COURT OF APPEAL FOR BRITISH COLUMBIA  
Citation:  
Community Savings Credit Union v.  
Bodnar,  
2022 BCCA 263  
Date: 20220729  
Docket: CA46551  
Between:  
Community Savings Credit Union, North Shore Credit Union,  
Chemainus Credit Union, Comox Valley Credit Union,  
Kootenay Savings Credit Union, VantageOne Credit Union,  
Village Credit Union, Greater Vancouver Community Credit Union,  
Coastal Community Credit Union and Vancouver City Savings Credit Union  
Appellants  
(Defendants)  
And  
Andrew Bodnar and John Humphrey  
Respondents  
(Plaintiffs)  
Brought under the Class Proceedings Act, R.S.B.C. 1996, c. 50  
Before:  
The Honourable Mr. Justice Groberman  
The Honourable Mr. Justice Harris  
The Honourable Mr. Justice Grauer  
On appeal from: An order of the Supreme Court of British Columbia, dated  
November 4, 2019 (Bodnar v. Community Savings Credit Union, 2019 BCSC 1885,  
Vancouver docket S047104).  
Counsel for the Appellant:  
(via videoconference)  
P.R. Bennett  
M.W. Mounteer  
Counsel for the Respondent:  
(via videoconference)  
R.J.H. Berrow  
J.M. Campbell  
Place and Date of Hearing:  
Place and Date of Judgment:  
Vancouver, British Columbia  
November 1213, 2020  
Vancouver, British Columbia  
July 29, 2022  
Community Savings Credit Union v. Bodnar  
Page 2  
Written Reasons by:  
The Honourable Mr. Justice Groberman  
Concurred in by:  
The Honourable Mr. Justice Harris  
The Honourable Mr. Justice Grauer  
Community Savings Credit Union v. Bodnar  
Summary:  
Page 3  
Under the Criminal Code, credit union charges exceeding $5.00 per transaction for  
overdrafts are considered interest. Until 2003, the defendants, unaware of the  
provision, imposed higher overdraft charges. Where overdrafts were small or  
outstanding for short periods, the resulting interest rate exceeded the criminal  
interest rate. In this class proceeding, the plaintiffs seek damages for unjust  
enrichment, or under provincial consumer protection legislation. At trial, the judge  
determined several common issues, finding that unjust enrichment could be  
determined on a class-wide basis, and that the appropriate remedy was to allow the  
credit unions to retain only $2.50 of the overdraft charges. He found that  
infringement of the Criminal Code provision constituted an “unconscionable act or  
practicefor the purpose of provincial legislation. Further, he held that for  
transactions that occurred more than six years before the writ was filed, the  
postponement provision of the Limitation Act could be invoked based on the  
plaintiffs’ lack of knowledge of the Criminal Code provision. On appeal, held: Appeal  
allowed in part. The only error made by the trial judge was in the exercise of  
remedial discretion. Forjay Management Ltd. v. 625536 B.C. Ltd., 2020 BCCA 70,  
decided after the judge’s decision, indicates that the court’s discretion over remedy  
is limited: it may deny the lender all recovery; limit its recovery to principal only; or  
limit the recoverable interest to the maximum under the Criminal Code. Here, the  
judge should have allowed the credit unions to retain a $5.00 overdraft charge per  
transaction.  
Community Savings Credit Union v. Bodnar  
Page 4  
Table of Contents  
Paragraph  
THE CRIMINAL CODE PROVISION AND THE  
OVERDRAFT FEES  
[7]  
UNJUST ENRICHMENT  
[12]  
[13]  
[19]  
[36]  
[37]  
[42]  
Enrichment of the Defendants  
Corresponding Deprivation of the Plaintiffs  
Lack of Juristic Reason for the Enrichment  
The First Stage of the Analysis Established Categories  
Second Stage of the Analysis Residual Reasons to Deny  
Recovery  
Enforceability of Contracts that Violate the Criminal Interest  
Provision of the Criminal Code and the Concept of Notional  
Severance  
[54]  
Did the Judge Err in Exercising his Remedial Discretion?  
[75]  
[75]  
[78]  
[83]  
[86]  
[87]  
[94]  
The Judge’s Reasons  
Were the Judge’s Conclusions Based in Evidence?  
The Addition of a Fifth Consideration  
Providing a Remedy not Allowed under Forjay  
The Appropriate Remedy  
DID A VIOLATION OF THE CRIMINAL CODE  
PROVISION RENDER THE TRANSACTIONS  
UNCONSCIONABLE UNDER THE PROVINCIAL  
STATUTES?  
ISSUES SURROUNDING THE LIMITATION PERIOD  
[102]  
[105]  
[111]  
Does s. 6(3)(f) Apply to Mistakes of Law?  
Was the Question of Whether a Reasonable Person Would  
Have Sought Legal Advice Properly Answered as a Common  
Issue?  
CONCLUSION  
[152]  
Community Savings Credit Union v. Bodnar  
Page 5  
Reasons for Judgment of the Honourable Mr. Justice Groberman:  
[1]  
This is an appeal from the determination of common issues in a class  
proceeding. The representative plaintiffs, on behalf of the class, allege that overdraft  
fees charged by eight credit unions until 2003 frequently resulted in effective interest  
rates that exceeded the 60% legal limit established by s. 347 of the Criminal Code,  
R.S.C. 1985, c. C-46. They claim that those who paid such interest rates are entitled  
to be reimbursed under the principles of unjust enrichment, or, alternatively, that  
damages are available to them under the provisions of two British Columbia  
statutes: the Trade Practice Act, R.S.B.C. 1996, c. 457 and the Business Practices  
and Consumer Protection Act, S.B.C. 2004, c. 2 (together, the “Provincial Statutes”).  
[2]  
This longstanding action is now approaching its conclusion. It is clear that up  
until 2003, the eight credit unions imposed overdraft fees that exceeded $5.00 per  
transaction. In a previous judgment, Bodnar v. Community Savings Credit Union,  
2018 BCCA 121, this Court affirmed a finding that the full amount of such overdraft  
charges constituted interest under the Criminal Code. In the judgment under appeal,  
the judge dealt with the remaining common issues in this action, as well as an  
interpretation issue with respect to the limitation period.  
[3]  
The judge determined that, where the imposition of the overdraft charges  
served to increase the effective interest rate beyond the 60% permitted by the  
Criminal Code, the credit unions were unjustly enriched at the expense of the  
members who paid the charges. He was of the view that an equitable remedy would  
be to allow the credit unions to retain only $2.50 of the overdraft charge in respect of  
each transaction.  
[4]  
The judge held, further, that in charging interest rates beyond those permitted  
by the Criminal Code, the credit unions committed unconscionable acts or engaged  
in unconscionable practices under the Provincial Statutes. In the result, members of  
the plaintiff class are entitled to pursue claims for damages under those statutes.  
Community Savings Credit Union v. Bodnar  
Page 6  
[5]  
Finally, the judge considered whether the limitation period for bringing the  
action would have been postponed in respect of members who did not have  
knowledge of the Criminal Code provision or its applicability to their situations. He  
found that, in such circumstances, the provisions of the former Limitation Act,  
R.S.B.C. 1996, c. 266 (which applies to this action) would postpone the running of  
the limitation period.  
[6]  
The credit unions appeal. They argue that:  
a) the question of whether a credit union was unjustly enriched by charging  
interest in excess of the amount allowed by the Criminal Code depended  
on the circumstances of each individual transaction, and ought not to have  
been determined on a class-wide basis;  
b) for those transactions where the overdraft charge pushed the interest rate  
beyond the rate permitted by the Criminal Code, the judge ought to have  
allowed the credit unions to retain an overdraft fee of $5.00 rather than  
$2.50, since a fee of $5.00 would not have been included as “interest”  
under the Criminal Code provision;  
c) the fact that the Criminal Code provision was contravened was not, in and  
of itself, sufficient to make the transactions unconscionable under the  
Provincial Statutes;  
d) the judge erred in finding that the limitation period could be postponed by  
virtue of class members’ lack of awareness that the overdraft charge was  
unlawful, and further erred in making determinations with respect to the  
postponement provision on a class-wide basis.  
The Criminal Code Provision and the Overdraft Fees  
[7]  
At material times, the Criminal Code provision establishing a criminal rate of  
interest read as follows:  
347. (1)… [E]very one who enters into an agreement or arrangement to  
receive interest at a criminal rate … is  
guilty of … [an offence].  
(2) In this section,  
credit advancedmeans the aggregate of the money … advanced …  
under an agreement or arrangement …;  
 
Community Savings Credit Union v. Bodnar  
criminal ratemeans an effective annual rate of interest calculated in  
Page 7  
accordance with generally accepted actuarial practices and principles  
that exceeds sixty per cent on the credit advanced under an  
agreement or arrangement;  
interest” means the aggregate of all charges and expenses … paid or  
payable for the advancing of credit under an agreement or  
arrangement, … but does not include any … overdraft charge …;  
overdraft chargemeans a charge not exceeding five dollars for the  
creation of or increase in an overdraft, imposed by a credit union …  
[8]  
It is common ground that, at least for periods between November 20, 1997  
and February 1, 2003 the charges imposed by the eight credit unions for creating or  
increasing an overdraft exceeded $5.00:  
Chemainus Credit Union imposed a $15 overdraft charge beginning  
December 3, 2000;  
 Community Savings Credit Union imposed a $17 overdraft charge;  
 Comox Valley Credit Union imposed a $15.00 overdraft charge beginning  
June 1, 2000;  
 Greater Vancouver Community Credit Union imposed a $6 overdraft charge  
beginning February 1, 2002;  
Kootenay Savings Credit Union imposed a $10 overdraft charge, which was  
increased to $12.50 on July 1, 1998. In addition, it imposed a daily overdraft  
charge of $5.00 for each day that an account remained in overdraft. In some  
situations (including all cases where the overdraft was less than $25.00),  
these charges may have been waived or refunded;  
North Shore Credit Union imposed a $20 overdraft charge;  
VantageOne Credit Union imposed a $6 overdraft charge; and  
Village Credit Union imposed an $8 overdraft charge, which was increased to  
$25 in May 1998.  
[9]  
The remaining two credit union defendants are joined in this action as  
successors to three of the eight credit unions in the list above. Coastal Community  
Credit Union acquired Chemainus Credit Union on July 31, 2004 and Comox Valley  
Credit Union on January 1, 2005; Vancouver City Savings Credit Union (which does  
business under the name “VanCity”) acquired Village Credit Union on July 1, 2005.  
Community Savings Credit Union v. Bodnar  
Page 8  
For the sake of completeness, I should also note counsel’s advice that North Shore  
Credit Union is now known as “BlueShore Financial.”  
[10] Because credit union overdraft fees exceeding $5.00 are considered interest  
charges, the interest on modest overdrafts that were outstanding for short periods of  
time often exceeded the Criminal Code’s limit of 60% per annum. The actuarial  
evidence in this case established, for example, that with a $6.00 overdraft charge  
and an overdraft period of one week, the overdraft charge alone would exceed the  
criminal rate of interest where the overdraft amount was less than $662.66. The  
evidence indicates that overdrafts of less than $500 and overdraft durations of less  
than one week were common.  
[11] It is not suggested that the credit unions deliberately flouted s. 347 of the  
Criminal Code. Rather, they seem not to have been aware of it until it was brought to  
their attention in February 2003. By July of that year, all the credit unions had  
reduced their overdraft charges to $5.00.  
Unjust Enrichment  
[12] It is well-established that there are three elements that must be proven to  
establish unjust enrichment: an enrichment of the defendant; a corresponding  
deprivation of the plaintiff; and an absence of a juristic reason for the enrichment  
(see Garland v. Consumers’ Gas Co., 2004 SCC 25 at para. 30).  
Enrichment of the Defendants  
[13] In the Court below, the credit unions contended that they had not been  
enriched by the receipt of overdraft charges. They said that because they are non-  
profit entities and are member owned, their receipt of overdraft charges did not  
benefit them. Rather, the benefits were wholly distributed to the credit union’s  
members in the form of enhanced services, reduced fees for other services,  
dividends, or other benefits.  
[14] In this Court, while the credit unions continue to emphasize that they did not  
profit from the impugned transactions, they do concede that the first element of  
   
