CITATION: Sivalingam v. Navaratnam, 2015 ONSC 6619
DIVISIONAL COURT FILE NO.: 103/15 DATE: 20151027
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
SARASWATHY SIVALINGAM Plaintiff (Respondent)
– and –
SENKODAN NAVARATNAM Defendant (Appellant)
James Chester, for the Plaintiff (Respondent) Ian Sonshine, for the Defendant (Appellant)
HEARD at Toronto: October 26, 2015
Swinton J.
Overview
[1] The appellant Senkodan Navaratnam appeals from the judgment of Deputy Judge Buie dated January 21, 2015, which ordered him to pay $5,814.40 to the respondent Saraswathy Sivalingam, and the subsequent order of April 17, 2015, requiring him to pay costs of $5,246.50.
[2] For the reasons that follow, I would allow the appeal in part.
Background
[3] The respondent advanced funds totaling $13,000 ($6,000, $5,000 and $2,000) in 2000. The purpose was to assist the appellant, then 17 years old, to immigrate to Canada from Sri Lanka. Shortly after he arrived in Canada as a Convention refugee, he signed acknowledgements that he had received $6,000 and $2,000 from the respondent. No mention is made of an interest rate in these documents. Apparently, he also signed three promissory notes, which are not in the Exhibit Book before me. There is no suggestion that these notes mentioned an interest rate.
[4] When he first arrived in Canada, the appellant was not able to make payments on account of principal. In accordance with an oral agreement with the respondent, he began making payments for interest only at the rate of 2% per month or 24% per annum from October 2000.
[5] In February 2003 the appellant repaid the $5,000 advance. He continued to make monthly interest payments on $8,000 through October 2003. From November 2003 to October 2004 he made no payments, as he was making arrangements to bring his family to Canada and could not afford to pay the interest.
[6] The trial judge found that the appellant paid the remaining principal of $8,000 in October 2004. She also found that there was outstanding interest owing of $1,840 as of November 2004.
[7] Although the respondent initiated a Small Claims Court action in June 2009 claiming outstanding principal, the trial judge found that the principal of $13,000 had been fully paid. This finding is amply supported by Exhibit 1, dated May 10, 2009, a document prepared by the appellant and family members and signed by the respondent and witnessed by her husband. She acknowledged that she had received from the appellant “the full amount of $13,000” and the balance sum of $1,840 “on account of interest is due and owing”. The appellant acknowledged in testimony at trial that the interest amount of $1,840 was due and owing in May 2009.
[8] The trial judge held that the respondent had not relinquished her claim for the interest by signing Exhibit 1. She then stated (at para. 26 of her reasons), “I find it is not unreasonable to conclude that the outstanding interest bore interest at the rate of 24% per annum.” Accordingly, she held that the appellant was obligated to pay interest on the $1,840, and interest on that amount should run at the rate of 24% per annum from November 2004 to November 2014. This resulted in the order that the appellant pay $5,814.40 to the respondent.
Issues on Appeal
[9] The appellant raises a number of grounds of appeal:
Did the trial judge err in failing to apply the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B?
Did the trial judge err in finding that the appellant was obligated to pay interest at 24% per annum on the outstanding interest of $1,840?
Did the trial judge err in awarding costs of $5,246.50?
Did the trial judge err in failing to apply the Limitations Act?
[10] The trial judge noted that the Limitations Act was not pleaded as a defence and, therefore, she did not consider the Act. I note that the appellant had counsel at the time of the pleading and for the first two days of the trial. While the “Prescription Act” was mentioned as an issue in the pleading, the reasons of the trial judge state that this was not pursued at trial.
[11] I see no error on the part of the trial judge in failing to apply the Limitations Act, given that the issue was not apparently pursued by the appellant’s counsel. Nor was there any indication in the written submissions from the defense (albeit written by the appellant’s brother, a university student) that there was a concern about limitations.
Did the trial judge err in finding that the appellant was obligated to pay interest at 24% per annum on the outstanding interest of $1,840?
[12] In my view, the trial judge made a palpable and overriding error in finding that interest at 24% per annum was owing on the outstanding interest of $1,840.
[13] There is no document in which the parties set out any interest rate, let alone an agreement that interest should be paid on outstanding interest – that is, as compound interest.
