OVERVIEW
The law governing prejudgment interest is unsettled. With respect to rates, this is by design: s. 130(2), Courts of Justice Act RSO 1990 c. C. 43 [“CJA”] establishes that the rate will vary from case to case, by requiring judicial consideration of factors including “changes in market interest rates”, and “the circumstances of the case”. However, with respect to time frame, the principles governing the interface between s. 128(1) of the Act (which provides that the entitlements of judgment creditors are to be “calculated from the date the cause of action arose”), and s. 130(1)(c) (which allows “interest for a period other than that provided” by s. 128(1)), are underdeveloped.
What follows are some thoughts aimed at clarifying the interface between ss. 128(1) and 130(1)(c), with the goals of: (1) providing Plaintiffs’ counsel with a better understanding of how to effectively assert the default statutory entitlement to prejudgment interest “calculated from the date the cause of action arose” (qua s. 128(1), CJA); and, (2) providing any readers from the defense bar with a better understanding of the grounds for such exposure.
This article is focused on historic tort claims subject to s. 16(1), Limitations Act SO 2002 c 24 Sch B, because these are the cases where accrued prejudgment interest weighs most significantly as an aspect of the value in dispute. Any discussion of such cases necessarily begins with MacLeod v Marshall 2019 ONCA 842 [“MacLeod”], the leading appellate authority establishing that the standard of correctness in the determination of this issue requires trial judges to explicitly articulate their adjudicative reasoning with respect to s. 130, CJA (at para 59).
However, even post-MacLeod, Courts have not consistently explained the heuristics applied to answer the question of when “the cause of action arose” (qua s. 128(1)). As a corollary, there has been a dearth of juristic reasoning providing substantive guidance as to when and why it is ever in the interests of justice to displace the statutory entitlement provided by s. 128(1) in those cases awarding “interest for a period other than that provided” by the default rule.
In some cases, this has been because the issue has turned on the agreement between the parties (as, for example, in MacLeod) or the tactical idiosyncrasies of motions for default judgment (see: Lapointe v Labelle 2023 ONSC 470 [“Lapointe”] at para 115); however, in others, the date that the cause of action arose has been linked variously to: (1) discoverability of claim date; (2) commencement of action date; (3) midpoint date; (4) date of abuse; and (5) date of the defendant’s criminal conviction (see: L.R. v. S.P., 2019 ONSC 1737 [“L.R.“] at paras 97, 98 and 105 op. cit. Barker v Barker 2021 ONSC 158 [“Barker”] at paras 937-938).
THE STATE OF THE LAW
In MacLeod, the disagreement between the parties was as to the rate of prejudgment interest, not the period over which the entitlement had accrued (see: 2018 ONSC 5100 at para 29). The parties had agreed that “the operative commencement date for the running of interest” was when “the notice of claim was delivered” (ibid.). This agreement was on all fours with the reasoning in L.R., supra (at para 105), and while it may have served a strategic purpose (albeit one that is opaque on the face of the reported decisions), counsel for all parties in like cases- where half a century or more may have elapsed since the subject torts- should remain adverted to the significant value that may be at stake in any such agreement.
In Lapointe, a default judgment where the Plaintiff was successful in obtaining prejudgment interest on general damages at the 5% rate provided for by Rule 53.10 of the Rules of Civil Procedure RRO 1990 Reg. 194, she had only claimed prejudgment interest from the date of the issuance of her Statement of Claim (at para 115). This approach was discrepant from that taken on a similar motion for default judgment in DS v Quesnelle 2019 ONSC 3230, where the Court was persuaded to grant prejudgment interest running from the date of the first occurrence of the subject torts (at para 43).