Community Savings Credit Union v. Bodnar  
Page 9  
unjust enrichment is made out and properly so. The Supreme Court of Canada  
has endorsed a “straightforward economic approach” to the question of whether  
there has been an enrichment of the defendant and a corresponding deprivation of  
the plaintiff (Pacific National Investments Ltd. v. Victoria (City), 2004 SCC 75 at  
para. 15). It has consistently rejected arguments to the effect that broader  
considerations should be taken into account to determine whether the transfer of a  
tangible benefit actually enriched the defendant.  
[15] For example, in Pacific National Investments, the City of Victoria argued that  
the transfer to it of roads, parkland, walkways, and a new seawall did not constitute  
an enrichment. Rather, it argued that the benefits accrued to its residents and  
visitors, and that the City of Victoria, itself, merely acquired a duty to expend money  
to maintain the amenities. The Court rejected the argument outright, saying simply:  
[19]  
The City’s present argument that the extra works and improvements it  
demanded are not an enrichment but something of a burden should be  
rejected.  
[16] Similarly, in Garland the defendant charged late payment penalties on gas  
bills. Those penalties were found, like the overdraft charges in the current case, to  
constitute interest and to cause the level of interest to exceed the rate permitted  
under s. 347 of the Criminal Code. In the Ontario Court of Appeal, Consumers’ Gas  
succeeded in its argument that the late payment fees did not enrich it, because the  
increased revenue it received was used to decrease gas rates rather than to  
increase profits. The Supreme Court of Canada summarized the reasoning of the  
majority of the Ontario Court of Appeal as follows:  
[33]  
… McMurtry C.J.O. found that while payment of money would  
normally be a benefit, it was not in this case. He claimed to be applying the  
straightforward economic approachas recommended in [Peter v. Beblow,  
[1993] 1 S.C.R. 980], but accepted the respondent’s argument that because  
of the rate structure of the [Ontario Energy Board], the respondent had not  
actually been enriched. Because [Late Payment Penalties] were part of a  
scheme designed to recover the respondent’s overall revenue, any increase  
in [Late Payment Penalties] was off-set by a corresponding decrease in  
regular rates. Thus McMurtry C.J.O. concluded, [t]he enrichment that follows  
from the receipt of [Late Payment Penalties] is passed on to all [Consumers’  
Gas] customers in the form of lower gas delivery rates” (para. 65). As a  
Community Savings Credit Union v. Bodnar  
Page 10  
result, the real beneficiary of the scheme is not the respondent but is rather  
all of the respondent’s customers.  
[17] The Supreme Court rejected that reasoning, preferring the view of the  
minority in the Ontario Court of Appeal. Iacobucci J, speaking for the unanimous  
Court, said:  
[36]  
I agree with the analysis of Borins J.A. on this point. The law on this  
question is relatively clear. Where money is transferred from plaintiff to  
defendant, there is an enrichment. Transfer of money so clearly confers a  
benefit that it is the main example used in the case law and by commentators  
of a transaction that meets the threshold for a benefit (see [Peel (Regional  
Municipality) v. Canada, [1992] 3 S.C.R. 762] at p. 790; Sharwood & Co. v.  
Municipal Financial Corp. (2001), 53 O.R. (3d) 470 (C.A.), at p. 478;  
P.D. Maddaugh and J.D. McCamus, The Law of Restitution (1990), at p. 38;  
Lord Goff and G. Jones, The Law of Restitution (6th ed. 2002), at p. 18).  
There simply is no doubt that Consumers’ Gas received the monies  
represented by the LPPs and had that money available for use in the carrying  
on of its business. The availability of those funds constitutes a benefit to  
Consumers’ Gas. We are not, at this stage, concerned with what happened to  
this benefit in the ongoing operation of the regulatory scheme.  
[18] The analysis in Garland governs the case before us, and the trial judge  
properly rejected the credit unions’ argument. The credit unions’ use of the funds to  
enhance their operations or to benefit their members is not relevant to the threshold  
issue of whether there was an enrichment. The payment of overdraft charges by  
members of the plaintiff class to the credit unions amounted to an enrichment.  
Corresponding Deprivation of the Plaintiffs  
[19] Though now conceding the element of enrichment, the credit unions still  
maintain that members of the plaintiff class who paid the overdraft charges did not  
necessarily suffer a deprivation corresponding to the enrichment, so that the second  
element of unjust enrichment has not been made out on a class-wide basis.  
[20] In fact, the credit unions contend that most members who paid the overdraft  
fees were actually benefitted by doing so. They say that the credit unions, rather  
than granting the overdrafts and collecting the fee, could simply have refused to  
honour cheques or transfers that put accounts into overdraft. A cheque or payment  
refused on the basis that there were not sufficient funds in the account to cover it  
 
Community Savings Credit Union v. Bodnar  
Page 11  
(generally referred to as an “NSF” return) could have serious negative repercussions  
for the member, particularly if it resulted in a default on a legal obligation. Even  
without legal repercussions, however, an NSF return would, in many cases, result in  
personal embarrassment and inconvenience for the member. Further, the credit  
unions point out that their charges for NSF returns were at least as high as their fees  
for creating or increasing an overdraft. The comparison is as follows:  
Institution  
Overdraft Charge  
(as detailed earlier in  
this judgment)  
$15.00  
Corresponding  
NSF Return  
Fee  
Chemainus Credit Union  
Community Savings Credit Union  
Comox Valley Credit Union  
Greater Vancouver Community  
Credit Union  
$20.00  
$22.00  
$25.00  
$26.00  
$17.00  
$15.00  
$6.00  
Kootenay Savings Credit Union  
$10.00,  
then $12.50  
plus daily overdraft fee  
$20.00  
$17.50  
then $20.00  
North Shore Credit Union  
VantageOne Credit Union  
Village Credit Union  
$20.00  
$21.00  
$28.00  
$6.00  
$8.00  
then $25.00  
then $25.00  
[21] The members who overdrew their accounts, the credit unions argue, did not  
experience any deprivation. Rather, they were afforded the privilege of having their  
NSF cheques or payments honoured and were not charged a premium for that  
privilege.  
[22] The credit unions quote from Air Canada v. British Columbia, [1989] 1 S.C.R.  
1161 at 1202, for the proposition that “[t]he law of restitution is not intended to  
provide windfalls to plaintiffs who have suffered no loss.”  
[23] I am not convinced that the issue is as straightforward as the credit unions  
suggest. Air Canada involved a claim by airlines that British Columbia had been  
unjustly enriched through the imposition of an unconstitutional gasoline tax. The  
case raised several complex issues. Among the defences advanced by British  
Columbia was that the airlines had increased their fares to cover the tax, and had  
Community Savings Credit Union v. Bodnar  
Page 12  
not, therefore, suffered a resulting deprivation. This has been termed the “passing  
on defence.”  
[24] Only six judges participated in the Air Canada decision. The judgment of  
Justice La Forest was the majority judgment, attracting the support of five members  
of the Court. While the quotation cited by the credit unions comes from that  
judgment, it comes from a portion endorsed by only three judges.  
[25] It is important to note that the Air Canada case pre-dates the systematic  
approach to unjust enrichment articulated in Garland. Justice La Forest, himself,  
commented that “it will take some time for the courts to work out the limits of the  
developing law of restitution(at 1202). His statement that “[t]he law of restitution is  
not intended to provide windfalls to plaintiffs who have suffered no loss” was not  
posited as the overarching principle of the law of restitution, but rather as a rationale  
for the passing on defence. Even in respect of that passing on defence, however,  
the Supreme Court of Canada has subsequently refused to endorse what was said  
in Air Canada. In Kingstreet Investments Ltd. v. New Brunswick (Finance), 2007  
SCC 1, the Court said:  
[45]  
The defence of passing on has developed almost exclusively in the  
context of recovery of taxes and other charges paid under a mistake of law.  
If, as La Forest J. suggests in Air Canada, [t]he law of restitution is not  
intended to provide windfalls to plaintiffs who have suffered no loss” (p.  
1202), then the defence ought to have arisen in other contexts as well. At the  
very least, the defence of passing on should also apply to mistaken  
payments, whether of fact or law, but such has generally not been the case in  
Canada (see [Peter D. Maddaugh and John D. McCamus. The Law of  
Restitution, Aurora, Ont.: Canada Law Book, 2004 (looseleaf updated  
September 2005)] at p 11-46). Professors Maddaugh and McCamus suggest  
that the reason the defence has not been applied outside the context of ultra  
vires taxes is because it is inconsistent with the basic principles of  
restitutionary law. They argue that “the mere fact that the taxpayer has  
mistakenly paid, with its own money, the revenue authority is sufficient to  
establish an unjust enrichment at the plaintiff’s expense. As between the  
taxpayer and the Crown, the question of whether the taxpayer has been able  
to recoup its loss from some other source is simply irrelevant” (p. 11-45).  
[26] The framework for analysis of unjust enrichment claims has been  
comprehensively set out in cases subsequent to Air Canada, particularly in Garland,  
Community Savings Credit Union v. Bodnar  
Page 13  
Kerr v. Baranow, 2011 SCC 10, and in Moore v. Sweet, 2018 SCC 52. It is, in my  
view, neither necessary nor helpful to try to reconcile the obiter comments of Justice  
La Forest in Air Canada with the subsequent jurisprudence. It is that subsequent  
jurisprudence that must govern.  
[27] It will often be the case that a defendant in an unjust enrichment action can  
show that the plaintiff has received some benefit from the transactions giving rise to  
the claim, and was, in some sense, “better off” than they would have been if the  
impugned transactions had not occurred. In applying the “straightforward economic  
analysis”, the Supreme Court of Canada has consistently refused to consider  
collateral benefits at the initial stages of the unjust enrichment analysis.  
[28] For example, in Peter v. Beblow, [1993] 1 S.C.R. 980, the defendant argued  
that his common-law wife and her children had enjoyed rent-free accommodations  
during the relationship, so that her contributions to the acquisition, maintenance and  
improvement to property did not give rise to unjust enrichment. That argument was  
not successful.  
[29] In Pacific National Investments, Victoria argued that the developer had, in the  
end, made a profit on its development, and so, notwithstanding that it had made  
contributions to municipal infrastructure, was better off than it would have been had  
the project not gone forward. Again, the argument was not successful.  
[30] In Kerr, complex issues of “mutual benefits” within a common law relationship  
were discussed at length. The Court provided a framework for dealing with those  
issues and indicated that they were not to be resolved at the initial stages of the  
unjust enrichment analysis (see also earlier statements to similar effect by the  
majority in Wilson v. Fotsch, 2010 BCCA 226 at para. 19).  
[31] The “straightforward economic approach” to the first two elements of unjust  
enrichment is not, then, a complex accounting exercise. Where a defendant has  
transferred a tangible benefit to the plaintiff, a court simply considers what the  
plaintiff gave and what the defendant received. It is not the function of the court, at  
Community Savings Credit Union v. Bodnar  
Page 14  
that stage of the analysis, to consider collateral benefits received by the plaintiff, nor  
is it to consider what events might have transpired if the impugned transaction had  
not occurred. The initial analysis was succinctly summarized by Justice Cromwell  
speaking for a unanimous Court in Kerr:  
[36]  
The first and second steps in the unjust enrichment analysis concern  
first, whether the defendant has been enriched by the plaintiff and second,  
whether the plaintiff has suffered a corresponding deprivation.  
[37]  
The Court has taken a straightforward economic approach to the first  
two elements enrichment and corresponding deprivation. Accordingly,  
other considerations, such as moral and policy questions, are appropriately  
dealt with at the juristic reason stage of the analysis: see Peter, at p. 990,  
referring to [Pettkus v. Becker, [1980] 2 S.C.R. 834], Sorochan v. Sorochan,  
[1986] 2 S.C.R. 38, and [Peel (Regional Municipality) v. Canada] affirmed in  
Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at  
para. 31.  
[38]  
For the first requirement enrichment the plaintiff must show that  
he or she gave something to the defendant which the defendant received and  
retained. The benefit need not be retained permanently, but there must be a  
benefit which has enriched the defendant and which can be restored to the  
plaintiff in specie or by money. Moreover, the benefit must be tangible. It may  
be positive or negative, the latter in the sense that the benefit conferred on  
the defendant spares him or her an expense he or she would have had to  
undertake (Peel, at pp. 788 and 790; Garland, at paras. 31 and 37).  
[39]  
Turning to the second element a corresponding deprivation the  
plaintiff’s loss is material only if the defendant has gained a benefit or been  
enriched (Peel, at pp. 789-90). That is why the second requirement obligates  
the plaintiff to establish not simply that the defendant has been enriched, but  
also that the enrichment corresponds to a deprivation which the plaintiff has  
suffered (Pettkus, at p. 852; [Rathwell v. Rathwell, [1978] 2 S.C.R. 436], at  
p. 455).  
[32] Here, the credit unions received overdraft charges (and interest) on  
overdrafts. The money received by the credit unions was paid directly by the  
members who overdrew their accounts. Those facts establish the first two elements  
of the unjust enrichment analysis.  
[33] The difficulty with the credit unions’ argument that the judge should have  
considered the consequences of an NSF return is that it conflates the consequences  
of not being granted credit with the deprivation that a member experienced in paying  
an overdraft charge. The transaction impugned in the current action is that of the  
credit union furnishing an overdraft but charging excessive interest on it. It is that  
Community Savings Credit Union v. Bodnar  
Page 15  
transaction that must be analysed to determine whether the credit unions were  
enriched and the borrowers correspondingly deprived. The consequences of an NSF  
return are not directly relevant to that inquiry.  
[34] I note, in any event, the credit unions’ underlying presumption — that the only  
possibilities were that the borrowers paid the unlawful overdraft charge or faced the  
inconvenience, embarrassment, and costs of an NSF return does not stand up to  
scrutiny. An obvious third possibility is that the credit union could have allowed the  
overdraft without charging an illegal fee for it. Indeed, after February 2003, credit  
unions lowered their overdraft charges to $5.00. All continued to evaluate situations  
where there were insufficient funds to cover a cheque or transfer, and all continued  
to grant overdrafts when they considered it prudent to do so. Further, there is no  
evidence of any increase in the rate of NSF returns by the credit unions after the  
change was made, except in the case of Kootenay Savings Credit Union, which  
does say that its criteria for granting overdrafts became more stringent after the fees  
were lowered.  
[35] The judge correctly determined that the credit unions were enriched when  
they received overdraft fees, and those that paid the overdraft charges suffered a  
corresponding deprivation.  
Lack of Juristic Reason for the Enrichment  
[36] Once it has been shown that the defendant was enriched and the plaintiff  
suffered a corresponding deprivation, the unjust enrichment analysis turns to the  
question of whether there is an absence of “juristic reason” for the enrichment. The  
structure of the analysis was established by the Supreme Court of Canada in  
Garland, particularly at paras. 4446. The Court summarized and elaborated upon  
the analysis in the majority judgment in Moore v. Sweet:  
[56]  
In Garland … Iacobucci J. formulated a juristic reason analysis that  
proceeds in two stages.  
[57]  
The first stage requires the plaintiff to demonstrate that the  
defendant’s retention of the benefit at the plaintiff’s expense cannot be  
justified on the basis of any of the “established” categories of juristic reasons:  
a contract, a disposition of law, a donative intent, and other valid common  
 
