By Kris Bonn
Law360 Canada (September 27, 2024, 10:57 AM EDT) — Ever since the Ontario Court of Appeal released MacLeod v. Marshall, 2019 ONCA 842, judges of the Superior Court have struggled with the pre-judgment interest rate for non-motor vehicle collision personal injury cases. Two recent decisions from the Court of Appeal put an end to any question that the presumptive pre-judgment interest rate for non-pecuniary damages is five per cent.
The same panel of Justice Lois Roberts, Justice Steve Coroza and Justice Sally Gomery heard Aubin v. Synagogue and Jewish Community Centre of Ottawa (Soloway Jewish Community Centre), 2024 ONCA 615, together with Henry v. Zaitlen, 2024 ONCA 614. Both appeals involved overlapping issues concerning pre-judgment interest.
In Aubin, the appellant suffered a serious head injury when she fell on premises owned by the respondent. Following a five-week jury trial, the appellants were awarded total damages of $3,602,839.83, including $216,000 for Doris Aubin’s non-pecuniary damages for pain and suffering and $85,000 for her spouse’s non-pecuniary damages under s. 61 of the Family Law Act.
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The trial judge allowed the respondents’ motion to deviate from the presumptive five per cent statutory pre-judgment interest rate for non-pecuniary damages, awarding pre-judgment interest for non-pecuniary damages at the rate of 1.3 per cent. At trial, the appellant had argued (rejected by the trial judge) that the pre-judgment interest rate should be 8.46 per cent based on their evidence of the rate of return earned by the respondents’ insurer and their own investments’ rates of return.
Zaitlen was a medical malpractice jury trial. The appellants were successful in proving that they suffered damages as a result of the negligence of the respondent, Dr. Marshall Zaitlen. Among other amounts, the jury verdict included $204,500 for Sean Henry’s non-pecuniary damages for pain and suffering and $100,000 for the non-pecuniary damages for the loss of care, guidance and companionship to the estate of his late wife, Sandy Robinson, who sadly had passed away before trial.
Dr. Zaitlen sought and was granted a reduction by the trial judge of the five per cent pre-judgment interest rate prescribed by s. 128(2) of the Courts of Justice Act (CJA) and r. 53.10 of the Rules of Civil Procedure. The trial judge exercised his discretion under s. 130(1) of the CJA to set the pre- judgment interest on the non-pecuniary damages at the rate of 1.3 per cent. He justified the reduction based on the changes in market interest rates and in his view, consistent with the principles from MacLeod.
In the two recent decisions, the court was clear that the plain language of s. 128(2) of the CJA and r.53.10 of the Rules clearly creates a presumptive or “default” five per cent pre-judgment interest rate for non-pecuniary damages. There is no longer any question that five per cent is the prescribed statutory presumptive pre-judgment interest rate for non-pecuniary damages (Henry at paras. 16–19).
Relying on its previous decisions, the court held that while a party’s prima facie entitlement to a presumptive statutory pre-judgment interest rate does not amount to an absolute entitlement to the presumptive rate; it sets up a rebuttable presumption that should only be deviated from where the party seeking a higher or lower rate demonstrates that there are unusual or special circumstances sufficient to justify such a departure (Aubin at para. 32)
The Court of Appeal held that the establishment of a presumptive pre-judgment interest rate scheme represents the will of the legislature that sacrifices perfection in the “interest of consistency and certainty” (Aubin at para. 33). This being the case, trial judges are not open to depart from it except where it is just to do so. If the court is going to deviate from the presumptive rate, the court must take into account all of the mandatory list of factors under s. 130(2) and not unduly focus on one factor, such as changes in market interest rates (Aubin at paras. 34–35).
The court emphasized the objective of the pre-judgment interest scheme to “encourage early settlements and the timely compromise of litigation.” Further, pre-judgment interest also serves to deprive the “wrongdoer of a windfall benefit he would otherwise receive,” namely, the use that the wrongdoer had of the money that should have been paid to the plaintiff (Henry at para. 28).
The court rejected the argument that the rates under ss. 127 and 128 of the CJA are determinative of the meaning of “market interest rates” under s. 130(2)(a) of the CJA. The court clarified that previous decisions of the court did not define “market interest rates” under s. 130(2)(a) as meaning “pre-judgment interest” rates under s. 127(1) of the CJA. The court held that in the absence of evidence or an agreement that pre-judgment interest rates equated to market interest rates, the trial judge erred in holding that they were equivalent (Aubin at paras. 58–59).
Interestingly, and helpful for plaintiffs, is that the court in Aubin not only found that the respondents (defendants) failed to meet their onus to demonstrate that it would be just to reduce the five per cent presumptive rate on the appellants’ non-pecuniary damages, it held that the appellants met their onus to demonstrate that there were special circumstances that it would be just in the circumstances of that case to increase the presumptive pre-judgment interest rate beyond five per cent (Aubin at para. 70).
The court reviewed the appellants’ unchallenged evidence of the actual average rate of return enjoyed by the respondents’ insurer during the relevant time period and the actual rates of return earned by the appellants on their investment portfolios to show that the average available market interest rates were about double the presumptive rate during the relevant period. The court held that it was just in the circumstances of the case that the pre-judgment interest rate on the appellants’ non-pecuniary and pecuniary damages be set at 8.46 per cent (Aubin at paras. 72-74).
These are two very important decisions in the personal injury and medical malpractice bar. They re- establish that the presumptive pre-judgment interest rate is five per cent and with the appropriate evidence, the rate can be increased beyond the five per cent default rate.
Kris Bonn is the managing partner at Bonn Law, a firm with offices in Belleville and Trenton that focuses on helping people with personal injury cases, medical malpractice and long-term disability
denials. Bonn is the president of the Brain Injury Association Quinte District and the past president of the Ontario Trial Lawyers Association.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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