Abolition of the 5% PJI rule in MVA cases, prospective or retroactive?

In the past weeks, have received numerous inquiries and feedback from the bar and the bench on my Gilbertson Davis LLP litigation blog post on s. 258.3(8.1) of the Insurance Act, regarding the abolition of the special 5% rule on prejudgment interest in motor vehicle tort actions.  Many colleagues in the civil defence bar have told me they have printed it out and used it as leverage at mediations and pretrial conferences.  The plaintiff bar has, as expected, argued the opposite, but the argument against retroactivity fails because the 5% rule has always been arbitrary.  It cannot be argued that 5% is a true measure of the plaintiff’s actual loss or of the economic gain of the defendant pending judgment, when the formula for other PJI awards is based on published bank rates.  The 5% rule has always been a thumb on the scales of justice promoting early settlement, not a true or vested entitlement.

There appears to be some confusion regarding the operation of the procedural/substantive distinction.  Both procedural and substantive law confer rights.  So the right to a 5% rate of prejudgment interest appears to be ‘substantive’ when in fact it is a procedural right conferred by the Ontario court rules.  I have updated my post, Why the new s. 258.3(8.1) of the Insurance Act will retroactively scale back prejudgment interest rates in MVA actions, with further commentary on this important point.

So my opinion remains: Retroactive it is.


Since the publication of this post, a decision of the Superior Court has ruled in favour of retroactivity, citing these very arguments.  For an updated commentary, follow this link.


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