When your injured as a result of somebody else’s negligence, usually your only recourse is to sue the person that caused your injuries. By doing so, you can recover compensation for lost income, medical expenses and even an amount to recognize the pain and suffering associated with your injury.
However, as the old saying goes, “the wheels of justice turn slow” which means that people often wait years before being compensated. Our legal system acknowledges that the wait itself should be worth money and, as a result, has legislated that in any compensation award given in Ontario, Pre-Judgment Interest (PJI) should be added on top.
Pre-judgment interest (PJI) is extra money added to the amount you win in court — to make up for the fact that you didn’t have that money during that waiting period.
In Ontario, PJI serves as compensation for the loss of use of money that a plaintiff would have received had the injury not occurred. Traditionally, the legislation has set the PJI rate for non-pecuniary damages in personal injury cases (not including motor vehicle accident cases) at 5% per annum. However, recent judicial decisions have refined this approach, introducing flexibility based on prevailing economic conditions and case-specific factors.
The Evolution of PJI Rates: From Fixed to Flexible
Historically, the 5% PJI rate was established to address higher market interest rates prevalent in the late 1980s. Over time, as market rates declined, the fixed 5% rate became increasingly misaligned with actual economic conditions. Recognizing this disparity, the Ontario Court of Appeal adjusted the PJI rate to 1.3%, reflecting the lower market interest rates at the time.
Recent Clarifications: Upholding the 5% Presumption with Room for Deviation
In 2024, the Court revisited the issue in Henry v. Zaitlen and Aubin v. Synagogue and Jewish Community Centre of Ottawa. These decisions reaffirmed the 5% rate as the presumptive standard for pain and suffering damages in personal injury actions, except those involving motor vehicle accidents. The Court emphasized that deviations from this rate should occur only in “unusual or special circumstances” and when it is just to do so. If a party is seeking a deviation from the presumptive 5%, they will be required to prove why.
Parties can seek guidance from the legislation with respect to what might be considered in deciding whether to deviate from the presumptive 5% including:
- Market Interest Rates: Fluctuations in prevailing interest rates can influence the appropriate PJI rate.
- Case Circumstances: Specific details of the case may justify a departure from the presumptive rate.
- Advance Payments: Any payments made before trial can affect the PJI calculation.
- Medical Disclosure: Timeliness and completeness of medical information provided.
- Claim and Recovery Amounts: Disparities between claimed and awarded amounts can be relevant.
- Party Conduct: Actions that unnecessarily prolong or expedite proceedings.
Pre-judgment interest serves as another mechanism to recover compensation when you are injured as a result of somebody else’s conduct. Speak to a personal injury lawyer if you’ve been hurt in a car crash or slip and fall.
ABOUT THE AUTHOR
Casey Dorey is an associate lawyer at Bergeron Clifford LLP. He works primarily in Kingston but travels across Eastern Ontario.
Casey obtained his LL.B from the University of Leicester, United Kingdom, with First Class Honours. While in law school, Casey was a Moot Court champion and represented the school externally in London, England. He was also awarded the Canadian Spring Scholarship.
He has appeared before the Ontario Superior Court of Justice, Small Claims Court, Criminal Injuries Compensation Board, and the Social Security Tribunal.
