The applicant, Hybrid Financial Ltd., sought a declaration that the buyout formula in a Royalty Agreement with the respondent, Flow Capital Corp., violated the criminal rate of interest provisions under s. 347 of the Criminal Code.
The court analyzed the Royalty Agreement and determined it was a hybrid financial transaction more akin to an equity investment than a traditional debt or credit facility.
Because the transaction did not constitute a 'credit advanced' and the payments were not 'interest', s. 347 did not apply.
The application was dismissed, and the applicant was ordered to comply with the buyout valuation process and resume its contractual obligations.