Community Savings Credit Union v. Bodnar  
Page 16  
law, equitable or statutory obligations (Garland, at para. 44; Kerr, at para. 41).  
If any of these categories applies, the analysis ends; the plaintiff’s claim must  
fail because the defendant will be justified in retaining the disputed benefit.  
For example, a plaintiff will be denied recovery in circumstances where he or  
she conferred a benefit on a defendant by way of gift, since there is nothing  
unjust about a defendant retaining a gift of money that was made to him or  
her by (and that resulted in the corresponding deprivation of) the plaintiff. In  
this way, these established categories limit the subjectivity and discretion  
inherent in the unjust enrichment analysis and help to delineate the  
boundaries of this cause of action (Garland, at para. 43).  
[58]  
If the plaintiff successfully demonstrates that none of the established  
categories of juristic reasons applies, then he or she has established a prima  
facie case and the analysis proceeds to the second stage. At this stage, the  
defendant has an opportunity to rebut the plaintiff’s prima facie case by  
showing that there is some residual reason to deny recovery (Garland, at  
para. 45). The de facto burden of proof falls on the defendant to show why  
the enrichment should be retained. In determining whether this may be the  
case, the court should have regard to two considerations: the parties’  
reasonable expectations and public policy (Garland, at para. 46; Kerr, at  
para. 43).  
[59]  
This two-stage approach to juristic reason was designed to strike a  
balance between the need for predictability and stability on the one hand, and  
the importance of applying the doctrine of unjust enrichment flexibly, and in a  
manner that reflects our evolving perception of justice, on the other.  
The First Stage of the Analysis Established Categories  
[37] In respect of the first stage of the juristic reason analysis, the “established  
category” of juristic reason in this case is contract. The overdraft charges were, in all  
cases, imposed pursuant to the terms of the credit unions’ account agreements with  
its members. The difficulty, of course, is that the agreements provided for overdraft  
charges that, in many cases, resulted in violations of the Criminal Code. A  
contractual provision that is inoperative because it conflicts with the criminal law is  
not a juristic reason for enrichment: see Kilroy v. A OK Payday Loans Inc., 2006  
BCSC 1213 at paras. 2627, aff’d. 2007 BCCA 231; and Garland at para. 51.  
[38] The fact that the contracts contravened the Criminal Code, however, does not  
preclude them from furnishing a juristic reason for at least part of the enrichment.  
Canadian courts have long since abandoned the proposition that contractual  
provisions that violate statutory enactments are necessarily void ab initio. In  
Transport North American Express Inc. v. New Solutions Financial Corp., 2004 SCC  
 
Community Savings Credit Union v. Bodnar  
Page 17  
7, the Court specifically addressed the question of the degree to which contracts that  
violate s. 347 of the Criminal Code can be enforced. Justice Arbour, speaking for the  
majority, said:  
[4]  
There is broad consensus that the traditional rule that contracts in  
violation of statutory enactments are void ab initio is not the approach courts  
should necessarily take in cases of statutory illegality involving s. 347 of the  
Code. Instead, judicial discretion should be employed in cases in which  
s. 347 has been violated in order to provide remedies that are tailored to the  
contractual context involved….  
[39] Though the Supreme Court of Canada ultimately overturned the judgment of  
the Ontario Court of Appeal (reported as Transport North American Express Inc. v.  
New Solutions Financial Corp. (2002), 60 O.R. (3d) 97), the judgment of the majority  
in the Supreme Court of Canada quoted from the following passage of the majority  
judgment of the Ontario Court of Appeal with approval at para. 31:  
[33]  
I agree with the British Columbia Court of Appeal in [Terracan Capital  
Corp. v. Pine Projects Ltd. (1993), 100 D.L.R. (4th) 431(B.C.C.A.)] that a  
judge has discretion to apply the doctrine of severance to an agreement that  
offends the criminal interest rate provisions of the Code. This discretion gives  
rise to a spectrum of available remedies. Where the loan transaction  
resembles a traditional loan sharking arrangement, the court may refuse to  
apply the doctrine of severance and hold the entire loan agreement  
unenforceable, including the obligation to repay the principal. While this  
remedy leaves the borrower with a windfall, this result may be justified in  
some cases by the need to denounce such usurious practices. See C.A.P.S.  
International Inc. v. Kotello, [2002] M.J. No. 205 [(QL)] (Q.B.). At the other  
end of the spectrum, in the case of a good faith commercial transaction  
where the equities favour the lender and severance does not undermine the  
policy of the legislation, the court may sever only those provisions of the loan  
agreement that put the effective interest rate over 60 per cent, leaving intact  
the borrower's obligation to repay the principal and pay some interest. See  
e.g., [Milani v. Banks (1997), 145 D.L.R. (4th) 55 (O.N.C.A.)]. Closer to the  
centre of the spectrum lies a case like Terracan, where the court severed all  
the interest provisions but upheld the debtor's obligation to repay the  
principal.  
[Emphasis added by Arbour J.]  
[40] I will, later in this judgment, discuss the principles of severance established by  
the Supreme Court of Canada in Transport North American Express, and the degree  
to which they support the validity of the credit unions’ charges. First, though, I will  
Community Savings Credit Union v. Bodnar  
Page 18  
consider whether there is any other plausible juristic reason that can justify the  
enrichment at issue in this action.  
[41] With respect to the first stage of the juristic reason analysis, the credit unions  
have not suggested that any established category of juristic reason for enrichment,  
apart from contract, exists in this case. Accordingly, I will turn, briefly, to the second  
stage of the juristic reason analysis, the search for a residual juristic reason.  
Second Stage of the Analysis Residual Reasons to Deny Recovery  
[42] As discussed in Garland, where a defendant contends that there is a residual  
juristic reason for enrichment (i.e., a reason outside an established category), they  
must demonstrate that it is supported by the reasonable expectations of the parties  
and by public policy.  
[43] In the case before us, the credit unions say that the overdraft charges that  
they imposed were consistent with the reasonable expectations of the parties and  
were not contrary to public policy.  
[44] In making their arguments, the credit unions emphasize that the overdraft  
fees compensated the credit unions for real work and expenses. In the case of each  
overdraft, the credit union was required to make an expeditious decision on whether  
to honour the cheque or payment or, instead, to process it as an NSF return. The  
decision was made only after speedy but thorough examinations of the  
circumstances. Those examinations included such matters as the history of the  
account, the member’s other assets with the credit union, and the likelihood the  
situation of insufficient funds in the account would be transitory. In making the  
decision, the credit union might make extensive inquiries, including attempts to  
contact the member.  
[45] The credit unions were put to expense and effort in dealing with overdrafts.  
The affidavits filed in this case show that some credit union staff spent a significant  
proportion of their working hours dealing with inquiries into whether cheques or  
payments that would result in overdrafts should be granted.  
 
