Explore the evolving world of prejudgment interest on Civil Banter. Learn how two major Court of Appeal decisions are reshaping civil litigation.
Hosts: Hamish Mills-McEwan and Stanford Cummings
Topic: In this technical but timely episode of Civil Banter, Hamish and Stanford explore the evolving world of prejudgment interest in civil litigation. With the help of two recent Ontario Court of Appeal decisions, they break down what prejudgment interest really means, why it matters, and how it’s calculated, especially in personal injury cases. The episode also touches on how these changes might shape litigation strategy and access to justice going forward.
What You'll Learn
Discussion Points
Small But Big Changes
Hamish and Stanford kick things off by discussing recent changes to how prejudgment interest is awarded in personal injury cases. They explain why these seemingly small percentage differences can have massive impacts on final awards and legal strategy.
Zaitlen Case Breakdown
A medical malpractice case that hinged on whether the statutory 5% interest rate was fair in light of historically low Bank of Canada rates. The Court of Appeal upheld the 5% default, citing a lack of compelling evidence to deviate.
Aubin Case Breakdown
In contrast, the Court of Appeal upped the prejudgment interest rate to 8.46% based on strong evidence that the plaintiff could have earned that return. This ruling could open the door to more in-depth financial evidence being introduced in future personal injury trials.
Legal Context and Risk
Hamish and Stan explore the balancing act between certainty and judicial discretion, and how these decisions may affect discovery, expert evidence, and client expectations. Is a simple 5% rule better for justice, or just efficiency?
LARPing Segment (Lawyers Are Real People-ing)
Stan shares his recent Tarantino rewatch and Hamish recommends The Prestige. While their movie tastes differ, both use film as a way to decompress from the heavy cognitive load of litigation.
Contact Information:
Email: civilbanter@nelliganlaw.ca
Social Media:
Thanks for tuning into Episode 4 of Civil Banter. Whether you’re a lawyer, law student, or someone curious about how civil law actually works, this episode will help you understand how even abstract topics like interest rates can deeply influence access to justice. Join Hamish and Stan next time as they continue to tackle tough legal issues and share what’s on their screens when court’s out.
Hamish:
Hello, I am Hamish. This is Stan. And this is Civil Banter. We are two associate lawyers at Nelligan Law, practicing civil litigation, and all things injuries and insurance. So we're going to jump right into our first segment. This is your favorite segment. This is LARPing. Lawyers Are Real Peopling.
Stan:
Lawyers Are Real Peopling. Yes.
Hamish:
And we're on episode number four. So jumping into the LARPing segment, Stan, you'll be answering the question, how have you been filling your time? What have you been watching? What have you been doing? What have you been doing outside of the practice of law?
Stan:
Well, we both have a sort of cinematic aspect to this episode. We're going to be starting... I'm going to be chatting about a little Quentin Tarantino run that I'm on.
Hamish:
Classic.
Stan:
Yeah. So I've been rewatching some Tarantino films. Kill Bill, both one and two. I watched those a lot when they came out, which is now 2003, 2004. So it's been a long time since I've watched them. And I went back to them, and totally different takeaways now than then. But I still love them. I love Tarantino's work. And these two films are... Well, I don't know if he treats them as one or not. Right? He says he's only going to do 10 movies. And I don't know if one and two are considered one movie.
Hamish:
What I do know is I watched them too young. They are very violent.
Stan:
Yeah. I had that takeaway too. Not just for the violence, but just the overall themes in it and everything. I took more away from it now than then. But I love him as a director. The music's always incredible, the themes. If you appreciate cinema, and my wife's a cinema major actually in...
Hamish:
I didn't knot that.
Stan:
Undergrad. Yeah. She has a cinema major in undergrad. So the shots and the music and just the way that they all get put together, they're such an experience really, those Tarantino films.
Hamish:
And practical stunts and wire work.
Stan:
All that stuff. Yeah. He's like an old-school filmmaker. And I try my very best to see his stuff in theaters for that reason. So I've been on a kick. And also watched Django Unchained for the second time recently. So that was another... What a well-cast... I mean, you're getting great actors in all of them, especially these last few ones that he's done. They're just so well cast. And Christoph Waltz is-
Hamish:
Yeah, incredible.
Stan:
...incredible. I think he won best supporting actor on that one.
Hamish:
Yeah. And these are right in the center of my movie tastes. Unfortunately, it's a Venn diagram that I don't share with my wife.
Stan:
Okay. Yeah, you're watching different movies.
Hamish:
We have an overlap, but when it comes to extreme violence in cinema depictions, she's not a fan.
Stan:
That's fair.
Hamish:
But we did find a middle ground in what I've been doing and how I've been spending my time, which is my movie suggestion and recommendation is travel back in time to 2006 and watch Chris Nolan's The Prestige.
Stan:
I can't say I've seen it. I know what you're talking about. I remember at the time thinking that would be a good movie for me, and wanting to go see it, but for whatever reason, not making it there.
Hamish:
Yeah, I think it's underrated. It's a really interesting universe and time period. It's 1890s London, and it's about two magicians. Like, stage magicians, that have this intense rivalry. Which again, doesn't necessarily sound like the setup for an intense psychological thriller, but it's really good. Again, star-studded cast, Christian Bale, Hugh Jackman, Scarlett Johansson, Andy Serkis. Like Gollum.
Stan:
Gollum. And one of those Star Wars characters. I can't remember what he's called in the new ones, but...
Hamish:
Michael Caine. And then also David Bowie.
Stan:
David Bowie?
Hamish:
Yeah. In a [inaudible 00:04:17].
Stan:
In a non-musical role?
Hamish:
Non-musical. It has to be one of his last movies.
Stan:
Got to be.
Hamish:
And yeah, the thing is, it's impossible to just watch the movie and not be like, "Oh, my God, that's David Bowie."
Stan:
I can't imagine David Bowie in the 1890s. I can't imagine him anytime before his time. He just seems like such a modern man.
Hamish:
It's an... Well, in the context of the movie, the casting decision does make sense, because he's Nikola Tesla.
Stan:
Okay.
Hamish:
I don't want to say more. I'll be spoiling it. I think we're outside the spoiler window given that we're some 19 years later.
Stan:
Almost 20 years on.
Hamish:
But the funny thing is, my wife pointed out that for whatever reason, it's a great Chris Nolan movie, I think it's after at least the first Batman movie, but he's really sort of in and around his... I mean, I think he's still in his prime. But he was really becoming well-known at that stage, and that's how we could draw such big talent that I think most of whom he'd already had featured in some of his earlier movies. But my wife points out everyone is doing a different accent to their own accent, in a very odd way.
Stan:
So there's no English people speaking with an English... Or I guess very regional. Here I am. Just sort of North Americanizing the whole thing. But as somebody with an English accent, there's a wide range of accents on that island. [inaudible 00:05:49].
Hamish:
That is, and somehow no one aligns. So Hugh Jackman is going in with an American accent instead of his Australian. Christian Bale, who is... It's questionable where his accent naturally is at the best of times, but he's going full cockney. Michael Caine's going full cockney, which just makes sense and that's standard. David Bowie is going kind of like Austrian, German. Scarlett Johansson is going English, but I wouldn't quite say cockney. So everyone's kind of just speaking with an accent that they don't really own, in a kind of a unnecessary way. I see no reason why Hugh Jackman couldn't have just been an Australian guy in this period.
Stan:
Totally feasible that an Australian would find their way to London in late 1800s. It's not impossible for that to have happened.
Hamish:
So outside of movie tastes, we're going to get a bit more serious with our next segment, which is, One Thing to Rule Them All. And in the segment we discuss a rule of civil procedure, a legal practice issue, a recent case, or a legal bone we have to pick. And we're going into meaty technical case law with a series of two Court of Appeal cases that touch on prejudgment interest.
Stan:
That's right. And these are relatively recent, which of course is one of the factors why we're talking about them. But they came out in August of 2024, jointly released. They should be read together. The first one... I say first one, it's one number ahead, but it's Henry and Zaitlen, the citation for those who care, 2024 ONCA 614. To be read with its companion matter of, Aubin, A-U-B-I-N and the Jewish Community Center of Ottawa. Local decision that made it up to the Court of Appeal. The citation on that one, 2024 ONCA 615. This is a three panel judge, Court of Appeal decision justices.
Hamish:
And I think the reason these made their way to the Court of Appeal was because they were big damage awards.
Stan:
Yeah. Substantial damages awarded in both of these decisions, and lawyers cost money, appeals cost money, and you wouldn't maybe take this there on a smaller number. But these were substantial and worth appealing because prejudgment interest is larger on a larger principle amount.
Hamish:
Fair enough. And so before we get into either case, let's just talk a bit about what prejudgment interest is, what it applies to, and what's the default rate.
Stan:
I think what it is easier than explaining why we have it. But what it is, is money that is paid on top of an amount that you receive for things that have happened in the past. There's prejudgment interest available on loss of income. So if you've been out of work because of something that's happened to you and you've lost money between the date of the incident and the date that you are either settling your claim or have received a judgment, while it's quite quantifiable in that case, the amount that you've lost out on, and because you've had to wait to get that money, you should be paid interest on that because you've waited. And time value of money is a relevant consideration in doing that. That's pretty straightforward. We're not here to talk about that, but it's illustrative of what prejudgment interest is.
Hamish:
And some of the cases, one of the references that stood out to me is the withholding of money. The difference being, it's not like someone has literally taken money from someone, held it in their bank account. But it's kind of analogous when we talk about, "I'm suing you for injuries that I've suffered. I'm suing you for pain and suffering." By the time we're at trial. What transpired that caused my injuries might have been three, four, five, six, seven...
Stan:
We had a case that we talked about earlier on this podcast, a 10-year wait between the incident and judgment.
Hamish:
Right. So it's to compensate someone for the idea that the money they're being paid at the time of trial is money that's essentially been withheld for them for the duration of that period.
Stan:
That's right.
Hamish:
And there's a bit of a difference between prejudgment interest between different types of lawsuits.
Stan:
And different types of damages.
Hamish:
Right, exactly. And so the damages and the prejudgment interest we're really focused on in these cases is prejudgment interest as it would apply to an award for general damages, for pain and suffering.
Stan:
That's right. So we're going to focus on that. Know that in the background, there are other types of damages. There's income loss damages that I just used as an example. There's a future and past care costs. So similar considerations for those. The legislative scheme is quite clear, that there's a rate that applies to those, and there's really no debate about it. But this concept of pain and suffering, and we've talked about that before in terms of valuing it, and how that's not an exact science either. It's also different because you're not awarding somebody for a directly quantifiable, easily calculated figure. You're rewarding them... Not rewarding them.
Hamish:
Compensating.
Stan:
Compensating them. Here we go. For the pain and suffering that they've experienced.
Hamish:
Right. And so for non-motor vehicle accident cases, there is a roughly... Well, sorry, there's a roughly established rate. And that's the rate that gets the argument in these two cases. For car accident cases, it's essentially black and white. And we're not going to go into the car accident cases, because that just doesn't come up in this situation. We're talking specifically about two personal... Well, a personal injury action, a medical malpractice action, and what is the prejudgment interest rate payable on general damages in those cases.
Stan:
That's right. So let's launch into it. There is a legislative scheme, which means laws. There are laws about how we do this. And why we do this is sort of background on that. But when somebody has something happen to them and they're injured because of it, and they receive an award for their pain and suffering, and the court sets their mind to calculating, "Well, what kind of interest rates should we apply to these folks?" There is a section of the Courts of Justice Act that dictates the amount that should be applied.
Hamish:
And so when we talk about the rate, what we're talking about is, it's a percentage. And so if a general damages award as found by a judge or jury is a $100,000, then mechanically we're looking at what interest rate percentage, in the same way that you have an interest rate on your mortgage and credit card debt, what percentage do we apply to that? And essentially for every year that has elapsed, we apply that percentage, simple interest not compounded, which is beyond the scope of this podcast, but what percentage do we apply for each year to increase that amount?
Stan:
That's right. And in the case of a personal injury action outside of a car accident, there is a legislative presumption that an interest rate of 5% will apply.
Hamish:
Per year.
Stan:
Per year. So if you've waited five years, then you get 25% pre-judgment interest. Which on a $100,000, is $25,000.
Hamish:
And as we discussed in these cases, the general damages and the pain and suffering is actually... It's a bigger quantum, so the pre-judgment interest rate...
Stan:
Over $200,000 on Aubin.
Hamish:
Yeah. And because the elapsed time, the damages award, the pre-judgment interest can get pretty significant, which is why these cases were so hotly contested.
Stan:
That's right. And so the legislative scheme does also allow for some judicial discretion.
Hamish:
Which is always a good thing.
Stan:
Yeah. And that is basically letting a judge do what they think is right. And in fact, that's what has brought some of these cases to the Court of Appeal.
Hamish:
And doing what's right can mean two different things in principle. It can mean, do we depart from this presumption of 5% and say, actually that would be over compensation. We're going to say that the percentage should be 1%, 2%, 3%. Or the discretion could in principle operate in the other direction. And as it eventually does in one of these cases, to say we're going to depart from the 5% rule and we're going to order that the prejudgment interest rate is higher. In this case, something like 8.3%. So first we'll look at Zaitlen and see what the dispute was there, and what brought it to the Court of Appeal.
Stan:
Great. Before we do that, I'll give the legislative sections. So prejudgment interest under the Courts of Justice Act is dealt with in Section 128, and 128 sub two is the specific section that deals with non-pecuniary loss in a personal injury action. That section refers to an earlier section of the Courts of Justice Act that says that their rules may set a rate. And that has been done. And that rate is 5%. And that's found in rule 53.10, of the Rules of Civil Procedure. So that's how we get to the 5% interest rate.
And the concept of judicial discretion, that is dealt with just a couple of sections further down. And that is in Section 130, which is labeled, Discretion of the Court. And in this section, I don't want to read too long from it, it's quite short, but, "The court may where it considers it just to do so in respect of the whole or any part of the amount on which interest is payable, either A, disallow interest under either section. B, allow interest at a higher rate or lower rate than that section provided." Or, "C, allow interest for a period other than what is provided for in either section."
So that's where the judicial discretion comes in. And there's some factors that a judge is to consider, and those are outlined in Section 130 sub two. I'm not going to read them all out now. They'll come up in our discussion.
Hamish:
And so getting into Zaitlen, it's a medical malpractice case. And the key issue on appeal is, at trial the defendant had argued that the 5% prejudgment interest rate should not apply, and instead they seek an interest rate of 1.3% on the general damages for the personal injury case. And it's obviously a significant departure. And kind of the rationale behind that departure was, interest rates generally, and there's some discussion of market rates versus the established prejudgment interest rates which are calculated off the Bank of Canada's prime interest rate, those interest rates set by the Bank of Canada and then referred to by the Courts of Justice Act were really low for this whole period between the accident date through the trial. So they were significantly lower than 5%. And because of that, the defendants were essentially saying, "Hey, if you get 5% per year, that's a massive overcompensation."
Stan:
That's right. It's in their interest to keep it lower based on a number of different factors, volume, et cetera. But it's funny, interest rates change all the time. And it's one of the reasons why I think this presumption of 5% was built in so that there could be some certainty, and it would help drive things to settle and people could understand what the expectation would be.
Hamish:
And it certainly makes our jobs easier if we can just say the interest rates 5%. Why? Because it's a rule.
Stan:
Well, that's what the law says, right? It's a presumption. And I don't know. I don't want to be too critical of the Court of Appeal, but I think these decisions really open it up to making some of these larger cases much more difficult and contentious. Because sometimes you might have to hire an expert to calculate what the prejudgment interest would be, and there'd be a plethora of considerations to come up, to consider, and it in fact may make settlement harder to come by.
And this idea of making settlement easier is actually one of the considerations behind granting prejudgment interest in the first place, which is discussed in paragraph 25 of the Zaitlen case where they say that the idea behind this prejudgment interest legislative scheme, it includes compensation to the plaintiff. That is fair. It encourages an efficiently run litigation and early settlements. And all of that is a factor in how long a proceeding takes.
Hamish:
And I think some of the comments from the court specifically, and some of the other case law they cite, I think it's about finding the Goldilocks zone. Which is, the presumption is 5%. Now, generally the purpose of prejudgment interest is to fairly compensate an injured party and restore him or her so far as money is able to. All that she or he has lost as a result of the injury. But neither too much nor too little. So that's kind of the motivation behind this is, if interest rates in terms of Bank of Canada interest rates are running at a very low level, the 5% could be an overcompensation. Historically, when the 5% was enacted, that was actually significantly lower than what the Bank of Canada interest rate would've been in that period. It was something like-
Stan:
Well, it was well into the tens, 10% to 20% in the '80s. So it would've been... The shoe would've been on the other foot back then.
Hamish:
Yeah.
Stan:
Which is one of the factors, I can't remember if it was in Zaitlen or Aubin, where the court discussed that the legislature understands that interest rate changes. That's why they probably put the 5% in there, because it can go up, it can go down. And this creates some certainty.
Hamish:
And again, it all sounds technical and it all sounds like we're talking about percentages, but remember, in this case, in Zaitlen, the plaintiff is awarded $204,000 for non-pecuniary general damages. And then his late wife is awarded a $100,000. So we're talking about what percentage applies to $300,000. And this is something where it would've applied from 2010, was when the instigating event happened. And the verdict that's made that then is being appealed is in 2021. So we're talking 11 years. And we're talking $300,000. And we're talking about what percentage applies. So 5% over 11 years of $300,000, that's going to be a significant amount of money, versus it being 1.3%.
Stan:
That's right. And if we start with the presumption that a 5% will apply, and one of the two parties, either the plaintiff saying, "Well, it should be higher than 5%." Or the defendant saying, "Well, it should be lower than 5%." In the next case, it's both parties saying the rate's wrong.
Hamish:
Right.
Stan:
It's with the onus... Which means the burden of proving. So the onus of moving that rate from 5%, either up or down, rests with the party that is trying to change the rate.
Hamish:
Right. Which makes sense. If I'm saying, whoa, whoa, whoa, this is overcompensation to give you 5%. Bank of Canada's interest rates have been at 1% or sub 1% or 1.3%, whatever the case may be, it should be on me to prove why we should depart from this established norm of 5%. And what evidence would I need to put in to show that really that's overcompensating you.
Stan:
Well, on the topic of what evidence to put in. That is part of the legislative scheme. And when you're asking a judge to deviate from the 5%, you're going to want to go up to them with a couple of compelling arguments it seems. And in the Zaitlen case, there... Spoiler. The court on this one said, "No, we're going to stick with 5%. There is no reason to deviate from there. The court should not have found that it was just to do so." But if you're going to be making this pitch that the rates should be up or it should be down, you got to come with evidence.
Hamish:
And that was what was lacking in this case, from recollection. There was some evidence about consumer price index, which is kind of a red herring. It's clearly abstractly a related concept, but it's not a concept that's found in any of the legislative scheme that you've previously described.
Stan:
Yeah, I'll just hit them really quick here. The factors that a court shall take into account is changes in the market interest rate. We can get into the discussion about market interest rates if we want. I don't think we really want to. Circumstances of the case. So broad. The fact that an advance payment was made, the circumstances of the medical disclosure by the plaintiff, the amount claimed and the amount recovered in the proceeding, and then the conduct of any party to shorten or lengthen the duration of the proceeding. If I'm reading those factors, it seems to me that the biggest push to change a rate up or down is, well, in large part the behavior of the parties and the timing of the payment. And it's there to incentivize, I think, good behavior.
And if you can go to the court either... Well, I'll use the example of a defendant. If you're the defendant and you've had to pay this award of general damages for pain and suffering, but it took 10 years to get to trial and the delay was on the part of the plaintiff, you could turn around and argue that, "Well, we would've paid it sooner had we been given timely medical advice. We would've paid it sooner had they set the action down for trial sooner. We would've paid it sooner if this trial didn't take six weeks and it took two weeks." There's a number of factors that they could turn around and point to, which if I'm a judge, maybe I'm compelled by that. As opposed to this big discussion about interest rates and market rates and bank rates. It might lead a judge, as it might lead me, to glaze over and to just go, 5%, I don't care.
Hamish:
And I think that's... The factors make a lot of sense through that lens. And while there are ones that are perhaps more technical, the changes in market interest rates, but I think the easiest ones to get are advanced payments. So that is, "I paid a portion of your pain and suffering damages before we even got to trial."
Stan:
If you know somebody has significant injuries, you may decide as a defendant to make an advance. Let's say you know for sure that the damage will be over a 100,000, but you're not sure they're going to be 150,000, 175,000, maybe even 200,000. If you make that advance, this could and will actually, I think, they must lessen or eliminate pre-judgment interest for the time period from when the advance was made.
Hamish:
Right. And as you said, if a party's dragging their feet and that's essentially entitling them to more interest, that's sort of clearly wrong. That's incentivizing the wrong type of behavior, knowing that, "Well, if I drag my feet and push this back two more years, then I'm getting 5% additional per year." That could be a calculation that a party could make.
