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ARTICLE · 25 OCTOBER 2018

A Matter Of "Interest"

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In a decision that raised concerns for lenders earlier this year, the Superior Court of Justice held, in Solar Power Network Inc. v. ClearFlow Energy Finance Corp.

CanadaFinance and Banking
Vickie Wong
Vickie Wong
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In a decision that raised concerns for lenders earlier this year, the Superior Court of Justice held, in Solar Power Network Inc. v. ClearFlow Energy Finance Corp.1, that the provision of a formula for determining the equivalent annual rate of interest applicable to a loan was insufficient for purposes of complying with the Interest Act.2   Lenders will be relieved to hear that this decision has now been reversed on appeal. The Court of Appeal addressed a number of points raised on appeal.3   However, we have limited our review to the main issue regarding the interpretation and application of s.4 of the Interest Act.

Background:

ClearFlow Energy Finance Corp. ("ClearFlow") had made various loans to Solar Power Network Inc. ("Solar Power").  Amounts payable in respect of the loans included the following:

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