Thursday, July 26, 2012

Interest on old judgments

Crosbie v. Crosbie, 2012 ONCA 516 is an interesting decision regarding discretion and old interest rates on old judgments:

[9] We are concerned however about the application judge’s failure to exercise his discretion to relieve Mr. Crosbie of the obligation to pay interest at the rate of 10% on the arrears from 1995 onwards.

[10] The statutory post-judgment interest rate should apply unless there are compelling and exceptional reasons to change the interest rate: Robert McAlpine Ltd. v. Byrne Glass Enterprises Ltd., 116 A.C.W.S. (3d) 441 (Ont. C.A.), [2001] O.J. No. 3208.

[11] The statutory post-judgment rate of interest when the order was made in 1995 was 10%. It has steadily fallen since then and is now 3%.

[12] In our view, the application judge erred in failing to view the dramatic decline in interest rates since 1995, combined with the extensive passage of time during which arrears have accumulated, as amounting to exceptional and compelling circumstances warranting a change in the rate of post-judgment interest: see MacKinnon v. Duffy (2000), 10 R.F.L. (5th) 336 (Ont. S.C.). Allowing arrears to continue to attract an interest rate of 10% would be unfair to Mr. Crosbie and provide an excessive return to Ms. Crosbie but might also be perceived as an incentive for a party in Ms. Crosbie’s position to delay enforcement.

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