Court File and Parties

COURT FILE NO.: FC-02-862-3 DATE: 2018/06/26

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Bertrand Pitre, Applicant AND: Carol Lalande, Respondent

BEFORE: Madam Justice Sylvia Corthorn

COUNSEL: Kevin Kavanagh, for the Applicant (Respondent on the motion) Carol J. Craig, for the Respondent (Applicant on the motion)

HEARD: March 28, 2018

Endorsement

CORTHORN J.

Introduction

[1] The parties were unable to resolve the issue of interest payable by the applicant father (respondent on this motion) on arrears of child support and of the father’s contribution towards post-secondary education expenses. In my 2017 endorsement (2017 ONSC 208 and “the Endorsement”), I made findings with respect to both categories of arrears. At paragraph 73 of my 2017 endorsement, I found that the respondent mother’s motion was a matter of enforcement of the 2008 Order.

[2] The parties have been embroiled in litigation for over 15 years. In 2002, Blishen J. made a final order with respect to child support and section 7 expenses. In 2004, the father brought a motion to change the 2002 order. Justice Mackinnon made an order in 2004 varying, to a limited extent, the 2002 order.

[3] In 2008 an order was made on consent (“the 2008 Order”), with the parties having entered into minutes of settlement. None of the 2002, 2004, or 2008 orders includes any term with respect to interest on payments in default.

[4] Counsel for the parties from 2016 (when the mother’s motion was heard) were not counsel when any one or more of the 2002, 2004, and 2008 orders was issued. No evidence was led as to why those orders did not include a term with respect to interest.

Positions of the Parties

[5] The mother submits that, because her motion was a matter of enforcement, the interest rate applicable to both categories of arrears is based on the date of the order (i.e. April 24, 2008). The mother relies on s. 129 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”). She argues that the interest rate is to be determined in accordance with s. 129(1). The post-judgment interest rate applicable to an order made in April 2008 is six (6) per cent per year. Pursuant to s. 129(2), interest at the prescribed rate begins to accrue as of the date of default.

[6] The mother’s alternative position is that the post-judgment interest rate be calculated on the basis of an average of the post-judgment interest rates applicable between 2008 and 2017. She calculates that average rate to be 2.94 per cent.

[7] The father does not take the position that the lack of any term with respect to interest means that no interest is payable on either category of arrears. He advances three alternative positions with respect to the applicable rate of interest.

[8] First, the father submits that interest be calculated on the basis of the post-judgment interest rates applicable for the three periods during which the arrears accrued in the two categories. The average rates of post-judgment interest proposed by the father are 2.94, 3.43, and 2.75 per cent for the three relevant periods.

[9] Second, the father argues that, if a post-judgment interest rate is to be used, then the applicable rate is that for the date on which the Endorsement was made. The father submits that it was on the date of the Endorsement that the arrears owing became known. The post-judgment interest rate for the first quarter of 2017 is two (2) per cent.

[10] Third, the father submits that the average of pre-judgment interest rates during the three relevant periods be used. The proposed average rates are 1.2, 1.56, and 1.36 per cent (depending on the category of and period during which the arrears accrued).

Analysis

[11] The father’s obligations to pay child support and post-secondary education expenses as found in the Endorsement are set out in the 2002, 2004, and 2008 orders. The arrears that formed the subject of the Endorsement are based on the child support obligations prescribed in the 2008 Order. The father knew as of the date of the 2008 Order what his obligations were and how they were to be managed over time (i.e. adjusted on an annual basis).

[12] That the father’s obligations with respect to child support and section 7 expenses were known as of the date of the 2008 Order is reflected in paragraph 69 of the Endorsement:

There is no concern on the motion before me that the father is facing an unexpected retroactive claim. The parties consented to the terms of the [2008] Order, which clearly set out the financial disclosure obligations and the potential for adjustments to the father’s support obligations over time. The [2008] Order does not include any term requiring the mother to pursue the father on an annual basis to comply with those obligations.

[13] Orders of the kind made in this litigation are intended to provide the parties with certainty. The application of s. 129 of the CJA to such orders is in keeping with the certainty intended. As of the date of an order, the parties are certain what interest rate will apply upon default of payment. They also know that interest begins to accrue as of the date of default (not as of the date of the order).

[14] For the following reasons, I reject the father’s three alternative proposals with respect to the rate of interest applicable to the arrears identified in the Endorsement.

[15] The first method proposed does not provide certainty; to the contrary, it gives rise to significant uncertainty, requires the parties to conduct detailed arithmetic calculations, and relies on a variety of interest rates dependent upon the date of default. This is not the scenario contemplated by s. 129 of the CJA.

[16] The first and third methods proposed call for an averaging of interest rates over time. Pursuant to s. 130 of the CJA, the court has the discretion to make an order for interest at a rate other than as prescribed by s. 128 (pre-judgment) or s. 129 (post-judgment). However, the manner in which that discretion is exercised is mandated by s. 130(2) of the CJA. That subsection provides that “the court shall take into account” six specific factors (ss.130(2)(a)-(f)). Those factors include:

a) Changes in market interest rates; b) The circumstances of the case; e) The amount claimed and the amount recovered in the proceeding; [and] f) The conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding.

[17] No evidence was led by the father in support of his request that the court exercise discretion pursuant to s. 130 of the CJA. As a result, there is no evidence upon which the court may rely in support of a departure from the post-judgment interest rate prescribed by s. 129 of the CJA.

[18] I reject the father’s proposal for interest based on the post-judgment interest rate as the date of the Endorsement. The obligations to pay arose from the 2008 Order. The Endorsement served only to fix the quantum of the father’s default on those obligations.

[19] The third method proposed is entirely inappropriate because it relies on pre-judgment interest rates determined as of the date of default. Pre-judgment interest is intended to compensate an individual for the loss of use of money from the date the cause of action arose to the date of the order for the payment of money (CJA, s. 128(1)). In this case, the date of the order for the payment of money is April 2008. The default in payment occurred after April 2008.

[20] I find that the mother’s alternative approach (an averaging of the post-judgment interest rates) is not applicable. First, that approach does not provide certainty. Second, the mother did not call evidence that would support the exercise of the court’s discretion pursuant to s. 130 of the CJA.

[21] In summary, the rate at which interest accrued on the arrears as they accumulated is determined in accordance with s. 129(1) of the CJA. Interest began to accrue as of the date of each default (s. 129(2)).

Disposition

[22] The interest rate applicable to the arrears found owing pursuant to the Endorsement is six (6) per cent per year, with interest beginning to accrue as of the date of default. At this point, determining the precise amount of interest payable is strictly an arithmetic calculation. I leave it to the parties to carry out that calculation.

Costs

[23] The difference between the extremes of the respective positions of the parties on the issue of interest is a four-figure number. The difference between the mother’s alternative and the father’s first alternative position is negligible.

[24] At the conclusion of the Endorsement, I invited the parties to make submissions with respect to interest in the event they were unable to resolve the issue. That invitation was not, however, made with a view to the parties abandoning reason. Leaving aside reason, a cost-benefit analysis would easily have demonstrated to the parties that it did not make economic sense to have their respective counsel return to court to make submissions on the issue of interest applicable to the two categories of arrears.

[25] The parties had an opportunity to turn a corner and resolve this aspect of their dispute without resort to the court. They chose to remain on the path they had been down for a number of years; a path that repeatedly led to the courthouse.

[26] There shall be no costs awarded with respect to the determination of the applicable interest rate.

Madam Justice Sylvia Corthorn Released: June 26, 2018