REASONS FOR DECISION

[On appeal from a Judgment of Deputy Judge A. Serafini of the Small Claims Court at Burlington, dated September 13, 2018]

KUMARANAYAKE J.

[1] The Appellant appeals from the Judgment of Deputy Judge Serafini, dated September 13, 2018. The Deputy Judge granted Judgment in the requested amount of $4,086.82, which included: prejudgment interest up to September 13, 2018 as requested at the contractual rate of 19.8%; costs as requested in the amount of $650.00; and postjudgment interest. However, the Deputy Judge granted postjudgment at the rate set out in the Courts of Justice Act, R.S.O. 1990, c. C.43 and not at the requested contractual rate of 19.8%. This appeal only relates to the award for postjudgment interest.

[2] The Appellant’s grounds of appeal as set out in its Notice of Appeal, dated October 4, 2018, are:

The trial judge erred in law in failing to award postjudgment interest at the contractual rate agreed to between the parties in accordance with the binding decisions…

[3] The Appellant’s position is that the Deputy Judge made an error in law for two reasons. First, the Deputy Judge should have granted postjudgment interest at the requested contractual rate. Second, the Deputy Judge should have provided reasons for why he did not grant postjudgment interest at the requested contractual rate.

[4] This appeal was not opposed by the Respondent. He was properly served. He did not file any materials. The Respondent was paged but did not respond. Counsel for the Appellant advised that he had been in contact with the Respondent by email and that the Respondent indicated that he did not intend to participate in the appeal. Counsel for the Appellant also confirmed that if the appeal was successful, no costs would be requested against the Respondent.

BACKGROUND

[5] In the Appellant/Plaintiff’s Claim, dated April 17, 2017, it plead that on March 1, 2015, the Appellant opened a Mastercard account for the Respondent. The Respondent used the Mastercard credit card for that account. As of August 21, 2016, $2,901.59 remained outstanding. The last payment made by the Respondent was $26.00 on December 31, 2015. Pursuant to the written credit card agreement, the Appellant/Plaintiff claimed pre and postjudgment interest at the rate of 19.8% per annum.

[6] The Respondent/Defendant filed a Defence, dated July 10, 2017. He plead that he was:

without information or knowledge sufficient to form an opinion as to the truth or accuracy of the Plaintiff’s claim, and based on that deny generally and specifically the Plaintiff’s claim

[7] The Appellant/Plaintiff brought a motion to strike the Defence on the basis that it disclosed no reasonable defence to its claim. That motion was heard by the Deputy Judge on September 13, 2018.

[8] The Deputy Judge granted the motion to strike and granted Judgment in favour of the Appellant/Plaintiff. He made the following endorsement:

The Defence is struck. Judgment for the Plaintiff for $4086.82 including pre judgement interest up to September 13, 2018 plus costs of $650 plus post-judgement interest at the C.J. A. rate.

[9] There were no other reasons given.

ISSUES

[10] The issues on this appeal are:

a) Should the Deputy Judge have provided reasons for why he did not grant postjudgment interest at the requested contractual rate of 19.8% per annum?

b) Should the Deputy Judge have granted postjudgment interest at the requested contractual rate of 19.8% per annum?

[11] For the reasons I discuss below, I find that the answer to both these questions is yes and the appeal is granted.

ANALYSIS

[12] The decision of the Deputy Judge is a final order. An appeal from a final order of the Small Claims Court lies to a single judge of the Divisional Court where the amount is in excess of $2,500. Therefore, I have jurisdiction to hear this appeal pursuant to s. 31 of the Courts of Justice Act.

[13] The powers of this appellate court are set out in s. 134(1) of the Courts of Justice Act:

Unless otherwise provided, a court to which an appeal is taken may,

(a) make any order or decision that ought to or could have been made by the court or tribunal appealed from;

(b) order a new trial;

(c) make any other order or decision that is considered just

[14] The standard of review for an error of law is correctness: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C. R. 235, at paras. 8 -10.

