Nelson v. C.T.C. Mortgage Corp., (1986) 67 N.R. 161 (SCC)

• Judge: Beetz, McIntyre, Chouinard, Lamer and Wilson, JJ.
• Court: Supreme Court (Canada)
• Case Date: June 12, 1986
• Jurisdiction: Canada (Federal)
• Citations: (1986), 67 N.R. 161 (SCC);1986 CanLII 14 (SCC);[1986] SCJ No 35 (QL);29 DLR (4th) 159;[1986] 4 WWR 481;[1986] 1 SCR 749;67 NR 161

Nelson v. CTC Mortgage Corp. (1986), 67 N.R. 161 (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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Nelson, Nelson and Nationwide Auto Leasing Ltd. v. C.T.C. Mortgage Corporation

(No. 19173)

Indexed As: Nelson v. C.T.C. Mortgage Corp.

Supreme Court of Canada

Beetz, McIntyre, Chouinard, Lamer and Wilson, JJ.

June 12, 1986.

Summary:

A mortgagor gave a mortgage to secure a loan of $219,801.00 for a term of six months at prime plus 6% per annum plus various other charges totalling $16,113.75. The mortgagor exercised its option to repay the loan early and after 87 days paid $206,122.80 to discharge the mortgage. The mortgagor claimed that the rate was over 60% per annum and criminal contrary to s. 305.1 of the Criminal Code of Canada. It was agreed that if the "effective rate of interest" under s. 305.1 was calculated on the total six month term, the rate was 52.49% and, if calculated on the 87 days the mortgage was outstanding, the rate was 84.1%.

The British Columbia Supreme Court held that the rate was not criminal.

The British Columbia Court of Appeal (Hutcheon, J.A., dissenting) in a judgment reported below and in [1985] 2 W.W.R. 560; 16 D.L.R.(4th) 139; 59 B.C.L.R. 221, dismissed the mortgagor's appeal and held that the effective rate of interest should be calculated on the total term of the mortgage.

The Supreme Court of Canada dismissed the mortgagor's appeal.

Criminal Law - Topic 1744

Offences against property - Criminal interest rate - Effective rate of interest - Calculation of - A mortgagor gave a mortgage to secure a loan for a term of six months at prime plus 6% per annum plus various other charges - The mortgagor exercised its option to repay the loan after 87 days - The mortgagor claimed that the rate was over 60% per annum and criminal contrary to s. 305.1 of the Criminal Code - It was agreed that if the "effective rate of interest" under s. 305.1 was calculated on the total six month term, the rate was 52.49% and, if calculated on the 87 days the mortgage was outstanding, the rate was 84.1% - The Supreme Court of Canada affirmed that the effective rate of interest should be calculated on the total term of the mortgage and that the rate was therefore not criminal.

Cases Noticed:

Mira Design Co. v. Seascape Hldg. Ltd., [1982] 1 W.W.R. 744; 34 B.C.L.R. 55; 22 R.P.R. 193 (S.C.), consd. [para. 39].

Mira Design Co. v. Seascape Hldg. Ltd. No. 2, [1982] 4 W.W.R. 97; 36 B.C.L.R. 355; 23 R.P.R. 219 (S.C.), consd. [para. 39].

Statutes Noticed:

Criminal Code of Canada, R.S.C. 1970, c. C-34, sect. 305.1 [paras. 17, 38].

Authors and Works Noticed:

Ziegel, J.S., Bill C-44: Repeal of the Small Loans Act and Enactment of a New Usury Law (1981), 59 Can. Bar Rev. 188 [para. 39].

Counsel:

D.W. Welder, for the appellants;

T.R. Braidwood, Q.C., for the respondent, C.T.C. Mortgage Corporation.

This case was heard on May 22, 1986, at Ottawa, Ontario, before Beetz, McIntyre, Chouinard, Lamer and Wilson, JJ., of the Supreme Court of Canada.

On June 12, 1986, the Supreme Court of Canada delivered the following judgment.