Court File and Parties
Court File No.: CV-14-1258-00 Date: 2020-04-27 Superior Court of Justice – Ontario
Between: Edward Watt, Plaintiff And: TD Insurance and TD Meloche Monnex, Defendants
Counsel: R. Kostyniuk, Counsel for the Plaintiff S. Iordanis, Counsel for the Defendants
Heard: In Writing
Reasons for Decision
Lemay J
[1] I released my reasons for judgment in this matter on November 14th, 2019 (2019 ONSC 6454) and addressed the issue of costs in a decision dated February 12th, 2020 (2020 ONSC 953). The Plaintiff, Mr. Watt, now raises the question of pre-judgment interest under the Courts of Justice Act and asks that I award it.
[2] The Defendants oppose the award of pre-judgment interest. The Plaintiff suggests that the total amount of interest that should be paid is $2,531.72. The Defendants’ submissions do not appear to challenge the quantum of interest, and I accept the Plaintiff’s quantum as correct.
[3] The Plaintiff’s counsel originally wrote a brief letter to my office to ask for the interest to be incorporated into the Court orders. I invited counsel for the Defendants to respond to this letter if they wished, and discovered that the Plaintiff’s request was opposed. I then asked Plaintiff’s counsel for additional submissions, receiving a detailed brief with case-law in reply to the Defence submissions.
[4] I will now address the submissions that I have received.
[5] First, section 128(1) of the Courts of Justice Act states that a person who is entitled to an order for the payment of money is entitled to claim an award of interest thereon. As a result of my decision, the Plaintiff was entitled to an order for the payment of money.
[6] This brings me to the question of whether there are any exclusions that would prevent the payment of prejudgment interest. Section 128(4) contains a listing of circumstances in which prejudgment interest is not to be paid. This case is not covered by any of those exclusions.
[7] The only way in which prejudgment interest would not be awarded in this case is if I decided to exercise my discretion under section 130 of the Courts of Justice Act. Counsel for the Defendant argues that I should exercise my discretion for two reasons, as follows:
a) The award of prejudgment interest would run counter to the purposes of insurance in terms of indemnifying the Plaintiff. b) The Plaintiff did not suffer a loss of his money, and only received an award to compensate him for lost chattels.
[8] Neither of these submissions have any merit. I start with the purposes of insurance argument. Counsel for the Defendants does not cite a single case to support her proposition that the payment of prejudgment interest runs counter to the purposes of insurance. I see no principled reason why a payment under an insurance policy would not attract an award of prejudgment interest. I reach that conclusion for three reasons.
[9] First, the payment under an insurance policy is a contractual payment for losses suffered by the Plaintiff. It is often either based on the replacement cost for the insured item or the actual cash value for the item, depending on whether or not it is replaced. This actual cash value takes depreciation into account because the item is used.
[10] However, the actual cash value is assessed as of the moment of loss. If the Plaintiff is deprived of the contractual payments that he is entitled to in order to replace something for some time after he has lost it, then he should be entitled to interest on that payment. Put another way, the goal of an award of damages is to put the Plaintiff in the position he would have been if the money had been paid to him when it was due. Interest assists in achieving that goal by accounting for the time delay between when the payment was due and when it was actually made.
[11] Second, if insurers were allowed to avoid the payment of interest as a “principle of insurance” there would be an incentive for insurers to keep the money owing under the policy and not pay it out for as long as possible, so that the insurance company could earn interest on the money while avoiding paying interest on the same money. This is contrary to the goals of a functioning insurance system, which should include the timely indemnification of the insured party.
[12] Finally, as a practical matter, if the payment of interest ran counter to the principles of insurance, then the Insurance Act would likely prohibit it. Instead, in a fire related claim, section 148.12 of the Insurance Act requires the payments to be made within sixty (60) days of the proof of loss being completed unless the contract specified a shorter length of time. The requirement for payment within a set time period clearly suggests that a failure to pay the monies owing under the policy would result in the accumulation of interest once the monies came due.
[13] I am fortified in my conclusions by the decision in Solway v. Lloyds Underwriters (, [2006] O.J. No. 2059 (C.A.)). In that case (at paragraph 62), the Court of Appeal adopted the applications judge’s reasoning and held that, in the absence of any express contractual provision, there was no reason why pre-judgment interest should not only be paid, but should be an amount that was payable over and above the policy limits. The decision in Solway is based on some of the points that I have set out above. There is no principled or legal basis to deny the Plaintiff prejudgment interest in this case.
[14] For these reasons, the Plaintiff is awarded prejudgment interest in the sum of $2,531.72.
[15] The Plaintiff has been successful on his position that pre-judgment interest should be awarded. It follows that he might very well be entitled to costs of these submissions. However, I have not received submissions from the parties on this point.
[16] If the parties cannot agree on costs, then they may make an appointment to see me in Court for oral submissions once the Courts have resumed regular operations.
[17] Counsel are to advise within fourteen (14) calendar days of the receipt of this endorsement whether such an appointment is necessary.
LEMAY J Released: April 27, 2020