SABS Update: Procedural, Proshmedural: The Wrong Decision on Pre-Judgment Interest
Superior Court decision of Cirillo v. Rizzo, 2015 ONSC 2440
Before the introduction of section 258.3(8.1) of the Insurance Act on January 1, 2015, the pre-judgment interest rate for non-pecuniary loss (e.g. pain and suffering damages) in motor vehicle collisions was 5%, the rate prescribed by the Rules of Civil Procedure. The amendment changed the rate to that prescribed by the Courts of Justice Act, which is currently 1%. Whether the new rate was to apply retrospectively (i.e. to actions arising before January 1, 2015) was not specifically addressed by the legislation and required the interpretation of a Court.
The first reported interpretation of the amendment came on April 15, 2015, in the Superior Court decision of Cirillo v. Rizzo, 2015 ONSC 2440. MacKenzie J. considered the critical question of whether the amendment was substantive or procedural in nature. He rightly identified that the amendment would have retroactive effect if it was procedural but not if it was substantive.
MacKenzie J. considered the arguments of the parties and analogous case law. His analysis focused on the difference between entitlement to pre-judgment interest and quantification of pre-judgment interest. Both parties agreed that entitlement is a substantive right but disagreed as to whether or not the mechanism for quantifying that entitlement is substantive or procedural. Favouring the defence position, MacKenzie J. found that the rate or “means” by which the entitlement can be quantified is procedural, and accordingly, that the amendment shall be applied retrospectively.
With the greatest of respect to MacKenzie J., I think he got it wrong. Following his logic, the pre-judgment interest rate could be reduced to 0.01% and it would remain a procedural right, but if it were reduced to 0%, it would be substantive. This cannot be right. The substantive right of a claimant to pre-judgment interest cannot be considered in the abstract; it is a right to a specific rate of interest, as prescribed at the time the action arose, not a right to any rate, as may later be determined. For many claimants, the decision in Cirillo v. Rizzo could mean a loss of thousands of dollars and lessened incentives for insurers to resolve their claims early in the litigation. It is my hope that an appeal Court will have the opportunity to consider this issue soon and that a different outcome will result. In the meantime, until I received appellant authority to the contrary, I will continue to advocate for 5% on any claim arising before 2015.
The Ontario Trial Lawyers Association (OTLA) has built a website to provide public education aimed at combating unfair practices and misinformation from the auto insurance industry. As proud members of OTLA, we at MD Lawyers invite you to visit this website at www.truthaboutinsurance.ca for some helpful information.
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