Pre-Judgment Interest in a Rising Rate Environment pursuant to Saulnier v. Postma, 2026 ONSC 1275

The decision in Saulnier v. Postma, 2026 ONSC 1275 is a useful reminder that pre-judgment interest is not always a mechanical exercise. Where market conditions shift significantly, the court may depart from the default statutory rate to reach a fair and compensatory result.

Background

Following an earlier judgment, the court ordered that Ms. Postma pay Mr. Saulnier pre-judgment interest on $233,131, dating back to the parties’ separation on March 31, 2020.

The parties were unable to agree on the applicable rate:

• Ms. Postma argued for the presumptive rate of 0.05% under the Courts of Justice Act

• Mr. Saulnier argued for an averaged rate of 2.75%, reflecting market conditions over time

The Legal Framework

Under the Courts of Justice Act:

• Section 128(1) provides for pre-judgment interest

• Section 127(1) sets the default rate

• Section 130(1) allows the court to depart from that rate where it is “just to do so”

The court may consider factors including changes in market interest rates, the circumstances of the case, and the conduct of the parties.

The Decision

In Saulnier v. Postma, 2026 ONSC 1275, Justice Petersen confirmed that the presumptive rate was 0.05%, but found that it was not appropriate in the circumstances.

The court instead ordered pre-judgment interest at an averaged rate of 2.75%.

Why the Court Departed from the Presumptive Rate

The determinative factor was the significant fluctuation in market interest rates over the relevant period.

As the court noted, rates increased from approximately 0.5% to over 5%, before declining again. Applying the fixed statutory rate would not reflect the economic reality over that time.

The court accepted Mr. Saulnier’s position that using the presumptive rate would effectively provide Ms. Postma with a below-market loan of the funds for several years.

By contrast, averaging the rates:

• More accurately reflected the prevailing market conditions over time

• Properly compensated Mr. Saulnier for the loss of use of the money, which is the core purpose of pre-judgment interest

Limited Role of Other Factors

Although the respondent relied on litigation conduct, settlement offers, and the outcome of the case, the court gave these factors little weight.

Justice Petersen noted that these issues had already been addressed in a prior costs decision, and declined to revisit them in determining the appropriate interest rate.

Takeaways

Saulnier v. Postma, 2026 ONSC 1275 reinforces several practical points:

• The statutory pre-judgment interest rate is only a starting point

• Courts retain discretion to depart from it where it would be unjust to apply it rigidly

• Significant changes in market rates can justify a different approach, including averaging

• Pre-judgment interest is compensatory, aimed at addressing the loss of use of money, not creating a windfall

Conclusion

Saulnier v. Postma, 2026 ONSC 1275 demonstrates a pragmatic approach to pre-judgment interest. Where the default rate does not reflect economic reality, the court may adjust it to ensure that the award fairly compensates for the time value of money.