On August 21, 2024, the Court of Appeal of Alberta’s decision in Jackson v. Cooper has been published.
We have previously written about this case in our article “Minor Injury Regulations, Alberta” and we are linking our article for your ease of reference – worth reading this trial decision if you have not.
The issue on Appeal:
The issue on appeal relates to the treatment of prejudgment interest on non-pecuniary damages and whether the trial judge erred in applying the new (lower) rate of prejudgment interest only after the Amendment came into force on December 9, 2020, rather than over the entire period for which prejudgment interest was calculated.
Decision: The appeal is dismissed for the reasons that follow.
The lower interest rate in the Amendment was not retrospective because pre-judgement interest is a “substantive right” and your client will therefore only be awarded the lower interest rate from when the Amendment came into effect.
We will provide the decision below for your review:
Overview
[1] Subsequent to a motorvehicle accident on October 21, 2015, but prior to trial, the Insurance Act, RSA 2000, c I-3 was amended to modify the rate of prejudgment interest applicable to non-pecuniary damages in motor vehicle accident claims: Insurance (Enhancing Driver Affordability and Care) Amendment Act, 2020, SA 2020, c 36, s 3 which introduced Insurance Act, s 585.2(2) (the Amendment). That rate had previously been 4% per annum pursuant to section 4(1) of the Judgment Interest Act, RSA 2000, c J-1. The Amendment changed the rate for motor vehicle accident claims to be the annual rates prescribed in the Judgment Interest Regulation, Alta Reg 215/2011, which for the five years prior to 2020 were 1.05%, 0.55%, 0.53%, 0.87% and 2.2%: Judgment Interest Regulation, ss 1(w)–1(aa).
[2] The appellants admitted liability, so the trial was limited to the question of damages: Jackson v Cooper, 2022 ABKB 609 at paras 1–2 [Trial Decision]. The issue on appeal relates to the treatment of prejudgment interest on non-pecuniary damages and whether the trial judge erred in applying the new (lower) rate of prejudgment interest only after the Amendment came into force on December 9, 2020, rather than over the entire period for which prejudgment interest was calculated.
[3] The appeal is dismissed for the reasons that follow.
Trial Decision
[4] The trial judge held that the calculation of prejudgment interest on non-pecuniary damages for the period prior to December 9, 2020 depended upon: whether the Amendment applies retroactively, retrospectively or immediately; what presumptions apply; and whether those presumptions are displaced. He concluded that the Amendment applied only to the calculation of prejudgment interest on non-pecuniary damages for the period after it came into force, not the entire period after the accident, because:
– while prejudgment interest is not a vested right, it is a substantive right;
– the presumption against retroactivity applies because prejudgment interest is a substantive right; and
– the presumption has not been displaced.
Grounds of Appeal
[5] The appellants submit that:
1. any presumptions that might apply are defeated by the trial judge’s finding that the right to prejudgment interest is not vested until judgment;
2. the trial judge erred in finding that prejudgment interest was a substantive, not a procedural right;
3. prejudgment interest is not triggered until the judgment is awarded, and therefore the presumptions against retroactivity and retrospectivity do not apply – the Amendment has immediate application once judgment is awarded and applies to the entire period for which prejudgment interest is calculated; and/or
4. any presumptions are rebutted by a contextual analysis which demonstrates that the legislature intended that the Amendment apply to the entire period of the calculation.
Standard of Review
[6] The temporal application of the Amendment is a matter of statutory interpretation, reviewable on a standard of correctness: Housen v Nikolaisen, 2002 SCC 33 at para 8; TELUS Communications Inc v Wellman, 2019 SCC 19 at para 30.
The Legislation
[7] Entitlement to prejudgment interest, which was not recoverable at common law, is addressed in section 2(1) of the Judgment Interest Act:
2(1) Where a person obtains a judgment for the payment of money or a judgment that money is owing, the court shall award interest in accordance with this Part from the date the cause of action arose to the date of the judgment.
