Case Commentary on Cobb v. Long Estate
Shane Katz provides commentary on Cobb v. Long Estate in the January edition of the OBA Insurance Law Newsletter.
To read the full article, please click here.
This article originally appeared in the Ontario Bar Association Insurance Law website:
“Despite the recent decision in El-Khodr v. Lackie, 2015 ONSC 4766 [El-Khodr], courts are still being requested to determine the appropriate deductible for general damages and pre-judgment interest on general damages in matters relating to motor vehicle accidents that commenced prior to the January 1, 2015, amendment to theInsurance Act.
The hotly debated issues are whether the inflation adjusted deductible for general damages and the new pre-judgment interest rate for general damages should be applied retrospectively or prospectively from January 1, 2015, when the amendment became effective. Since the legislation itself contains no clear transitional language, the Courts have been required to address the issues directly when finalizing judgments.
The lack of legislative intention regarding the timing of application for the amendments to the Insurance Act led to a particularly unpredictable result in Cobb v. Long Estate, 2015 ONSC 6799 [Cobb]. On October 13, 2015, after a month long jury trial, Justice Belch heard the Plaintiff’s motion to settle the terms of the judgment, where two of the issues raised were the appropriate amount of the statutory deductible to be applied to the Plaintiff’s general damage award and the appropriate rate for pre-judgment interest to be applied to the general damage award.
With respect to the deductible issue, the Defendant requested that the Court apply the proscribed inflation increased deductible of $36,540.00. The Plaintiff urged the Court to follow El-Khodr with respect to the deductible, and apply a $30,000.00 deductible. Relying on El-Khodr, the Plaintiff claimed that the deductible was substantive law and therefore should not be applied retrospectively. Justice Belch agreed with the reasoning in El-Khodr and found that the changes to the insurance act allowing for the increased deductible were changes to the substantive law and should not be applied retrospectively. Justice Belch acknowledged that the Defendant would reap a windfall as the Defendant’s insurer had been setting premiums based on the $30,000.00 deductible.
With respect to the pre-judgment interest issue, the Defendant argued that the legislation was to be applied retrospectively, requiring pre-judgment interest at a rate of 0.5% per annum to be applied. The Defendant’s argument was based on the position that “the substantive nature of entitlement to prejudgment interest does not trump the procedural mechanism to which the entitlement is granted and Rule 53.10 is a procedural rule that quantifies the entitlement to prejudgment interest.” (para 18) The Plaintiff submitted that pre-judgment interest should be calculated using the previous standard of 5%, consistent with the El-Khodr decision, as pre-judgment interest was a substantive right, and therefore should not be applied retrospectively. The Plaintiff also opposed the retrospective operation of the amendment on policy grounds, arguing that the insurance company had calculated their premiums over the past seven years under the presumption that pre-judgment interest would accrue at the rate of 5%.
After considering the parties’ conflicting submissions and acknowledging that the El-Khodr judgment is under appeal, Justice Belch, chose to rely on Section 130(1)(b) of the Courts of Justice Act, instead of accepting either argument put forth by the parties.
Section 130(1)(b) of the Courts of Justice Act, states:
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 under section 128 or 129,
(b) allow interest at a rate higher or lower than that provided in either section;
Taking into account the factors set out in s. 130(2) of the Courts of Justice Act, Justice Belch determined that the circumstances of the case, specifically the fact that the Plaintiff has been without compensation from the Defendant in the seven years since the accident, warranted an exercise of discretion in awarding pre-judgment interest at the rate of 3%.
Until the appellate courts provide some clarity on these issues, Justice Belch’s decision will likely be heavily relied upon by plaintiffs’ counsel. “
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