Community Savings Credit Union v. Bodnar  
Page 19  
[46] It should be recognized that the provision of the Criminal Code excluding  
overdraft fees from interest calculations has not changed materially since its  
enactment more than forty years ago. The original enactment (as s. 9 of the Small  
Loans Act and Criminal Code Amendment Act, S.C. 1980-81-82-83, c. 43) allowed  
overdraft charges to be excluded from interest calculations, but only if they were  
$5.00 or less. The $5.00 maximum has applied since the provision was brought into  
force on April 1, 1981 (SI/81-63). The original intent of the Criminal Code provision  
appears to have been to allow a reasonable fee to be charged for processing an  
overdraft without that fee being counted as interest. The $5.00 maximum may well  
have been reasonable in 1981, but based on the material before the court, it seems  
probable that by the mid-1990s it would not have been sufficient to compensate  
credit unions for the costs of assessing whether or not to honour a cheque or  
payment that would put an account into overdraft.  
[47] The charges made by the credit unions, then, do not appear to be exorbitant.  
They were excessive, it would seem, only by the standards of the Criminal Code.  
The evidence strongly suggests that the parties believed that their affairs were  
governed by the account agreement. The judge made a finding that the credit unions  
were unaware that their overdraft charges put them in violation of the Criminal Code.  
No customer raised the issue until legal action was commenced.  
[48] Nonetheless, it is doubtful that it can be said that the parties had a  
“reasonable expectation” that their affairs would be governed by the account  
agreements. The advancement of overdrafts was an ordinary part of the business of  
credit unions, and it was the credit unions’ obligation to be aware of the laws that  
applied to that part of their business. While I accept that the Criminal Code would not  
be the first place they would look for regulatory provisions, their failure to be aware  
of the provision cannot, as a matter of law, be excused.  
[49] Even if, for the sake of argument, we were to accept that the parties had a  
reasonable expectation that the applicable overdraft charges were those set out in  
the account agreements, it would be difficult to accept that those charges were  
Community Savings Credit Union v. Bodnar  
Page 20  
consistent with the public interest. Section 347 of the Criminal Code specifically  
outlaws the charging of interest in excess of sixty percent per annum. Further it  
explicitly and unequivocally includes all overdraft fees in calculating the interest,  
unless the overdraft fees are $5.00 or less.  
[50] The Criminal Code provisions must have been enacted with full knowledge  
that credit unions perform work in deciding whether to honour a cheque or payment  
that puts an account into overdraft. Those provisions represent Parliament’s  
assessment of the public interest. In maintaining the Criminal Code provision in  
place without modification, it must be assumed that Parliament continues to consider  
that overdraft fees that are over $5.00 should be treated as interest, and that interest  
rates above 60% are contrary to the public interest.  
[51] In that regard, the decision in Garland is instructive. Consumers’ Gas charged  
its customers a late payment penalty that had been approved by the Ontario Energy  
Board. The company had every reason to believe that the charge was a valid one,  
as it had been endorsed by an order of the provincial regulator. Further, the approval  
of the Ontario Energy Board indicates that the charge was not objectively  
unreasonable. In 1994, however, an action against Consumers’ Gas was  
commenced. It alleged that the Ontario Energy Board’s order was inoperative  
because it conflicted with the Criminal Code provision. At that point, Consumers’  
Gas was under notice that its authority to charge the late payment fee was  
challenged.  
[52] The Supreme Court of Canada accepted that the Ontario Energy Board’s  
order constituted a residual juristic reason for the enrichment, but only up until the  
point that Consumers’ Gas had notice that the validity of the order was being  
challenged. Accordingly, the Court required the late payment fees imposed after the  
commencement of the action to be returned to customers. Once Consumers’ Gas  
was aware that the Ontario Energy Board’s order might not be valid, it could no  
longer maintain that it was in the public interest to impose the charges.  
Community Savings Credit Union v. Bodnar  
Page 21  
[53] In the case we are considering, there is nothing akin to an order of a  
Provincial regulatory body that would have been capable of casting doubt on the  
applicability of s. 347. The credit unions have no basis for arguing that it was in the  
public interest for them to violate a clear and subsisting provision of the Criminal  
Code. As such, there is no residual juristic reason for the credit unions’ enrichment.  
Enforceability of Contracts that Violate the Criminal Interest Provision of  
the Criminal Code and the Concept of Notional Severance  
[54] In the result, the only juristic reason capable of supporting the enrichment lies  
in the contractual arrangements between the credit unions and their members. Only  
to the extent that the law is prepared to enforce those contracts do they justify the  
enrichment of the credit unions.  
[55] I return, then, to the decision in Transport North American Express. The main  
issue for the Supreme Court of Canada in that case was how a court can go about  
severing unlawful provisions in a contract from those that are unobjectionable. The  
traditional approach was described as the “blue-pencil” approach, in which a court  
could strike specific clauses from the contract, leaving the balance intact. The judge  
at first instance in Transport North American Express recognized that striking  
specific clauses would do more violence to the parties’ agreement than simply  
reading down the interest payment provisions so that they allowed interest to be  
charged at a rate that was lawful. He described the reading down as a “notional  
severance.”  
[56] The majority judgment of the Ontario Court of Appeal rejected the idea of  
notional severance, holding that the blue-pencil approach was the appropriate one.  
The Supreme Court of Canada reinstated the judgment of the chambers judge,  
finding that “notional severance” was an available remedy:  
[32]  
If the case is an appropriate one for the court to sever only those  
provisions of the loan agreement that put the effective interest rate over 60  
percent, and if it is conceded, as it must be, that such a rewording alters the  
agreement of the parties, the question becomes only a choice of the  
appropriate technique of severance. The preferred severance technique is  
the one that, in light of the particular contractual context involved, would most  
appropriately cure the illegality while remaining otherwise as close as  
 
Community Savings Credit Union v. Bodnar  
Page 22  
possible to the intentions of the parties expressed in the agreement. The  
blue-pencil technique may not necessarily achieve that result.  
[57] The Court described the appropriate approach as follows:  
[40]  
[T]he appropriate approach is to vest the greatest possible amount  
of remedial discretion in judges in courts of first instance. The spectrum of  
available remedies runs from a court holding contracts in violation of s. 347  
void ab initio, in the most egregious and abusive cases, according to the  
criteria identified in [William E. Thomson Associates Inc. v. Carpenter (1989),  
61 D.L.R. (4th) 1], to notional severance. In the determination of where along  
the spectrum a particular contract lies, the considerations identified in  
Thomson by Blair J.A. should be referred to and analysed carefully. Although  
Blair J.A. was considering the desirability of severing illegal interest from  
principal, the same factors are helpful in determining whether to reduce illegal  
interest to a legal level.  
[58] The Court described the Thomson criteria as follows:  
[42]  
As outlined above, in Thomson, Blair J.A. identified four  
considerations relevant to the determination of whether public policy ought to  
allow an otherwise illegal agreement to be partially enforced rather than being  
declared void ab initio in the face of illegality in the contract:  
1. whether the purpose or policy of s. 347 would be subverted by  
severance;  
2. whether the parties entered into the agreement for an illegal purpose  
or with an evil intention;  
3. the relative bargaining positions of the parties and their conduct in  
reaching the agreement;  
4. the potential for the debtor to enjoy an unjustified windfall.  
[59] In Forjay Management Ltd. v. 625536 B.C. Ltd., 2020 BCCA 70, the Court  
clarified the nature of the discretion given to a trial judge in giving a remedy involving  
“notional severance.”  
[60] The parties in Forjay had entered into a second mortgage agreement for a  
one-year term. The nominal interest rate on the mortgage was 12%, but of the  
$10 million amount secured by the mortgage, $4 million represented fees paid to the  
lenders (two fees of $2 million each). The judge accepted actuarial evidence  
establishing that the effective interest rate on the transaction was 91.28%.  
Community Savings Credit Union v. Bodnar  
Page 23  
[61] The judge purported to impose a notional severance remedy. She severed  
one of the $2 million fees, removing the obligation to pay it entirely, and increased  
the nominal mortgage rate to 18%. She further ordered that the overall effective  
annual interest rate should not exceed 40%.  
[62] This Court considered that the judge had misinterpreted the scope of the  
discretion granted in Transport North American Express:  
[52]  
… [T]he judge understood Transport’s “spectrum of remedies” to  
include a reading down to any legal rate of interest in combination with  
severance and/or modification of terms. In my view, the spectrum of remedies  
identified at para. 40 in Transport is much narrower. It consists of three  
options:  
1)  
2)  
3)  
voiding the contract ab initio;  
striking out a term or terms of the contract; or  
reading down the interest rate to 60%.  
[63] These three remedies are those specifically mentioned in Transport North  
American Express. While the Supreme Court of Canada stated, in that case, that its  
intention was to “vest the greatest possible amount of remedial discretion in judges  
in courts of first instance”, Forjay appears to interpret that comment as being  
directed to which of the three remedies is chosen rather than to the ability to fashion  
more creative remedies.  
[64] Forjay, then, indicates that in deciding the extent to which a contract that  
provides for the payment of interest at a criminal rate is enforceable, the judge’s  
discretion is limited to choosing among three forms of remedy: holding that the  
contract is void, severing particular provisions of the contract (what has been called  
the “blue-pencil” approach to severance), and notional severance to bring the  
interest rate down to the legal rate. Forjay does not allow for a judge to adopt a  
“chancellor’s foot” approach to remedy, fashioning an arbitrary solution that seems  
to do justice according to the judge’s own conscience. That is not to say, however,  
that judge may not adapt the form of remedy approved in Forjay to fit the nature of  
the particular transaction in question.  
Community Savings Credit Union v. Bodnar  
Page 24  
[65] In Forjay, this Court cites two of its earlier judgments: Wei v. Li, 2019 BCCA  
114, and Eha v. Genge, 2007 BCCA 258. In Wei, the plaintiff sued to enforce a  
judgment rendered in China that included a provision for interest to run at 0.2% per  
day. The trial judge accepted that the rate was equal to 73% per annum and agreed  
that the rate should reduced through notional severance to 60% per annum. On  
appeal, the majority in this Court agreed:  
[42]  
Transport v. New Solutions calls for the severance of a criminal  
rate of interest and its replacement by the rate of 60% where the four criteria  
discussed above are met. According to the summary trial judge’s findings,  
they were met in this case. Why should notional severance not be available in  
respect of foreign judgments in the same way as it is for domestic  
judgments?  
[66] In Eha v. Genge, an individual lent money to a friend, with an agreement for  
interest at a rate of 10% per month. The trial judge concluded that the loan  
arrangement was objectionable and held the contract to be void ab initio, such that  
the lender was disentitled from claiming repayment of the principal as well as  
interest.  
[67] This Court found that the judge had erred in giving such a remedy:  
[13]  
I consider the judge was required to do a much fuller contextual  
analysis than he performed in the present case. The reliance placed upon  
[Kotello v. Dimerman, 2006 MBCA 77] was misplaced and greater weight  
should have been placed on the case of Transport. If the judge had  
performed the sort of analysis suggested by the Supreme Court of Canada at  
para. 41 of that case, I am satisfied he would not have reached the  
conclusion he did.  
[68] This Court considered that the circumstances were not akin to loan-sharking,  
and that the judge had exceeded his discretion in finding the transaction to be void  
ab initio. This Court severed the interest payment provisions, and ordered that the  
defendant repay the principal, along with pre-judgment interest at the more modest  
statutory rates.  
[69] The jurisprudence of this Court, then, requires a trial judge to carefully  
consider the four considerations set out in Transport North American Express before  
arriving at a remedy, and places limits on the remedy that may be implemented.  
Community Savings Credit Union v. Bodnar  
Page 25  
[70] I would observe that the four considerations do not constitute a simple  
“checklist.” Rather, each reflects different concerns underlying the exercise of  
discretion. The first consideration that of whether the purpose or policy of s. 347  
would be subverted by severance recognizes that a judge’s discretion cannot be  
allowed to override the legislative intent of the Criminal Code provision. It would be  
an error for a judge to grant a remedy that fails to respect the rationale for the  
provision.  
[71] The second consideration whether the parties entered into the agreement  
for an illegal purpose or with an evil intention takes into account the broader goals  
of the criminal law and of regulation. Parties must be discouraged from deliberately  
defying or subverting the law. Courts cannot countenance transactions that are  
criminal, corrupt, or malevolent.  
[72] The third consideration the relative bargaining positions of the parties and  
their conduct in reaching the agreement recognizes that the law is aimed at  
preventing lenders from exploiting vulnerable or desperate borrowers.  
[73] The fourth consideration the potential for the debtor to enjoy an unjustified  
windfall also reflects a desire to avoid exploitation, this time exploitation of the  
lender by the borrower. A borrower should not generally be allowed to exploit a  
situation of unknowing violation of the criminal interest provision to obtain a windfall  
from an unsuspecting lender.  
[74] Together, the four considerations set out in Transport North American  
Express are designed to place transactions on a spectrum. The most egregious  
violations of the Criminal Code provisions will result in the courts refusing, entirely, to  
enforce the debt obligation. Other transactions may result in a court refusing to allow  
the plaintiff any interest on the debt. This remedy may be appropriate in a situation  
where the lender, though not intending to act criminally, takes advantage of another  
person by demanding an exorbitant interest rate. In most cases where the parties  
have entered into a commercially defensible loan arrangement not knowing that it  
Community Savings Credit Union v. Bodnar  
Page 26  
violated the criminal interest provision of the Criminal Code, courts have applied a  
remedy of notional reverence, simply reducing the interest rate to 60%.  
Did the Judge Err in Exercising his Remedial Discretion?  
The Judge’s Reasons  
[75] The trial judge briefly considered each of the four factors set out in Transport  
North American Express:  
[84]  
On factor 1, the purpose and policy of s. 347 is largely a neutral  
factor. As stated in Transport North American Express at para. 43, “[s]ince it  
is very difficult to identify the policy objective behind s. 347 of the Code  
beyond the prevention of loan-sharking, violations of this section that clearly  
do not involve loan-sharking should be approached cautiously, keeping in  
mind that there is no need to deter, through the criminal law, effective interest  
rates of up to 60 percent per year”. In that case, the interest rate was read  
down to 60%. In Forjay Management Ltd. v 0981478 B.C. Ltd., 2019 BCSC  
238, the Court found that a “commercial lending transaction intended for  
normal purposes” could be read down to 60% without subverting the policy  
underlying s. 347: paras. 24246.  
[85]  
On the other hand, as stated in Garland at para. 57, “[a]s a matter of  
public policy, a criminal should not be permitted to keep the proceeds of his  
crime.” In my view, this applies even if the Overdraft Charges are collected in  
ignorance of s. 347.  
[86]  
[F]actor 2 is not present. Clearly, the parties did not enter into an  
agreement for an illegal purpose or with evil intention.  
[87] Factor 3 favours the plaintiffs. The relative bargaining power of  
individual Class members was very weak compared to that of the Credit  
Unions. This was far from a transaction between equal parties. By contrast, in  
Transport North American Express, the offending interest rate was read down  
to the 60% threshold, as opposed to the full interest being returned, in part  
because that case involved a commercial arrangement negotiated by  
sophisticated parties with the benefit of independent legal advice.  
[88]  
Factor 4 favours the defendants. The plaintiffs did receive a significant  
benefit in the form of the shortfalls in their account being temporarily covered.  
Also, I accept that the defendants would have incurred some costs in  
administering the Overdraft Charges.  
[76] He then went on to consider a further factor, the need for an incentive to  
ensure that agreements comply with the law:  
[89]  
More generally, I recognize the defendants’ argument that the $5.00  
limit on overdraft charges in s. 347 of the Criminal Code has been unchanged  
since its enactment and has been outpaced by inflation. However, in my view,  
giving legal effect to such a policy consideration is best left to Parliament. As  
   
Community Savings Credit Union v. Bodnar  
Page 27  
well, in Terracan at para. 59, the decision respecting notional severance was  
made after a caution that “the courts should not be too quick to rewrite  
agreements by picking and choosing from alternative provisions which would  
result in a legal rate of interest.” Otherwise, the Court stated, “there will be  
little incentive for lenders to ensure that their agreements provide for interest  
at legal rates.” Similarly here, the Credit Unions ought not to be  
disincentivized from being proactive in ensuring their agreements comply with  
the Criminal Code. Hence, I would avoid a mechanical approach by simply  
rewriting the commercial arrangement between the parties to the maximum  
benefit of the defendants.  
[77] The judge then provided a remedy:  
[90]  
As noted in Transport North American Express, “[i]n each case, the  
determination of where along the spectrum a given case lies, and the  
remedial consequences flowing therefrom, will hinge on a careful  
consideration of the specific contractual context and the illegality involved.”  
Hence, a spectrum of remedies is available, and I need not confine the  
choice of remedies to the binary alternatives of full recovery or severance of  
the offending portion of the interest rate.  
[91]  
Overall, balancing the above factors in all the circumstances, I would  
exercise my discretion to order that the defendants retain 50% or $2.50 of the  
$5 legitimate portion of the impugned Overdraft Charges. This figure falls  
within the legal limit and represents half of the lawful fees the defendants  
were entitled to charge. Such a remedy would recognize the unequal  
positions of the parties, acknowledge the value the Class members received  
by their overdrafts being covered by the defendants, but also prevent the  
defendants from being rewarded with a free pass through retroactive  
retention of the full $5 they were entitled to charge had they been properly  
cognizant of the law and their commercial responsibilities.  
Were the Judge’s Conclusions Based in Evidence?  
[78] In my view, the judge’s approach reflected three errors. The first lay in his  
failure to fully evaluate the evidence in considering the third Transport North  
American Express factor. As reproduced above, the judge’s finding in respect of that  
factor was:  
The relative bargaining power of individual Class members was very weak  
compared to that of the Credit Unions. This was far from a transaction  
between equal parties.  
[79] It is true that the credit unions are substantial institutions, and that individuals  
who overdraw their accounts are not likely to have substantial economic clout, but  
the third Transport North American Express consideration is not just concerned with  
 
Community Savings Credit Union v. Bodnar  
Page 28  
the relative size or economic power of the parties. The evidence did not support the  
judge’s finding that the members were in a “very weakbargaining position vis à vis  
the credit unions. It is important to recognize that credit unions differ from ordinary  
commercial savings and loan institutions in that they are run by their members. The  
individual class members, therefore, had the ability to initiate and vote on changes in  
policy with respect to overdraft transactions. Further, the evidence shows that, in at  
least some instances, credit unions waived or reduced their fees to account for the  
situations faced by individual members. There is also evidence showing that some  
members reached arrangements with their credit unions that exempted them from  
the fees.  
[80] Finally, although there is limited evidence on this issue, it is clear most class  
members had a choice of credit unions and other financial institutions with which  
they did business. If they considered a particular institution’s overdraft charges to be  
overly high, they could shop around for a better arrangement at another institution.  
[81] The judge also failed to consider the rationale for the third Transport North  
American Express consideration. The evidence does not support the idea that the  
interest rates charged by the credit unions exploited the weakness of their members.  
[82] In saying this, I recognize that the credit unions had the responsibility to  
ensure that their transactions did not contravene the criminal interest provision, and  
that the individual members did not have any such responsibility. Thus, the credit  
unions were “at fault” in charging criminal interest rates. However, that factor,  
standing alone, was insufficient to find that a remedy beyond notional severance  
was necessary in this case.  
The Addition of a Fifth Consideration  
[83] The second error identifiable in the judge’s reasons is in paragraph 89, which  
appears to add a fifth consideration to the existing North American Transport  
Express considerations, saying that “the Credit Unions ought not to be  
disincentivized from being proactive in ensuring their agreements comply with the  
Criminal Code.”  
 
Community Savings Credit Union v. Bodnar  
Page 29  
[84] It is important to recognize that the Transport North American Express criteria  
apply only in situations where a criminal interest rate has been charged. The four  
criteria (and particularly the first three) allow a court to take into account the need for  
deterrence and for disincentives to violate the law.  
[85] In treating deterrence and disincentive as if they were additional factors to  
consider beyond the four set out in Transport North American Express, the judge  
allowed those considerations a disproportionate effect on the remedy.  
Providing a Remedy not Allowed under Forjay  
[86] Finally, in finding that the contracts were enforceable to the extent of allowing  
a $2.50 overdraft charge in place of the overdraft charge that had been assessed by  
the credit unions, the judge fashioned a remedy that is not one of the three  
subsequently found by this Court in Forjay to be available.  
The Appropriate Remedy  
[87] The parties accept that, if there has been unjust enrichment, the remedy for  
that enrichment should take the form of notional severance, as discussed in  
Transport North American Express. They disagree, however, on the appropriate  
outcome of such severance. The credit unions argue that they should be entitled to  
retain an overdraft fee of $5.00 for each transaction, and only refund the amount of  
the overdraft charge that exceeded $5.00. The representative plaintiffs support the  
judge’s conclusion that an overdraft fee of only $2.50 for each transaction should be  
allowed.  
[88] As I have indicated, the judge’s conclusion that an overdraft fee of only $2.50  
should be permitted for each transaction is the product of an analysis carried out  
without the benefit of this Court’s reasons in Forjay, and it is inconsistent with those  
reasons.  
[89] The parties were correct to suggest that notional severance was the  
appropriate remedy in this case. As I read Forjay, that means that the court’s task  
was to reduce the interest rate to the maximum legal level.  
   