[8] The Judgment Interest Act specifies different prejudgment interest rates for non-pecuniary damages and pecuniary damages. Interest on non-pecuniary damages is set at 4% per annum (s 4(1)) whereas interest on pecuniary damages is to be calculated at a rate prescribed annually in the Judgment Interest Regulation (s 4(2)):
4(1) Interest awarded under this Part on non‑pecuniary damages shall be calculated at the rate of 4% per year.
(2) Interest awarded under this Part on pecuniary damages and in debt or other actions shall be calculated, for each year or part of a year included in the period in respect of which the interest is payable, at the prescribed rate applicable to that year.
[9] Two aspects of the way prejudgment interest is calculated for motor vehicle accident claims were modified by the Amendment which came into force on December 9, 2020: (i) the time period for the calculation was reduced from commencing when the cause of action arose to the earlier of when the statement of claim was served or written notice of the claim was provided to the defendant’s insurer (Insurance Act, s 585.2(1)); and (ii) prejudgment interest on non-pecuniary damages was to be calculated at the same rate as for pecuniary damages, rather than at 4% (Insurance Act, s 585.2(2)). Only the second of these two changes is at issue on this appeal:
585.2… (2) Notwithstanding section 4(1) of the Judgment 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 that Act in the same manner as interest awarded on pecuniary damages.
Analysis
Immediate/prospective, retroactive and retrospective legislation
[10] It is recognized by commentators and judges, including by the trial judge (Trial Decision at para 171), that these terms can be confusing and are sometimes misused.
[11] The difference between immediate, and retrospective application of new legislation was explained by the Supreme Court in Épiciers Unis Métro-Richelieu Inc, division “Éconogros” v Collin, 2004 SCC 59 at para 46 [Épiciers]:
If events are under way when it comes into force, the new legislation will apply in accordance with the principle of immediate application, that is, it governs the future development of the legal situation (Côté, supra, at pp. 152 et seq.). If the legal effects of the situation are already occurring when the new legislation comes into force, the principle of retrospective effect applies. According to this principle, the new legislation governs the future consequences of events that happened before it came into force but does not modify effects that occurred before that date (Côté, supra, at pp. 133 et seq. and pp. 194 et seq.).
[12] Professor Drieger’s explanation of the distinction between retroactive and retrospective effect (E.A. Driedger, Statutes: Retroactive Retrospective Reflections (1978), 56 Can Bar Rev 264 at 268–69) has been endorsed by the Supreme Court of Canada (Benner v Canada (Secretary of State), 1997 CanLII 376 (SCC), [1997] 1 SCR 358 at para 39 [Benner]; Canada (Attorney General) v Hislop, 2007 SCC 10 at para 127):
A retroactive statute is one that operates as of a time prior to its enactment. A retrospective statute is one that operates for the future only. It… imposes new results in respect of a past event. A retroactive statute operates backwards. A retrospective statute operates forwards, but it looks backwards in that it attaches new consequences for the future to an event that took place before the statute was enacted. A retroactive statute changes the law from what it was; a retrospective statute changes the law from what it otherwise would be with respect to a prior event. [Emphasis in original]
[13] The application of new legislation is “properly characterized as immediate rather than retrospective and therefore perfectly acceptable” if the factual situation required to trigger the legal effect at issue is not complete until after the coming into force of the legislation: Ruth Sullivan, The Construction of Statutes, 7th ed (Toronto: LexisNexis Canada, 2022) at 733 [Sullivan]. Driedger is often cited for the proposition that a “statute is not retrospective unless the description of the prior event is the fact-situation that brings about the operation of the statute”: see, e.g., Canmore (Town of) v Three Sisters Mountain Village Properties Ltd, 2023 ABCA 278 at para 66. Professor Sullivan notes a “situation defined in terms of successive facts is not complete and does not become part of the past until the final fact in the series… comes to an end”: Sullivan at 731.
The presumption against interference with vested rights is not engaged
[14] As a matter of statutory interpretation, it is presumed that the legislature does not intend to interfere with “vested rights”: R v Dineley, 2012 SCC 58 at para 45 [Dineley]; Dikranian v Quebec (AG), 2005 SCC 73 at paras 32–36 [Dikranian]. Vested rights are rights that are tangible and concrete which have crystalized and can be enforced in the future:Dikranianat paras 30, 37.
