• Shankar Law Office

What is Pre-judgment Interest?

Updated: Oct 29



The Court said that as a general rule, a payor spouse is required to pay prejudgment interest on an equalization payment owing to the payee spouse. However, the applicable legislation makes clear that the granting or denial of prejudgment interest is discretionary: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 130. This means that a court may or may not award read judgement interest based on the particular facts of each case before it. It is not mandatory in other words.


There are exceptions to the general rule. Exceptions arise “where, for various reasons, the payor spouse cannot realize on the asset giving rise to the equalization payment until after the trial, does not have the use of it prior to trial, the asset generates no income, and the payor spouse has not delayed the case being brought to trial”: Burgess v. Burgess (1995), 1995 CanLII 8950 (ON CA), 24 O.R. (3d) 547 (C.A.), at p. 552; Fielding v. Fielding, 2015 ONCA 901, 129 O.R. (3d) 65, at para. 43.


In the case being appealed, the trial judge refused to award prejudgment interest. The major asset identified at trial was the matrimonial home. The trial judge specifically found that there was no evidence that the respondent obtained any financial benefit, as joint owner of the home, in having the appellant continue to reside in the matrimonial home and pay its carrying costs for more than three years following the separation. He further noted that the appellant chose to remain in the matrimonial home and incur its carrying costs rather than seek an order for its sale.


The trial judge recognized that the respondent did make efforts to make several payments of child support in the amount of $30,456 post-separation and that the respondent agreed to pay more than his proportionate share of some of the s. 7 expenses. Indeed, the trial judge observed that the respondent agreed to pay for certain s. 7 expenses that the trial judge would not otherwise have ordered. Again, these factors supported the trial judge’s decision not to grant prejudgment interest for child support in this case.



Analysis:

Reviewing the reasons above, it is clear that one needs to make a reasoned case for prejudgment interest. It is not automatic. Rather, it requires deep analysis to convince the court that prejudgment interest in a case involving equalization is necessary especially if the opposing party is going to be benefited. But that requires hard work, analysis and research.


At Shankar Law, we will be happy to do this kind of hard work, research and analysis on every matrimonial case before us. We work throughout Ontario primarily from our three offices in Owen sound, Port Elgin and Wiarton. We look forward to working with you.

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