Should the Deputy Judge have provided reasons for not granting postjudgment interest at the requested contractual rate of 19.8% per annum?

[15] The Deputy Judge made an error in law by not providing reasons for his decision with respect to postjudgment interest. Without reasons, an effective appellate review is not possible: Loans Till Payday v. Brown, 2010 ONSC 6639 (Div. Ct.), at para. 18.

[16] As Herman J. stated in Loans Till Payday v. Brown, at paras. 16 and 17,

In considering the adequacy of reasons, the reviewing court must consider the day-to-day realities of the decision-making body. The Small Claims Court is mandated to hear and determine questions of law and fact “in a summary way” (Courts of Justice Act, s. 25). The volume of cases it receives makes it the busiest court in Ontario (Coulter A. Osborne, Civil Justice Reform Project, November 2007). A Small Claims Court judge cannot be expected to provide lengthy reasons for his or her decision in every case.

That does not mean, however, that the Small Claims Court judge is relieved of any requirement to provide reasons. As Goudge J. wrote in Clifford v. Ontario (Attorney General) (2009), 2009 ONCA 670, 98 O.R. (3d) 210 (Ont. C. A.):

[R]easons must be sufficient to fulfill the purposes required of them particularly to let the individual whose rights, privileges or interest are affected know why the decision was made and to permit effective judicial review…[T]he “path” taken by the tribunal to reach its decision must be clear from the reason read in the context of the proceeding, but it is not necessary that the tribunal describe every landmark along the way.

[17] As there were no reasons given by the Deputy Judge, I am unable to determine why he declined to award postjudgment interest at the requested contractual rate or why he departed from binding decisions, if those decisions were applicable to the case before the Deputy Judge.

Should the Deputy Judge have granted postjudgment interest at the requested contractual rate of 19.8% per annum?

[18] The Appellant submits that the Deputy Judge made an error in law when he granted postjudgment interest at the rate provided by the Courts of Justice Act. It submits that there is authority, that was binding on the Deputy Judge, stating that where an interest rate is set by contract, departure from that contractual interest rate requires exceptional circumstances.

[19] The relevant provisions of the Courts of Justice Act for postjudgment interest are ss. 129 and 130, which read:

Postjudgment interest

129 (1) Money owing under an order, including costs to be assessed or costs fixed by the court, bears interest at the postjudgment interest rate, calculated from the date of the order.

Interest on periodic payments

(2) Where an order provides for periodic payments, each payment in default shall bear interest only from the date of default.

Interest on orders originating outside Ontario

(3) Where an order is based on an order given outside Ontario or an order of a court outside Ontario is filed with a court in Ontario for the purpose of enforcement, money owing under the order bears interest at the rate, if any, applicable to the order given outside Ontario by the law of the place where it was given.

Costs assessed without order

(4) Where costs are assessed without an order, the costs bear interest at the postjudgment interest rate in the same manner as if an order were made for the payment of costs on the date the person to whom the costs are payable became entitled to the costs.

Other provision for interest

(5) Interest shall not be awarded under this section where interest is payable by a right other than under this section. R.S.O. 1990, c. C.43, s. 129.

Discretion of court

130 (1) The court may, where it considers it just to do so, in respect of the whole or any part of the amount on which interest is payable under section 128 or 129,

(a) disallow interest under either section;

(b) allow interest at a rate higher or lower than that provided in either section;

(c) allow interest for a period other than that provided in either section.

Same

(2) For the purpose of subsection (1), the court shall take into account,

(a) changes in market interest rates;

(b) the circumstances of the case;

(c) the fact that an advance payment was made;

(d) the circumstances of medical disclosure by the plaintiff;

(e) the amount claimed and the amount recovered in the proceeding;

(f) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; and

(g) any other relevant consideration. R.S.O. 1990, c. C.43, s. 130.