[15] The trial judge accepted that prejudgment interest in this case was not a vested right as it “only crystalizes after the trial judge has given a decision”: Trial Decision at para 186. We agree that prejudgment interest, and especially the right to any particular rate of interest, is not a vested right prior to interest being awarded. As such, application of the Amendment to the calculation of prejudgment interest in this case did not engage the presumption against interference with vested rights.
[16] However, contrary to what is argued by the appellants, the fact that the respondent had no vested right in any particular rate of prejudgment interest at the time the Amendment came into force does not mean other presumptions of statutory interpretation do not apply.
The presumption against retrospective application is engaged
[17] The presumption against retrospective application applies not just in cases involving vested rights, but also more broadly where substantive rights are affected. The presumption was set out in R v Dineley, 2012 SCC 58 at para 10 [Dineley] and reiterated more recently in R v Chouhan, 2021 SCC 26 at para 91 [Chouhan] as follows:
New legislation that affects substantive rights will be presumed to have only prospective effect unless it is possible to discern a clear legislative intent that it is to apply retrospectively … .
[18] The trial judge held that the presumption against retrospective application applies only “in the penal context”: Trial Decision at para 193. We reject that proposition. There is nothing in either Dineley or Chouhan that suggests the presumption against retrospective application should be limited in this way. Therefore, to determine whether the presumption is engaged, we consider whether the Amendment affects substantive rights.
[19] The appellants argue the Amendment is procedural and does not affect substantive rights. They rely on the proposition that “new procedural legislation designed to govern only the manner in which rights are asserted… is presumed to apply immediately to both pending and future cases”: Dineleyat para 10.
[20] The distinction between legislation that is purely procedural and legislation that is substantive or encroaches on substantive rights is that “procedural amendments depend on litigation to become operable: they alter the method by which a litigant conducts an action or establishes a defence or asserts a right. Conversely, substantive amendments operate independently of litigation: they may have direct implications on an individual’s legal jeopardy by attaching new consequences to past acts or by changing the substantive content of a defence; they may change the content or existence of a right, defence, or cause of action; and they can render previously neutral conduct criminal”: Chouhan at para 92.
[21] The trial judge concluded that prejudgment interest is a substantive right that “recognizes the value of the damages award and, specifically, the use the money could have been put to had it been paid at the time the claim arose. As such, it goes to the substance of the cause of action asserted and, even though it is only awarded after a judgment has been given, there is no sense in which prejudgment interest governs the manner in which a litigant asserts a cause of action so as to make it procedural”: Trial Decision at para 185.
[22] We agree with the trial judge that the Amendment is not purely procedural and affects a substantive right. As the Amendment affects substantive rights, the presumption against retrospective application is engaged. The Amendment is presumed to have prospective, not retrospective, effect: Dineleyat para 10.
The appellants’ interpretation is contrary to the presumption against retrospective application
[23] The appellants argue that even if the presumption against retrospective application does apply, applying the Amendment to calculate prejudgment interest for the period prior to December 9, 2020 would not be contrary to that presumption, because such an application would be “prospective” or “immediate”, not “retrospective” or “retroactive”.
[24] The trial judge concluded that the interpretation proposed by the appellants was “retroactive”: Trial Decision at para 194. That is not in our view correct. We do not consider application of the rate specified in the Amendment for the purpose of calculating interest for the period prior to its coming into force to constitute a retroactive effect, because such an application does not amount to operation of the Amendment “as of a time prior to its enactment”. On no interpretation of the Amendment does it purport to change what the law was as of a prior time.
[25] The real issue is whether applying the interest rate specified in the Amendment to a period prior to its enactment should be considered “immediate” or purely prospective, as opposed to “retrospective”.
