Sorbam Investments Limited v. Litwack, 2021 ONSC 6504

Court File and Parties

COURT FILE NO.: 12-53595

DATE: 2021/10/04

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Sorbam Investments Ltd., Plaintiff

AND

Alan David Ltwack, Gary Michael Litwack and Deborah Ruth Litwack, in their capacity as Estate Trustees of the Estate of Moses Litsack, deceased, Samuel Litwack and 1129892 Ontario Limited, Defendants

BEFORE: Justice R. Ryan Bell

COUNSEL: Michael S. Hebert and Cheryl Gerhardt McLuckie, for the Plaintiffs

Steven Greenberg, for the Defendant 1129892 Ontario Limited

HEARD: In writing

ENDORSEMENT – PreJudgment Interest

Overview

1In my July 29, 2021 judgment, I awarded damages to Sorbam Investments Ltd. in the amount of $1,200,000 for diminution in market value of 1770 Woodward Avenue and $91,307.21 for engineering expenses. I awarded prejudgment interest on these amounts under s. 128 of the Courts of Justice Act, R.S.O. 1990, c. C.43.

2The parties have been unable agree on the operative date for the calculation of prejudgment interest. In accordance with my direction, the parties provided me with their written submissions on this issue.

3In relation to the $1,200,000 awarded for diminution of market value, Sorbam submits that prejudgment interest should run from August 24, 2010, the date 1129892 Ontario Limited (“112Co”) was put on notice of the contamination, at the rate of 1.3 per cent. Sorbam takes the position that prejudgment interest on the damages awarded for engineering expenses should run from the date of each invoice, again at the rate of 1.3 per cent.

4112Co’s position is that prejudgment interest should run on the $1,200,000 from August 2, 2017, when 1770 Woodward was sold by Sorbam, at the rate of 0.8 per cent. 112Co asserts that until 1170 Woodward was sold, a) the value, if any, by which the property had diminished was unknown and b) there was no loss of opportunity to reinvest the amount of the loss. 112Co does not take issue with the calculation of prejudgment interest on engineering expenses incurred by Sorbam.

The Courts of Justice Act

5Prejudgment interest is addressed in ss. 127, 128 and 130 of the Courts of Justice Act. These sections provide in part:

127. (1) In this section and in sections 128 and 129,

“prejudgment interest rate” means the bank rate at the end of the first day of the last month of the quarter preceding the quarter in which the proceeding was commenced, rounded to the nearest tenth of a percentage point;

(2) After the first day of the last month of each quarter, a person designated by the Deputy Attorney General shall forthwith,

(a) determine the prejudgment and postjudgment interest rate for the next quarter; and

(b) publish in the prescribed manner a table showing the rate determined under clause (a) for the next quarter and the rates determined under clause (a) or under a predecessor of that clause for all the previous quarters during the preceding 10 years.

128. (1) A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order.

(3) If the order includes an amount for past pecuniary loss, the interest calculated under subsection (1) shall be calculated on the total past pecuniary loss at the end of each six-month period and at the date of the order.

130. (1) 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,

(a) disallow interest under either section;

(b) allow interest at a rate higher or lower than that provided in either section;

(c) allow interest for a period other than that provided in either section.

6The factors that the court shall take into account for the purpose of s. 130(1) include changes in market interest rates, the circumstances of the case, and “any other relevant consideration”: Courts of Justice Act, s. 130(2).

Analysis

(i) Applicable Interest Rate

7Sorbam’s action was commenced on February 10, 2012. 112Co suggests that prejudgment interest should be calculated at the rate of 0.8 per cent, being the interest rate for the quarter that includes August 2017, the date from which it says interest should run.

8The prejudgment interest rate is the applicable rate for the quarter in which the subject proceeding was commenced. According to the table published by the Ministry of the Attorney General, Court Services Division, in accordance with s. 127(2) of the Courts of Justice Act, the applicable prejudgment interest rate for proceedings commenced in the first quarter of 2012 is 1.3 per cent.

