Immeubles Fournier Inc. et al. v. Construction St-Hilaire Ltée

Immeubles Fournier Inc. et al. v. Construction St-Hilaire Ltée

Majority held Interest Act s.8 must be construed to cover fines and penalties that have the effect of increasing the charge on arrears beyond the rate payable on principal not in arrears; the 15% contractual indemnity was therefore a prohibited penal charge and could not be recovered; consequence: Court of Appeal decision awarding the indemnity set aside and Superior Court judgment restored.

Citation
[1975] 2 SCR 2
Parties
Appellant / Defendant: Les Immeubles Fournier Inc.; Appellant / Guarantor / Defendant: Rimouski Transport Limitée; Respondent / Plaintiff: Construction St-Hilaire Limitée
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
29 April 1974
Procedural Posture
Civil Appeal (mortgage/contract) / Final Judgment on Appeal to Supreme Court of Canada
Outcome
Appeal allowed; judgment of the Court of Appeal set aside; judgment of the Superior Court restored; respondent not entitled to recover the 15% indemnity; costs against respondent in all Courts.
Legal Topics
Penal Clause, Interest Act S.8, Civil Code Art.1077, Subrogation, Tender and Payment Into Court, Usury
Source Language
English
Priorities and Hypothecs Mortgage Law Contract Law Interest Law Constitutional Law Penal Clause Interest Act S.8 Civil Code Art.1077 +3 more

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Parties

Les Immeubles Fournier Inc.

Appellant / Defendant

Rimouski Transport Limitée

Appellant / Guarantor / Defendant

Construction St-Hilaire Limitée

Respondent / Plaintiff

Procedural Posture

Civil Appeal (mortgage/contract) / Final Judgment on Appeal to Supreme Court of Canada

Legal Issues

  1. 1 Whether a contractual penal clause (15% indemnity) is recoverable under Civil Code law and federal Interest Act s.8
  2. 2 Whether appellants' tender of principal, interest and costs without the 15% indemnity discharged their obligation
  3. 3 Whether Article 1077 of the Civil Code or public order prevents stipulation of a contractual penal indemnity

Ratio Decidendi

Majority held Interest Act s.8 must be construed to cover fines and penalties that have the effect of increasing the charge on arrears beyond the rate payable on principal not in arrears; the 15% contractual indemnity was therefore a prohibited penal charge and could not be recovered; consequence: Court of Appeal decision awarding the indemnity set aside and Superior Court judgment restored.

Court Disposition

Appeal allowed; judgment of the Court of Appeal set aside; judgment of the Superior Court restored; respondent not entitled to recover the 15% indemnity; costs against respondent in all Courts.

Orders

  • Appeal allowed
  • Judgment of the Court of Appeal set aside