Does Pre-Judgment Court Order Interest Need to be Pled on Retroactive Periodic Spousal Support?

Does Pre-Judgment Court Order Interest Need to be Pled on Retroactive Periodic Spousal Support?

Does pre-judgment court order interest need to be pled on retroactive periodic spousal support? The short answer is no. Court order interest, governed by the Court Order Interest Act [COIA], is mandatory on pecuniary judgments whether it is pled or not.

Nature of Spousal Support

The parties in B.L.S v D.J.S., 2021 BCSC 1311 appeared in front of Madam Justice Norell on November 19, 2021 to settle the order with respect to pre-judgment interest payable on the ordered spousal support. On November 5, 2021, Justice Norell clarified the nature of the award is retroactive periodic spousal support such that it is taxable in the claimant’s hand and deductible by the respondent. The award is for a total of $643,500 comprised of periodic, retroactive spousal support payments of $17,875 per month for the period of April 1, 2011 to March 31, 2014. The claimant argued the award was intended to be lump sum spousal support, but was unsuccessful. Justice Norell did not address the issue of pre-judgment interest as she assumed it would be applied when she wrote the reasons for judgment.

Pre-Judgment Interest

The respondent put forward five arguments against pre-judgment interest:

  1. the claimant is attempting to settle the order twice, and the matter is res judicata;
  2. the claimant has not pled a claim for pre-judgment interest;
  3. because the award will be taxable in the claimant’s hands, there should be no pre-judgment interest on the portion that will become tax payable;
  4. any pre-judgment interest should accrue from the date the separation agreement was set aside; and
  5. there was both a compensatory and non-compensatory basis for the award of spousal support, and to the extent it was non-compensatory based, the award is not a pecuniary judgment.

Justice Norell rejects all the respondent’s arguments, except the third which the claimant consents to.

Most notably, on the respondents second argument, he cites Bryne v Bryne, 2013 BCSC 934 at para. 42 where the court states: “[t]here is no claim for prejudgment interest, and thus no order is made.” Justice Norell does not consider this to be a judicial determination that pre-judgment interest cannot be ordered if it is not pled. Pre-judgment interest is mandatory subject to certain exceptions as stated in the COIA.

On the respondent’s final argument, Justice Norell states that in her view, to the extent the award for spousal support was based on need, it represents a loss of financial support, is an order for the payment of money and therefore pecuniary. In addition, as the claimant argued, without pre-judgment interest, there would be an incentive for payors not to pay spousal support, and the recipient would not be compensated for the interest they could have earned on money which should have been received.

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