9The onus is on the party seeking a lower rate to justify a deviation from the “presumptive rate”: Graham v. Rourke (1990), 1990 CanLII 7005 (ON CA), 75 O.R. (2d) 622 (C.A.), citing Spencer v. Rosati (1985), 1985 CanLII 2032 (ON CA), 50 O.R. (2d) 661 (C.A.), at pp. 664-65. 112Co does not point to fluctuations in prejudgment interest rates or argue in favour of an averaged rate. 112Co’s argument is premised on 0.8 per cent being the prejudgment interest rate in August 2017. The statutory regime provides for a specified rate – based on when the proceeding was commenced – subject to variation by the exercise of judicial discretion. 112Co has failed to persuade me that a deviation from the presumptive rate of 1.3 per cent is warranted.

(ii) Operative Date

10In its submissions, 112Co admits that the cause of action arose in August 2010 when it was notified by Sorbam of the contamination. In accordance with s. 128(1) of the Courts of Justice Act, Sorbam is therefore entitled to prejudgment interest calculated from August 24, 2010, unless I exercise my discretion to allow prejudgment interest for a different period of time.

11Prejudgment interest, absent special circumstances, is ordinarily awarded to reflect the value of money wrongfully withheld from the plaintiff: Wilson v. Cranley, 2014 ONCA 844, at para. 20. Sorbam suffered a loss – the diminution in market value of 1770 Woodward – as a result of 112Co’s inaction in relation to the contamination. The environmental concerns associated with the property impeded the sale of the property for many years. When 112Co was first put on notice of the contamination, 112Co told Sorbam to “look elsewhere” and refused to provide access to its own property to permit an investigation of the contamination. 112Co has failed to persuade me that a departure from s. 128(1) is warranted; to the contrary, a departure in these circumstances would allow 112Co to benefit from its own wrongful conduct.

12112Co submits that the diminution in market value was not known until the property was sold. This is incorrect. My finding that the contamination migrating from 112Co’s property reduced the market value of 1770 Woodward by $1,200,000 was based on the uncontradicted expert evidence of the real estate appraiser, Mr. Shore.

13I also do not accept 112Co’s submission that there was no loss of opportunity to reinvest the amount of the loss until the property was sold. Sorbam has been deprived of the value of its loss since the cause of action arose in August 2010. It will continue to be deprived of the value of its loss until the judgment is satisfied.

14In my view, Livent v. Deloitte, 2014 ONSC 4085 does not assist 112Co. At para. 10 of Livent, Gans J. stated that the correct date for the running of prejudgment interest should be “tied to the date that the losses occasioned as a result of the negligence or breach of contract, as the case may be, start to be incurred or realized.” In the case before me, that date would be when the cause of action arose, not the date of the sale of the property.

15The situation is different in respect of the engineering expenses incurred after the date of the wrong. In that case, interest runs only from the date the expense is incurred: Livent, at para. 15, citing Waddams, The Law of Damages (loose-leaf, November 2013 Rel.) (Toronto: Canada Law Book, 2013), ch. 7, at p. 23. Sorbam’s calculation of prejudgment interest from the date of each invoice at the rate of 1.3 per cent is not challenged by 112Co.

Conclusion

16Prejudgment interest will be calculated at the rate of 1.3 per cent on the damages of $1,200,000 awarded for diminution in value from August 24, 2010, resulting in the amount of $170,616.99. Prejudgment interest on the engineering expenses will be calculated at the rate of 1.3 per cent from the date of each invoice, yielding the amount of $7,085.99.

Ryan Bell J.

Justice R. Ryan Bell

Date: October 4, 2021

COURT FILE NO.: 12-53595

DATE: 2021/10/04

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: Sorbam Investments Ltd., Plaintiff

AND

Alan David Ltwack, Gary Michael Litwack and Deborah Ruth Litwack, in their capacity as Estate Trustees of the Estate of Moses Litsack, deceased, Samuel Litwack and 1129892 Ontario Limited, Defendants