While the Plaintiffs in MacLeod and Lapointe respectively resiled- whatever their reasons- from asserting the full extent of their rights under the law, the totality of the case law presents a rather haphazard variety of outcomes. In C.O. v. Williamson, 2020 ONSC 3874 [“Williamson”], where the Plaintiff’s “cause of action and prejudgment interest” were “based on discoverability” (at para 241), the date that the Plaintiff’s cause of action arose was held to be “when she saw Mr. Williamson [i.e. the perpetrator] on television causing her to very shortly thereafter seek professional therapeutic assistance for his sexual assaults” (at para 244). This was on all fours with Hockley v. Riley, 2005 Carswell Ont 6958 (S.C.) rev’d in part on other grounds 2007 ONCA 804 and Milne v. Betts, 2012 ONSC 5565 op. cit. L.R., supra, at note 4. In Whitfield v. Whitfield 2015 ONSC 3422, pre-judgment interest ran from the day the Plaintiff began to experience a recovered memory of abuse (at para 10). The Plaintiff had advanced this argument on the basis of her discoverability position, as was necessary prior to the 2016 amendments to the Limitations Act, supra, to remove limitation periods for torts relating to sexual abuse. Accordingly, the jurisprudence brooks a distinction between pre-2016 and post-2016 actions, given that discoverability prior to the 2016 amendments would necessarily have to be configured proximally to the commencement of proceedings, often at a significant temporal remove from the subject torts in historic claims.
In Barker, supra, a 2021 decision involving abuse claims with respect to “experimental and medically meritless” programs (at para 941), discoverability was construed in terms of when the “nature of the…programs became known” (ibid.), on January 1, 2000.
The decisions in Barker and Williamson exemplify the recent jurisprudential emphasis on the subjective aspects of discoverability, largely to the exclusion of the objective elements of the statutory determination as to when “the cause of action arose” (s. 128(1), CJA). The statute would be well served by a more objective approach, informed by both English and Canadian common law.
RESTORING OBJECTIVITY TO S. 128(1), CJA: LESSONS FROM THE ENGLISH JURISPRUDENCE
The limitations jurisprudence has had a distorting effect on the objective terms of s. 128(1), CJA. In historical cases brought prior to the enactment of s. 16(1), Limitations Act, construing the date the cause of action arose would be inextricable from the issue of discoverability (see: Whitfield, supra, at para 10).
In Pioneer Envelopes Ltd. v. Minister of Finance of B.C. 1980 CanLII 714 (BC SC), the British Columbia Supreme Court noted how the definition of “cause of action”1 is “more often…discussed with respect to limitation provisions in a statute” than “specifically”, with respect to its own “particular meaning”, which the Court restated as a “broad rule”:
A cause of action is not defined by the Court Order Interest Act and the common law has never specifically said it has a particular meaning. More often it has been discussed with respect to limitation provisions in a statute… The broad rule under this head is that the time a cause of action arises is when any fact that is material to be proved entitling the plaintiff to succeed is in existence so that a defendant will have the right to traverse any such allegations of fact (at para 37).
This “broad rule” goes back to Lord Bramwell’s restatement in Backhouse v Bonomi (1861) 11 ER 825 [“Backhouse”] of the “principle…that the right of action is complete as soon as the wrongful act is done” (at 827). The New Brunswick Court of the King’s Bench explained that this principle gave rise to the doctrine that “when the actual damage is done, the cause of action arises”: ibid., and Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127 at 132 op. cit. Clair v. Temiscouata Railway Co., 1906 CanLII 270 (NB KB) at 621.
The Supreme Court of Canada has repeatedly relied on Lord Diplock’s restatement of this doctrine in Letang v. Cooper, [1965] 1 Q.B. 232 (C.A.), cited in Canadian Imperial Bank of Commerce v Green 2015 SCC 60 as follows (at para 188):
A cause of action is “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”: Letang v. Cooper, [1965] 1 Q.B. 232 (C.A.), at pp. 242-43, per Diplock L.J.; Markevich v. Canada, 2003 SCC 9, [2003] 1 S.C.R. 94, at para. 27; Dilollo Estate (Trustee of) v. I.F. Propco Holdings (Ontario) 36 Ltd., 2013 ONCA 550, 117 O.R. (3d) 81, at para. 43.
