The Government of Ontario has recently announced that for trials beginning in 2013 the "discount rate", which is used to calculate the present value of future pecuniary damages, will be lowered to -0.5% for the initial 15 years following the trial. Rule 53.09 of Ontario’s Rules of Civil Procedure divides the future into two periods: the first 15 years after the commencement of the trial, and everything after 15 years. The Rule mandates that the discount rate for that second period remains constant at 2.5% per annum, but the discount rate for the initial 15 year period fluctuates from year to year, based on inflation.
The new negative discount rate of -0.5% means that awards for future pecuniary damages incurred during this time will actually increase in quantum. This is the first time since the Rule was adopted in 2000 that there has been a negative rate.
By lowering its discount rate to -0.5%, Ontario continues to have the lowest rate amongst Canadian jurisdictions which have such a formula to calculate future pecuniary damage awards. This development will undoubtedly have tactical implications for the defence of claims which will materialize immediately.