Court File and Parties

CITATION: K.C.C. Chooka Cabinet Ltd. v. Kingsway Consulting Group Inc., 2026 ONSC 378

COURT FILE NO.: DC-25-00000310-0000

DATE: 20260120

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

K.C.C. CHOOKA CABINET LTD., a.k.a. K.C.C. CHOOKA CABINET LTD. o/a CHOOKA KITCHENS & MILLWORK, a.k.a. CHOOKA KITCHENS & MILLWORK

Appellant

– and –

KINGSWAY CONSULTING GROUP INC.

Respondent

COUNSEL:

S. Kuuskne, for the appellant

P. Portman, for the respondent

HEARD: January 7, 2026

On appeal from the order of Deputy Judge L. Vicars of the Superior Court of Justice (Small Claims Court), dated March 12, 2025.

REASONS FOR DECISION

SCHRECK J.:

[1] The appellant, K.C.C. Chooka Cabinet Ltd., appeals from a decision of the Small Claims Court granting judgment in favour of the respondent, Kingsway Consulting Group Inc., for breach of contract and prejudgment and postjudgment interest at the 36% rate specified in the contract. The appellant submits that the deputy judge misapprehended and failed to consider certain evidence, failed to take into account public policy considerations arising from the illegality of the contract and erred by setting prejudgment and postjudgment interest at a criminal rate.

[2] For the reasons that follow, I am not persuaded that the deputy judge’s findings of fact were tainted by any palpable or overriding error that would justify this court’s intervention or that prejudgment interest was set at a criminal rate. The appeal is accordingly dismissed.

I. EVIDENCE

A. The Contract

[3] K.C.C. Chooka Cabinet Ltd. (“Chooka”) is a cabinetry and millwork business owned by Salah Nafeh. Kingsway Consulting Group Inc. (“Kingsway”) is a corporation that prepares and files applications to the Canada Revenue Agency (“CRA”) for Scientific Research and Experimental Development (“SRED”) tax credits.

[4] In late 2016, Chooka entered into a contract with Kingsway. According to its terms, Kingsway was to prepare an SRED tax credit application on behalf of Chooka, who agreed to provide the information required for the application and then submit it to the CRA. Kingsway was to be paid a fee amounting to 25% of the amount of the tax credit being applied for. The full amount was to be paid in the event of any default of the terms of the contract, as well as interest at a rate of 36% for any outstanding amounts.

[5] Kingsway prepared an SRED application on behalf of Chooka claiming a tax credit for a project to develop a process for building a podium and sent Chooka an invoice for $12,648.06 (a fee of $8,693.06 as well as an SRED “sign up” fee of $3,955.00). Chooka refused to pay this, claiming that the SRED application was fraudulent as the project described in it did not exist.

B. The Plaintiff’s Evidence

[6] Kingsway’s principal, Chris Fattaei, testified that he had prepared the application in good faith relying on information and documentation that had been provided to him by Mr. Nafeh. Once the report was submitted, he sent it to Chooka to review. He received no response despite having sent several e-mails.

[7] Mr. Fattaei testified that he had no direct knowledge of the podium project and had never seen the podium or any physical evidence of its existence. He did not independently verify any of the information in his report and had relied entirely on information provided to him by Mr. Nafeh.

C. The Defendant’s Evidence

[8] Parisa Nafeh, an employee of Chooka and the owner’s daughter, was the only defence witness at trial. She testified that she worked very closely with Mr. Nafeh and was aware of all aspects of the business.

[9] According to Ms. Nafeh, Chooka only manufactured custom residential products such as kitchen cabinets, vanities and wall units. It had never manufactured a podium and had never undertaken the project identified in Kingsway’s report. Ms. Nafeh testified that Chooka never submitted the SRED claim prepared by Kingsway because it was fraudulent.

[10] Ms. Nafeh testified that an assertion in Kingsway’s report that an employee called Pari Akhbari has spent 275 hours working on the podium project was false. She explained that Ms. Akhbari, who was her mother, did not work for Chooka.

[11] Ms. Nafeh testified that Mr. Nafeh had telephoned Mr. Fattaei and told him that Chooka refused to submit the claim because it was fraudulent. She was not a party to this conversation and was only told about it by her father. She acknowledged that none of Mr. Nafeh’s concerns had been put in writing.

II. ANALYSIS

A. Grounds of Appeal Relating to the Deputy Judge’s Findings of Fact

(i) Overview

[12] The deputy judge released oral reasons on March 12, 2025, which included the following findings of fact:

The two witnesses had very different perspectives on what transpired. To the extent that their evidence differed, I find that Mr. Fattaei’s evidence is more reliable because he had direct knowledge of the facts that are in dispute, and he gave his evidence in a forthright and straightforward manner.