Community Savings Credit Union v. Bodnar  
Page 30  
[90] In the case before us, the most obvious way to do that is to reduce the  
overdraft charge on each transaction where a criminal rate of interest was charged  
to $5.00. In that way, the overdraft charge would not be included in the calculation of  
interest, and all of the transactions would be legal under the Criminal Code  
provision.  
[91] While I accept that the interest rate could be reduced to 60% in ways other  
than reducing the overdraft charge to $5.00, the reduction of the overdraft charge, in  
this case, is the simplest and most obvious solution, and recognizes that the error  
committed by the credit unions was in applying a flat fee that ignored the Criminal  
Code provision.  
[92] While I acknowledge that the remedies said to be available in Forjay did not  
include a remedy of reducing an overdraft charge, that is because Forjay was not a  
case involving overdraft charges. Adapting the remedy of reading down the interest  
rate by reducing the overdraft charge to $5.00 the level that would not, under the  
statute, be considered interest is, as I see it, consistent with the underlying  
rationale of Forjay, and is the most reasonable way to notionally sever the loan  
agreements to make them lawful.  
[93] Accordingly, based on the analysis undertaken by the judge, he ought to have  
exercised his discretion in favour of reducing the overdraft fees on each transaction  
to $5.00. It was an error to go further and reduce the fees to $2.50.  
Did a Violation of the Criminal Code Provision Render the Transactions  
Unconscionable Under the Provincial Statutes?  
[94] The plaintiff class contends that in charging interest beyond the rate allowed  
by the Criminal Code, the credit unions engaged in unconscionable acts or practices  
contrary to the Provincial Statutes. It says that class members are entitled, where it  
is of benefit to them, to elect to pursue claims for damages under those statutes  
instead of seeking a restitutionary remedy involving notional severance of the loan  
contracts. The idea that class members are entitled to make such an election was  
affirmed by this Court in Tracy v. Instaloans Financial Solutions Centres (B.C.) Ltd.,  
 
Community Savings Credit Union v. Bodnar  
Page 31  
2010 BCCA 357. Class members are not required to make the election until matters  
have progressed to the point where they are able to gauge which remedy is most  
advantageous.  
[95] The credit unions say that the issue of whether they engaged in  
unconscionable acts or practices requires a detailed examination of the  
circumstances of each transaction and is not a question that can be decided on a  
class-wide basis. The plaintiff class, on the other hand, says that proof that a  
criminal interest rate was charged is enough to establish that the credit unions  
engaged in unconscionable acts or practices.  
[96] Section 8 of the Business Practices and Consumer Protection Act describes  
the circumstances in which an act or practice is unconscionable:  
8 (1) An unconscionable act or practice by a supplier may occur before,  
during or after the consumer transaction.  
(2) In determining whether an act or practice is unconscionable, a court must  
consider all of the surrounding circumstances of which the supplier knew or  
ought to have known.  
(3) Without limiting subsection (2), the circumstances that the court must  
consider include the following:  
(a) that the supplier subjected the consumer or guarantor to undue  
pressure to enter into the consumer transaction;  
(b) that the supplier took advantage of the consumer or guarantor's  
inability or incapacity to reasonably protect his or her own interest  
because of the consumer or guarantor's physical or mental infirmity,  
ignorance, illiteracy, age or inability to understand the character,  
nature or language of the consumer transaction, or any other matter  
related to the transaction;  
(c) that, at the time the consumer transaction was entered into, the  
total price grossly exceeded the total price at which similar subjects of  
similar consumer transactions were readily obtainable by similar  
consumers;  
(d) that, at the time the consumer transaction was entered into, there  
was no reasonable probability of full payment of the total price by the  
consumer;  
(e) that the terms or conditions on, or subject to, which the consumer  
entered into the consumer transaction were so harsh or adverse to  
the consumer as to be inequitable;  
(f) a prescribed circumstance.  
Community Savings Credit Union v. Bodnar  
Page 32  
[97] The Trade Practice Act was predecessor legislation, repealed in 2004.  
Section 4 of that statute is in similar terms to s. 8 of the Business Practices and  
Consumer Protection Act. Sections 4(2) and 4(3)(e) of the earlier statute are  
materially identical to ss. 8(2) and 8(3)(e) of the Business Practices and Consumer  
Protection Act.  
[98] The plaintiffs’ claims engage s. 8(3)(e) of the Business and Consumer  
Protection Act and s. 4(3)(e) of the Trade Practice Act. This Court has previously  
held that claims under those provisions may be determined as common issues, In  
Bodnar v. The Cash Store Inc., 2006 BCCA 260, the defendants argued, at the  
certification hearing, that a claim involving unconscionable acts or practices under  
the legislation could not be certified as a common issue, because statute required an  
examination of “all of the surrounding circumstances of which the supplier knew or  
ought to have knownto determine whether the claim was made out. They took the  
position that the surrounding circumstances of each consumer’s transaction would  
be unique. The plaintiff class was successful in having the issue certified as a  
common issue and the defendants appealed. This Court upheld the certification,  
finding that individualized inquiries would not be necessary:  
[13]  
The appellants say that the first four of the s. 8(3) factors all require  
individualized assessment.  
[14]  
The respondents intend to limit their allegations to those falling under  
s. 8(3)(e) and advance a general submission that the terms or conditions  
of all transactions are so harsh or adverse to the consumer as to be  
inequitable. Relying on the direction in s. 8(2) that the court must consider all  
of the surrounding circumstances in determining whether an act or practice is  
unconscionable, the appellants contend that they are permitted to raise  
factors referred to in ss. 8(3)(a) to (d) on an individualized basis in answer to  
the respondents' allegations under subparagraph (e). In my view, that is a  
misreading of the provisions. Subsections (a) to (d) are intended to identify  
factors from which an inference of unconscionability may be drawn. They do  
not outline defences to clams of unconscionability. If the respondents limit  
their claims to subsection (e) unconscionability, I do not think subsections (a)  
to (d) could be of any assistance to the appellants in defending those claims.  
In my view, the commonality of issues … as defined by the Chambers judge  
is not undermined by the statutory direction in s. 8 of the [Business and  
Consumer Protection Act]. The restriction of consumer transactions by  
definition under the [Act] to transactions “for purposes that are primarily  
personal, family or household” should be capable of application by general  
inference from the small size of the loans without involving individual inquiry.  
Community Savings Credit Union v. Bodnar  
Page 33  
[99] A similar conclusion was reached by this Court in Kilroy v. A OK Payday  
Loans Inc. In that case, the trial judge found that the imposition of late fees by the  
defendant resulted in interest rates that contravened the Criminal Code provision.  
She found the defendant’s actions constituted unconscionable acts or practices  
under the statutes. The defendant appealed. This Court upheld the findings of the  
trial judge:  
[27]  
The learned judge concluded that contravention of s. 347 of the Code  
was sufficient for the loans, as consumer transactions, to contain an  
unconscionable act or practice in breach of the [Business and Consumer  
Protection Act] and [Trade Practice Act]. …. A OK contends that s. 347 of the  
Code essentially creates a strict liability offence and contravention of that  
provision is not per se unconscionable. It submits that at a minimum it is  
entitled to discover individual class members on the circumstances referred  
to in s. 8(3)(a) to (d) of the [Business and Consumer Protection Act] to  
support a defence that A OK did not engage in conduct that would offend  
those criteria. The respondent’s position is that the class does not rely on any  
s. 8(3)(a) to (d) circumstances to demonstrate unconscionability. The  
respondent argues contravention of s. 347 is conclusive that the terms of the  
transaction were so harsh or adverse to the consumer as to be inequitable  
within s. 8(3)(e). On this theory individual circumstances of particular class  
members become irrelevant and there are no grounds for discovery of  
individual class members on unconscionability issues.  
[28]  
… The learned judge applied [Bodnar v. The Cash Store, Inc.] and  
concluded that individual assessments were unnecessary. Accordingly there  
was no need to canvass individual circumstances on discovery. She went on  
to conclude that illegality under s. 347 of the Code could be equated with  
unconscionability under s. 8 of the [Business and Consumer Protection Act],  
relying on the statement of Lambert J.A. in Harry v. Kreutziger (1978), 9  
B.C.L.R. 166 at p. 178 (C.A.) that: “In my opinion, it is … appropriate to seek  
guidance as to community standards of commercial morality from legislation  
that embodies those standards in law.I agree that interest charged at a rate  
determined to be illegal under the criminal law is unconscionable for the  
purposes of the [Business and Consumer Protection Act] and the [Trade  
Practice Act], in the context of standard form consumer transactions. I would  
reject that ground of appeal.  
[100] The credit unions seek to distinguish Bodnar v. The Cash Store Inc. and  
Kilroy on the basis that the payday loan business at issue in those cases was  
materially different from the business of the credit unions in this case. The trial judge  
was not convinced by that argument.  
Community Savings Credit Union v. Bodnar  
Page 34  
[101] I agree with the trial judge that this case is not distinguishable from Bodnar v.  
The Cash Store, Inc. or from Kilroy on any principled basis. In the result, I would  
affirm the trial judge’s finding that the violations of the criminal interest provision of  
the Criminal Code constituted unconscionable acts or practices contrary to the  
Provincial Statutes.  
Issues Surrounding the Limitation Period  
[102] The final issues to be resolved on this appeal concern the postponement of  
the limitation period. This action was commenced with the filing of a writ of summons  
and statement of claim on December 21, 2004. Under s. 3(5) of the Limitation Act  
that was then in force, the general limitation period was six years. Absent any  
provision extending the limitation period, claims of members of the plaintiff class that  
arose prior to December 21, 1998 would be statute barred. In recognition of the  
potential for a Limitation Act defence in respect of such claims, subclasses have  
been designated within the plaintiff class for claimants whose claims arose before  
December 21, 1998. Those subclasses one in respect of each of the defendant  
credit unions — have been designated the “Mistake Subclasses”, presumably  
because the viability of their claims depends on the applicability of the following  
provisions of the Limitation Act:  
6 …  
(3) The running of time with respect to the limitation periods set by this Act for  
any of the following actions is postponed as provided in subsection (4):  
(f) for relief from the consequences of a mistake;  
(4) Time does not begin to run against a plaintiff with respect to an action  
referred to in subsection (3) until those facts within the plaintiff's means of  
knowledge are such that a reasonable person, knowing those facts and  
having taken the appropriate advice a reasonable person would seek on  
those facts, would regard those facts as showing that  
(a) an action on the cause of action would, apart from the effect of the  
expiration of a limitation period, have a reasonable prospect of  
success, and  
 
Community Savings Credit Union v. Bodnar  
Page 35  
(b) the person whose means of knowledge is in question ought, in the  
person's own interests and taking the person's circumstances into  
account, to be able to bring an action.  
(5) For the purpose of subsection (4),  
(a) appropriate advice, in relation to facts, means the advice of  
competent persons, qualified in their respective fields, to advise on  
the medical, legal and other aspects of the facts, as the case may  
require,  
(b) "facts" include  
(i) the existence of a duty owed to the plaintiff by the  
defendant, and  
(ii) that a breach of a duty caused injury, damage or loss to the  
plaintiff,  
(6) The burden of proving that the running of time has been postponed under  
subsections (3) and (4) is on the person claiming the benefit of the  
postponement.  
[103] The credit unions acknowledge that their imposition of overdraft charges in  
excess of $5.00 was a result of their mistaken belief that such charges were legal. It  
is probable that the members of the Mistake Subclasses shared that belief, but that  
is a matter that will have to be established on an individual basis.  
[104] In respect of the limitation issue, there was a common issue certified arising  
out of s. 6(4) of the statute. The parties also requested that the judge answer a  
second question: whether “relief from the consequences of a mistake” in s. 6(3)(f)  
was confined to issues of fact, or also included issues of law. While the parties  
addressed the issue under s. 6(4) first (as did the judge), I will, instead, begin with  
s. 6(3), as that is the threshold for the application of the postponement provision of  
the Limitation Act.  
Does s. 6(3)(f) Apply to Mistakes of Law?  
[105] The plaintiff class argues that “relief from the consequences of a mistake”  
includes relief from the consequences of a mistake of law. The judge accepted that  
proposition. The credit unions, however, take the position that a mistake of law  
cannot suffice as a basis for postponing a limitation period.  
 
