MDS v. Factory Mutual: Moving The Needle Toward A More Compensatory Model Of Pre-Judgment Interest

In many cases, parties approach pre-judgment interest ("PJI") as a mechanical exercise, applying rates set out under the Courts of Justice Act ("CJA") and calculating them on a simple interest basis. In MDS Inc. v. Factory Mutual Insurance Company (FM Global), 2020 ONSC 1924, the Ontario Superior Court considered when it is appropriate to depart from this standard approach in favour of an interest award based on the actual interest rates paid by the plaintiff and calculated on a compound basis aimed at more fairly compensating the plaintiff for its actual loss.

Background

MDS made a claim for loss of profit under its insurance policy. MDS had suffered a loss of profits following the shutdown of a nuclear facility that supplied MDS with the radioisotopes it was in the business of selling to the medical market. The insurer denied coverage and the parties engaged in a decade long legal dispute.