THE INTRODUCTION OF ECONOMIC FACTORS INTO LITIGATION CASES: ONTARIO'S 2 ½ PERCENT SOLUTION
AbstractViews are divided on whether awards of future pecuniary damages should be influenced by actuarial and economic evidence. This article contrasts the evidentiary approach, which allows consideration of economic factors, with legislative guidelines that systematically impose a 2½ per cent interest rate on the capitalized value of an award in recognition of the difference between estimated investment and price inflation rates. After discussing the theoretical advantages and disadvantages of both approaches, the author presents evidence that the 2 ½ per cent rate is inappropriate because of failure to recognize a reliable source of data contained in Bank of Canada publications, and the use of an inappropriate methodology. Relevant variables suggest a more accurate rate of 3 ½ percent. Given the weaknesses of the legislative approach and the practical implications of the percentage difference, the author concludes that courts are the more appropriate forum for resolution of this issue, and that litigants ought not to be precluded from bringing important evidence on the basis of economic factors.
Keywords:Civil Procedure, Economics
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