Equalization Payment: Can You Get Pre-Judgment Interest Added, For the Time Leading Up to Trial?
At what point can a spouse claim pre-judgment interest against the other, for the time leading up to trial? Does it start at the first “volley” of litigation between them? Or only once certain legal claims have been raised?
These were the questions for the court in Van Delst v. Hronowsky, where the wife asked the court for about two years’ worth of pre-judgment interest on the roughly half-million dollars she reasonably expected as her equalization payment from the husband. She wanted it to be calculated from the date in 2017 that she started her court application against him, and ending on the date of trial.
The divorcing former couple had managed to resolve almost all of their legal issues but one: the equalization of their Net Family Properties. They still disagreed on several sub-issues about how various items were to be valued, including the husband’s complex and sizeable pension. The court carefully calculated these amounts and confirmed that the husband indeed owed the wife $563,560.23 in equalization.
It then turned to the question of whether it should order pre-judgment interest on that amount, and if so, from what point in time should it be calculated.
The husband naturally wanted to minimize or eliminate his liability; he conceded there was a general legal principle that a person who received a monetary award by order of a court is entitled to pre-judgment interest. However, he pointed out that the court had the authority to adjust the interest amount if the circumstances warranted.
The court observed that the wife’s entitlement to pre-judgment interest arises under the Courts of Justice Act, which allows a person to claim pre-judgment interest from the date the cause of action arose, to the date of the order. However, the court has discretion on whether or not to award it in full or in part, and can take into account that:
- The husband may not be able to realize on the asset giving rise to the equalization payment until after the trial;
- The husband does not have use of the asset prior to trial;
- The asset generates no income;
- The husband has not delayed the case being brought to trial;
- There have been changed in the market interest rates; or
- An advance has already been made.
The court can also take into account the amount the wife claimed and recovered from the husband in the proceeding, and the conduct of either of them which tended to shorten or unnecessarily lengthen its duration.
Here, the interest amount claimed by the wife was well within the husband’s ability to pay. The case had been lengthened by the husband’s conduct throughout the course of the litigation, including requests for trial adjournments in late 2018. There was no evidence of any factor that would militate against awarding pre-judgment interest to the wife.
However, the court did note that she did not originally ask for a divorce in her original 2017 application; she waited more than a year to add it to her application, after being granted permission by a judge. This was a pivotal legal claim in the overall proceedings, and its timing had to be considered when making the award.
The court accordingly found that the wife was entitled to pre-judgment interest on the $563,560.23 equalization payment, calculated from September 17, 2018, which was the date she amended her pleadings to also seek a divorce. The husband was ordered to pay the equalization amount pus the pre-judgment interest within 15 days of the order.
For the full text of the decision, see: