WISHART SAVINGS CREDIT UNION APPELLANT - v. -, 2003 SKQB 159

2003 SKQB 159 Q.B. A.D. 2003 No. 17 J.C. W. IN THE QUEEN’S BENCH JUDICIAL CENTRE OF WYNYARD BETWEEN: WISHART SAVINGS CREDIT UNION APPELLANT - and - BRADLEY ROSE RESPONDENT G. A. Richards for the appellant No one appearing for the respondent FIAT WILKINSON J. April 3, 2003 [ 1 ] This appeal raises the issue of pre-judgment interest on a claim under a promissory note. The appellant appeals from a decision in Small Claims Court on February 21, 2003 wherein the presiding judge denied the appellant’s claim for interest on the following grounds: The loan agreement specifies interest payable at 11% fixed.

There is nothing to specify if per annum or otherwise and accordingly only Pre-judgment interest in accord with The Pre-Judgement Interest Act will be allowed as of June 28, 2002. Payments appear to have been payable on the 28th day of each month and the last payment was made May 24, 2002.

[ 2 ] The statement of claim of November 1, 2002 indicates the appellant was suing on the promissory note. The promissory note was tendered in evidence.

It sets out the respondent was to pay $5,600 with interest thereon, both before and after maturity, default or judgment, at the rate of 11% per annum by 24 installments of $261 each with the first payment to be made on January 28, 1998 and a like amount every month thereafter until December 28, 2000 at which time the total amount owing (inclusive of principal and interest) shall be paid. [ 3 ] Although it was unnecessary to do so, the appellant filed a copy of the respondent’s application and loan agreement in the small claims trial.

That document set out the purpose of the loan and that the loan would be secured by a promissory note. It also provided that the time and manner of payment was “interest payable at 11% fixed, term two years, amortization 24 months”. It is this provision that the presiding judge relied on in holding that the appellant had failed to provide for a fixed rate “per annum”. [ 4 ] The application and loan agreement is not a debt instrument. The application itself notes that the time and manner of payment are suggested terms only and that the terms may vary on approval.

The appellant sued on the promissory note and it is the terms of the promissory note that govern the appellant’s entitlement to interest. Extrinsic evidence is, as a general rule, inadmissible as the law relating to negotiable instruments requires certainty on the face of the note itself as to the rate and calculation of interest. See: MacLeod Savings & Credit Union Ltd. v.

Perrett , 1981 CanLII 165 (SCC) , [1981] 1 S.C.R. 78 . [ 5 ] It has been held that unless a promissory note provides in unequivocal terms for payment of a particular rate of interest after maturity, only the statutory rate of interest can be recovered. See: Toronto-Dominion Bank v. Mr. Klean Enterprises Ltd. (1987), 1987 CanLII 4893 (SK CA) , 55 Sask. R. 93 , [1987] S.J. No. 203 , 37 D.L.R. (4th) 717 (Sask. C.A.) ; Pizzey v. Crestwood Lake Ltd. , [2002] O.J. No. 4413 (Ont.

S.C.) `. [ 6 ] The promissory note in question contains explicit and unambiguous provision for payment of interest “both before and after maturity, default or judgment at the rate of 11% per annum”. The appellant was therefore entitled to judgment in the amount claimed, namely in the amount of $4,335.67 plus interest at 11% per annum from October 21, 2002 until date of judgment (a per diem rate of $1.02). Accordingly, the appeal is allowed and judgment will issue accordingly. The appellant will have costs of this appeal, to be taxed. ____________________ J.