10.14.05
In whose interest is interest?
Bozzo v. Giampaolo, released May 25, 2005.
The Ontario Rules take a weird approach to prejudgment interest. They basically say that the rate is the one prevailing when the claim is issued.
What could possibly be the reason for that? Especially when, as the Court of Appeal observed in this case, “the purpose of prejudgment interest is to compensate for loss of use of money.�
Rates vary over time. Litigation takes time.
Judges typically ignore the rule and average the rates. The OCA upheld that approach again in this case.
Let me suggest another approach.
Many jurisdictions in the United States require very high pji rates, often more than triple the prime rate.
This prevents defendants from using delay as cheap financing.
If you do not think it is cheap, try doing the math. Prejudgment interest in Ontario is not onerous, is not compounded, and is paid only at the end when the principal amount is due. My bank won’t do that.
Litigation moves much faster in the U.S.
Hmmmmmmmmm…