Loans Till Payday v. Brown

 

Loans Till Payday v. Christopher Brown

 

LTP Tracer Corp. o/a/ Cash Shop v. Nerisha Sookhoo

 

Loans Till Payday v. Saral Singh

 

Metro Payday Loans v. Devon Brown

 

Loans Till Payday v. Balasubramaniam Selliah

 

Loans Till Payday v. Aisha Marsh

 

Ontario Superior Court of Justice (Divisional Court)

 

Herman J.

 

Heard: October 13, 2010

Judgment: December 1, 2010

Docket: Toronto 20/10, 21/10, 22/10, 23/10, 24/10, 25/10

 

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Counsel: David J. Rose, for Plaintiffs / Appellants

 

No one for Respondents

 

Subject: Corporate and Commercial; Civil Practice and Procedure; Contracts

 

Financial institutions --- Institutions with banking functions — Miscellaneous institutions

 

Payday loan lenders — Borrowers defaulted on payday loans — Agreement stated that on default, borrowers were to pay liquidated damages, fees for cheques not honoured, locator fee if mail returned, and 59 per cent interest after default — Lender's action for recovery of amounts pursuant to promissory note underlying loan was allowed — Trial awarded judgment in amount claimed in each case, or slightly more or less than that amount, costs of either $200 (in one case) or $225 (in five cases), pre-judgment interest of 22 per cent from date of default, and post-judgment interest at the court rate — Lender appealed damages — Appeal allowed, new hearing ordered — Trial judge gave no reasons as to why only partial judgment was given — Insufficient evidence existed to make appropriate judgment, so matter returned to small claims court — Unclear whether costs claimed were liquidated damages or penalty, or if default charges reasonable.

 

Remedies --- Damages — Damages in contract — Contract to lend money

 

Payday loan lenders — Borrowers defaulted on payday loans — Agreement stated that on default, borrowers were to pay liquidated damages, fees for cheques not honoured, locator fee if mail returned and 59 per cent interest after default — Lender's action for recovery of amounts pursuant to promissory note underlying loan was allowed — Trial judge awarded judgment in amount claimed in each case, or slightly more or less than that amount, costs of either $200 (in one case) or $225 (in five cases), pre-judgment interest of 22 per cent from date of default, and post judgment interest at court rate — Lender appealed damages — Appeal allowed, new hearing ordered — Trial judge gave no reasons as to why only partial judgment was given — Insufficient evidence existed to make appropriate judgment, so matter returned to small claims court — Unclear whether costs claimed were liquidated damages or penalty, or if default charges reasonable.

 

Cases considered by Herman J.:

 

Clifford v. Ontario (Attorney General) (2009), 256 O.A.C. 354, 93 Admin. L.R. (4th) 131, 2009 ONCA 670, 2009 CarswellOnt 5595, 2009 C.E.B. & P.G.R. 8359, 98 O.R. (3d) 210, 312 D.L.R. (4th) 70, 188 L.A.C. (4th) 97, 76 C.C.P.B. 184 (Ont. C.A.) — considered

 

Dunlop Pneumatic Tyre Co. v. New Garage & Motor Co. (1914), [1915] A.C. 79, [1914] All E.R. Rep. 739, 83 L.J.K.B. 1574 (U.K. H.L.) — referred to

 

Federal Business Development Bank v. Eldridge (1985), 67 N.B.R. (2d) 93, 172 A.P.R. 93, 1985 CarswellNB 250 (N.B. Q.B.) — referred to

 

Statutes considered:

 

Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A

 

Generally — referred to

 

s. 75 — referred to

 

Courts of Justice Act, R.S.O. 1990, c. C.43

 

s. 25 — considered

 

Payday Loans Act, 2008, S.O. 2008, c. 9

 

Generally — referred to

 

Rules considered:

 

Small Claims Court Rules, O. Reg. 258/98

 

R. 19.01 — referred to

 

APPEAL by lenders from judgment regarding loans, regarding damages.

 

Herman J.:

 

1        This decision concerns six appeals from assessments of damages in the Small Claims Court. The appeals in the six cases were consolidated by order of Molloy J., dated February 9, 2010.

 

2        The cases all involve alleged default on payday loans. None of the respondents filed a defence. The appellants obtained default judgment. The cases were referred to a judge for the purpose of assessing damages. In each case, the judge awarded partial judgment in favour of the appellants.

 

3        The appellants submit that the judge made three errors: he did not provide reasons; he failed to award the full amount of damages as a liquidated debt; and he failed to award interest at the rate set out in the agreements.

 

Background

 

4        The six cases involve payday loans. The loans were entered into between December 2007 and May 2009.

 

5        The legislation that applied at the time the agreements were entered into was the Consumer Protection Act, S.O. 2002, c. 30, Sch. A. Payday loans are now governed by the Payday Loans Act 2008, S.O. 2008, c. 9.

