Canada: Ontario Court Of Appeal Overturns Lower Courts, Certifies Criminal Interest Cash-Advance Class Action

Originally published by LexisNexis, June 2007

Markson v. MBNA Canada Bank, 2007 ONCA 334

The Court of Appeal for Ontario recently overturned the decisions of two lower courts in this class proceeding, which had twice been refused certification as a class action.

The Plaintiff, Markson, alleged that MBNA’s transaction fees and interest in connection with cash advances from credit cards are in violation of s. 347 of the Criminal Code, which prohibits the charging of "interest" that exceeds a rate of 60% per annum. "Interest" is very broadly defined in the Criminal Code to include all charges incurred for the advancing of credit, not limited to interest as commonly understood. In other cases the term has likewise been interpreted very broadly. Markson sought an injunction, damages for breach of contract and a restitutionary remedy in unjust enrichment.

Mr. Justice Cullity of the Superior Court had refused to certify the class action on the grounds that the contractual and restitution claims did not raise common issues and because a class proceeding was not the preferable procedure. The majority of the Divisional Court agreed, with a dissent by Mr. Justice O’Driscoll (see our Class Action Update, June 2007).

In the Court of Appeal, Mr. Justice Rosenberg identified the "fundamental issue" as whether a class proceeding would be appropriate where all members of the proposed class were at risk of being charged interest at a criminal rate, but where only a small portion of that group actually were charged interest at that rate – and where, in fact, some members of the class may not mind being charged the interest if it means they can continue to receive cash advances on the cards without restrictions on the size of advances or repayment terms.

As a matter of general principle, Justice Rosenberg disagreed with the position that a class proceeding should not be certified in cases where the defendant had caused widespread but individually minimal harm. This is, in his view, the ideal case for a class action, as it may be the only avenue to redress the wrong and hold the wrongdoer to account.

Justice Rosenberg did agree with the motions judge on certain points. The difficulty and expense to which MBNA would be put in determining which of its customers had, in fact, been charged interest at a criminal rate was a relevant factor in the analysis. If a large number of transactions had to be examined individually, that did suggest that the claims of customers were not suited to a class proceeding – although such a conclusion would have the effect of leaving any wrongdoing undeterred and unpunished.

In order to address the concern that individual examination of claims would not be desirable in a class proceeding (while not conceding that it would be impossible), the proposed representative plaintiff reformulated the claim to provide for an assessment of damages in the aggregate, to be shared amongst the class on an average or proportionate basis, without proof of individual claims. Justice Rosenberg accepted that this approach was viable, as it would leave no questions of law or fact, except those relating to the assessment of monetary relief, to be determined (as required by s. 24(1)(b) of the Class Proceedings Act). To say otherwise would, in his view, permit large institutions that allegedly make large illegal profits from millions of small, individual transactions to be effectively immune from suit by their customers. Entitlement to monetary relief may depend on individual assessments, but certification may still be allowed where potential liability can be established on a class-wide basis.

Justice Rosenberg relied on Gilbert v. Canadian Imperial Bank of Commerce, [2004] O.J. No. 4260 (S.C.J.), where a class proceeding was certified and a settlement approved in a case involving allegations of undisclosed and unauthorised charges on foreign exchange transactions on credit-card accounts. The class comprised all cardholders as of a certain date. The settlement amount was apportioned among class members in payments which the judge admitted were arbitrary, and not representative of amounts actually charged or available only to class members with valid claims – but which nevertheless fell within the spirit and intentions of the Class Proceedings Act.

Justice Rosenberg also discussed the defendant’s argument that the voluntariness of the payment of interest at a criminal rate provided an exemption from Criminal Code liability, based on the Supreme Court of Canada’s having held in two cases that where such a payment arises from the voluntary act of the debtor (for example, a voluntary mortgage pre-payment), there will be no violation.1 Justice Rosenberg accepted that the decision to receive a cash advance, when to repay it and whether to make additional credit purchases could be regarded as voluntary acts on the part of the customer, and that the voluntariness defence could therefore be a common issue in the litigation.

With respect to preferable procedure, Justice Rosenberg concluded that refusing to allow the claim to go forward as a class proceeding would deprive MBNA’s customers of the ability to obtain disgorgement of the bank’s profits, which would not be available to them if the plaintiff were obliged to pursue an individual action. The preferability analysis ought to consider the three advantages of class proceedings (promoting judicial economy, access to justice and behaviour modification) in light of the common issues seen in context, other available procedures, and whether a class proceeding would be a fair, efficient and manageable method of advancing the claim – and not, as the motions judge appeared to have done, to analyse each of these principles separately. Here, the Court of Appeal concluded that consideration of the preferability principles as a whole strongly weighed in favour of certification.

Unfortunately, the decision leaves uncertain the issue of what constitutes an inappropriate charge that may be characterized as a criminal rate of interest.


1. Degelder Construction Co. v. Dancorp Developments Ltd., [1998] 3 S.C.R. 90; nelson v. C.T.C. Mortgage Corp., [1986] 1 S.C.R. 749.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions