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Interest - CJA Rates. Henry v. Zaitlen
In Henry v. Zaitlen (Ont CA, 2024) the Ontario Court of Appeal allowed an appeal on CJA s.128 and 130 grounds, here relating to "non-pecuniary damages for personal injury":[2] This appeal turns on the trial judge’s approach to prejudgment interest for non-pecuniary damages prescribed under s. 128(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”) and r. 53.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) and to the exercise of the discretion under ss. 130(1) and (2) of the CJA to deviate from the presumptive entitlement to prejudgment interest.
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C. Analysis
[11] The trial judge’s exercise of his discretion under s. 130(1) of the CJA to decrease the prejudgment interest rate would ordinarily be entitled to deference on appellate review: MacLeod, at para. 48, citing Stellarbridge Management v. Magna International (2004), 2004 CanLII 9852 (ON CA), 71 O.R. (3d) 263 (C.A.), at para. 85, leave to appeal refused, [2004] S.C.C.A. No. 371. However, as I shall explain, the trial judge’s legal analysis, including his application of s. 130 of the CJA, was flawed. In my view, the trial judge effectively exercised his discretion based on the incorrect principles that there is no presumptive statutory prejudgment interest rate and that, as a matter of principle, the overarching consideration in the exercise of his discretion must be the prevailing market interest rates, which he effectively equated to prejudgment interest rates for pecuniary damages and the Consumer Price Index. As a result, he failed to correctly apply the provisions of the CJA in accordance with the governing principles related to prejudgment interest on non-pecuniary damages.[4] Moreover, in considering the “changes in market interest rates” criterion, the trial judge erred in his interpretation of the meaning of “market interest rates” and the evidence sufficient to establish them.
[12] My analysis of the trial judge’s reasons should be read in conjunction with my reasons in Aubin v. Synagogue and Jewish Community Centre of Ottawa (Soloway Jewish Community Centre), 2024 ONCA 615, in particular the discussion of the legislative purpose and policy of ss. 128(1)-(2) and 130(1)-(2) of the CJA, and r. 53.10 of the Rules, and the interpretation of “changes in market interest rates” in s. 130(2)(a) of the CJA. However, my analysis requires that I repeat some of the same points in both decisions.
[13] The trial judge’s failure to consider all the factors in s. 130(2) in deciding that a lower prejudgment interest rate was just in the circumstances and his narrow focus on and misapplication of “changes in market interest rates” under s. 130(2)(a) “were not in accordance with a full and balanced application of the factors set out in s. 130(2), and amounted to an error in law”: Pilon v. Janveaux (2006), 2006 CanLII 6190 (ON CA), 211 O.A.C. 19, at para. 31.
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[16] The plain language of s. 128(2) of the CJA and r. 53.10 of the Rules is clear. It creates a presumptive or “default” five per cent prejudgment interest rate for non-pecuniary damages: Cobb, at paras. 69 and 71. The trial judge’s failure to give effect to the applicable rules of interpretation in considering this provision is an analytical error.
[17] The statutory presumption that the five per cent rate of interest applies to non-pecuniary loss on personal injury is baked into s. 128(2) of the CJA:Despite subsection (1), the rate of interest on damages for non-pecuniary loss in an action for personal injury shall be the rate determined by the rules of court under clause 66(2)(w). [Emphasis added.] [18] The rate determined by the rules of court is set out in r. 53.10 of the Rules: “The prejudgment interest rate on damages for non-pecuniary loss in an action for personal injury is five per cent per year.”
[19] The five per cent rate is the prescribed statutory presumptive rate for non-pecuniary loss. As this court stated in Somers v. Fournier (2002), 2002 CanLII 45001 (ON CA), 60 O.R. (3d) 225 (C.A.), at para. 30, the CJA “confers a substantive right to claim pre-judgment interest on a person who is entitled to an order for the payment of money.” Moreover, there is a prima facie entitlement to the rate provided for in the CJA: Andani, at para. 15.
[20] I disagree with the respondent’s submission that this court in Cobb determined that there is no presumptive statutory prejudgment interest rate. The court in Cobb recognized, at paras. 69 and 71, that s. 128 “contemplates two default rates of prejudgment interest: one for damages for non-pecuniary loss in personal injury actions, and one, called ‘the prejudgment interest rate’, for all other money awards for which s. 128 makes prejudgment interest available”, and that “s. 128(2) creates an exception from this [s. 128(1)] default rate of prejudgment interest for damages for non-pecuniary loss arising from personal injuries”. There is a presumptive entitlement to prejudgment interest at the statutory rate. However, there is not, as this court clarified in Cobb, at paras. 85 and 90, an absolute or vested entitlement to prejudgment interest or to the five per cent statutory rate of interest for non-pecuniary loss. This is because, as Cobb further explained, at paras. 72, 86, 87 and 90, the presumptive statutory entitlement to prejudgment interest and to the presumptive rates can be displaced where the court “considers it just to do so”, in accordance with the discretion afforded under section 130(1) of the CJA. Section 130(1) of the CJA reads as follows:The court may, where it considers it just to do so, in respect of the whole or any part of the amount on which interest is payable under section 128 or 129 [postjudgment interest],
(a) disallow interest under either section;
(b) allow interest at a rate higher or lower than that provided in either section;
(c) allow interest for a period other than that provided in either section. [Emphasis added.] [21] Although the presumption can be displaced, the court’s acknowledgement of the presumption at the start of its analysis under s. 130(1) of the CJA is important. The presumption places the onus squarely on the party seeking to depart from the prima facie entitlement to the presumptive statutory interest rate to demonstrate why the court should exercise its discretion to do so: Graham v. Rourke, 1990 CanLII 7005 (ON CA), [1991] 75 O.R. (2d) 622 (C.A), at p. 627; Ben-Israel v. Vitacare Medical Products Inc. et al. (1999), 1999 CanLII 2556 (ON CA), 122 O.A.C. 57 (C.A.), at para. 20; Andani, at para. 15; Novakovic v. Kapusniak, 2008 ONCA 381, 52 R.F.L. (6th) 9, at para. 44; Metropolitan Toronto Police Widows & Orphans Fund v. Telus Communications Inc. (2008), 2008 CanLII 5595 (ON SC), 44 B.L.R. (4th) 140 (Ont. Sup. Ct.), at para. 69, aff’d 2009 ONCA 111, 55 B.L.R. (4th) 12; McFlow Capital Corp. v. James, 2021 ONCA 753, at para. 58, 63-65.
[22] While the court may exercise its discretion under s. 130(1) of the CJA to depart from the presumptive rate of interest, it is not mandatory that it do so. Moreover, it should only do so where “it considers it just to do so”. The rationale for this is that prejudgment interest should be viewed as part of the compensation due to the party: see Irvington Holdings Ltd. v. Black (1987), 1987 CanLII 4246 (ON CA), 58 O.R. (2nd) 449 (C.A.), at p. 487; Graham, at p. 629; Hislop v. Canada (Attorney General), 2004 CanLII 43774 (ON CA), [2005] 73 O.R. (3d) 641 (C.A.), at paras. 145, 147-48; and Somers, at para. 23.
[23] In my view, this means that the prescribed interest rates should not be deviated from as a matter of course but rather where the court determines that there are unusual or special circumstances sufficient to justify such a departure, having regard to the mandatory criteria under s. 130(2) of the CJA and all other relevant considerations: Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460, 106 O.R. (3d) 427, at para. 74; Tuffnail v. Meekes, 2020 ONCA 340, 449 D.L.R. (4th) 478, at para. 113. This is a cumulative assessment: each factor taken into account by the court does not have to by itself amount to an unusual or special circumstance, so long as, taken as a whole, the factor or factors relied upon by the court amount to unusual or special circumstances.
[24] The discretion under s. 130(1) of the CJA is broad. However, as this court observed in Somers, at para. 30, the legislative policy with respect to prejudgment interest “does not include an unfettered discretion for Ontario courts on whether to award pre-judgment interest.” Rather, the court’s discretion is informed by the mandatory list of factors under s. 130(2) that must be taken into account:For the purpose of subsection (1), the court shall take into account,
(a) changes in market interest rates;
(b) the circumstances of the case;
(c) the fact that an advance payment was made;
(d) the circumstances of medical disclosure by the plaintiff;
(e) the amount claimed and the amount recovered in the proceeding;
(f) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; and
(g) any other relevant consideration. [Emphasis added.] [25] I set out the list in s. 130(2) of the CJA to highlight that the “changes in market interest rates” is only one of the myriad factors that the court “shall take into account” in determining whether to exercise the discretion under s. 130(1) to alter the presumptive entitlement to prejudgment interest. The various specified factors listed in s. 130(2) that may affect an award of interest are not restricted to a mere mathematical difference in market interest rates but reflect the legislative policy and purposes underlying the statutory interest scheme. These include the fair compensation of the plaintiff and the encouragement of efficiently run litigation and early settlements, having regard to such factors as the conduct of the parties and the duration of the proceedings.
[26] While one factor may predominate over others in the circumstances of a given case, it is important for the court not to limit immediately its review to only one factor. Rather, the proper exercise of the court’s discretion requires an examination of all the mandatory factors, including the catchall categories of “the circumstances of the case” and “any other relevant consideration”. This comprehensive review fulfills the overarching consideration that changes to the presumptive interest rates must be in the interests of justice.
[27] The Federal Court of Appeal’s observations in Apotex Inc. v. Wellcome Foundation Ltd., 2000 CanLII 16270 (FCA), [2001] 1 F.C. 495 (C.A.), aff’d (on other grounds), 2002 SCC 77, [2002] 4 S.C.R. 153, related to the factors set out in s. 130(2) of the CJA, also assist in framing the appropriate analytical perspective to the judicial exercise of discretion in determining the appropriate award of prejudgment interest. Namely, the court in Apotex Inc., at para. 70, emphasized that the discretion afforded to trial judges under s. 130 serves to encourage timely litigation and assists in controlling the litigation process, but does not displace the principle that interest awards are compensatory, not punitive:Judicial discretion as to the appropriate rate and period at which interest will run is thought to assist the court in controlling the litigation process and to avoid inappropriate compensation. Specifically, such discretion is thought to persuade plaintiffs to commence actions without undue delay so that their entitlement to interest is not slowed. Conversely, discretion as to an award of interest in light of the conduct of the proceedings should compel guilty defendants toward settlement. Considerations as to conduct of proceedings should, nonetheless, only be used to assist the trier of fact in selecting the date at which interest will commence or cease, or the appropriate rate at which interest will accrue. That is, the maxim that an award of interest is compensatory rather than punitive is not displaced by the discretion reserved for the court. [Footnotes omitted. Emphasis added.] [28] Similarly, in Kinbauri Gold Corp. v. Iamgold International African Mining Gold Corp. (2004), 2004 CanLII 36051 (ON CA), 192 O.A.C. 24 (C.A.), at para. 120, this court emphasized the objective of the prejudgment interest scheme to “encourage early settlements and the timely compromise of litigation”. Relatedly, prejudgment 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: Apotex Inc., at para. 68, quoting M.A. Waldron, The Law of Interest in Canada (Scarborough: Carswell, 1992), at pp. 129-30. This is tied into the concept of compensation – as this court observed in Irvington Holdings Ltd., at p. 487:Interest should not be used as either a reward or a penalty, but should reflect the value of money wrongfully withheld from the appellant from the date of its demand for payment for its injury to the date when the compensation due it was determined at trial. [29] The legislative policy underlying the