(Photo credit: Creactionc/SXC)
When you are involved in a car accident and you decide to file a claim, it can take a while for the case to make its way through the courts. In the meanwhile, you are forced to incur costs related to your recovery or to the damage related to the incident.
As a result, a court’s judgment will include prejudgment interest (PJI), which will apply from the date the plaintiff serves notice until the time a judgment is made. The rates are listed in the Courts of Justice Act, s. 127.
A recent ruling by a Superior Court of Justice determined that these updated rates apply to all motor vehicle accident claims, despite when the loss occurred.
For example, in January 1 of this year, an amendment to the Insurance Act led to a change in the calculation of the PJI. In Cirillo v. Rizzo, the plaintiff was involved in a motor vehicle accident in 2005 when he was struck by the defendant’s vehicle while walking. In March 2014, the defendant made an offer to settle for $50,000 for all claims, including non-pecuniary damage, plus prejudgment interest from the date the claim was served to the date the offer was accepted.
On January 26, the plaintiff accepted the offer, but this acceptance comes after the Insurance Act amendments came into effect. Due to this change, the prejudgment interest rate for non-pecuniary damage dropped to 4.5 per cent each year from the five per cent each year, when the offer was first made.
The plaintiff argued the settlement should utilize the rate before the change since the amendment to the Act is substantive and it should not have a retroactive effect, while the defendant argued the settlement should utilize the rate after the change since the Act’s amendment is procedural and should have retroactive effect.
If the plaintiff’s argument succeeded, he would receive an interest amount of $19,975 and if the defendant’s argument succeeded, the plaintiff would receive an interest amount of $17,977.50 for a period of 7.99 years.
The judge ruled in favour of the defendant, which means that the newly implemented PJI rate will apply to all motor vehicle claims, despite the date of when the incident occurred, which means defendants may pay less, but plaintiffs may receive less to assist them with their recovery.
Accident benefits are available to anyone involved in a motor vehicle accident regardless of their role in the accident. The personal injury and accident lawyers at Neinstein Personal Injury Lawyers have been dealing with all accident related issues throughout Ontario for over 45 years. We know how to get you the compensation that you deserve and get your life back in order after being in a car accident. Call us at 416-920-4242, set up a free consultation, and come speak with us.
Greg Neinstein
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