In Henry v. Zaitlen, 2022 ONSC 7259, the court considered the applicable rate of prejudgment interest (“PJI”).
In the Courts of Justice Act, the PJI rate for non-pecuniary loss is 5% per year. However, in MacLeod v. Marshall, 2019 ONCA 892, the Court of Appeal held that the trial judge erred in awarding PJI at 5% without taking into account the factors in section 130(2) of the Courts of Justice Act, particularly market interest rates. We discussed the MacLeod decision in a previous blog post.
The defendant in the case in issue argued that the PJI rate should be 1.3%, which was the rate applicable at the time the statement of claim was issued. Justice Sanfilippo agreed with this. His Honour noted that, from the time the cause of action arose to the date of judgment, the PJI rate was low. A rate of 5% would overcompensate the plaintiffs.
This case, and the MacLeod decision, show that it is an error to award PJI at 5% for non-pecuniary loss without considering market rates.