statutory interest scheme seeks fair compensation for a plaintiff having regard to all relevant circumstances. The inclusion of the presumptive interest rates in ss. 127-128 of the CJA eschews mathematical precision “in the interest of consistency and certainty”: Robert McAlpine Ltd. v. Byrne Glass Enterprises Ltd., [2001] O.J. No. 3208 (C.A.), at para. 5. Similarly, this court in Andani, at para. 18, further explained this legislative purpose:[O]ne of the collateral purposes of the prejudgment interest statutory provisions was to introduce an element of certainty into the determination of the period over which prejudgment interest is to be paid, the award of damages which will and will not attract prejudgment interest and the prejudgment interest rate. No one prejudgment interest formula can, with certainty, resolve all problems, including the problem of compensating plaintiffs fairly. [Emphasis added.] [30] As noted in Andani, at para. 17, the five percent prejudgment interest rate would not fully compensate a plaintiff even if it perfectly aligned with the annual return on investment that the plaintiff could have obtained had money awarded as damages been received at the date of injury. This is because the prejudgment rate is a simple, rather than compound, rate. . Aubin v. Synagogue and Jewish Community Centre of Ottawa (Soloway Jewish Community Centre)
In Aubin v. Synagogue and Jewish Community Centre of Ottawa (Soloway Jewish Community Centre) (Ont CA, 2024) the Ontario Court of Appeal allowed an interest appeal, here focussing on CJA 128(2) pre-judgment interest and the CJA 130 discretionary variance from that:[1] This appeal turns on the correct analytical approach to the application of the five per cent presumptive prejudgment interest rate on non-pecuniary damages under s. 128(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”) and r. 53.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), and to the exercise of the court’s discretion under ss. 130(1) and (2) of the CJA to deviate from the presumptive prejudgment interest rates for both non-pecuniary and past pecuniary losses under ss. 127(1) and 128(1), (2) and (3)[1] of the CJA.
[2] This appeal was heard together with the appeal in Henry v. Zaitlen, 2024 ONCA 614 because both appeals involved overlapping issues concerning prejudgment interest. My analysis of the trial judge’s reasons in this case should therefore be read in conjunction with my reasons in Henry, in particular the discussion of the legislative purpose and policy of ss. 128(1)-(2) and 130(1)-(2) of the CJA, and r. 53.10 of the Rules, and the interpretation of “changes in market interest rates” in s. 130(2)(a) of the CJA.
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[4] The only issue on this appeal is the trial judge’s prejudgment interest order with respect to the jury’s awards of non-pecuniary damages for personal injury and past pecuniary damages. ....
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(a) Governing statutory provisions and legal principles
[25] I start with a review of the relevant provisions of ss. 128(1)-(2) and 130(1)-(2) of the CJA, and r. 53.10 of the Rules, including the legislative purpose and policy underlying them. I then turn to the governing approach articulated in the case law to the treatment of prejudgment interest and the exercise of the court’s discretion to deviate from the presumptive prejudgment interest rates.
[26] Section 128(1) of the CJA sets out the presumptive entitlement to prejudgment interest:A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order. [27] Under s. 127(1) of the CJA, “prejudgment interest” is defined as “the bank rate at the end of the first day of the last month of the quarter preceding the quarter in which the proceeding was commenced, rounded to the nearest tenth of a percentage point”. In accordance with s. 127(2), the prejudgment interest rates are determined and published in a table by the Ministry of the Attorney General. At the relevant time, the prejudgment interest rate applicable to past pecuniary damages was 0.8 per cent.
[28] Section 128(2) of the CJA stands as an exception to s. 128(1). It provides for the application of a set rate of interest to non-pecuniary loss on personal injury:Despite subsection (1), the rate of interest on damages for non-pecuniary loss in an action for personal injury shall be the rate determined by the rules of court under clause 66(2)(w). [Emphasis added.] [29] The rate determined by the rules of court is set out under r. 53.10 of the Rules: “The prejudgment interest rate on damages for non-pecuniary loss in an action for personal injury is five per cent per year.”