Stan:
They could. Especially when, as we're seeing now, the bank or market rates are lower than 5%. I don't really think in practice plaintiffs are thinking that way. I just don't see that as a viable argument from a defendant. But they would make it. I would've made it
Hamish:
Yeah, I think it's about removing... It's almost like removing carrots, and trying to take carrots and sticks out the equation. We're not trying to incentivize things one way or another other than encouraging settlement. And the Court of Appeal certainly, I think in Zaitlen, it's kind of the cleaner case in the sense that they fixed it, they fixed the facts that were before them, the decision that was before them by just saying, not enough evidence to depart from the general rule. The general rule stands.
Stan:
[inaudible 00:28:26] 5%. It's a higher burden. You can't just go and ask for it. You've got to prove it. And there's got to be compelling circumstances. Which is music to some lawyers' ears, because as we say to almost all of our clients, the answer to any of their questions is usually, it depends. Right? Ask any lawyer, "Well, what do you think about this?" "Well, that depends on a number of different factors." And so those different factors come into play in the next decision.
Hamish:
Right. Which is the more complicated decision, perhaps more interesting. Aubin and synagogue, and Jewish Community Center of Ottawa. So in this case-
Stan:
Yeah, this case, I think if it was not part of this double decision that came out and it was just a Zaitlen decision, I don't think it would've made any waves really. 5%, great. We stick to it. It would've probably flown under the radar. But now, again, spoiler alert, the court upped the amount of prejudgment interest in this case to over 8% based on the circumstances. And I can tell you that our local bar sort of perked their ears up and went, "Okay, this is a potentially game-changing decision for calculating prejudgment interest." Especially in these large cases.
Hamish:
And again, this was a serious head injury in a slip and fall. And general damages in this case were $216,000 for pain and suffering. The overall judgment, when you factor in the other types of losses that this plaintiff experienced, was also very significant. The total amount was 3.6 million. And again, it was lengthy litigation. It was about seven years from incident to the time... The trial. [inaudible 00:30:12].
Stan:
Which I don't think is always the fault of the parties either.
Hamish:
And in this case, from recollection, the court was pretty specific that, yeah, this wasn't a heel dragging exercise. That's how long the litigation took.
Stan:
That's right. There's no indication whatsoever, and in fact, it probably falls into what we see with our own practice in terms of the wait from incident to judgment. I'd say seven years is a pretty accurate average.
Hamish:
And so in this case, the defendant makes the same pitch, but gets counter attacked.
Stan:
Counter attack. That's right. Yes. Both parties say 5% isn't fair or correct, or just, in the circumstances.
Hamish:
Yeah. So the defendant goes in saying, "No. During this period the Bank of Canada interest rates have been considerably under 5%. So we, the defendant, say that the award for prejudgment interest on top of the pain and suffering damages should be at a rate of 1.3%." And the plaintiff goes in and say, "Well, no. We want a departure from the 5% to the upside. And the basis we're essentially saying is that for that period of time, our investments in..." I believe it was in RSPs, "..had an annualized average return of something like..." It was 8.3%, 8.6%. "So we want that."
Stan:
Well, and they also said that insurance company that's behind the defendant, they made over 12% interest on the money that they could have held... Well, they did hold onto, in the same time period. They had actually put into evidence the amount of a return that the insurer had generated during that time period, and it was over 12%. So they're saying, "Well, there's no incentive on an insurer to pay the general damages earlier in a situation where they're making almost 13% returns on the money."
Hamish:
And so reading between the lines, I sort of think what happened in this case is two parties showed up to make a pitch. The plaintiff and the defendant. The plaintiffs, I think just put in more evidence on which the court could decide.
Stan:
Well, I think, yeah, in terms of hard evidence, yes, because the Court of Appeal talks about how there was some judicial notice taken of market rates and of bank rates and things like that.
Hamish:
And judicial notice, this is when a judge can basically say, "I don't need specific evidence on this. I can just consider it to be true because it's so widely known. Everyone knows this background fact. I don't need you to have someone testify about it. I'm just going to accept it's true."
Stan:
That's right. It was during a time of very low interest rates. Very low interest rates. Where all of the other damages that we talked about at the outset of the pod, those have the low interest rates attached to them. So you'll have rates of under a percent sometimes attached to things like past income loss and past medical expenses. And then you're being asked for the [inaudible 00:33:31] to award 8% or 10%, or even the presumptive 5% rate being considerably higher than the rates that were common at that time, and were in fact applied to the damages in the same case.
And I can see why a judge looking at this issue, hearing from the defendant that 5% is well outside of the rate that's applied to any other head of damage, it's well ahead of the rate that people at that time were getting on their mortgages. It just seemed punitive to a defendant in that case. But as we'll see, again, it depends. And on these facts, the plaintiff, it looks like they did, obviously, they wanted the Court of Appeal, an excellent job tabling real tangible evidence about why that money had it been paid earlier, could have generated a lot more than 5%.
Hamish:
And ultimately, again, the court in this case kind of took the hard route. Because they're faced with these two arguments, 1.3% or 8.46%. Now, we know that the option is there for the court to say 5%, because that's the default.
Stan:
And what they did in the decision right before.
Hamish:
Exactly. But instead they say, "No. That is enough evidence from the plaintiff that they in principle would've been able to get this type of return had they invested it. And we're happy with the evidence that's been put in. And we think in this situation, it's in the interest of justice to elevate the prejudgment interest rate."
And I think we discussed earlier that, not to say anything about this case specifically, this is from reading the decision, I think it's fair to say that this is the right result in this case. And also having that ability certainly helps our clients. And we would happily make that argument in all of our cases. There is a but, and the but is, does this decision risk it becoming this big sideshow in any personal injury case where you're talking about general damages and prejudgment interest where there's a whole sideshow where you're saying and trying to tender evidence about what your client could have done or would have... Well, it wouldn't be could, but what your client would have done with this money and what benefit in terms of investment return they would've received had they invested this money?
Stan:
Yeah, I think it has that potential. Well, it definitely has that potential in the right circumstances. I think in the majority of the cases that we or any other personal injury lawyer is going to have, it probably will just be a presumptive 5% rate. A lot of the clients don't have investments and can't point to a certain portfolio and a really discrete set of circumstances. But I think in the cases where the clients have the means, they have investments, they're getting returns, they're beyond your everyday person who's just making their ends meet and they are a little further along, then it would warrant an in-depth discussion. And it would frankly probably be in the interest of justice to do that. I think it would be fair to them.
Hamish:
Yeah, I mean, I agree. I guess my point of pushback is just, because the amount being suggested was 8.46%, which is higher, but not that much higher than 5%, I think the Court of Appeal had an easier time making this decision. But if we take the facts of this case and manipulate them a bit, then I think we can come to a percentage where I think the Court of Appeal would've just sort of flatly refused based on any evidence. And my example is, let's say we're in the position of the plaintiff and we say that, "Yeah, I park 5% of my salary, I plow it straight into Bitcoin. And I would've done that with any amount of money that I would've received and has been withheld from me." And if Bitcoin appreciates at 40% a year, do I get to say, "Well, that's the interest rate. That would be fair for me."
Stan:
I'm just now thinking about, this might also open a big can of worms on discovery. Where if you're claiming, and every claim has prejudgment interest as a matter of course in the claim, you're allowed to pry as a defendant into the kind of investments that people have going on. And I could see a world in which maybe wrongly now, a plaintiff lawyer would say, "No, we refuse to answer those questions about the investments." And so forth. And then go, "Wait a minute, I should have let them answer that." What happens if you... I mean, I'm not a Bitcoin investor. I know there's been ups and there's been downs, huge ones, huge swings up and down.
Would the argument flow the other way there? "Oh, you would've lost this money, this investment. Your rates should be lower." And maybe for that reason we should just stick with 5%. Keep it straightforward. And you know what? Not every law is fair, and the justice system isn't always just, and we try. And as you say, in some cases, if you think about the amount of time, money, potential financial advice that would be required on cases like these, you might actually net out below simply applying a 5% rate.
Hamish:
And I almost feel like this decision and the approach on this issue is kind of emblematic of a tension in law, which is always certainty, having a law that says what it says, but then also being like, but we do trust our judges. We trust our decision makers and we want to give them discretion to consider what's just.
Stan:
That's right. Honestly, the lawyer in me loves it, because it's another thing to put your mind to and think about, and it's another angle to represent your clients well, on both sides of this, because you can argue it both ways. But the, I don't know, maybe taxpayer in me that wants a more efficient judicial system, the citizen, let's say in me, kind of leans towards just do it at 5% and get on with it.
Hamish:
Well, we wouldn't have the whole podcast to be able to explain it, if that was the case though.
Stan:
That's right. We would not.