[20] In Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601, at paras. 49-50, the Supreme Court of Canada states:

… Absent exceptional circumstances, the interest rate which had governed the loan prior to breach would be the appropriate rate to govern the post-breach loan. The application of a lower interest rate would be unjust to the lender.

This analysis applies equally to pre-judgement interest and postjudgment interest. Pre-judgment interest is necessary to compensate a plaintiff for the period from when the money was initially owed until the date of the judgement. Contract law principles may require such interest to be compounded so as to award the plaintiff the benefit of the bargain. Damage awards, however, are not necessarily paid at the date judgement is rendered. Contract law entitles the plaintiff to the full value of the benefit of the bargain at the time payment is finally made. Where the parties have earlier agreed on a compound rate of interest, or there are circumstances warranting it, it seems fair that a court have the power to award compound postjudgment interest as damages to enable the plaintiff to be fully compensate when the award is finally paid.

[21] MacKenzie J. followed this direction in Capital One Bank v. Matovska, [2007] O.J. No 3368 (Div. Ct.), which was similar on its facts to the case before me. With respect to what constitutes exceptional circumstances, MacKenzie J. stated, at para. 13, that:

In my view, unless the terms respecting interest rates in the credit card agreement are vague or unclear or unless the interest rate derived from the written agreement infringes a statutory provision such as the Interest Act, effect should be given to the contractual rate fore the determination of both pre- and postjudgment interest.

[22] I agree with MacKenzie J.

[23] In the matter before me, there was authority that was binding on the Deputy Judge.

[24] The terms of the credit card agreement were neither vague nor unclear. The credit card agreement/customer agreement was in evidence before the Deputy Judge. Section 8 of the agreement indicates that the Respondent would

still be responsible for paying interest at the rate current at the time under this Agreement if:

• You fail to meet the terms of this Agreement

• We obtain a court judgment against you for payment of the debt under this Agreement …

[25] Further, the monthly credit statements were attached to the affidavit filed in support of the motion to strike the Defence. The last two statements (for May 27 to June 26, 2016 and June 27 to July 26, 2016) clearly remind the Respondent that the applicable contractual interest rate is 19.8% per annum.

[26] There is no evidence of exceptional circumstances. I see no reason based on the evidence that was before the Deputy Judge for why he did not follow the binding authorities referred to above. His endorsement does not provide reasons. Therefore, I find that the Deputy Judge made an error in law by not awarding postjudgment interest at the contractual interest rate of 19.8%.

CONCLUSION

[27] For the reasons outlined above, I set aside the Deputy Judge’s Judgment only as it relates to postjudgment interest. I order that the postjudgment interest is set at 19.8% per annum.

[28] There shall be no costs of this appeal.

Kumaranayake J.

Released: October 28, 2019

CITATION: Capital One Bank v. Carroll, 2019 ONSC 6261

COURT FILE NO.: DC-18-0090-0000

DATE: 2019 10 28

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

B E T W E E N:

CAPITAL ONE BANK (CANADA BRANCH)

Appellant

and -

DANIEL A. CARROLL

Respondent

REASONS FOR JUDGMENT

[On appeal from a Judgment of Deputy Judge A. Serafini of the Small Claims Court at Burlington, dated September 13, 2018]

KUMARANAYAKE J.

Released: October 28, 2019

Capital One Bank v. Carroll, 2019 ONSC 6261

Case Summary

REASONS FOR DECISION

BACKGROUND

ISSUES

ANALYSIS

Should the Deputy Judge have provided reasons for not granting postjudgment interest at the requested contractual rate of 19.8% per annum?

Should the Deputy Judge have granted postjudgment interest at the requested contractual rate of 19.8% per annum?

Postjudgment interest

Interest on periodic payments

Interest on orders originating outside Ontario

Costs assessed without order

Other provision for interest

Discretion of court

Same

CONCLUSION

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 4

Legislation 2