We previously blogged on Cirillo v. Rizzo, where the Court held that s. 258.3(8.1) of the Insurance Act should be applied retroactively (the section provides that pre-judgment interest should be calculated in accordance with s. 127 of the Courts of Justice Act).
Perhaps unsurprisingly, another judge has come to the opposite conclusion. In El-Khodr v. Lackie, 2015 ONSC 4766 (S.C.J), Justice Toscano Roccomo held that s. 258.3(8.1) is substantive law, therefore it cannot be applied retroactively.
Until there is appellate authority on this issue, it may be that the calculation of PJI in motor vehicle actions is a matter for negotiation in settlement discussions.
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Rabu, 07 Oktober 2015
Rabu, 22 April 2015
The Calculation of Pre-judgment Interest in Motor Vehicle Claims
On January 1, 2015, s. 258.3(8.1) of the Insurance Act was amended to change the rate at which pre-judgment interest ("PJI") in motor vehicle claims. A recent Superior Court of Justice decision held that the change is retrospective, meaning it will apply to all motor vehicle claims, regardless of the date of loss.
The effect of the amendment is that the provision in r. 53.10 which sets PJI for non-pecuniary loss at 5% no longer applies. Accordingly, PJI is to be calculated at the rates set out for each quarter in s. 127(1) of the Courts of Justice Act.
In Cirillo v. Rizzo, 2015 ONSC 2440 (S.C.J.), the plaintiff was in a motor vehicle accident on October 1, 2005. In January 2015 the plaintiff accepted the defendant's offer of $50,000. The question was how PJI should be calculated. The defendant argued the amendment should have retrospective application because it is procedural in nature; the plaintiff argued it should not, as it is substantive in nature.
Justice MacKenzie agreed with the defendant. Although entitlement to interest is a substantive right, the means by which the entitlement can be quantified are procedural. As a result, the rates set out in s. 127 applied, which had the effect of reducing PJI from 5% to 4.5%.
Given the low interest rates in recent years, the changes to the way PJI is calculated could have a substantial impact on the amount of interest defendants must pay.
The effect of the amendment is that the provision in r. 53.10 which sets PJI for non-pecuniary loss at 5% no longer applies. Accordingly, PJI is to be calculated at the rates set out for each quarter in s. 127(1) of the Courts of Justice Act.
In Cirillo v. Rizzo, 2015 ONSC 2440 (S.C.J.), the plaintiff was in a motor vehicle accident on October 1, 2005. In January 2015 the plaintiff accepted the defendant's offer of $50,000. The question was how PJI should be calculated. The defendant argued the amendment should have retrospective application because it is procedural in nature; the plaintiff argued it should not, as it is substantive in nature.
Justice MacKenzie agreed with the defendant. Although entitlement to interest is a substantive right, the means by which the entitlement can be quantified are procedural. As a result, the rates set out in s. 127 applied, which had the effect of reducing PJI from 5% to 4.5%.
Given the low interest rates in recent years, the changes to the way PJI is calculated could have a substantial impact on the amount of interest defendants must pay.
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