Hossack v. Shaw

Hossack v. Shaw

The agreed high monthly interest rate did not bind the borrowers after maturity of the obligations unless the contract explicitly so stipulated; any excessive interest paid after maturity was voluntary and not recoverable, and recoverable interest after maturity is limited to the statutory rate of 5% per annum unless a higher post‑maturity rate is clearly stipulated. Respondents were not money‑lenders under the Acts and the Money‑Lenders Acts did not render the transactions void.

Citation
(1918) 56 SCR 581
Parties
Appellant/defendant: Donald C. Hossack; Appellant/defendant: Lucinda E. Hossack; Respondent/plaintiff: John E. Shaw; Respondent/plaintiff: Frank E. Shaw
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
25 June 1918
Procedural Posture
Contract (loan/promissory Notes) / Appeal to Supreme Court of Canada From Appellate Division of the Supreme Court of Ontario
Outcome
Appeal allowed in part; judgment of Appellate Division modified
Legal Topics
Maturity of Loan, Post‑maturity Interest, Voluntary Payment, Money‑lenders Definition, Unconscionability
Source Language
English
Contract Interest Usury/statutory Interest Money‑lenders Legislation Maturity of Loan Post‑maturity Interest Voluntary Payment Money‑lenders Definition +1 more

Case Brief

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Parties

Donald C. Hossack

Appellant/defendant

Lucinda E. Hossack

Appellant/defendant

John E. Shaw

Respondent/plaintiff

Frank E. Shaw

Respondent/plaintiff

Procedural Posture

Contract (loan/promissory Notes) / Appeal to Supreme Court of Canada From Appellate Division of the Supreme Court of Ontario

Legal Issues

  1. 1 Whether respondents were 'money‑lenders' within the meaning of the Ontario Money‑Lenders Act or Dominion Interest Act
  2. 2 Whether a contractual stipulation of interest 'until paid' (2½%/2% per month) binds borrower to that rate after maturity
  3. 3 Whether excessive interest paid after maturity is recoverable

Ratio Decidendi

The agreed high monthly interest rate did not bind the borrowers after maturity of the obligations unless the contract explicitly so stipulated; any excessive interest paid after maturity was voluntary and not recoverable, and recoverable interest after maturity is limited to the statutory rate of 5% per annum unless a higher post‑maturity rate is clearly stipulated. Respondents were not money‑lenders under the Acts and the Money‑Lenders Acts did not render the transactions void.

Court Disposition

Appeal allowed in part; judgment of Appellate Division modified

Orders

  • Modify judgment to compute interest after maturity at 5% per annum unless a higher post‑maturity rate is clearly stipulated in the respective contracts
  • If parties cannot agree on computation, refer the amount to the registrar for determination