Hamish:
So moving on, we're going to move to our Shout Out segment. So in this segment you can shout out a person, a thing, a news tidbit, or an event. And I'm going to jump straight into selfishly my shout out, which is a shout out to podcasts. Specifically podcasts that I like. And you might like. I think we've got two Canadian ones in there. So I'm a big fan of for Canadian politics and I would say political intrigue and a relatively balanced perspective, The Bridge with Peter Mansbridge. It's especially interesting, depending on when this episode airs, it might have all been resolved and it might have eliminated a lot of the political intrigue, but with the election upcoming, it's a really good place to get some Canadian-specific content that kind of plays both sides of the fence and get some interesting perspectives.
Then if you want to learn more about interest in other contexts, then you should check out the Canadian macroeconomics podcast, The Loonie Hour, which is all about real estate, global macro, Canadian-specific politics, to the extent it touches on economics, which is arguably a lot.
Stan:
Right. What's your undergrad in?
Hamish:
Criminology.
Stan:
Okay. Yeah.
Hamish:
So nothing related to this, but I had a roommate, he studied finance. And I got sick of losing to arguments against him because he just knew more about it than I did. So at one point I just raided his textbooks and started reading up.
Stan:
You're such a lawyer.
Hamish:
And then finally we have Hardcore History, which is by Dan Carlin. It's basically just Dan Carlin giving-
Stan:
Hours long.
Hamish:
Yeah. Four hours on an interesting, serious but not, historian perspective on history. And some of his well-known ones, I mean, probably the most well-known is Blueprint for Armageddon in which he puts out 18 hours on World War I.
Stan:
Well, yeah, he's a favorite of the office. We're not the only one listening to that. There's a number of us history geeks in the office. I know Craig and Jonathan Constable are also listeners as well on that.
Hamish:
Yeah. And Joe.
Stan:
Oh, is he as well?
Hamish:
Yeah. Yeah, Joe's-
Stan:
We're outing all of our nerd colleagues.
Hamish:
Stan, do you have anything you'd like to shout out?
Stan:
Yeah, I'll shout out some podcasts as well. Why not? We're on one. And I've talked about it before. Big fan of The Rest Is History podcast. So much so that I'm a subscriber to that one. I'm going to out myself as a Leaf fan right now. Sorry to all of our listeners in Ottawa. I know you're disappointed in me. I'm disappointed in myself, frankly. But I listen to the Leaf Report podcast. It's one of the earliest ones that I started listening to. A couple of reporters who follow the team, James Mirtle and Jonas Siegel, who are both at The Athletic, which is another great news organization that I follow as well.
So those guys I've been listening to for a long time. Stuff You Should Know. Not as much lately, but it was the first podcast I ever listened to. It gave me the bug. That's probably why I'm here now, sitting across the table from you. So a big shout out to them. And a weird one, but it's fun, the Omnibus podcast, Ken Jennings of Jeopardy fame. He does a podcast with John Roderick who's a musician, an indie rock musician. And they're both in Seattle and they tend to ramble as well, but in an intelligent kind of way that I find interesting. I will give a quick shout out here to the University of Ottawa, Engineering, Science, and Construction Law Student Society.
Hamish:
Great guys. Great guys and gals.
Stan:
Yeah, that's right. They came to our firm and they listened to us regale them with self-serving tales of Victory. And they nodded politely and pretended to be interested or were genuinely interested, and they seemed like a really great group of students. I was really impressed with all of them, honestly. They were great and a lot of fun to talk to about the law and about just life and their interests as well.
Hamish:
Okay. And with that, we'll say our goodbyes. You can find our team at nelliganlaw.ca. We have our email up and running, which is civilbanter@nelliganlaw.ca.
Stan:
Please write to us if we got any part of that whole prejudgment interest thing wrong. And we will read your corrections out on our podcast. If we were right, you can heap praise upon us as well. We're pretty good about that.
Hamish:
And you can find me on LinkedIn at linkedin.com/in/hmillsmcewan. And I'm a bit absent on the posting front, so I need to come up with my next topic. So if you have topic suggestions for my LinkedIn rambling posts, I'll also kindly take those.
Stan:
There you go. You can find me on LinkedIn as well, similar way, LinkedIn.com/in/stanford-cummings. And with that, like, comment, subscribe, five star reviews only. Thanks.
Hamish:
Okay, let's wrap.