Interest Act - 2008 Report

FOOTNOTES
[1] See Mary Anne Waldron, The Law of Interest in Canada (Scarborough, Ont.: Carswell, 1992) at 24. The leading Supreme Court of Canada case on point is still Ontario (Attorney General) v. Barfried Enterprises Ltd., [1963] S.C.R. 570.

[2] R.S.C. 1985, c. C-46. The impact of this provision on commercial transactions was dealt with in a paper by Jennifer Babe entitled “Section 347 of the Criminal Code of Canada: Business Law Problems Remain” presented at the 2007 ULCC Conference. That topic will not be covered in this paper.

[3] R.S.C. 1985, c. E-15.

[4] S.C. 1996, c. 23.

[5] R.S.C. 1985, c. C-3.

[6] S.O.R./93-169.

[7] S.O.R./2001-527.

[8] In the Special Measures Import Regulations, S.O.R./84-927.

[9] See, for example, Bank of Nova Scotia v. Dunphy Leasing Enterprises Ltd. (1991), 83 Alta. L.R. (2d) 289 at para. 105 (C.A.); aff’d (1994), 18 Alta. L.R. (3d) 2 (S.C.C.).

[10] Note that s. 122(2) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, may be linked to or based upon section 3 of the Interest Act. It provides as follows:

If interest on any debt or sum certain is provable under this Act but the rate of interest has not been agreed on, the creditor may prove interest at a rate not exceeding five per cent per annum to the date of the bankruptcy from the time the debt or sum was payable, if evidenced by a written document, or, if not so evidenced, from the time notice has been given the debtor of the interest claimed.

[11] British Pacific Properties Ltd. v. British Columbia (Minister of Highways & Public Works), [1980] 2 S.C.R. 283 at 290.

[12] See, for example, IAC Ltd. v. Guerrieri (1982), 139 D.L.R. (3d) 352 (Ont. C.A.); Toronto-Dominion Bank v. F.G. Connolly Ltd. (1982), 56 N.S.R. (2d) 289 (S.C. – T. Div.); McLeod Young Weir Ltd. v. Nunziata, [1991] O.J. No. 701 (C.J. – Gen. Div.); Huber v. Commcorp Financial Services Inc., [1996] 7 W.W.R. 506 (Sask. Q.B.).

[13] British Pacific Properties Ltd., supra note 11 at 289-90.

[14] Pizzey Estate v. Crestwood Lake Ltd. (2004), 69 O.R. (3d) 306 at para. 37 (C.A.).

[15] S.O.R./93-292.

[16] S.O.R./96-188.

[17] Alta. Reg. 348/1993, s. 16.

[18] See, e.g., R.R.O. 1990, Reg. 944, s. 2.

[19] R.S.C. 1985, c. I-15, s.4.

[20] Canadian Tire Acceptance Ltd. Card Holders v. Canadian Tire Acceptance (1994), 118 D.L.R. (4th) 238 (Ont. Ct. (Gen. Div.)) aff’d (1995), 26 O.R. (3d) 95 (C.A.); Prince Albert Co-operative Assn. v. Rybcka (2006), 289 Sask. R. 92 (C.A.).

[21] V.K. Mason Construction v. Bank of Nova Scotia, [1985] 1 S.C.R. 271.

[22] R.S.C. 1985, c. 1 (5th Supp.), s. 162.1.

[23] See, e.g., Consumer Protection Act, 2002, S.O. 2002, c. 30, Sch. A, ss. 77-81; Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2, ss. 57-70.

[24] S.C. 1991, c. 46, ss. 450-453, 568-571.

[25] S.C. 1991, c. 48, ss. 385.16-385.2.

[26] S.C. 1991, c. 47, ss. 480-484.

[27] See Bank Act, supra note 24 at s. 1.

[28] See Consumer Protection Act, supra note 23 at s. 1; see also Business Practices and Consumer Protection Act, supra note 23 at s. 1.

[29] O. Reg. 17/05, s. 62.1.

[30] Elcano Acceptance Ltd. v. Richmond, Richmond, Stambler and Mills (1991), 79 D.L.R. (4th) 154 (Ont. C.A.).

 

[31] R.S.C. 1985, c. I-15.

[32] And any amount overpaid may be recovered back or deducted from any other interest. See section 9, Interest Act.

[33] London Loan and Savings Co. of Canada v. Meagher, [1930] S.C.R. 378.

[34] Metropolitan Trust v. Twin Grand Development Ltd., [1995] 1 W.W.R. 533 (Sask. Q.B.); aff’d [1995] 10 W.W.R. 576 (Sask C.A.).

[35] The phrase has been considered, but never applied. See Commonwealth Savings Plan Ltd. v. Triangle “C” Cattle Co. Ltd. and Pozzobon (1966), 55 W.W.R. 52 (B.C.C.A.).

[36] Re Kilgoran Hotels Ltd. and Samek, [1968] S.C.R. 3.

[37] [1975] 1 S.C.R. 266.

[38] (2001), 203 Sask. R. 73 (C.A.).

