August 14, 2015

A Substantive Right: The Right Decision on Pre-Judgment Interest

El-Khodr v. Lackie, 2015 ONSC 4766

 

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Brent Hodge

In my update of May 19, 2015, Procedural Proshmedural: The Wrong Decision on Pre-Judgment Interest, I wrote on the Cirillo v. Rizzo decision. In that case, MacKenzie J. determined that pre-judgment interest was a procedural, rather than substantive, right such that the change to the interest rate for non-pecuniary general damages (e.g. pain and suffering damages) in motor vehicle cases, made through section 258.3(8.1) of the Insurance Act, would be applied retroactively. I am pleased to report that at least one member of the judiciary disagrees with MacKenzie J.

In the second reported interpretation of the amendment, El-Khodr v. Lackie, 2015 ONSC 4766, Toscano Roccamo J. found that pre-judgment interest is a matter of substantive law, meaning changes to the pre-judgment interest rate would not apply retrospectively. She concluded that Cirillo had been wrongly decided based on a misreading of a previous case. Toscano Roccamo J. went on to cite a number of cases in support of the position that entitlement to a particular pre-judgment interest rate is a substantive right. Further, she looked at the legislature’s purpose in enacting section 258.3(8.1) which was to match the rate of pre-judgment interest more closely with the actual loss of interest incurred by parties due to the delay in getting an award for damages. The amendment was not enacted to assist the Court in controlling its process.

In El-Khodr, application of the pre-amendment interest rate (5%) rather than the post-amendment interest rate (2.5%) prevented the loss of over $40,000 in interest owed to the Plaintiff. El-Khodr appears to be the correct decision, which should be applied by other Courts and litigants; however, it is anticipated that El-Khodr will be appealed and that the Court of Appeal will weigh in on this issue sometime in 2017. While the issue remains to be decided finally, I will continue, now with Court authority, to advocate for 5% on any claim arising before the amendment came into force on January 1, 2015.

 

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