Court of Appeal decisions clarify prejudgment interest rate rules

In 2014, the Ontario Government passed Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, an amendment to the Insurance Act that came into effect the following year. One of the measures contained in the act reduced the default prejudgment interest rate for pain and suffering damages awarded in automotive injury lawsuits from five per cent to the bank rate at the time the proceeding started. The change sparked debate among defendant and plaintiff side car accident lawyers.

Confusion centred on the question of whether the interest rate reduction could be applied retroactively or whether it was intended for new lawsuits only. This September, the Ontario Court of Appeal’s decisions on El-Khodr v. Lackle and Cobb v. Long Estate – heard simultaneously – clarified Bill 15’s intention in this matter.

“The Ontario Court of Appeal has clarified that 2015 amendments to the Insurance Act could apply to actions that were brought forward before changes came into force,” wrote Law Times’ Alex Robinson in an October 2 article.

Defence lawyers were pleased by the ruling. One lawyer who represented the defense in El-Khodr told Robinson that “this decision will now discourage plaintiffs’ counsel from delaying the commencement of actions and will accelerate the litigation process, all to the benefit of the injured plaintiff.”

Plaintiff side car accident lawyers are less pleased with the decision, in particular because it discourages victims from settling their accident benefits claims prior to resolving civil actions.

“I think it really is making practicing lawyers in this field take a hard look at their cases before they know they can take on a case anymore in these motor vehicle crash cases,” one plaintiff lawyer in Cobb told Robinson.

“If you apply [the prejudgment insurance rate] retroactively, then, effectively, the reduction in premiums is coming at the expense of accident victims that were injured in motor vehicle accidents that occurred entirely prior to the date of the amendment,” added a plaintiff lawyer in El-Khodr. “So that’s a little disappointing.”

While the Court of Appeal’s decision has left car accident lawyers frustrated, the fight for accident victims’ rights may not be over: Robinson writes that the plaintiffs in both El-Khodr and Cobb are considering an appeal to the Supreme Court of Canada.

If you or someone you love has been injured in an automobile accident, consider contacting the experienced personal injury lawyers at Will Davidson LLP’s Oakville offices. Our team has years of experience helping Ontarians access compensation for their injuries.

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