1990 for loss of care, guidance, and companionship.

The trial judge issued a ruling setting the prejudgment interest rate at 1.3 percent for non-pecuniary damages and 0.8 percent for past pecuniary damages. This ruling deviated from the statutory presumptive five-percent rate for non-pecuniary damages.

The respondents requested a reduction in the presumptive five-percent rate on the basis that the market interest rates were lower during the relevant period. The appellants, on the other hand, wanted the prejudgment interest to be 8.46 percent, based on the rates of return of their own investment portfolios and of the respondents’ insurer.

The judge sided with the respondents. The judge determined that the market interest rates were well below five percent and that applying the statutory rate would result in overcompensation. The judge rejected the appellants' evidence regarding the higher rates of return earned by the respondents' insurer as irrelevant.

Rates overturned

In Aubin v. Synagogue and Jewish Community Centre of Ottawa (Soloway Jewish Community Centre), 2024 ONCA 615, the Ontario Court of Appeal issued a judgment ruling that the trial judge took an improper approach to determining the prejudgment interest rates by failing to give effect to the statutory presumptive five-percent rate for non-pecuniary damages under s. 128 of Ontario’s Courts of Justice Act, 1990.

The appeal court held that the judge misinterpreted the purpose of non-pecuniary damages and allowed the criterion of prejudgment interest rates to overshadow other relevant factors that she should have considered under s. 130(2) of the Courts of Justice Act.

The appeal court emphasized that the legislative intent behind the statutory five-percent rate was to address the issue of fluctuations in interest rates. The court said that it should not disregard this rate except in cases where special circumstances justified a departure.

The appeal court disagreed with the rejection of the appellants' evidence of their own investment returns averaging at 8.46 percent and the respondents' insurer's average annual rate of return of 12.99 percent. The appeal court found these factors relevant in determining the appropriate prejudgment interest rate.