Payday-loan ruling could affect other cases

B.C. Supreme Court Justice Brenda Brown ruled that late fees and processing fees charged by A OK Payday Loans Inc. - a small B.C. company - are interest. She found that the company was charging an interest rate above 60 per cent - the maximum amount of interest that can be charged under Canada's Criminal Code.

The Toronto Star
August 16, 2006

Payday-loan ruling could affect other cases
Tara Perkins

A B.C. judge's ruling that a payday-loan company was charging criminal interest rates will influence the outcome of dozens of similar suits in Canada, say lawyers who are bringing class-action lawsuits against payday-loan companies.

"It's the first class-action, of which there are several out there, in which a decision has been rendered involving the legality of the fees that were charged by a payday-loan company," said Paul Bennett, the Vancouver-based lawyer with Hordo & Bennett.

"I think it has significant implications to the other cases that are outstanding. We believe the reasoning in this case will apply to any of the fees that are charged by any of the other payday-loan operators."

Toronto-based lawyer Marg Waddell, of Paliare Roland, agreed, saying "This is a very significant ruling that should impact on all the other cases outstanding across the country." While a decision in the British Columbia Supreme Court is not binding in Ontario, it will be given significant weight by the court, lawyers said.

B.C. Supreme Court Justice Brenda Brown ruled that late fees and processing fees charged by A OK Payday Loans Inc. - a small B.C. company - are interest. She found that the company was charging an interest rate above 60 per cent - the maximum amount of interest that can be charged under Canada's Criminal Code.

Justice Brown asked lawyers to submit further evidence before she determines what relief should be paid to the plaintiffs.

Bruce Hallsor, the lawyer representing A OK Payday Loans, said this decision will be looked at by other courts, but "it's fully expected that this issue will be raised in higher courts." His client has not yet decided whether to appeal.


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