May 14, 2021 – Prejudgment Interest: Key Principles

“A trial judge should consider the conduct of the proceedings and delays attributable to particular parties to those proceedings in determining the rate of prejudgment interest.  Prejudgment interest is not, however, intended as a means of punishing or rewarding parties for the manner in which they have conducted the proceedings.  Its role is compensatory.  I see no basis to interfere with the trial judge’s finding that Mr. Novakovic’s conduct of the claim should not deprive him of the compensation due him under the Courts of Justice Act provisions relating to prejudgment interest.

The appellant also argues that the rate of prejudgment interest should be modified to reflect the change in the rate between December 2000 and September 2005.  The rate fluctuated between a high of six percent in December 2000 and a low of 2.3 percent in 2002.  The average for the time period would appear to be about 3.4 percent.

Trial judges sometimes average prejudgment interest rates over the time period between the commencement of the action and the obtaining of judgment.  This is particularly appropriate where the prejudgment interest rates fluctuate widely.  The onus is, however, on the parties seeking a different rate than that imposed by the statute to justify the imposition of that different rate.  I do not think the fluctuations in issue in this case are sufficient to hold that some averaging of the prejudgment interest rates was essential.  Clearly, the trial judge could have averaged the rate but, in my view, she did not err in not doing so.”

         Novakovic v. Kapusniak, 2008 ONCA 381 (CanLII) at 42-44