On December 9, 2020, our provincial government lowered the interest rates on damages that plaintiffs receive in motor vehicle accidents. Our Court of King’s Bench in Jackson v Cooper had to decide whether the change in interest rates was retroactive or not. In other words, the Court had to determine whether the lowered interest rates applied to motor vehicle accidents that occurred even before December 9, 2020.
What are damages?
In order to understand the issue addressed in Jackson v Cooper, it will be helpful to discuss what damages and interest are. In a personal injury case, damages are monetary payments awarded for various types of losses.
There are all sorts of types or “heads” of damages that might apply in a personal injury case. An injured person may have suffered a loss of income, loss of ability to care for their household, as well as many other types of losses. A common type of loss is pain and suffering, a type of non-monetary loss.
When someone is owed damages, the at fault party would normally have to pay interest on the damages. For example, if someone was in a motor vehicle accident on January 1, 2015, but wasn’t paid until January 2018, they would be owed about 3 years interest on the damages for pain and suffering.
How much interest is payable on damages?
For monetary losses, like loss of income or payments for medical services, one would have to consult the Judgment Interest Regulation. This regulation specifies how much interest is payable per given year.
For example, the interest rates payable in 2019 and 2020 were as little as 2.2% and 1.5% respectively. In 2021 to 2022, the interest rate is only 0.2%.
For non-monetary losses, like pain and suffering, however, the interest rate had been set at a steady 4%, as per the Judgment Interest Act.
The Insurance (Enhancing Driver Affordability and Care) Amendment Act, 2020, lowered the interest rate on non-monetary losses caused by motor vehicle accidents to match the rates in the Judgment Interest Regulation. In other words, this change drastically lowered the interest rates from 4% to 0.2% in 2021 and so on, meaning that plaintiffs in motor vehicle accidents would be getting substantially less interest on their damages than before.
The Jackson v Cooper Decision
This Fall, a decision called Jackson v Cooper was released The Court was asked to determine whether the interest rates prior to December 9, 2020 were at the 4%, or whether they were at the lower amounts as per the Judgment Interest Regulation.
The insurance company in question argued that the lowered rate of interest for non-pecuniary damages applied no matter the date of the accident. In other words, they argued the 4% no longer applied in any circumstances when it was a motor vehicle accident.
The Court determined otherwise, finding that the change in interest rates only applied going forward from December 9, 2020. In other words, a plaintiff who is injured in a motor vehicle accident prior to December 9, 2020 would still get 4% interest on their non-monetary losses up to December 9, 2020, then would get the reduced rate of interest from December 9, 2020 forward.
The types of damages available and various interest rates payable on awards can be complicated to figure out. If you have been injured in an accident we recommend that you speak to one of our qualified lawyers to discuss your case.