[39] Saskatchewan Co-Operative Financial Services Ltd. v. Tarel Hotel (1994), 118 D.L.R. (4th) 629 (Sask. C.A.); leave to appeal to S.C.C. refused, [1995] 2 S.C.R. ix.

[40] S.C. 1991, c. 46.

[41] Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2; Fair Trading Act, R.S.A. 2000, c. F-2; Cost of Credit Disclosure Act, 2002, S.S. 2002, c. C-41.01; Consumer Protection Act, C.C.S.M. c. C200; Cost of Credit Disclosure Act, S.N.B. 2002, c. C-28.3; Consumer Protection Act, R.S.P.E.I.1988, c. C-19.

[42] Ontario has chosen not to include mortgages in its cost of borrowing disclosure legislation. That policy choice, of course, affects a significant number of consumers, although those borrowing from federal banks would have the protection of the Bank Act.

[43] Only one case appears to have applied s. 6 to deprive the lender of interest. See Bank of Nova Scotia v. Daniel (1986), 38 R.P.R. 316 (Alta. Q.B.).

[44] Proposed amendments to section 6 have been passed, but never brought into force. The 2001 amendment (c. 4, s. 176) appeared to expand the classes of mortgage covered by the section to include those set out in regulation and to allow regulations to require the kind of disclosure to be made. This does not seem an advisable choice since it left the current archaic language and the timing of the disclosure unchanged.

[45] Subsection 8(2) provides: “Nothing in this section has the effect of prohibiting a contract for the payment of interest on arrears of interest or principal at any rate not greater than the rate payable on principal money not in arrears.”

[46] Senate Debates (28 April 1880) at 404; House of Commons Debates (31 March 1880) at 963; Mary Anne Waldron, "The Federal Interest Act: it sure is broken, but is it worth fixin’" (1997), 29 Can. Bus. L.J. 161 at 164.

[47] Section 9 provides that “if any sum is paid on account of any interest, fine or penalty not chargeable, payable or recoverable under section …8, the sum may be recovered back or deducted from any other interest, fine or penalty chargeable, payable or recoverable on the principal.”

[48] Reliant Capital Ltd. v. Silverdale Development Corp., 2006 BCCA 226; 270 D.L.R. (4th) 717 (B.C.C.A.) at paras. 68-69; leave to appeal to S.C.C. refused, [2006] 2 S.C.R. viii.

[49] See T. Telfer, “Preliminary Background Paper on the Canada Interest Act” (Uniform Law Conference of Canada, 2007) at para 35.

[50] See e.g., Reliant Capital Ltd. v. Silverdale Development Corp., supra note 48 at para. 56.

[51] N.B.Y. Enterprises Inc. v. Duffin, [2006] O.J. No. 982 (S.C.J.).

[52] Mary Anne Waldron, Q.C., “The ‘Legitimate Purposes’ Test: Are Roses Changing Their Names?” U.B.C. L. Rev. (forthcoming).

[53]Reliant Capital Ltd. v. Silverdale Development Corp., supra note 48 at para. 55.

[54] Waldron, supra, note 52.

[55] Waldron, supra, note 46. See e.g., Unconscionable Transactions Act, R.S.A. 2000, c. U-2; Unconscionable Transactions Relief Act, R.S.S. 1978, c. U-1; Unconscionable Transactions Relief Act, C.C.S.M. c. U20; Unconscionable Transactions Relief Act, R.S.O. 1990, c. U.2; Unconscionable Transactions Relief Act, R.S.N.L. 1990, c. U-1; Unconscionable Transactions Relief Act, R.S.N.B. 1973, c. U-1; Unconscionable Transactions Relief Act, R.S.N.S. 1989, c. 481; Unconscionable Transactions Relief Act, R.S.P.E.I. 1988, c. U-2.

[56] Waldron, supra, note 1; Telfer, supra, note 49 at para 42; House of Commons Debates (31 March 1880) at 964.

[57] Subsection (2) reads as follows:

“Nothing in this section applies to any mortgage on real property or hypothec on immovables given by a joint stock company or other corporation, nor to any debenture issued by any such company or corporation, for the payment of which security has been given by way of mortgage on real property or hypothec on immovables.”

[58] Mary Ann Waldron, “Section 10 of the Interest Act: All the King’s Men” (1988), 13 C.B.L.J. 468 at p. 473-474; Waldron, supra, note 1 at 91-92; Potash v. Royal Trust Co., [1986] 2 S.C.R. 351 at para.13.

[59] [1986] 2 S.C.R. 351.

[60] Ibid. at para. 32.

[61] Waldron, supra, note 1 at 92-93. See e.g., 233467 B.C. Ltd. v. Montreal Trust of Canada (1994), 115 D.L.R. (4th) 124 (B.C.C.A.); Litowitz v. Standard Life Assurance Co. (Trustee of) (1996), 30 O.R. (3d) 579 (C.A.) ; leave to appeal to S.C.C. refused, [1997] 2 S.C.R. ix.

[62] R.S.O. 1990, c. M.40, s. 18(1).

[63] C.C.S.M. c. M200, s. 20(6).

Next Annual Meeting

2018 Conference (Centennial)

Delta Hotel

Québec City, QC

August 12 - 16, 2018