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Interest - CJA Rates

. Chaudry v. Bank of Montreal

In Chaudry v. Bank of Montreal (Div Court, 2023) the Divisional Court considers interest under CJA s.130, here varied to a market investment rate rather than the statutory default rate:
[27] In this wrongful dismissal claim, the appellant seeks three potential forms of relief for what, in civil litigation, is ordinarily addressed as pre- and post-judgment interest under the Courts of Justice Act. First, the appellant is seeking pre- and post-judgment interest on a different scale, based on the rate of return on investments that he would have earned on the damages up until the time of payment. There is no issue that this can be sought. It is contemplated by the Courts of Justice Act provisions on interest. Section 130 permits a party to seek a rate different from the default rates in the Act.
. Tribute (Springwater) Limited v. Atif

In Tribute (Springwater) Limited v. Atif (Ont CA, 2021) the Court of Appeal considered the court's discretion over interest awards:
[26] Section 127 of the Courts of Justice Act (“CJA”) provides for prejudgment and postjudgment interest at prescribed rates. A court “shall not” award prejudgment interest under s. 128 or postjudgment interest under s. 129 where “interest is payable by a right other than under” either statutory provision: ss. 128(4)(g) and 129(5). These provisions preclude the court from ordering prejudgment and postjudgment interest in accordance with the statutory interest rates under the CJA if interest is otherwise payable in some other way (such as by virtue of a contract). Section 130(1) provides for the court’s discretion to disallow interest under either s. 128 or s. 129, to allow interest at a rate higher or lower than provided under either section, or to allow interest for a period other than that provided in either section. Section 130(2) sets out the factors relevant to the exercise of such discretion.

[27] The motion judge reduced the interest rate, relying on her “inherent jurisdiction”. Contrary to the respondent’s argument, I do not agree that s. 130, which speaks to discretion to depart from prejudgment and postjudgment interest under ss. 128 and 129, is exhaustive of the court’s discretion, and that there is no discretion to depart from a contractual rate of interest. In the exercise of the court’s common law and equitable jurisdiction, the departure from a contractual rate of interest can be justified by “special circumstances”: Gyimah v. Bank of Nova Scotia, 2013 ONCA 252, at para. 10; Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601, at paras. 46-50. The contractual rate of interest has also been disallowed in circumstances where it is “extremely onerous or unfair” and adequate notice of the contractual term was not provided: see Tilden Rent-A-Car Co. v. Clendenning (1978), 1978 CanLII 1446 (ON CA), 18 O.R. (2d) 601 (C.A.); MacQuarie Equipment Finance Ltd. v. 2326695 Ontario Ltd. (Durham Drug Store), 2020 ONCA 139, at paras. 23, 37-38; Forest Hill Homes v. Ou, 2019 ONSC 4332, at paras. 19-20.


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Last modified: 11-10-23
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