Ms. Nafeh’s evidence was largely opinion evidence or hearsay evidence to which I ascribe no weight. Importantly, her evidence showed that she had no direct knowledge about the technical interviews the plaintiff conducted with her father, nor did she have any direct knowledge that the defendant had never advised the plaintiff that there were any concerns with the report, let alone that the report was a fabrication and a fraud as claimed in the defendant’s defence to these proceedings.

[13] Counsel for the appellant takes issue with several aspects of the deputy judge’s findings of fact. He submits that the deputy judge erred by: (1) disregarding Ms. Nafeh’s evidence that Chooka had never manufactured a podium; (2) failing to have regard for inconsistencies between Mr. Fattaei’s testimony and the report; (3) disregarding Mr. Fattaei’s inability to substantiate the reliability of information in the report.

(ii) Appellate Review of Factual Findings

[14] It is well established that an appellate court owes significant deference to a trial court’s findings of credibility and reliability absent palpable and overriding error: R. v. Kruk, 2024 SCC 7, 489 D.L.R. (4th) 385, at paras. 82-84; Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 12-18. An error will be “palpable” if it is “plainly seen,” “plainly identified” or “obvious” and will apply to conclusions that are “clearly wrong,” “unsupported by the evidence” or “unreasonable”: Kruk, at para. 97; Housen, at paras. 5-6; R. v. Clark, 2005 SCC 2, [2005] 1 S.C.R. 6, at para. 6. An error will be “overriding” if it is “shown to have affected the result” or “goes to the very core of the outcome of the case”: Kruk, at para. 98; Clark, at para. 9; South Yukon Forest Corp. v. Canada, 2012 FCA 165, 431 N.R. 286, at para. 46.

(iii) Alleged Misapprehensions of Evidence

[15] Contrary to what is implicitly suggested in the appellant’s submissions, the central issue at trial was not whether or not Chooka had conducted experiments on a podium, but whether Mr. Fattaei had relied in good faith on information provided by to him by Mr. Nafeh. The deputy judge accepted Mr. Fattaei’s evidence that he had done so and that Chooka had not responded to his requests to verify the contents of the report. This finding necessarily rejected the allegation of fraud made by the defendant and was sufficient to establish a breach of the contract. Whether there actually had been a podium project was of no moment. It follows from this that the public policy considerations raised by the appellant do not arise.

[16] Ms. Nafeh’s evidence that no podium had been manufactured did not resolve the issue the deputy judge had to determine. The deputy judge did not find that Ms. Nafeh “had no direct knowledge that the report was a fabrication,” as the appellant contends. Rather, she found that Ms. Nafeh had “no direct knowledge about the technical interviews the plaintiff conducted with her father . . . .” This finding was consistent with Ms. Nafeh’s evidence.

[17] Similarly, the deputy judge did not err by ignoring Ms. Nafeh’s evidence that her mother did not do any work for Chooka. The deputy judge accepted Mr. Fattaei’s evidence that he relied on what he was told by Mr. Nafeh, who ignored his repeated requests to review the contents of the report. It was open to her to do so.

[18] The fact that Mr. Fattaei could not substantiate the contents of the report was consistent with his evidence that Chooka failed to respond to his requests to verify the contents. It follows that the deputy judge did not err by failing to consider this.

(iv) Failure to Consider Inconsistencies

[19] The appellant submits that the deputy judge erred by failing to consider certain inconsistencies between Mr. Fattaei’s testimony and the contents of the report. For example, Mr. Fattaei testified that he did not see the podium because it had been finished and delivered two weeks before he entered into the contract with Chooka, but the report stated that the podium experiment was abandoned because it was unsuccessful.

[20] I would not give effect to this submission. It is well established that there is no obligation on a trial judge to review and resolve every inconsistency in a witness’s evidence: R. v. N.P., 2025 ONCA 110, at para. 23; R. v. J.L., 2024 ONCA 36, 170 O.R. (3d) 97, at para. 39; R. v. A.M., 2014 ONCA 769, 123 O.R. (3d) 536, at para. 14. This is especially true in the context of reasons in the Small Claims Court, which is mandated by s. 25 of the Courts of Justice Act, R.S.O. 1990, c. C.43 to “hear and determine in a summary way all questions of law and fact”: Maple Ridge Community Management Ltd. v. Peel Condominium Corporation No. 221, 2015 ONCA 520, 389 D.L.R. (4th) 711, at para. 35; Girgis v. Fine Touch Painting Co., 2025 ONSC 6832 (Div. Ct.), at para. 10.

B. Prejudgment and Postjudgment Interest

[21] The contract between Chooka and Kingsway specified that any unpaid fees would be subject to interest at a rate of 36%. The Deputy Judge awarded prejudgment and postjudgment interest at that rate.

[22] At the time the contract was entered into, a “criminal rate” was defined in s. 347(2) of the Criminal Code, R.S.C. 1985, c. C-46 as “an effective annual rate . . . that exceeds 60% on the credit advanced under an agreement or arrangement.” The section was amended by s. 610(1) of the Budget Implementation Act, 2023, No. 1, S.C. 2023, c. 26, which changed the definition of a “criminal rate” to “an annual percentage rate of interest . . . that exceeds 35% on the credit advanced.”[^1] The term “credit advanced” includes unpaid debts for goods and services: Garland v. Consumers’ Gas Co., [1998] 3 S.C.R. 112, at paras. 35-40. The amendment came into force on January 1, 2025.[^2]

[23] Prejudgment interest in breach of contract cases is ordinarily fixed in accordance with the terms of the contract: Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601, at paras. 49-50; Professional Court Reporters Inc. v. Pistachio Financier Corp., 2022 ONCA 669, at para. 14; Gyimah v. Bank of Nova Scotia, 2013 ONCA 252, 305 O.A.C. 198, at para. 10. However, the court can exercise its common law and equitable jurisdiction to depart from the contractual rate in special circumstances: Tribute (Springwater) Limited v. Atif, 2021 ONCA 463, 33 R.P.R. (6th) 1, at para. 27.

[24] I agree that the fact that a rate meets the definition of a “criminal rate” could be a special circumstance justifying a departure from the contractual rate. However, s. 347.01(1) of the Criminal Code provides that s. 347 does not apply to agreements provided for by regulation and s. 1 of the Criminal Interest Rate Regulations, SOR/2024-114 (which neither counsel brought to my attention) provides that:

1. For the purposes of subsection 347.01(1) of the Criminal Code, section 347 of that Act does not apply in respect of an agreement or arrangement if

(a) the borrower is not a natural person;

(b) the borrowing is for a business or commercial purpose; and

(c) either

(i) the amount of the credit advanced is more than $10,000 but less than or equal to $500,000 and the annual percentage rate of interest — calculated in accordance with generally accepted actuarial practices and principles — does not exceed 48% on the credit advanced, or

(ii) the amount of the credit advanced is more than $500,000.

The agreement in this case falls appears to fall into this category. As the rate of prejudgment interest is not criminal, there is no basis for this court to intervene.

III. DISPOSITION

[25] The appeal is dismissed.

[26] I will end these reasons with a word of advice to counsel for the respondent. The respondent’s factum is replete with allegations of impropriety against opposing counsel. During the hearing of the appeal, counsel interrupted the appellant’s submissions to make further allegations of impropriety. While I was ultimately not persuaded by counsel for the appellant’s arguments, they were not improper and there was no need to refer to them as such. The allegations were uncalled for and inappropriate. I would remind counsel that “civility is often the most effective form of advocacy”: Groia v. Law Society of Upper Canada, 2018 SCC 27, [2018] 1 S.C.R. 772, at para. 76.

[27] Since counsel did not provide a bill of costs or cost outline prior to the hearing as required by s. 45(k) of the Consolidated Practice Direction for Divisional Court Proceedings, there will be no order as to costs: Wong v. Dale, 2025 ONSC 3551 (Div. Ct.), at para. 23; Toronto (City) v. Minto (Mimico) Inc., 2024 ONSC 2674 (Div. Ct.), at para. 15; Sinnappu v. Tharmalingam, 2023 ONSC 4456 (Div. Ct.), at para. 4.

Justice P.A. Schreck

Released: January 20, 2026

CITATION: K.C.C. Chooka Cabinet Ltd. v. Kingsway Consulting Group Inc., 2026 ONSC 378

COURT FILE NO.: DC-25-00000310-0000

DATE: 20260120

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

K.C.C. CHOOKA CABINET LTD.

Appellant

– and –

KINGSWAY CONSULTING GROUP INC.

Respondent

REASONS FOR DECISION

Schreck J.

Released: January 20, 2026

[^1]: The new version defines the criminal rate as an annual percentage rate (“APR”), while the previous version defined it as an effective annual rate (“EAR”). The previous 60% EAR is roughly the equivalent of a 48% APR: https://www.justice.gc.ca/eng/trans/bm-mb/other-autre/c69/division33-section33.html. Neither the contract nor the judgment under appeal in this case specify whether the 36% rate is an EAR or an APR.

[^2]: Order Fixing January 1, 2025 as the Day on Which Sections 610 to 612 of the Budget Implementation Act, 2023, No. 1 Come Into Force, SI/2024-25.