You may have heard the term “Pre-judgment Interest” during negotiations and the exchange of offers in your case. Pre-judgment interest is the interest awarded on non-pecuniary damages to recognize what you could have done with the money if it had been paid to you at the time your injury arose, on the date of the car accident.
The Insurance (Enhancing Driver Affordability and Care) Amendment Act, 2020, SA 2020, c 36 [Insurance Amendment Act], which came into force on December 9, 2020, changed how pre-judgment interest is calculated for motor vehicle accident claims by adding s 585.2(2) to the Insurance Act, RSA 2000, c I-3.
Whether s 585.2(2) applies to the period from the date of the motor vehicle accident up to December 9, 2020 (when the legislation came into force), is highly debated. The Alberta Court of King’s Bench decision in September 2022 in Jackson v Cooper, 2022 ABKB 609, was the first ruling on the calculation of pre-judgment interest since the Insurance Amendment Act came into force.
Pre-judgment interest can considerably impact the amount of compensation you will receive, especially if your case has been in litigation for several years. Below is a summary of the Court’s decision in Jackson v Cooper and how pre-judgment interest is calculated.
On October 21, 2015, the plaintiff injured his neck, shoulders, back, chest and ribs, when the defendant accelerated after a stop sign and struck the rear passenger door of the plaintiff’s vehicle. The plaintiff’s vehicle was deemed a total loss. He exchanged information with the other driver and reported the accident to the police.
Two days after the motor vehicle accident, he saw a physician at a walk-in clinic, and was found to have mild pain of the paraspinal muscle and upper back muscle. He was diagnosed with a soft tissue strain or sprain. Physiotherapy and massage therapy were advised.
About one week later, the plaintiff saw a chiropractor. The plaintiff was diagnosed with partial inflammation and spasms in his back and neck, and Whiplash-Associated Disorder II (WAD-II).
The plaintiff also received physiotherapy. Despite treatment, the plaintiff’s symptoms did not resolve. The plaintiff was found to have suffered a serious impairment as a result of the motor vehicle accident. The serious impairment resulted in a substantial inability to perform his normal activities of daily living, was ongoing since the motor vehicle accident, and was not expected to improve substantially. The Court held that the plaintiff’s chronic myofascial pain is not a “minor injury” under the Minor Injury Regulation.
The parties disagreed about the calculation of pre-judgment interest on non-pecuniary damages. Non-pecuniary damages are those losses that are not directly quantifiable in monetary value, for example, the pain and suffering experienced and the loss of enjoyment of life.
The issues addressed by the Court in the calculation of pre-judgment interest are discussed below.
Before the Insurance Amendment Act came into force, pre-judgment interest was calculated in accordance with the Judgement Interest Act, RSA 2000, c J-1. One of the issues, in this case, was whether pre-judgment interest for the period before December 9, 2020, should be calculated in accordance with the Judgement Interest Act or in accordance with s. 585.2(2) of the Insurance Act. There is no transitional provision in the Insurance Amendment Act that specifically states whether s 585.2(2) applies prior to December 9, 2020, the date the Insurance Amendment Act came into force.
Section 585.2(2) of the Insurance Act states:
Notwithstanding section 4(1) of the Judgement Interest Act, interest in respect of damages for non-pecuniary loss in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile must be calculated in accordance with section 4(2) of the Act in the same manner as interest awarded on pecuniary damages.
Pre-judgment interest is recognition of the use the money could have been put to if had been paid at the time the claim arose. The Court held that pre-judgement interest reflects the substance of the cause of action and therefore is a substantive right, not a procedural right.
As a substantive right, there is a presumption that legislation does not apply retroactively. The Court held that there was nothing specifically in the wording of s 585.2(2) of the Insurance Act that would indicate that the Legislature intended s 585.2(2) to apply retroactively.
The Court’s decision in Jackson v Cooper is the first on the application of the changes to prejudgment interest with the Insurance Amendment Act. This case is relied on by plaintiffs to ensure they receive the interest they are entitled to on non-pecuniary damages.
There are many factors that determine the compensation you will receive in your case. If you have questions about pre-judgment interest and application of the Insurance Amendment Act or Minor Injury Regulation to your case, contact our Accident Injury Lawyers today.