The appellant obtained a mortgage loan from the respondent trust company to finance a construction project.
The loan agreement required substantial fees and bonuses, and the term was for 11 months, but the loan was not repaid for more than three years.
The appellant challenged the validity of the loan, claiming the trust company received payments of interest at a criminal rate contrary to s. 347(1)(b) of the Criminal Code.
The Supreme Court of Canada held that the effective annual rate of interest should be calculated over the period during which credit was actually outstanding, not the contractual term.
Calculated on this basis, the interest payments did not constitute a criminal rate, and the appeal was dismissed.