[26] The appellants argue their interpretation results only in “immediate” or prospective application, because the right to prejudgment interest was not triggered until judgment was awarded, which did not happen until after the Amendment came into force. Applying Épiciers, they submit the relevant events were only “under way” when the Amendment came into force. The “legal effects of the situation” were not “already occurring”, because there had not yet been any judgment. They highlight that section 2(1) of the Judgment Interest Act states, “[w]here a person obtains a judgment for the payment of money… the court shall award interest” [emphasis added].
[27] The appellants’ argument requires characterizing the “events” or “fact-situation” required to trigger the legal effect at issue as including the judgment itself as “the final fact in the series”.
[28] If the judgment is not included, there is no real question that the application argued for by the appellants is retrospective. The Amendment imposes a “new result” or “future consequence” – being a different (and lower) prejudgment interest rate – in respect of what in that case would be a “past event” or “event that happened before it came into force” – being the injuries sustained by the respondent in the motor vehicle accident and the passage of time without payment. Where the “fact-situation is an event (the happening of or the becoming something), then the enactment would be given retrospective effect if it is applied so as to attach a new duty, penalty or disability to an event that took place before the enactment”: Bennerat paras 39, 42. New legislation has retrospective effect where it “governs the future consequences of events that happened before it came into force but does not modify effects that occurred before that date”: Épiciers at para 46.
[29] Legislation in Ontario that modified the interest rate on non-pecuniary damages was viewed in Cobb v Long Estate, 2017 ONCA 717 at paras 78, 101, 102 [Cobb] as having “retrospective effect” engaging the presumption against retrospective application. The Ontario Court of Appeal’s finding in Cobb that the presumption was rebutted will be addressed later in this judgment.
[30] By contrast, the British Columbia Court of Appeal in O’Brien v Anderson, 2000 BCCA 460 at paras 37-44 [O’Brien] concluded that a provision which allowed for periodic instead of lump sum payment of damages enacted after an accident had occurred was viewed as operating “from the time the damage award is made which in this case was after the section came into force”, thereby raising “no issue of retrospectivity”. The Court cited an earlier decision in Wintle v Piper (1994), 93 BCLR (2d) 387, 1994 CanLII 1542 (BCCA) where it had considered the application of an amendment regarding interest on pecuniary damages to a period prior to the enactment and explained, “Using Driedger’s analysis, this result can be seen as a holding that the event on which the amendment acted was the pronouncement of the judgment, not the time of the cause of action”: O’Brien at para 41.
[31] We prefer the approach adopted in Cobb that applying the lower prejudgment interest rate to the period preceding the coming into force of the Amendment would be giving it retrospective effect. We disagree that section 2(1) of the Judgment Interest Act should be understood as specifying that a judgment is a distinct factual pre-requisite. The actual effect of section 2(1) (which reads, “Where a person obtains a judgment for the payment of money or a judgment that money is owing, the court shall award interest in accordance with this Part…”) is that a judgment for the payment of money is to include prejudgment interest as calculated under the Act. Courts do not typically issue separate judgments in respect of damages and prejudgment interest.
[32] In any event, the fundamental facts required to trigger the default prejudgment interestrate specified in section 4(1) of the Judgment Interest Act are the facts that entitled the respondent to non-pecuniary damages – the motor vehicle accident and the injuries sustained therein – plus the passage of time without the appellants making payment, regardless of whether a formal judgment had yet been obtained.
[33] To include the judgment itself as a “fact” required for assessing operation of the presumption would not accord with the purpose of the presumption, which exists “[b]ecause of the need for certainty as to the legal consequences that attach to past facts and conduct”: Dineleyat para 10. The “facts and conduct” the consequences for which the parties needed “certainty” was non-payment in light of the accident and injury, not the issuance of a judgment.
[34] This is apparent if we consider the situation where, instead of decreasing the rate, the Amendment had increased it – for example, from 4% to 10%. On each day the appellants deferred payment, they would have known the cost of that conduct: the 4% annual rate. Had they known it would instead cost them 10%, they may have acted differently and paid sooner. This is the type of reliance that the presumption against retrospective application exists to protect.