Consistent with this definition, the British Columbia Supreme Court has recently restated, in relation to the definition of “cause of action” in s. 1(1), Court Order Interest Act, R.S.B.C. 1996, c. 79, that “[a] cause of action arises when every fact exists that the plaintiff needs to prove in order to establish his claim”: Norkum v Fletcher, 2019 BCSC 922 at para 17. The provenance of this restatement is referable to Lord Esher M.R. in Cooke v. Gill (1873), L.R. 8 C.P. 107 at 116 [“Cooke”] (see also: Service Packing Co. Ltd. v. Fraser Valley Mushroom Growers’ Co-operative Assn. 1985 CanLII 367 (BC SC) at para 4 and Surerus Construction & Development Ltd. v. Rudiger, 2001 BCSC 355 at para 11):
“Cause of action” has been held from the earliest time to mean every fact which is material to be proved to entitle the plaintiff to succeed, every fact which the defendant would have a right to traverse.
Accordingly, there is substantial support in both English and Canadian jurisprudence for the proposition that a “cause of action” for the purposes of s. 128(1), CJA is not temporally bounded by discoverability. A “cause of action” pre-exists the discoverability of same.
RE: RATES
MacLeod is often misunderstood. It does not suggest that the 5% rate found in Rule 53.10 no longer applies. It simply stands for the proposition that the Court should consider the applicable factors in paragraph 130(2)(a) CJA (i.e. “changes in market interest rates”) in determining the applicable rate. In Williamson, the Court did so in depth, applying a 2.5% interest rate on nonpecuniary damages (cf para 245)- as opposed to the 1.3% rate sought by the defense with reference to MacLeod (cf para 243)- based on the following reasoning:
Since the financial crisis of 2008, market interest rates have been extremely low, sometimes historically so. Those low interest rates were in place for the entire relevant period in Macleod but only for a much lesser portion of the entire relevant period in this case [the “relevant period” began in 1996]. In these circumstances, I am persuaded that in this case, the pre-judgment interest rate for the non-pecuniary awards should be higher than in MacLeod.
In Estate of Mary Fleury et al v. Olayiwola A. Kassim, 2022 ONSC 2464 [“Estate of Mary Fleury”], a medical negligence case, the Court considered “the impact of the global pandemic on the world economy” in terms of how “the rate of interest continues to increase” (at para 328), and awarded prejudgment interest on non-pecuniary damages at the rate of 5%. Justice Jensen found in Lapointe “that the reasoning applied by the court in Estate of Mary Fleury et al also applies in the present case” (at para 123), which arguably reflects the present state of the law for historic sexual abuse cases.
While Lapointe was distinguished in Aubin v Synagogue and Jewish Community Centre of Ottawa 2023 ONSC 3926 (at paras 39-40), a premises liability case, Justice Williams emphatically noted that “these cases [i.e. Estate of Mary Fleury and Lapointe] turned on their own facts” (at para 40). It follows that as long as “the rate of interest continues to increase” vis a vis “the world economy” (cf. Estate of Mary Fleury at para 328), then defendants- and especially defendants in historic cases subject to s. 16(1), Limitations Act, supra- may face prejudgment interest rates on non-pecuniary general damages that are greater than 2.5% and which may be up to the full 5% rate under Rule 53.10.
In the circumstances of present market interest rates, plaintiffs’ counsel have unique opportunities to assert the compatibility of the 5% rate under Rule 53.10 with s. 130(2)(e), CJA. In any given case, optimizing these opportunities requires “the date the cause of action arose” (cf s. 128(1), CJA) to be interpreted in accordance with what Lord Esher in Cooke indicated this “has been held from the earliest time to mean.”
This article was written by Aron Zaltz of Preszler Injury Lawyers