Community Savings Credit Union v. Bodnar  
Page 36  
[106] Historically, a distinction was drawn between actions based on mistake of law  
and those based on mistake of fact. Restitutionary relief was available in cases of  
mutual mistake of fact, but not in cases of mutual mistake of law. The history of this  
distinction is discussed at length in the judgment of Justice Dickson (dissenting) in  
Nepean Hydro Electric Commission v. Ontario Hydro, [1982] 1 S.C.R. 347 beginning  
at 357, and by Lord Goff of Chieveley in Kleinwort Benson Ltd v. Lincoln City  
Council, [1999] 2 A.C. 349 at 36874.  
[107] The distinction was subject to significant criticism, and several exceptions  
were developed to the general principle that no recovery was available for money  
paid under mistake of law. In Nepean Hydro Electric Commission, the dissenting  
judges expressed the view that mistakes of law and mistakes of fact should be  
placed on the same footing. In Air Canada v. British Columbia, La Forest J.,  
speaking for the majority, adopted the views expressed in the dissent in Nepean  
Hydro Electric Commission, saying, at 1201:  
In my view the distinction between mistake of fact and mistake of law  
should play no part in the law of restitution. Both species of mistake, if one  
can be distinguished from the other, should, in an appropriate case, be  
considered as factors which can make an enrichment at the plaintiff's  
expense "unjust", or "unjustified".  
[108] The House of Lords reached a similar conclusion in Kleinwort Benson, a case  
that interpreted limitations legislation. The English Legislation (s. 32(1) of the  
Limitation Act 1980) was in the following terms:  
[W]here in the case of any action for which a period of limitation is prescribed  
by this Act … (c) the action is for relief from the consequences of a mistake  
…. the period of limitation shall not begin to run until the plaintiff has  
discovered the … mistake … or could with reasonable diligence have  
discovered it.  
[109] In my view, that legislation is analogous to s. 6(3)(f) of the Limitation Act, and  
the House of Lords determination that the provision applied to mistakes of law as  
well as to mistakes of fact is persuasive.  
[110] Section 6(3)(f), is not, on its face, confined to mistakes of fact. Given the  
modern inclination of the law of restitution not to distinguish between mistake of law  
Community Savings Credit Union v. Bodnar  
Page 37  
and mistake of fact, I am not convinced that there is any reason to interpret s. 6(3)(f)  
as being confined to mistake of fact. The judge was, in my view, correct in finding  
that the provision applies equally to actions for relief from the consequences of  
mistakes of law and of fact.  
Was the Question of Whether a Reasonable Person Would Have Sought  
Legal Advice Properly Answered as a Common Issue?  
[111] The common issue certified in respect of s. 6(4) was:  
[W]ould a reasonable person, having been charged an overdraft fee in  
excess of $5 by the Credit Union, seek advice as to whether those acts  
established a cause of action against the Credit Union, prior to February 5,  
2003?  
[112] The credit unions took the position that the question could not be answered  
on a class-wide basis, and that individual inquiries would have to be made. The  
judge did not accept that position:  
[110] I do not agree with the defendants on this point. The fees in excess of  
$5 charged by the Credit Unions, though prima facie illegal under the  
Criminal Code, were simply too small to prompt a customer to seek advice  
about the legality of the fees. As well, a reasonable person would place  
reliance on the sophistication of the Credit Unions and would assume that  
each of the defendants had made appropriate inquiries such that the basic  
lawfulness of the interest charges had been determined.  
[111] Moreover, the Overdraft Charges were incurred in return for the  
service of the Credit Unions temporarily covering an overdrawn account. A  
reasonable person in such circumstances would likely expect to pay some  
minor fee for such a service. The fact that none of the Credit Unions received  
any complaints about the overdraft fees prior to 2003 tends to confirm this  
view.  
[112] I find that a reasonable person, having been charged an overdraft fee  
in excess of $5 by one of the defendants, would not have sought advice as to  
whether those acts established a cause of action against the Credit Union,  
prior to February 5, 2003.  
[Emphasis in original.]  
[113] The credit unions say that the judge erred in failing to appreciate that each  
individual class member had different information at different times prior to February  
5, 2003. They say that the court was not in a position to determine what advice a  
 
