LRC Reports

Discount Rates (1980)

The issue of discount rates was first referred to the Commission in a letter from the Deputy Attorney General in February of this year. That letter enclosed a copy of a draft Prospective Pecuniary Damages Act dealing, inter alia, with discount rates and Mr. Vogel requested the Commission to “assess this proposal and make constructive comments” and it was in that spirit the Commission approached it.

In April,  the  Commission  wrote  to  the  Attorney  General  suggesting  an  amendment to  the Supreme Court Act along the following lines:

The Chief Justice, after consulting the other judges of the court and such other persons as he considers appropriate, may prescribe from time to time the rate of interest to be used in determining the capitalized value of an award in respect of future damages.

This suggestion prompted further discussion which largely centred on two principal issues

  • Should the discount rate be set by a person or body other than the Chief Justice (SC BC)
  • Should the discount rate prescribed be limited to one that reflects only the difference between the estimated rates of price inflation and investment or should the so-called “productivity factor” be an additional parameter?

The current project will focus on reviewing and making recommendations on two principal issues of discount rate.

Keywords: discount rate; future; damage; future interest; inflation;
productivity; present value; pecuniary; dependency; compensation; injury; capitalization; award

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