The Court Of Appeal's Take On Deductible & Prejudgment Interest In MVA Claims

Co-authors: Lee Chitty and Alexander Steffen, Law Students

First presented at a Client Seminar

Background

Non-pecuniary damages (also called general damages) are awarded to a plaintiff that sustained a non-monetary loss. These damages are not capable of exact quantification. Examples of such losses include, inter alia, pain and suffering.

Claims for general damages in automobile cases are subject to a statutory threshold test.1 If a person injured in a motor vehicle accident meets the threshold test, a statutory deductible applies. Previously, this deductible was $30,000.00 and only applied to general damages awards under $100,000.00.

On August 1, 2015, legislative reform to the Insurance Act2 took effect. The statutory deductible applicable to damages for a non-pecuniary loss was increased from $30,000.00 to $36,500.00. The $100,000.00 vanishing deductible limit was also increased to $121,799.00. The deductible and threshold amount to which it applies is revised each January to account for inflation.3 For example, in the case of damages arising from automobile accidents from January 1, 2017, until December 31, 2017, the deductible for general damages when a tort award does not exceed the monetary threshold of $124,616.21 is $37,385.17. For example:

Pain & Suffering Awarded $37,385.17 $0.00 $50,000.00 $12,614.834 $124,616.21 Full Amount In addition to damages, a plaintiff is entitled by statute to prejudgment interest. In automobile accident cases, prejudgment interest is calculated from the date on which the defendant was first given notice of the claim to the date of judgment or settlement. Amendments to the Insurance Act reduced the prejudgment interest rate in cases involving automobile accidents occurring after January 1, 2015. Prior to January 2015, prejudgment interest accruing on damages for non-pecuniary loss in personal injury actions was governed by rule 53.10 of the Rules of Civil Procedure,5 which provided for interest at the rate of 5% per year.

On January 1, 2015, the Insurance Act was amended to provide that rule 53.10 no longer applies to non-pecuniary losses arising from automobile accidents. This legislative reform dropped the 5% prejudgment interest rate and adopted the lower general prejudgment interest regime governed by s. 128(1) of the Courts of Justice Act6 which is currently 0.8%.7

Issues

The amendments to the Insurance Act did not contain specified dates upon which the increased deductible and lower prejudgment interest rate were to come into effect. Naturally, the questions that arose from the above-described legislative changes were as follows:

What deductible amount should be applied for accidents that occurred prior to August 1, 2015? In other words, is it $30,000.00, or the increased amount further to legislative reform? What prejudgment interest rate should be applied for accidents that occurred prior to January 1, 2015? For instance, is it 5% as prescribed by rule 53.10 of the Rules of Civil Procedure, or the lower prejudgment interest rate prescribed by the Court of Justice Act? These issues have recently been resolved by the...