[30] The presumptive statutory entitlement can be displaced where the court “considers it just to do so”, in accordance with the discretion afforded under section 130(1) of the CJA:The court may, where it considers it just to do so, in respect of the whole or any part of the amount on which interest is payable under section 128 or 129 [postjudgment interest],
(a) disallow interest under either section;
(b) allow interest at a rate higher or lower than that provided in either section;
(c) allow interest for a period other than that provided in either section. [Emphasis added.] [31] Doherty J.A., writing for this court, in Graham v. Rourke, 1990 CanLII 7005 (ON CA), [1991] 75 O.R. (2d) 622 (C.A.),at p. 627, set out the correct approach to the exercise of the court’s discretion under s. 130 of the CJA:Reviewing the trial judge's exercise of his discretion as to the prejudgment interest rate, I begin from the premise that a party is prima facie entitled to pre-judgment interest at the rate prescribed in ss. [127] and [128] of the Act. The onus is on the party seeking a higher or lower rate to justify a deviation from that “presumptive rate” [Emphasis in original. Citations omitted.] [32] A party’s prima facie entitlement to a presumptive statutory prejudgment interest rate does not amount to an absolute or a vested entitlement to the presumptive rate: Cobb v. Long Estate, 2017 ONCA 717, 416 D.L.R. (4th) 222, at paras. 85, 90. However, 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, having regard to the mandatory criteria under s. 130(2) of the CJA: Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460, 106 O.R. (3d) 427, at para. 74; Tuffnail v. Meekes, 2020 ONCA 340, at para. 113. Each factor informing the exercise of the court’s discretion need not, by itself, amount to unusual or special circumstances, so long as the court is satisfied that, in considering the relevant circumstances as a whole, there are unusual or special circumstances. The rationale for the rebuttable presumption and onus is that prejudgment interest should be viewed as part of the compensation due to the plaintiff: see Irvington Holdings Ltd. v. Black (1987), 1987 CanLII 4246 (ON CA), 58 O.R. (2d) 449 (C.A.), at p. 487; Graham, at p. 629; Hislop v. Canada (Attorney General), 2004 CanLII 43774 (ON CA), [2005] 73 O.R. (3d) 641 (C.A.), at paras. 145, 147-48; and Somers v. Fournier (2002), 2002 CanLII 45001 (ON CA), 60 O.R. (3d) 225 (C.A.), at para. 23.
[33] The establishment of a presumptive prejudgment interest rate scheme represents the will of the legislature to establish a coherent scheme that sacrifices perfection “in the interest of consistency and certainty”: Robert McAlpine Ltd. v. Byrne Glass Enterprises Ltd., [2001] O.J. No. 3208 (C.A.), at para. 5. Similarly, this court in Andani et al. v. Peel (Regional Municipality) et al., [1994] 66 O.A.C. 137 (C.A.), at para. 18, further explained this legislative purpose:[O]ne of the collateral purposes of the prejudgment interest statutory provisions was to introduce an element of certainty into the determination of the period over which prejudgment interest is to be paid, the award of damages which will and will not attract prejudgment interest and the prejudgment interest rate. No one prejudgment interest formula can, with certainty, resolve all problems, including the problem of compensating plaintiffs fairly. [34] Given that the statutory interest scheme represents the will of the legislature, it is not open to the courts to depart from it except where it is just to do so. As this court observed in Somers, at para. 30, the legislative policy with respect to prejudgment interest “does not include an unfettered discretion for Ontario courts on whether to award prejudgment interest.” Rather, the court’s discretion is informed by the mandatory list of factors under s. 130(2) that must be taken into account: MDS Inc., at para. 24. Section 130(2) of the CJA provides as follows:For the purpose of subsection (1), the court shall take into account,
(a) changes in market interest rates;
(b) the circumstances of the case;
(c) the fact that an advance payment was made;
(d) the circumstances of medical disclosure by the plaintiff;
(e) the amount claimed and the amount recovered in the proceeding;
(f) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; and
(g) any other relevant consideration. [Emphasis added.] [35] A plain reading of the factors under s. 130(2) reveals the legislative intention that the court’s exercise of its discretion under s. 130(1) must be a balanced one, based on the wide consideration of justice and not curtailed by any one particular factor. The specified factors go beyond a mathematical calculation and comparison of market interest rates, and, as I discuss in more detail below, of prejudgment interest or bank rates as defined under the CJA. They seek to animate in a measured consideration of all relevant factors the question of overall fairness as reflected in the legislative policy and purposes underlying these provisions.
