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Pre-judgment Interest on General Damages

( Disponible en anglais seulement )

décembre 10, 2019 | Chris T.J. Blom

In 2015 the Ontario Insurance Act, R.S.O. 1990 c.C.18 was amended to provide that Rule 53.10 of the Rules of Civil Procedure, R.R.O. 1990, which calls for pre-judgment interest at 5%, no longer applies to cases involving car accidents.

The policy rationale underlying the amendment was the climate of low interest rates over the past few decades. At the time of the amendment, the rate of pre-judgment interest under s.127 of the Courts of Justice Act, R.R.O. 1990, c.C.43 (the “Act”) was 1.3%.

Courts have been reluctant to embrace this approach in cases which do not involve car accidents, until the recent Court of Appeal decision of MacLeod v Marshall 2019 ONCA 842 (“MacLeod”).

The court recognized that a trial judge has the discretion to allow interest at a lower rate having regard to changes in market rates, under s.130 of the Act.

MacLeod involved a claim for damages for sexual abuse. The trial judge failed to consider the jurisdiction to reduce the rate of interest, despite the submissions of counsel for the defence.

The Court of Appeal concluded that the trial judge should have taken into account the declining rates of interest and allowed the appeal on the rate of interest, to adjust it to 1.3% on general and aggravated damages, reflecting the economic reality that rates have declined significantly over time.

The MacLeod case may be advanced for the proposition that pre-judgment interest at the market rate, now 2.0%, should be the rate used on the award of general damages in all cases such as slip and falls, assault and defamation.

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