[14] The parties’ history demonstrates that there was little documentation of their arrangements. The respondent advanced three payments totaling $13,000 in 2000 to assist the appellant. He signed acknowledgements in 2000 that he received $6,000 and $2,000 from the respondent, and he signed three promissory notes. None of the documents mentions interest rates.
[15] It is true that the parties had an oral agreement that the appellant would pay interest on the principal, and he began to do so in the fall of 2000. There is no evidence suggesting that they agreed that the interest was to be compounded.
[16] The most significant document for purposes of this issue is the signed acknowledgement in May 2009 that the $13,000 had been paid and $1,840 in interest was outstanding. The trial judge stated that there was “no evidence” that the parties discussed any interest rate of 24% per annum on the outstanding interest in May 2009.
[17] The trial judge concluded that it was reasonable to conclude that interest at 24% per annum was owing on the outstanding interest. In my view, the trial judge made a palpable and overriding error in finding that there was a right to ongoing interest on the outstanding interest from November 2004. When the respondent signed the document in May 2009, she acknowledged that $1,840 on account of interest was due and owing. She did not demand interest on that amount. She apparently took no issue with the quantum of $1,840 – an amount that reflected simple interest owing from November 2003 to October 2004.
[18] Moreover, nothing in the parties’ conduct suggests that there was an agreement that there should be compound interest rather than simple interest. The respondent had not pursued the payment of the outstanding interest in the courts during the period after November 2004. Her initial claim made no mention of the interest rate claimed. Even the amended claim fails to plead a right to compound interest.
[19] Given the wording of the 2009 document and the nature of the parties’ dealings with respect to the payment of interest, the trial judge erred in finding that the respondent is entitled to interest on the $1,840 from 2004. There is no evidence to support that conclusion.
[20] Accordingly, the judgment of the trial judge shall be amended to order the appellant to pay $1,840 plus post-judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43.
Did the trial judge err in awarding costs of $5,246.50?
[21] Given the appellant’s success on this appeal, the costs order of the trial judge cannot stand. However, even had I upheld the decision on the merits, it is my view that the trial judge erred in principle in awarding costs to the respondent that included $3,550 and HST for counsel fees (for a total of $4,011.50 for fees). It appears that she considered only the cap on fees in s. 29 of the Courts of Justice Act, which sets the maximum amount of costs at 15% of the amount claimed or the value of the property, absent the exceptional circumstances set out in the section. In this case, 15% would have resulted in fees of $4,217.16 including HST.
[22] The trial judge erred in principle in failing to give weight to other factors that should be considered in awarding costs – in particular, the relative success of the parties and the conduct of a party that tended to lengthen the proceeding.
[23] The respondent sought $24,880 including $6,000 in punitive damages in her amended claim. After a four day trial, she succeeded only in obtaining an order for the outstanding interest of $1,840 plus interest on that amount. The respondent did not succeed in her allegation that the principal of the loan of $8,000 was not paid, nor her claim for interest accrued on that principal.
[24] Moreover, the respondent’s conduct contributed to the length of the proceeding. Within a month of signing the acknowledgement that the outstanding principal had been paid, she commenced her action claiming a principal amount of $8,000. The pleading was subsequently amended to include a claim for interest on that amount and punitive damages. She did not succeed on these issues largely because of the acknowledgement.
[25] Given the respondent’s limited success at trial, the award of costs was clearly excessive. Given the disposition of this appeal on the merits, the respondent has had even more limited success in her action. In the circumstances, there should be no award of costs for the trial.
Conclusion
[26] The appeal is allowed in part. The order of the trial judge shall be amended to order the following:
• The appellant shall pay to the respondent $1,840 plus post-judgment interest in accordance with the Courts of Justice Act.
• The order as to costs of the action is set aside, with an order that there should be no costs of the action.
[27] As agreed by the parties, the appellant, as the successful party, shall have costs of the appeal in the amount of $2,000.00 all inclusive.
___________________________ Swinton J.
Released: October 27, 2015
CITATION: Sivalingam v. Navaratnam, 2015 ONSC 6619
DIVISIONAL COURT FILE NO.: 103/15 DATE: 20151027
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
SARASWATHY SIVALINGAM Plaintiff (Respondent)
– and –
SENKODAN NAVARATNAM Defendant (Appellant)
REASONS FOR JUDGMENT
Swinton J.
Released: October 27, 2015