 

6        In each case, the appellants initiated a claim in Small Claims Court alleging a default in payment and seeking various amounts pursuant to a promissory note signed by the respondent. There is a copy of a signed promissory note attached to each claim.

 

7        In each promissory note, the respondent agrees to pay a specified amount by a certain date (8 to 14 days after the date money was advanced). The amounts that the respondents agreed to pay are between $500 and $562 in four of the cases, and $1,016.40 and $1,125 in two of the cases.

 

8        In the event of default, the respondent also agrees to pay: costs as liquidated damages ($350 in the four agreements in the $500-$562 range; $500 in the two agreements involving more than $1,000); a set fee for cheques that are not honoured; a locate fee of $450.00 plus GST should any mail be returned; and 59% interest after the date of default.

 

9        In each claim, the appellants seek the amount that the respondent agreed to pay in the promissory note (except in one case, where a partial payment is deducted). The claim refers to the amount as the "payday advance". However, according to the promissory note, that amount includes interest and fees in addition to the amount that was advanced to each respondent.

 

10        The appellants also seek 59% interest from the date of default in all six cases. In some of the cases, a locate fee is sought ($450 plus GST of $22.50), with an invoice for that amount attached. In some of the cases, the appellants also seek either $75 or $95 for cheques that have not been honoured.

 

11        In each case, the judge wrote in the amounts he awarded on a form entitled "Trial & Assessment Hearing Endorsement Record".

 

12        The judge awarded: judgment in the amount that the appellant claimed was advanced, or slightly more or less than that amount; costs of either $200 (in one case) or $225 (in five cases); pre-judgment interest of 22% from the date of default; and post judgment interest at the court rate.

 

13        In all cases, the judge awarded less than the amount that was claimed.

 

Failure to give reasons

 

14        In each case, the judge filled out amounts on the form in the spaces for: judgment, costs, pre-judgment interest and post judgment interest. He did not provide any reasons for awarding partial judgment.

 

15        Courts and tribunals are required to give reasons for their decisions in order that the parties know why the decision was made and to permit meaningful appellate or judicial review.

 

16        In considering the adequacy of reasons, the reviewing court must consider the day-to-day realities of the decision-making body. The Small Claims Court is mandated to hear and determine questions of law and fact "in a summary way" (Courts of Justice Act, s. 25). The volume of cases it receives makes it the busiest court in Ontario (Coulter A. Osborne, Civil Justice Reform Project, November 2007). A Small Claims Court judge cannot be expected to provide lengthy reasons for his or her decision in every case.

 

17        That does not mean, however, that the Small Claims Court judge is relieved of any requirement to provide reasons. As Goudge J. wrote in Clifford v. Ontario (Attorney General) (2009), 98 O.R. (3d) 210 (Ont. C.A.):

 

[R]easons must be sufficient to fulfill the purposes required of them particularly to let the individual whose rights, privileges or interests are affected know why the decision was made and to permit effective judicial review....[T]he "path" taken by the tribunal to reach its decision must be clear from the reasons read in the context of the proceeding, but it is not necessary that the tribunal describe every landmark along the way.

 

18        In the case before me, there is a complete absence of reasons for the judge's decisions to grant partial judgment. The appellants can only speculate as to why the judge decided to award them less than they claimed. The absence of reasons means that effective appellate review is not possible.

 

19        In these circumstances, I have no choice but to allow the appeal.

 

Disposition

 

20        The appellants ask that I decide the cases instead of returning them to the Small Claims Court for an assessment. They submit that the promissory notes signed by each of the respondents provide a sufficient basis for me to grant them judgment in full.

 

21        However, I have insufficient information to enable me to determine whether judgment in the full amount is appropriate in the circumstances.

 

22        The promissory notes refer to an amount that the individual respondent is required to pay by a certain date. They do not indicate how that amount is allocated as between the amount advanced to the respondent, the interest charged and fees. I am therefore unable to determine what the interest rate is and whether that interest rate is legally permissible.

 

23        I have insufficient information to determine whether the costs claimed are liquidated damages or whether they are, instead, a penalty (see Dunlop Pneumatic Tyre Co. v. New Garage & Motor Co. (1914), [1915] A.C. 79 (U.K. H.L.); Federal Business Development Bank v. Eldridge (1985), 67 N.B.R. (2d) 93, 172 A.P.R. 93 (N.B. Q.B.). The fact that the promissory notes indicate that they are liquidated damages is not conclusive.

 

24        I also cannot determine whether the default charges are reasonable, as required by s. 75 of the Consumer Protection Act, or whether the disbursements are reasonable, as stipulated in Small Claims Court Rule 19.01.

 

25        The appeal is therefore allowed. The cases are referred back to a different judge or deputy judge of the Small Claims Court for an assessment of damages.

 

Appeal allowed.

 

END OF DOCUMENT