Recent decisions support 5% prejudgment interest in non motor vehicle accident cases

Use of default interest rate to plaintiffs’ advantage, says Bogoroch's Alexandra Roman

Recent decisions support 5% prejudgment interest in non motor vehicle accident cases

This article was created in partnership with Bogoroch & Associates LLP

Mallory Hendry of Canadian Lawyer sat down with Alexandra Roman, lawyer with Bogoroch & Associates, to discuss why this proposition is especially significant in today’s environment.

Two recent decisions, Mansoor v 690981 Omtario Ltd. and Creccal Investments Ltd. and The Estate of Mary Fleury et al. v Olayiwola A. Kassim, supporting 5% per annum for prejudgment interest for non-pecuniary damages are particularly significant given the increased delay in the justice system due to the COVID-19 pandemic, says Alexandra Roman, a lawyer with Bogoroch & Associates LLP.

“These decisions are beneficial to plaintiffs, especially given the significant delays in litigation and moving cases to trial in the context of the pandemic,” says Roman. “These two decisions, discussed below, stand for the proposition that 5% prejudgment interest should apply.”

Pursuant to s. 128(5) of the Courts of Justice Act, plaintiffs can recover prejudgment interest from the date that the cause of action arose. The default interest rate is set at 5% as contemplated by Rule 53.10 of the Rules of Civil Procedure but is subject to the court’s discretion. Though plaintiffs are entitled to prejudgment interest, an issue that often arises in personal injury cases is what percentage should be applied. Generally, the defence position is that the interest rate ought to be lower than 5%. In light of recent case law, plaintiffs have support for the proposition that the prejudgment interest rate should be set at 5% in non motor vehicle accident litigation.

In Mansoor v. 690981 Ontario Ltd. and Creccal Investments Ltd., defendant insurer Aviva urged the court to apply the prejudgment interest rate at 1.3%, and while the court has discretion to consider these arguments and discretion about which interest rate will be applied, here the court ruled in favour of the plaintiff and declined to exercise its discretion to depart from the 5% prejudgment interest rate as set out in the Rules of Civil Procedure, said Roman.

“This case stands for the proposition that the court reinforced Rule 53.10 and the default interest rate,” she says, adding it was interesting that Aviva led no evidence as to the prevailing market interest rates and postulates that perhaps that played a role in the court’s decision.

Another recent case that confirms the principle is The Estate of Mary Fleury et al. v Olayiwola A. Kassim,2022 ONSC 2464, a medical negligence case where Justice Stothart also set the rate at 5%, upholding the Mansoor decision. Here the Court engaged in a comprehensive analysis of the prevailing market interest rates from 2015-2021. The court considered that the average rate of inflation fluctuated between 1% and 4.8% and took judicial notice that in March of 2020 “much of the world shut down due to an unprecedented global pandemic.” Justice Stothart acknowledged the impact of the global pandemic on the world economy and specifically recognized that the rate of interest continues to increase.

At paragraphs 326 to 329 Justice Stothart held as follows:

“[326]   In this case the court agrees that the pre-judgement interest should begin in 2015, when Mary Fleury began to experience symptoms likely related to appendiceal cancer which the court finds was in June, 2015. For the purposes of calculation, the pre-judgement interest should begin on June 1, 2015.

[327]   Having considered the factors outlined in section 130(2), the court notes that in this case the period of pre-judgment interest will run from June 1, 2015 to the date of judgement, a period of approximately 7 years. This is not a case where the pre-judgement interest will apply for an excessively long period of time.

[328]   During the time period between June, 2015 and December, 2021, the average rate of inflation fluctuated between 1.0% and 4.8%.  The court takes judicial notice that in March, 2020 much of the world shut down due to an unprecedented global pandemic. The impact of the global pandemic on the world economy continues to today’s date and the rate of interest continues to increase. This adds a level of uncertainty to any analysis with respect to pre-judgement interest.

[329]   Having considered the changes in market interest rates, the impact of a global pandemic, and the circumstances of this case the court declines to exercise its discretion to depart from the pre-judgement interest rate for non-pecuniary damages as set out in Rule 53.10. Prejudgment interest on non-pecuniary damages will therefore accrue at a rate of 5% per annum, commencing on June 1, 2015.”

“I thought that was a very timely analysis, and it’s interesting that the court has taken the pandemic into consideration,” Roman says, adding that going forward plaintiffs’ arguments for prejudgment interest rates at the full 5% are well-supported in light of the caselaw.

It should be usefully noted that Justice Stothart distinguished MacLeod v. Marshall and held that s. 130 of the Court of Justice Act allowed a trial judge discretion to depart from the default rate.

“Given these very recent decisions, I think plaintiffs have compelling arguments to support a prejudgment interest rate at 5% per annum for non-pecuniary damages,” says Roman.

Alexandra Roman joined Bogoroch & Associates LLP as a lawyer in July 2016. She was called to the Bar in 2017. Alexandra received an Honors Bachelor of Arts degree in Law and Society from York University in 2012. She then continued on to Osgoode Hall Law School, earning her Juris Doctor in 2016. During her time at Osgoode, Alexandra developed her interest in litigation by working at the Community and Legal Aid Clinic (CLASP) where she represented underprivileged clients before a variety of administrative boards and tribunals.

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