Community Savings Credit Union v. Bodnar  
Page 38  
reasonable person would take on the information available without analysing, for  
each person, what information they had.  
[114] In my view the judge did not err in his reasoning. The answer to the question  
of whether the amounts in issue were too small to reasonably prompt a person to  
seek legal advice will be the same for every member of the Mistake Subclass. There  
is no suggestion that the magnitude of the unlawful interest charges for any  
individual rose to a level that would have prompted a person to engage a legal  
advisor.  
[115] Similarly, there is no basis to interfere with the judge’s assessment that it  
would be reasonable for a person in the position of a class member to assume that  
the credit union had taken steps to ensure that its charges were lawful.  
[116] It is, of course, possible (though improbable) that some members of the  
Mistake Subclasses had knowledge that the interest charges were unlawful. They  
may have been aware of the Criminal Code provision, or they may have been more  
generally aware of the existence of very low legal limits on overdraft charges without  
necessarily being aware of the precise statutory provisions. A reasonable person  
with such knowledge would have been in a position to seek legal advice. Such a  
person, however, could not rely on s. 6 of the Limitation Act, because they could not  
establish that their claims were “for relief from the consequences of a mistake.”  
[117] As I have indicated, the question of whether a class member had actual  
knowledge that the overdraft charges were unlawful is a question that must be  
decided on an individual basis. It is conveniently answered in the course of inquiring  
into whether an individual’s action qualifies as one “for relief from the consequences  
of a mistake.” It need not be re-canvassed under s. 6(4).  
[118] The credit unions contend, however, that regardless of actual knowledge,  
members of the Mistake Subclasses should be presumed to know the law, and  
therefore deemed to have had knowledge of Criminal Code provisions.  
Community Savings Credit Union v. Bodnar  
Page 39  
[119] There is scope for an assumption that a “reasonable person” is one who is  
familiar with basic aspects of the law. A reasonable person operating in a  
specialized field might also be fixed with a responsibility to ascertain the law  
applicable to that field. There is a principled distinction to be drawn, however,  
between assuming that reasonable people are aware of fundamental aspects of the  
law for example, that assaulting a person is unlawful and presuming that they  
are aware of the details of regulatory provisions of limited applicability. Civil society  
depends on people having a general awareness of broadly applicable legal  
propositions, and it is appropriate to fix reasonable people with such awareness. On  
the other hand, it is unrealistic to assume that a reasonable person will have an  
encyclopedic knowledge of the law that includes every detail of every statutory  
provision.  
[120] The provision in question in this case is not one that can be assumed to be  
within the knowledge of members of the public, or even the subset of the public that  
were members of credit unions. Indeed, the evidence establishes that the credit  
unions themselves did not have knowledge of the provisions. Further, as I have  
indicated, what are essentially regulatory provisions governing credit unions would  
not ordinarily be matters dealt with in the Criminal Code or, indeed, in a federal  
statute. There is no reality to a presumption that members of the public are aware of  
the provision.  
[121] The credit unions, nonetheless, contend that there is a general proposition  
that people are presumed to know the law. In support of this proposition, they have  
cited several cases decided in the context of limitation provisions. In examining the  
cases, it is important to appreciate that the structure and language of limitations  
statutes in various jurisdictions and at various times differ. Caution must be  
exercised in using cases decided under one statutory regime as precedents under a  
different regime.  
Community Savings Credit Union v. Bodnar  
Page 40  
[122] Many jurisdictions use the concept of “discoverability” to determine when a  
limitation period begins. Typically, when they speak of “discoverability”, they are  
referring to the discoverability of material facts, not law.  
[123] The credit unions say that the British Columbia legislation should be  
interpreted as if the test were simply one of discoverability. In support of their  
argument, they cite dicta from the dissenting judgment of Iacobucci and Major JJ. in  
Novak v. Bond, [1999] 1 SCR 808:  
[10]  
British Columbia has adopted a specific postponement provision  
within the statute. The role of the postponement provision is the same as that  
of the discoverability rule: to ensure that plaintiffs who, in the exercise of  
reasonable diligence, cannot know that they have a viable claim against a  
particular defendant or cannot reasonably bring an action, will not be barred.  
[Emphasis added by the appellants.]  
[124] While I do not doubt that s. 6 had the same role in the Limitation Act as the  
discoverability rule has in other limitation legislation, that does not mean that it fulfils  
that role in precisely the same way. In setting a test for determining the appropriate  
time for a plaintiff to bring an action, s. 6 of the Limitation Act does not confine itself  
to considering the plaintiff’s knowledge of material facts.  
[125] The test under s. 6(4) is not one of simple discoverability of material facts.  
Instead, it includes the idea that people are entitled to the benefit of professional  
advice. Thus, it premises the running of the limitation period not on simple  
knowledge of material facts, but on a finding that a reasonable person with  
knowledge of those facts would seek appropriate advice and, having obtained that  
advice, would recognize the existence of a cause of action. Where the known facts  
would not prompt a reasonable person to take advice, time does not begin to run.  
[126] With this distinction in mind, I turn to the case law. The case most heavily  
relied on by the credit unions is Boyce v. Toronto (City) Police Services Board, 2011  
ONSC 53 at para. 23, aff’d 2012 ONCA 230. In Boyce the plaintiff claimed that he  
suffered damages as a result of an assault committed on him by peace officers while  
he was incarcerated in a holding cell. The action was commenced after the expiry of  
Community Savings Credit Union v. Bodnar  
Page 41  
the limitation period. The plaintiff did not dispute that he had knowledge, from the  
outset, of all information that he needed to commence a claim, including knowledge  
that assaults are unlawful. He said, however, that he “was not aware that a  
limitations period existed”, and so waited until after the officers had been criminally  
convicted before commencing his action.  
[127] The applicable limitation legislation was the Limitation Act, 2002, S.O. 2002,  
c. 24, Sched. B. The statute provided for the limitation period of two years from the  
date on which the claim was “discovered”. The relevant section was as follows:  
5. (1) A claim is discovered on …  
(a) the day on which the person with the claim first knew,  
(iv) that, having regard to the nature of the injury, loss or damage, a  
proceeding would be an appropriate means to seek to remedy it ….  
[128] The appellant contended given that he did not know there was a limitation  
period, he was entitled to hold the view that an action was not an appropriate means  
to seek a remedy until after the criminal proceedings were concluded. The chambers  
judge rejected that argument:  
[23]  
Section 5(1)(a)(iv) does not import an idiosyncratic limitation period  
calibrated by the claimant’s familiarity with or ignorance of the law. The test is  
an objective one. While it is possible to envisage that a new kind of right  
might arise that has not been hitherto protected, thus making it arguable that  
a civil proceeding might not be seen objectively as an appropriate means to  
seek to remedy, a battery causing personal injury is a classic example of the  
kind of wrong that is appropriate for redress by court action. A citizen is  
presumed to know the law of the land.  
[129] The Ontario Court of Appeal affirmed the decision, in a brief written  
endorsement in which it indicated that it agreed with the reasons of the chambers  
judge.  
[130] In my view, the structure and language of the legislation considered in Boyce  
is not sufficiently close to the legislation in issue in this case to provide much  
guidance. The Ontario statute based the limitation period on discoverability alone. It  
is noteworthy that even within that regime, the judge was prepared to accept that in  
Community Savings Credit Union v. Bodnar  
Page 42  
respect of novel legal rights, there might be room for a court to consider a  
postponement in the running of the limitation period.  
[131] The credit unions cite two further Ontario decisions for the proposition that  
“error or ignorance of the law or legal consequences of the facts does not postpone  
the running of the limitation period”: Lauesen v. Silverman, 2016 ONCA 327 and  
Coveley v. Thorsteinssons LLP, 2018 ONSC 4804. Given that those cases were  
decided under the Ontario statute, they are not of assistance in this case.  
[132] The only British Columbia decision cited by the credit unions in support of the  
proposition that ignorance of law cannot postpone the running of the limitation period  
is Bank of Montreal v. Ricketts (1990), 44 B.C.L.R. (2d) 95 (C.A.). In that case,  
Justice Locke, speaking only for himself, stated, at 110 that “[i]gnorance of the law or  
a mistaken opinion is on principle no excuse and has been held on similar legislation  
not to be a ‘fact’, within the meaning of s. 6(3).”  
[133] The comment referred to does not appear to me to be essential to the  
reasoning of Justice Locke. Indeed, it is not at all clear that the appellant in the case  
was relying on any error of law or mistaken opinion: the case turned on the question  
of whether the plaintiff had been diligent in determining the identities of parties that it  
proposed to add as defendants to the action. The majority of the court (including  
Justice Locke) found that the appellant had been dilatory, and that its explanation for  
the delay was inadequate.  
[134] Justice Locke spoke only for himself, and neither the judge that concurred in  
the result nor the dissenting judge made any reference to the role of “ignorance of  
the law” in the limitations context. Accordingly, Justice Locke’s observation does not  
bind the Court.  
[135] The case cited as having been decided “on similar legislation” is Do Carmo v.  
Ford Excavations Pty Ltd. (1984), 154 C.L.R. 234 (Aus. H.C.). The facts of  
Do Carmo were straightforward. Mr. Do Carmo was a worker from Portugal who  
immigrated to Australia in 1971, at which time he secured employment as a  
Community Savings Credit Union v. Bodnar  
Page 43  
labourer. He was often exposed to silica dust in the course of his work. He left his  
employment in June of 1974. and was diagnosed with silicosis in 1976 after showing  
signs of a progressive pulmonary disability. He sought legal advice from his union’s  
solicitors in late 1976 but was not told that he had a viable cause of action against  
his employer. In late 1978, the solicitors gave him the impression that there was no  
reasonable basis for commencing an action.  
[136] In July 1979, Mr. Do Carmo sought independent legal advice, and in  
September of that year, his solicitor obtained an expert report that established that it  
was widely known in the industry throughout the period of Mr. Do Carmo’s  
employment that the use of water hosing and face masks minimized the risk of  
silicosis. Mr. Do Carmo’s employer did not provide that protection.  
[137] On receiving the report, Mr. Do Carmo’s solicitor recommended commencing  
a lawsuit, and the claim was filed shortly thereafter.  
[138] The applicable limitation legislation was the Limitation Act 1969 (N.S.W.), as it  
existed between 1971 and 1979. Under s. 14 of that statute, an action could not be  
brought “after the expiration of … six years running from the date on which the  
cause of action first accrue[d].” The courts considered it clear that the limitation  
period had run before the action was commenced.  
[139] The New South Wales Act did not have a provision that served to postpone  
the running of a limitation period, but did have a provision giving the court discretion  
to extend the limitation period if the plaintiff could show that  
any of the material facts of a decisive character relating to the cause of action  
was not within the means of knowledge of the [plaintiff] until a date after the  
commencement of the year preceding the expiration of the limitation period  
for the cause of action.  
[140] The provisions of the legislation were complicated, prompting Murphy, A.C.J.  
to note that the statute was  
derived from and cop[ied] the complexity and obscurity of the English  
Limitation Act 1963 which Lord Reid in Smith v. Central Asbestos Co. (1973)  
Community Savings Credit Union v. Bodnar  
Page 44  
A.C. 518, at p. 529 ("the Asbestos Case") stated had "a strong claim to the  
distinction of being the worst drafted Act on the statute book".  
[141] For better or for worse, the same influence is seen in the Limitation Act that  
we are considering. Some of the concepts in the British Columbia statute mirror  
those in the New South Wales statute, and some of the language is similar. There  
are, however, also differences. Among those differences is that the British Columbia  
statute does not employ the concept of “material facts of a decisive character.”  
[142] The majority of the High Court of Australia held that because Mr. Do Carmo  
did not know about the industry’s state of knowledge in 1971 until his solicitor  
obtained the expert report, he lacked knowledge of “material facts of a decisive  
character.” It also found that he had exercised due diligence in seeking out  
information. Accordingly, the limitation period was extended.  
[143] The majority of the court was of the view that a mere lack of knowledge of the  
legal requirements for a negligence action would not have sufficed to extend the  
limitation period. That appears to be the finding Justice Locke had in mind when he  
said [i]gnorance of the law or a mistaken opinion is on principle no excuse” for  
extending a limitation period.  
[144] In my view, Justice Locke’s statement overstated the scope of the finding in  
Do Carmo as well as the similarity of the New South Wales regime to the British  
Columbia legislation.  
[145] Apart from the fact that British Columbia did not employ the concept of  
“material facts of a decisive character” in its legislation, it is also noteworthy that the  
provisions of the New South Wales statute considered in Do Carmo were only those  
applicable to personal injury negligence actions. A separate, simpler, regime applied  
to actions based on mistake:  
56. (1)… [W]here there is a cause of action for relief from the consequences  
of a mistake, the time which elapses after a limitation period … commences  
to run and before the date on which a person having the cause of action  
first discovers, or may with reasonable diligence discover, the mistake does  
Community Savings Credit Union v. Bodnar  
Page 45  
not count in the reckoning of the limitation period for an action on the cause  
of action by him ….  
[146] Given the important differences between the two statutes, and the specific  
findings of fact in Do Carmo, little weight can be placed on it in interpreting the  
British Columbia Limitation Act.  
[147] Section 6(4) of the Limitation Act is not concerned merely with discovery of  
material facts. In that respect, the legislation is more similar to the English statute  
considered in Kleinwort Benson than it is to the Ontario legislation at issue in Boyce  
or even to the New South Wales legislation at issue in Do Carmo.  
[148] The credit unions raise one further concern with the postponement of the  
limitation period, in the form of a floodgates argument. They say that if the chambers  
judge was correct in finding that the limitation period is postponed in this case, then  
“… there would never be a limitation period for an unjust enrichment claim premised  
on a provision of a public statute that a set of proposed class members happened to  
be unaware of.I do not accept that proposition.  
[149] First, as I have indicated, there is scope for finding that a reasonable person  
should be aware of fundamental propositions of law, and also that a reasonable  
person has a duty to ascertain the law relating to any specialized area in which they  
do business. The evidence in this case demonstrated that few people were aware of  
the special provision of the Criminal Code governing credit union interest charges.  
[150] I would also note that while the Limitation Act provided for the postponement  
of limitation periods, it did not allow them to be postponed indefinitely. Section 8 of  
the Act set out an ultimate limitation period, which could not be extended or  
postponed.  
[151] In my opinion, the judge made no errors in his analysis of s. 6 of the  
Limitation Act, or in his answer to the common question arising out of it.  
Community Savings Credit Union v. Bodnar  
Page 46  
Conclusion  
[152] The trial judge concluded his judgment by setting out his answers to the  
common questions as follows:  
[119] :  
(a) Does an Overdraft Charge exceeding $5.00 constitute interest as  
defined by and for the purpose of s. 347 of the Criminal Code, either  
in whole or in part?  
Yes. … [T]his determination was made in an earlier judgment.  
(b) If an Overdraft Charge exceeding $5.00 constitutes interest under  
s. 347 of the Criminal Code, either in whole or in part, has the  
collection by the Credit Unions of such Overdraft Charges resulted in  
the payment by Class members and the receipt by the Credit Unions  
of interest at a criminal rate in respect of the overdrafts by Class  
members of their accounts, contrary to s. 347(1) of the Criminal  
Code?  
Yes. The actuarial evidence provided by the plaintiffs establishes  
that each Credit Union received interest at a criminal rate.  
Whether each individual member of the Class paid interest at a  
criminal rate can be ascertained at the next stage of the class  
proceedings.  
(c) If the Credit Unions have, through the collection of overdraft charges,  
received interest at a criminal rate from Class members:  
i. have the Credit Unions benefited by the receipt of such interest?  
Yes.  
ii. has the Plaintiff shown that no juristic reason from an established  
category exists to deny recovery of such interest from the Credit  
Unions?  
Yes.  
iii. have the Credit Unions established as a matter of law any residual  
defence which constitutes a juristic reason for the enrichment of the  
Credit Unions?  
No, except that the appropriate remedy is to allow the  
Credit Unions to retain $2.50 of each Overdraft Charge.  
(d) If the Credit Unions have been unjustly enriched by the receipt of interest at a  
criminal rate from members of the Class in respect of overdrafts of their  
accounts, are the Credit Unions liable to account to those Class members for  
the unlawful interest received from them and all profits earned therefrom?  
Yes. Given the answer to common issue (c), the parties agree that  
(d) must be answered in the affirmative.  
 
Community Savings Credit Union v. Bodnar  
Page 47  
(e) If the Credit Unions have received interest at a criminal rate from Class  
members pursuant to the terms upon which the Credit Unions created or  
increased an overdraft in the Class members’ accounts:  
i. are the individual circumstances of dealings between each Class  
member and the Credit Unions relevant to the determination of  
whether such receipt constitutes an unconscionable act or practice  
within the meaning of s. 4 of the Trade Practices Act, R.S.B.C. 1996,  
c. 457 and s. 8 of the Business Practices and Consumer Protection  
Act, S.B.C. 2004, c. 2? and  
No.  
ii. considering any circumstances found to be relevant as aforesaid,  
does the creation or increase of an overdraft by the Credit Unions and  
its receipt of interest at a criminal rate in respect of an overdraft  
constitute an unconscionable act or practice within the meaning of s. 4  
of the Trade Practices Act and s. 8 of the Business Practices and  
Consumer Protection Act?  
Yes  
(f) If the conduct of the Credit Unions in creating or increasing an overdraft in the  
Class members’ accounts or collecting interest from Class members in  
respect of those overdrafts constitutes unconscionable act or practice  
pursuant to s. 4 of the Trade Practices Act and s. 8 of the Business Practices  
and Consumer Protection Act, are the Credit Unions liable for damages or  
restitution to those Class members who have suffered any loss or damage  
because of the unconscionable act or practice, pursuant the Trade Practices  
Act, s. 22(1) and the Business Practices and Consumer Protection Act,  
ss. 104, 105, 171(1), and 172(3)?  
Yes.  
(g) If the Credit Unions have through the collection of overdraft charges received  
interest at a criminal rate from Class members, have the Credit Unions  
charged and collected those overdraft charges in the mistaken belief that the  
charges were lawful?  
Yes. The parties agree on this issue.  
(h) If the answer to (g) is yes, did the Credit Unions receive any challenges or  
questions from Class members concerning the legality of the overdraft  
charges in excess of $5 charged by the Credit Unions, prior to February 15,  
2003?  
No. The parties also agree on this issue.  
(i) If the answer to (g) is yes, would a reasonable person, having been charged  
an overdraft fee in excess of $5 by the Credit Unions, seek advice as to  
whether those acts established a cause of action against the Credit Unions,  
prior to February 5, 2003?  
No.  
Community Savings Credit Union v. Bodnar  
Page 48  
[153] In my view, the only error in these answers is in respect of answer (c)(iii). As I  
have indicated, the judge ought to have allowed the credit unions to retain $5.00 of  
each overdraft charge rather than only $2.50. Accordingly, I would amend the  
answer (c)(iii) to read: “No, except that the appropriate remedy is to allow the Credit  
Unions to retain $5.00 of each Overdraft Charge.”  
[154] Apart from the amendment to that answer, I would affirm the judge’s  
conclusions.  
The Honourable Mr. Justice Groberman”  
I AGREE:  
The Honourable Mr. Justice Harris”  
I AGREE:  
The Honourable Mr. Justice Grauer”  

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