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[42] Interest rate fluctuations are well known to the legislature. It has nonetheless chosen to leave the five per cent presumptive rate in place for non-motor vehicle accident personal injury claims. As this court observed in Ben-Israel v. Vitacare Medical Products Inc. et al. (1999), 1999 CanLII 2556 (ON CA), 122 O.A.C. 57 (C.A.), at para. 21:In selecting the pre-judgment interest model that is now reflected in the Courts of Justice Act, the Legislature must have recognized that where interest rates fluctuate during the relevant pre-judgment interest period there necessarily will be some element of over (or under) compensation. [Emphasis added.] [43] This court, in Andani, at para. 17, a decision cited to by the trial judge although not on this point, criticized the same argument advanced by the respondents and accepted by the trial judge that there is a risk of overcompensation where there have been fluctuations in interest rates. The court in Andani noted that the interest scheme does not fully compensate a plaintiff or measure the costs of delay:To achieve full compensation, an award of damages must include prejudgment interest in an amount which will compensate the plaintiff for the loss of use and the loss of value of a monetary award until it is paid. The statutory scheme for prejudgment interest does not provide for the payment of compound interest. There is no doubt that compound interest would more accurately compensate a plaintiff, or as it was put by the British Columbia Law Reform Commission “… more accurately measure the costs of delay to a successful plaintiff”. [Citations omitted.] [44] In her consideration of prejudgment interest on non-pecuniary damages, the trial judge ignored the fact, referenced and relied upon in her consideration of past pecuniary damages, that prejudgment interest does not generally provide full compensation for a plaintiff because it only provides for simple interest.
[45] The trial judge’s analysis was further affected by her conclusion that “there is no doubt that the jury’s awards for non-pecuniary damages for both [appellants] compensate for future, as well as past losses”. This conclusion runs contrary to this court’s clear determination of the same issue in Spencer v. Rosati et al. (1985), 1985 CanLII 2032 (ON CA), 50 O.R. (2d) 661, at pp. 665-66:With respect to the second ground, that is, the one that gives effect to the appellant’s enduring part of the pain and suffering after the date of fixing the damages, we think that this introduces an unnecessary complexity into the determination of interest which is at odds with the terms of the legislation. Even if part of a judgment for non-pecuniary loss is notionally to cover the future our law requires a single, once and for all, payment to be made now. We see no warrant for extending judicially the policy set forth in s. 36(5)(d) [of the Judicature Act, R.S.O. 1980, c. 223, now s. 128(4)(d) of the CJA] respecting future pecuniary loss. [46] Further, this court’s decision in Borland v. Muttersbach (1986), 1985 CanLII 2134 (ON CA), 53 O.R. (2d) 129 (C.A.), at pp. 146-47, citing to and following the above noted passage from Spencer, expressly rejected the trial judge’s erroneous conclusion here that awards of non-pecuniary damages include compensation for future losses. This court approved the trial judge’s rejection in Borland of the same proposition that “non-pecuniary damages in a case of serious personal injuries are designed to provide solace in the future and to that extent are damages for future pecuniary loss.”
[47] The trial judge’s focus on overcompensation caused her to lose sight of the other purposes of prejudgment interest and neglect the other criteria under s. 130(2) of the CJA in relation to both past pecuniary and non-pecuniary damages.
[48] In Kinbauri Gold Corp. v. Iamgold International African Mining Gold Corp. (2004), 2004 CanLII 36051 (ON CA), 192 O.A.C. 24 (C.A.), at para. 120, this court reiterated that “the legislature’s policy in providing for the payment of pre-judgment interest is intended to encourage early settlements and the timely compromise of litigation”. Those purposes are reflected in the other factors under s. 130(2), as, for example, in s. 130(2)(c) “the fact that an advance payment was made”.
