Tonnell Investments Ltd. v. East Marstock Lands Ltd. et al., (1977) 16 N.R. 139 (SCC)

• Judge: Laskin, C.J.C., Martland, Judson, Ritchie, Spence, Pigeon, Dickson and Beetz, JJ.
• Court: Supreme Court (Canada)
• Case Date: June 24, 1977
• Jurisdiction: Canada (Federal)
• Citations: (1977), 16 N.R. 139 (SCC);2 RPR 69;77 DLR (3d) 145;1977 CanLII 33 (SCC);16 NR 139;[1978] 1 SCR 974

Tonnell Inv. v. East Marstock Lands (1977), 16 N.R. 139 (SCC)

MLB headnote and full text

Tonnell Investments Limited v. East Marstock Lands Limited et al.

Indexed As: Tonnell Investments Ltd. v. East Marstock Lands Ltd. et al.

Supreme Court of Canada

Laskin, C.J.C., Martland, Judson, Ritchie, Spence, Pigeon, Dickson and Beetz, JJ.

June 24, 1977.

Summary:

This case arose out of a mortgagor's default under a mortgage, which provided for a three month interest penalty in case of default. The mortgagee and the mortgagor settled the matter before the mortgage sale, but the mortgagee claimed the three month interest penalty. The Ontario Supreme Court dismissed the mortgagee's claim for the penalty and the mortgagee's appeal was dismissed by the Ontario Court of Appeal. The mortgagee appealed.

The Supreme Court of Canada dismissed the appeal and held that the penalty provision was void under s. 8 of the Interest Act, R.S.C. 1970, c. I-18, which prohibited the charging of a fine or penalty on arrears under a mortgage which would have the effect of increasing the charge on arrears beyond the rate of interest payable on the principal amount not in arrears. The Supreme Court of Canada held that s. 8 was valid legislation within the federal power over interest in s. 91(19) of the British North America Act.

Constitutional Law - Topic 1715

Extent of powers conferred - Ancillary doctrine - Legislation ancillary to federal power - The Interest Act, R.S.C. 1970, c. I-18, s. 8, prohibited the charging of a fine or penalty on arrears under a mortgage which would have the effect of increasing the charge on arrears beyond the rate of interest payable on the principal not in arrears - The Supreme Court of Canada held that s. 8 was valid federal legislation, because the provision regarding the fine or penalty was ancillary to the federal power over interest.

Constitutional Law - Topic 6206

Enumeration in s. 91 of British North America Act - Interest - British North America Act, s. 91(19) - Interest respecting mortgages - The Interest Act, R.S.C. 1970, c. I-18, s. 8, prohibited the charging of a fine or penalty on arrears on a mortgage which would have the effect of increasing the charge on arrears beyond the rate of interest payable on the principal not in arrears - The Supreme Court of Canada held that s. 8 was valid legislation within the federal power over interest in s. 91(19) of the British North America Act.

Interest - Topic 3068

Statutory interest - Interest Act - Mortgages - Prohibition of payment of fine or penalty on arrears of principal or interest - The Interest Act, R.S.C. 1970, c. I-18, s. 8, prohibited the charging of a fine or penalty on arrears on a mortgage which would have the effect of increasing the charge on arrears beyond the rate of interest payable on the principal not in arrears - A mortgage provided for a three month interest penalty in case of default - The Supreme Court of Canada held that such a penalty provision was void under s. 8 of the Interest Act.

Cases Noticed:

Attorney-General of Canada v. Nykorak, [1962] S.C.R. 331, refd to. [para. 2].

London Loan & Savings v. Meagher, [1930] S.C.R. 378, refd to. [para. 5].

Immeubles Fournier v. Construction St-Hilaire, [1975] 2 S.C.R. 2; 10 N.R. 541; consd. [para. 6].

Attorney-General for Ontario v. Barfried Enterprises Ltd., [1963] S.C.R. 570, reversing [1962] O.R. 1103; 35 D.L.R. (3d) 449, consd. [para. 8].

Singer v. Goldhar [1924] 2 D.L.R. 141; (1924), 55 O.L.R. 267, consd. [para. 8].

Asconi Building Corporation v. Vocisano, [1947] S.C.R. 358, consd. [para. 8].

Saskatchewan Farm Security case, [1949] A.C. 110, consd. [para. 17].

Lynch v. The Canada North-West Land. Co. (1891), 19 S.C.R. 204, refd to. [para. 19].

Ladore v. Bennett, [1939] A.C. 468, refd to. [para. 19].

Lethbridge Irrigation District v. Independent Order of Foresters, [1940] A.C. 513, refd to. [para. 19].

Attorney-General for Canada v. Attorney-General for British Columbia, [1930] A.C. 111, appld. [para. 20].

Fish Canneries Case, Attorney-General for Canada v. Attorney-General for British Columbia, [1930] A.C. 111, appld. [para. 20].

Attorney-General for Ontario v. Attorney-General for Canada, [1894] A.C. 189, consd. [para. 20].

Royal Bank of Canada v. Larue, [1926] S.C.R. 218, affd. [1928] A.C. 187, consd. [para. 20].

Companies' Creditors Arrangement Act Reference, [1934] S.C.R. 659, consd. [para. 20].

Farmers' Creditors Arrangement Act Reference, [1936] S.C.R. 384 affd. [1937] A.C. 391, consd. [para. 20].

Attorney-General of Quebec v. Attorney General of Canada, [1945] S.C.R. 600, consd. [para. 20].

Statutes Noticed:

British North America Act (1867), sect. 91(19) [para. 16].

Interest Act, R.S.C. 1970, c. I-18, sect. 2 [para. 12]; sect. 6 [para. 9]; sect. 8 [para. 13]; sect. 10 [para. 21].

Small Loans Act, R.S.C. 1970, c. S-11 [para. 21].

Counsel:

B.G. Freesman, for the appellant;

John Hahn, for the respondent;

G.W. Ainslie, Q.C., and Martin Low, for the intervenant Attorney-General of Canada;

D.W. Mundell, Q.C., and J.T. McCabe, for the intervenant Attorney-General of Ontario;

Oliver Prat, for the intervenant Attorney-General of Quebec;

William Henkel, Q.C., for the intervenant Attorney-General of Alberta.

This case was heard on March 29 and 30, 1977, at Ottawa, Ontario, before LASKIN, C.J.C., MARTLAND, JUDSON, RITCHIE, SPENCE, PIGEON, DICKSON and BEETZ, JJ., of the Supreme Court of Canada.

On June 24, 1977, the judgment of the Supreme Court of Canada was delivered and the following opinions were filed:

LASKIN, C.J.C. - see paragraphs 1 to 3;

PIGEON, J. - see paragraphs 4 to 23.

MARTLAND, J., concurred with LASKIN, C.J.C.

JUDSON, RITCHIE, SPENCE, DICKSON, and BEETZ, JJ., concurred with PIGEON, J.