Pozzan v Gibbons (No 2)

In the matter of Pozzan v Gibbons (No 2), the plaintiff, having been awarded a substantial money judgment, sought an award of interest on the judgment at the default rate of 20% as per the loan agreement between the parties. The defendant, Gibbons, argued against the application of this rate post-judgment, and the case reached the court for determination of the applicable interest rate on the judgment.

The legal issues central to this case were whether the Supreme Court Rules could confer a discretion on the court to award interest at a rate other than the statutory rate and whether such a rule, if it existed, was consistent with the Supreme Court Act 1935. Specifically, the court had to determine the applicability of the loan agreement's interest rate provisions to the post-judgment interest, given that the borrower had defaulted and the lender sought interest at the default rate stipulated in the agreement.

The court held that there is no discretion to award interest on a judgment other than at the statutory rate outlined in the rules of court. The court found that Supreme Court Rules r 84.19, which purported to confer a discretion on the court to award interest at a rate other than the statutory rate, was inconsistent with s 114 of the Supreme Court Act 1935 and was therefore pro tanto invalid. The court reasoned that the statutory scheme established by the Supreme Court Act 1935 did not allow for any variation from the prescribed rate of interest on judgments, and any rule that suggested otherwise was void to the extent of its inconsistency with the Act.

As a result, the court determined that the interest on the judgment must be calculated at the statutory rate prescribed by the rules of court, rather than at the default rate specified in the loan agreement. This decision ensures that the statutory interest rate remains the standard for all judgments, barring any explicit legislative change to the interest rate provisions.