Rarotonga, 2010

Simon's Megalomaniacal Legal Resources


ADMINISTRATIVE LAW | SPPA / Fairness (Administrative)

home / about / Democracy, Law and Duty / testimonials / Conditions of Use

Civil and Administrative
Litigation Opinions
for Self-Reppers


Stay Current With all
Ontario and Canada
Appeal Court Dicta

Interest - Contractual versus CJA Rates

. Capital One v. Jonathan

In Capital One v. Jonathan (Div Ct, 2022) the Divisional Court considered whether contractual (as opposed to rule-governed) post-judgment interest should be awarded in a credit card debt case (they should):
[14] The case at bar is indistinguishable from the recent case of Capital One Bank v Carroll, 2019 ONSC 6261 (Div. Ct.) in which Kumaranayake, J., sitting on appeal as a single judge of the Divisional Court, stated as follows at paras. 20-23:
In Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601 (S.C.C.), 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 post-judgment 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 post- judgment interest as damages to enable the plaintiff to be fully compensate when the award is finally paid.
MacKenzie J. followed this direction in Capital One Bank v. Matovska, [2007] O.J. No. 3368 (Ont. 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 post-judgment interest.
I agree with MacKenzie J.

In the matter before me, there was authority that was binding on the Deputy Judge.
. McFlow Capital Corp. v. James

In McFlow Capital Corp. v. James (Ont CA, 2021) the Court of Appeal reviewed generally where parties may vary from the CJA s.130 interest rules:
[57] McFlow claims the trial judge erred in awarding prejudgment interest at the CJA rate rather than the mortgage rate.

[58] The party seeking an order to depart from the CJA rate pursuant to s. 130 of the CJA, has the onus to demonstrate that the CJA rate should be displaced: Metropolitan Toronto Police Widows & Orphans Fund v. Telus Communications Inc. (2008), 2008 CanLII 5595 (ON SC), 44 B.LR. (4th) 140 (Ont. SC), at para. 69, aff’d 2009 ONCA 111, 55 B.L.R. (4th) 12.

[59] Awards of compound prejudgment or post judgment interest are generally limited to breach of contract cases where there is evidence that the parties agreed, knew, or should have known that the money would bear compound interest as damages: Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601, at para. 55. Compound prejudgment or post judgment interest “may be awarded as consequential damages in other cases but there would be the usual requirement of proving that damage”: Bank of America, at para. 55. The same principles apply to interest at a rate in excess of the rate provided for in the CJA.


The author has waived all copyright and related or neighboring rights to this Isthatlegal.ca webpage.