In a case called Carr v. Modi, 2016 O.N.S.C 7255 the Divisional Court has offered some direction on the vexing issue of when the legislative changes to the pre-judgment interest rate are to be given effect. At issue was the applicable interest rate given the January 1, 2015 legislative amendment.
The accident that gave rise to the litigation occurred January 30, 2008. The action was settled September 25, 2015. When the parties could not agree on the appropriate pre-judgment interest rate, this issue, amongst others, was decided by Justice Lederer. In a judgment dated April 19, 2016 Justice Lederer held that the applicable rate was 5% (i.e. that the legislative changes did not have retroactive application).
The Defendants appealed this judgment. In an oral decision dated December 1, Justice Molloy, writing for a unanimous panel of the Court agreed with Justice Lederer.
In so agreeing, she held:
1. That the issue with respect to the appropriate rate was a question of law, which required the motion judge to be correct;
2. That the January 1, 2015 change to the interest rate was a substantive change and presumed to have not been retroactive; and
3. That there was no language in the legislation to support the amendment being given retroactive affect.
The court also declined to interfere with the motion judge’s decision to not employ his discretion to lower the rate.
Practically, where this leaves these cases is that for motor vehicle accidents that occur before January 1, 2015 the applicable rate is 5% until, and unless the Court of Appeal says differently.