[49] The balanced concept of fair compensation to a plaintiff by the payment of prejudgment interest is illustrated by the consideration of one of the other purposes of prejudgment interest, namely, to deprive the wrongdoer “of a windfall benefit he would otherwise receive” because of the use of monies that should have been paid to the plaintiff: Apotex Inc. v. Wellcome Foundation Ltd., 2000 CanLII 16270 (FCA), [2001] 1 F.C. 495 (C.A.), at para. 122. As this court observed, respecting this purpose, in Irvington Holdings Ltd., at p. 487:Interest should not be used as either a reward or a penalty, but should reflect the value of money wrongfully withheld from the appellant from the date of its demand for payment for its injury to the date when the compensation due it was determined at trial. [Emphasis added.] [50] The trial judge’s narrow focus on prejudgment interest rates and her failure to consider all the applicable factors in s. 130(2) in deciding what was just in the circumstances “were not in accordance with a full and balanced application of the factors set out in s. 130(2) and amounted to an error of law”: Pilon v. Janveaux (2006), 2006 CanLII 6190 (ON CA), 211 O.A.C. 19 (C.A.), at para. 31. At paras 51-59 the court continues to consider 'market interest rates'.
. Chaudry v. Bank of Montreal
In Chaudry v. Bank of Montreal (Div Court, 2023) the Divisional Court considers interest under CJA s.130, here varied to a market investment rate rather than the statutory default rate:[27] In this wrongful dismissal claim, the appellant seeks three potential forms of relief for what, in civil litigation, is ordinarily addressed as pre- and post-judgment interest under the Courts of Justice Act. First, the appellant is seeking pre- and post-judgment interest on a different scale, based on the rate of return on investments that he would have earned on the damages up until the time of payment. There is no issue that this can be sought. It is contemplated by the Courts of Justice Act provisions on interest. Section 130 permits a party to seek a rate different from the default rates in the Act. . Tribute (Springwater) Limited v. Atif
In Tribute (Springwater) Limited v. Atif (Ont CA, 2021) the Court of Appeal considered the court's discretion over interest awards:[26] Section 127 of the Courts of Justice Act (“CJA”) provides for prejudgment and postjudgment interest at prescribed rates. A court “shall not” award prejudgment interest under s. 128 or postjudgment interest under s. 129 where “interest is payable by a right other than under” either statutory provision: ss. 128(4)(g) and 129(5). These provisions preclude the court from ordering prejudgment and postjudgment interest in accordance with the statutory interest rates under the CJA if interest is otherwise payable in some other way (such as by virtue of a contract). Section 130(1) provides for the court’s discretion to disallow interest under either s. 128 or s. 129, to allow interest at a rate higher or lower than provided under either section, or to allow interest for a period other than that provided in either section. Section 130(2) sets out the factors relevant to the exercise of such discretion.
[27] The motion judge reduced the interest rate, relying on her “inherent jurisdiction”. Contrary to the respondent’s argument, I do not agree that s. 130, which speaks to discretion to depart from prejudgment and postjudgment interest under ss. 128 and 129, is exhaustive of the court’s discretion, and that there is no discretion to depart from a contractual rate of interest. In the exercise of the court’s common law and equitable jurisdiction, the departure from a contractual rate of interest can be justified by “special circumstances”: Gyimah v. Bank of Nova Scotia, 2013 ONCA 252, at para. 10; Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601, at paras. 46-50. The contractual rate of interest has also been disallowed in circumstances where it is “extremely onerous or unfair” and adequate notice of the contractual term was not provided: see Tilden Rent-A-Car Co. v. Clendenning (1978), 1978 CanLII 1446 (ON CA), 18 O.R. (2d) 601 (C.A.); MacQuarie Equipment Finance Ltd. v. 2326695 Ontario Ltd. (Durham Drug Store), 2020 ONCA 139, at paras. 23, 37-38; Forest Hill Homes v. Ou, 2019 ONSC 4332, at paras. 19-20.
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