Court Provides Guidance on Pre-judgement Interest Calculation

On September 9, 2022, the Alberta Court of King’s Bench released the decision in Jackson v Cooper, 2022 ABKB 609. The Plaintiff in this matter sought damages for injuries suffered in a motor vehicle accident on October 21, 2015. As part of the relief sought, the Plaintiff requested a finding from the Court with respect to the calculation of pre-judgment interest (“PJI”) on any general damages awarded.

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, modified the calculation of pre-judgment interest for motor vehicle accident claims by adding s 585.2(2) to the Insurance Act, RSA 2000, c I-3 (the “Insurance Act”). 

Per section 585.2(2) of the Insurance Act, PJI for non-pecuniary damages in bodily injury cases, arising from the use or operation of a motor vehicle, was to be calculated according to section 4(2) of the Judgment Interest Act, RSA 2000, c J-1 (this is the same rate used for pecuniary damages, set annually).

Since the Insurance Amendment Act came into force, there has been disagreement in the interpretation of section 585.2(2), in particular whether the provision applies retroactively.

The Court addressed the calculation of PJI at paragraphs 166 to 199 of the decision, undertaking a review of the principles of statutory interpretation, guidance from the Minister of Finance’s explanation for the change in PJI, and the interpretation of similar legislation with respect to PJI in Ontario.

The Court agreed with the Plaintiff’s position that the legislation was not retroactive, and distinguished the Ontario interpretation of similar legislation on the basis that there was evidence in Ontario of legislative intent to make the provisions retroactive. The Court noted there was no evidence of intention to make the legislation retroactive in Alberta.

The Court concluded that PJI is a substantive right, which attracts a presumption against retroactivity. Although the right to PJI does not vest until there is a determination by a trial judge, the Court concluded that a right does not need to be vested to invoke the presumption against retroactivity.

The Court did not find evidence to displace the strong presumption against retroactivity within the language of Section 585.2(2), as the presumption requires “direct language or necessary implication to upend.”[1]

In conclusion, the Court calculated PJI on non-pecuniary damages at 4% up to the date the Insurance Amendment Act came into force (December 9, 2020), then pursuant to s. 585.2(2) thereafter.

Based on this recent decision, calculation of PJI for non-pecuniary damages in motor vehicle accident claims will be split for accidents which occurred before December 9, 2020, with PJI calculated per section 4(1) of the Judgment Interest Act (currently 4%) to December 9, 2020, and pursuant to section 4(2) thereafter.

[1] Jackson v Cooper, 2022 ABKB 609, at para 198.