The plaintiff sued the defendants for amounts owing under a Merchant Cash Advance Agreement.
The court found that the agreement was in substance a loan, not a purchase of future receivables, because the plaintiff shifted the risk of fluctuating sales entirely to the merchant by charging a fixed weekly amount.
The court held that the 42% APR did not violate the criminal rate of interest provisions of the Criminal Code, but applied the Interest Act to reduce the interest rate to 5% per annum because no annual rate was expressed.
The court also found the liquidated damages and monitoring fees to be unenforceable penalties.
Judgment was granted for the balance of the principal plus 5% interest and NSF fees, and the personal guarantee was upheld.
