Degelder Construction Co. v. Dancorp Developments Ltd. et al.

• Jurisdiction: Federal Jurisdiction (Canada)
• Court: Supreme Court (Canada)
• Judge: Iacobucci, Major, Bastarache and Binnie, JJ.
• Citation: (1998), 231 N.R. 122 (SCC),[1998] SCJ No 75 (QL),[1998] 3 SCR 90,58 BCLR (3d) 1,20 CR (5th) 77,231 NR 122,1998 CanLII 765 (SCC),[1999] 5 WWR 797,5 CBR (4th) 1,20 RPR (3d) 165,129 CCC (3d) 129,113 BCAC 1,165 DLR (4th) 417
• Date: 30 October 1998
• Subject Matter: CRIMINAL LAW

Degelder Constr. Co. v. Dancorp Dev. (1998), 231 N.R. 122 (SCC)

MLB Headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [1998] N.R. TBEd. OC.023

Dancorp Developments Ltd. (appellant) v. Metropolitan Trust Company of Canada and Dunwoody Limited (respondents) and Degelder Construction Co. Ltd. (respondent) and Seaboard Life Insurance Company (respondent) and Mike Degelder and William Little (defendants by counterclaim) and Metropolitan Trust Company of Canada, Owen Bird, Seaboard Life Insurance Company, Co-operators Life Insurance Company, Confederation Life Insurance Company and Dunwoody Limited (respondents)

(25355)

Indexed As: Degelder Construction Co. v. Dancorp Developments Ltd. et al.

Supreme Court of Canada

L'Heureux-Dubé, Cory, McLachlin,

Iacobucci, Major, Bastarache

and Binnie, JJ.

October 30, 1998.

Summary:

Dancorp Developments Ltd. owned and developed a condominium project. The project was initially financed by a mortgage from Metropolitan Trust Co. A problem arose during construction requiring part of the project to be demolished and rebuilt. Metropolitan Trust agreed to provide the additional funds to Dancorp to cover the remedial costs and the completion of the project. The second mortgage loan required Dancorp to pay substantial fees and bonuses in addition to a conventional interest rate. The term of the agreement was for eleven months, but the loan was not in fact repaid for more than three years. Dancorp chal­lenged the validity of the second mortgage loan, alleging that the amounts which Metropolitan Trust had deducted from the loan advances were illegal interest payments under s. 347(1)(b) of the Criminal Code.

The British Columbia Supreme Court in a decision reported (1994), 16 B.L.R.(2d) 188, dismissed Dancorp's claim under s. 347 following a summary trial. Dancorp ap-pealed.

The British Columbia Court of Appeal, in a decision reported 73 B.C.A.C. 45; 120 W.A.C. 45, dismissed the appeal. Dancorp appealed again.

The Supreme Court of Canada dismissed the appeal.

Criminal Law - Topic 1741

Offences against property - Criminal inter­est rate - General - Section 347(1)(a) of the Criminal Code made it illegal to enter into an agreement or arrangement to receive interest at a criminal rate and s. 347(1)(b) made it illegal to receive a pay­ment or partial payment of interest at a criminal rate - The Supreme Court of Canada set out how s. 347 should be in­terpreted - See paragraph 34.

Criminal Law - Topic 1744

Offences against property - Criminal inter­est rate - Effective rate of interest - Dan­corp obtained a mortgage loan from Metro­politan Trust - The loan agreement required Dancorp to pay substantial fees and bonuses plus a conventional interest rate - The agreement was for 11 months, but the loan was not repaid for more than three years - Dancorp subsequently chal­lenged the validity of the loan, claiming that Metropolitan had received interest payments at a criminal rate, contrary to s. 347(1)(b) of the Criminal Code - The Supreme Court of Canada held that Metropolitan had not received interest at a criminal rate (i.e., 347(1)(b) was not vio­lated) - The time frame for purposes of determining whether s. 347(1)(b) was violated was, in this case, the period dur­ing which credit was outstanding (three years), rather that the term of the loan (11 months).

Cases Noticed:

Garland v. Consumers' Gas Co. (1998), 231 N.R. 1 (S.C.C.), refd to. [para. 1].

Nelson v. C.T.C. Mortgage Corp. (1984), 67 N.R. 162; 16 D.L.R.(4th) 139 (B.C.C.A.), affd. [1986] 1 S.C.R. 749; 67 N.R. 161, dist. [paras. 13 et seq.].

Thomson (William E.) Associates Inc. v. Carpenter (1989), 34 O.A.C. 365; 69 O.R.(2d) 545 (C.A.), refd to. [para. 26].

Aectra Refining & Marketing Inc. v. Lin­coln Capital Funding Corp. (1991), 6 O.R.(3d) 146 (Gen. Div.), refd to. [para. 28].

R. v. Duzan and Family Pawn & Second Hand Store Inc. (1993), 105 Sask.R. 295; 32 W.A.C. 295; 79 C.C.C.(3d) 552 (C.A.), refd to. [para. 28].

Statutes Noticed:

Criminal Code, R.S.C. 1985, c. C-46, sect. 347 [para. 11].

Counsel:

Gary A. Nelson, for the appellant;

William C. Kaplan and Francis L. Lamer, for the respondent Metropolitan Trust Company of Canada;

Robert Sewell, for the respondents Sea­board Life Insurance Company, Co-op­erators Life Insurance Company and Confederation Life Insurance Company.

Solicitors of Record:

Berger & Nelson, Vancouver, British Col­umbia, for the appellant;

Blake, Cassels & Graydon, Vancouver, British Columbia, for the respondent Metropolitan Trust Company of Canada;

McCarthy Tétrault, Vancouver, British Columbia, for the respondents Seaboard Life Insurance Company, Co-operators Life Insurance Company and Confeder­ation Life Insurance Company.

This appeal was heard on March 23, 1998, before L'Heureux-Dubé, Cory, McLachlin, Iacobucci, Bastarache and Binnie, JJ., of the Supreme Court of Canada.

The following decision was delivered for the court in both official languages, by Major, J., on October 30, 1998: