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Change in Pre-Judgment Interest Determined to be Retroactive

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Change in Pre-Judgment Interest Determined to be Retroactive

Posted April 27, 2015

We blogged about the change in the pre-judgment interest rate last month. As of January 1, 2015, the Insurance Act was amended to provide that the 5% pre-judgment rate set out in the Rules of Civil Procedure does not apply in motor vehicle accident cases. As a result, pre-judgment interest on general or non-pecuniary damages in motor vehicle accident cases will now be based on the rate that applies to all other damages. That rate is presently 1.3%.

A question arose as to whether the change was intended to be retroactive, that is, whether it was intended to be applied to motor vehicle accidents that occurred before January 1, 2015. The recent decision in Cirillo v. Rizzo has answered that question, at least for now. The court, in that case, concluded that while entitlement to pre-judgment interest is a substantive right (akin to the right to sue, for example), the mechanism for determining the amount of pre-judgment interest in a particular case is procedural in nature. Procedural amendments are presumed to apply retroactively and the court found that the change in the pre-judgment interest rate was intended to apply to all motor vehicle accident cases regardless of the date of the accident.

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