GD Blog analysis vindicated: Court finds s. 258.3(8.1) of Insurance Act retroactively scales back PJI rates

R. Lee Akazaki, C.S., B.A. (Hons.), J.D.Civil Litigation, Insurance, Negligence0 Comments

In a post on this site last November, “Why the new s. 258.3(8.1) of the Insurance Act will retroactively scale back prejudgment interest rates in MVA actions,” I stated that the statutory amendment reducing the rate of prejudgment interest for non-pecuniary damage awards (damages for pain and suffering and the non-pecuniary portion of dependent family claims) in automobile tort cases must be applied retroactively.  In large or catastrophic claims involving years of pre-trial procedures, the difference can be quite substantial.

These past four months, I am told the blog post has been printed off and by defence lawyers across Ontario, and that the reasoning has been debated at mediations and pretrials.  Lawyers have been waiting for the court to opine on the subject.  In a decision released today but not yet available on the court’s website, Cirillo v. Rizzo 2015 ONSC 2440, the Ontario Superior Court followed the reasoning I stated in the November article, on all fours.

Verdict: Procedural and retroactive it is.

Despite the considerable interest-based debate within the bar, any lawyer versed in the rules of statutory interpretation should not find the point hard to grasp.  The provision does not deal with entitlement to an award of interest, but the method of calculation.  The method of calculation based on a static 5%, moreover, is based on an arbitrary percentage rate instead of a measurement of actual loss or loss of investment opportunity.  In that regard, the rate could not be defended as substantive because it was not tied to real and provable loss, or to variable investment rates reflecting actual economic indicators.  It had to be procedural in the way rule 49, which favours plaintiffs in the allocation of costs after trial, is a ‘thumb on the scale’ intended to encourage defendants to settle out of court.  (See Akazaki, “Peering over the plaintiffs’ and defendants’ parapets: Redesigning Ontario Rule 49 to Encourage Meaningful Offers of Settlement,” The Advocates’ Quarterly: 30:285)  A rule that guides the court’s process must be characterized as procedural, compared to one that contemplates evidence-based awards of compensation

Post-Script:

The subsequent decision of the same court in El-Khodr v Lackie2015 ONSC 4766, disagreed with Cirillo, on the basis that prejudgment interest at a particular rate was a substantive right.  The flaw in this reasoning appears to be the implied holding that statutes are substantive and rule of court procedural.  This is incorrect, because the procedural-substantive dichotomy is a principle of statutory interpretation, i.e. applied to legislation as well as regulations.  The new statute states that rule 53.10, a procedural rule, no longer applies.  A statutory provision that takes away a procedural right cannot be characterized as a substantive provision.  It is uncertain whether the Court of Appeal will remove the deadlock, because the issue is time-limited and applicable to a finite number of cases.


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About the Author
R. Lee Akazaki, C.S., B.A. (Hons.), J.D.

R. Lee Akazaki, C.S., B.A. (Hons.), J.D.

Civil trial and appeal counsel in all levels of Ontario courts, leave applications to the Supreme Court of Canada, and administrative tribunals. Certified by the Law Society of Upper Canada as a Specialist in Civil Litigation. Hearings in English and French. Bio | Contact

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