Legal Blog

Interest on Damages

Madison Homes v. Shi 2020 Ont SCJ

Purchaser did not close, vendor re-sold, and vendor sued for damages. Aside from a discussion of damages and mitigation, the judge had to decide whether to enforce a clause in the agreement that gave interest on all money that the purchaser was to have paid at 20% per year compounded monthly. The judge noted that even the vendor realised that this clause was onerous, given that it claimed the interest only on the shortfall and not on the full sale price. The judge held that the clause was unreasonable and unenforceable because the clause was not drawn to the purchaser’s attention when he signed the agreement.

Burkshire Holdings Inc. Ngadi 2021 Ont SCJ

Same situation as in Madison; indeed, same interest rate of 20%. The judge realised that the agreement was not in the same category as signing a rental car agreement; there was time to reflect and legal advice involved. However, the judge still held that the clause was “surprisingly onerous,” not brought to the purchaser’s attention, and therefore unenforceable.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.