Compound Interest - Commercial Plaintiffs (Presumption)

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Date Retrieved: 2024-02-21
CLNP Page ID: 2155
Page Categories: [Contract Law]
Citation: Compound Interest - Commercial Plaintiffs (Presumption), CLNP 2155, <https://rvt.link/4l>, retrieved on 2024-02-21
Editor: Sharvey
Last Updated: 2023/02/22


Enbridge Gas. v. Michael Marinaccio et al, 2011 ONSC 4962 (CanLII)[1]

[16] Interest is claimed at the rate of 4.3% compounded. The rate is not objected to but the compounding is.

[17] Courts of equity have always exercised the power to award compound interest whenever a wrongdoer deprives a company of money which it uses in its business. On general principles it should be presumed that had the business not been deprived of the money, it would have made the most beneficial use of it available to it. Alternatively, it should be presumed that the wrongdoer made the most beneficial use of it. See Air Canada v. Ontario (Liquor Control Board), 1997 CanLII 361 (SCC), [1997] 2 S.C.R. 581 at para. 85[2] per Iacobucci J. and Bank of America Canada v. Mutual Trust, 2002 SCC 43 (CanLII), [2002] 2 S.C.R. 601 at para. 41 per Major J.[3]

[18] In my view the plaintiff is entitled to compound interest to be compounded monthly.

[19] In my reasons for judgment I held that the plaintiff was entitled to its loss, being the amount paid by it to the four Piro entities, less the net recovery after the costs of collecting resulting from the Marinaccio settlement. The loss was $6,542,928.63.[1] The gross amount collected under the Marinaccio settlement was $1,948,727. The total fees and disbursements incurred by the plaintiff in collecting that amount was $1,129,138, leaving a net recovery under the settlement of $819,589. Mr. Morrison contends that the gross amount recovered from the Marinaccio settlement should be deducted from the loss rather than the net amount after costs as there is no breakdown or calculation of this amount in the evidence. I think if Mr. Morrison seriously contended that the amounts were not spent, he could have asked for more particulars, assuming they are not contained in the two inch thick bundle of invoices provided by the plaintiff. I am prepared to accept that the amount was spent. I ordered that the net recovery after costs under the Marinaccio settlement should be deducted from the plaintiff's loss in order that there not be double recovery. To deprive the plaintiff of the cost of the recovery under the Marinaccio settlement would deprive it of a portion of its loss. The net recovery of $819,589 is to be used with the result that the loss to be paid by Piro and Montaldi is $5,723,339.60.

[20] In the circumstances, the plaintiff is entitled to interest at 4.3% per annum compounded monthly on $6,542,928.63 from February 1, 2008 to April 14, 2009 and on $5,723,339.60 from April 15, 2009 until April 14, 2011. I do not allow interest after April 14, 2009 on the interest calculation for the period from February 1, 2008 to April 14, 2009 as claimed by the plaintiff.

[21] Post-judgment interest is to be paid in accordance with the Courts of Justice Act. I am advised that that rate is 3%.


[2] [1] [3]

Bank of America Canada">Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 (CanLII)[3]

I. Introduction

1 Whether a court has jurisdiction to award compound interest on an award for damages has been the subject of debate. That question, renewed in this appeal, is: can the court order the payment of compound pre- and post-judgment interest? The trial judge in the Ontario Court (General Division) said yes but was reversed by the Ontario Court of Appeal.

2 Sections 128 and 129 of the Ontario Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”), prescribe interest rates and methods of calculation before and after judgment and also permit a court to award other rates and methods of calculation in accordance with those sections.

3 Is the appellant entitled, on a breach of contract claim, to compound interest both before and after judgment? I conclude that it is and, as a result, the appeal is allowed.

...

55 An award of compound pre- and post-judgment interest will generally be limited to breach of contract cases where there is evidence that the parties agreed, knew, or should have known, that the money which is the subject of the dispute would bear compound interest as damages. It may be awarded as consequential damages in other cases but there would be the usual requirement of proving that damage component.

...

62 The courts have the jurisdiction to award pre-judgment and post-judgment interest at both common law and equity. Sections 128(4)(g) and 129(5) CJA allow courts to award interest by means of these powers as a substitute for the interest prescribed by those sections. This is such a case. As a result, the order of the Court of Appeal is set aside and the trial judgment restored. Accordingly, the appeal is allowed. The appellant is entitled to costs throughout.

References

  1. 1.0 1.1 Enbridge Gas. v. Michael Marinaccio et al, 2011 ONSC 4962 (CanLII), <https://canlii.ca/t/fmqc3>, retrieved on 2023-02-22
  2. 2.0 2.1 Air Canada v. Ontario (Liquor Control Board), 1997 CanLII 361 (SCC), [1997] 2 SCR 581, <https://canlii.ca/t/1fr0x>, retrieved on 2023-02-22
  3. 3.0 3.1 3.2 Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 (CanLII), [2002] 2 SCR 601, <https://canlii.ca/t/51s8>, retrieved on 2023-02-22