[35] The interpretation advanced by the appellants – that the new (lower) interest rate should be applied to calculate the prejudgment interest owed for the period prior to December 9, 2020 – is retrospective. Therefore, it runs counter to the presumption against retrospective application.
The presumption against retrospective application is not rebutted
[36] Finally, the appellants argue that the presumption against retrospective application is in this case rebutted by a contextual analysis which demonstrates that the legislature intended the Amendment to apply to the entire prejudgment period.
[37] In Cobbat para 94, the Ontario Court of Appeal recognized that “[c]ommon-law presumptions on temporal application of legislation are simply aids in the identification of legislative intent” and are not determinative. In that case, “a contextual analysis of the legislation demonstrate[d] that the legislature intended [the amendment] to apply to causes of action that had already arisen but not yet been tried” having regard to the following factors:
i. the statute that introduced the amendment contained “no transition language that clearly indicates the temporal application of th[e] amendment” which contrasted with previous amendments to “the prejudgment interest regime in the Judicature Act and the Courts of Justice Act over the last forty years” where the legislature “clearly indicated that the changes were to have only prospective effect”: Cobbat paras 96–101;
ii. the expressed goal when the subject amendment was introduced “was to bring down the cost of claims to achieve a reduction in automobile insurance rates within a two-year window and the adjustment of the prejudgment interest rate was one part of that strategy”: Cobbat para 102;
iii. “to achieve the cost reduction goal as quickly as possible and within the two-year window promised by the government would require the amendments… to apply to cases already in the system”: Cobbat para 103; and
iv. “[a]ny perceived unfairness to litigants who commenced their actions before the effective date of the amendment can be ameliorated through the exercising of a trial judge’s discretion under s. 130 of the Courts of Justice Act to award prejudgment interest at a rate other than the default rate”: Cobbat para 103.
[38] The trial judge in the present case found there was nothing in the legislation that suggested the Amendment should be applied to calculate interest during the period prior to its coming into force. He rejected the appellants’ submission that the Minister of Finance’s explanation that the Amendment was “to reduce the costs of claims for insurance companies and, in doing so, to reduce insurance premiums paid by individuals” was sufficient evidence of legislative intent, particularly as “premiums were assessed based on the Judgment Interest Act rates up until the legislative changes”: Trial Decision at para 198.
[39] The Supreme Court has repeatedly stated that evidence of clear legislative intent is required to rebut the presumption against retrospective application: the legislature is required “to indicate clearly any desired retroactive or retrospective effects” (British Columbia v Imperial Tobacco Canada Ltd, 2005 SCC 49 at para 71); it must be “possible to discern a clear legislative intent that it is to apply retrospectively” (Dineley at para 10); and “[o]rdinarily, express language or necessary implication… provides th[e] necessary indication that Parliament has turned its mind to the issue of retrospectivity (Tran v Canada (Public Safety and Emergency Preparedness), 2017 SCC 50 at para 50).
[40] The appellants point to two aspects of retrospective legislative intent. First, the Amendment was introduced as part of legislation intended to enhance insurance affordability by taking “immediate measures to stabilize auto insurance premiums”. Second, no transitional provisions were provided for the Amendment, whereas transitional provisions were provided for the other two substantive amendments made at the same time.
[41] In our view, neither aspect is sufficient to overcome the presumption against retrospective application in this case. Unlike in Cobb, no specific cost-reduction threshold or timeline was identified with respect to the Amendment. The two other substantive amendments introduced along with the Amendment both had temporal language specifying that those provisions would be applied prospectively. As s 558.1, which dealt with the calling of expert witnesses, affects procedural rights, no presumption against retrospective application would have applied in the absence of the temporal provision in s 558.1(10). Whereas s 585.1, which shifts liability to pay for property damage as between insurers, affects substantive rights, so the presumption against retrospective application would have applied absent the temporal provision in s 585.1(17). In such circumstances, it is not a “necessary implication” that the legislature’s failure to expressly address how the subject Amendment would be applied means it was intended to apply retrospectively.
Conclusion
[42] The appeal is dismissed.
See DISCLAIMER in About Page.