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The following court decisions address the recoverability of financing costs by counsel and/or their clients where funds are used to pay for disbursements, and medical/treatment costs.

Interest on Litigation Loan Recovered from Defendant
in Supreme Court of Nova Scotia Decision

Stephen Pauwels, BridgePoint Financial Group | July 31, 2014 | Posted in Commentary

A recent Nova Scotia Costs Order represents the first time in that province that a defendant has been ordered to reimburse interest incurred by a plaintiff in full on litigation loans which were “necessary to continue the litigation”. Mr. Lowell Weir was one of a group of plaintiffs who were awarded in 2013 over $2 million in compensatory and $200,000 in punitive damages in a securities-related action against National Bank Financial which arose from the collapse of Halifax technology company, Knowledge House Inc. In order to afford the costs involved in the prolonged litigation, he borrowed approximately $100,000 through three separate litigation loans, incurring total interest costs in excess of $80,000.


Precedent set in BC for Litigation Funding Agreements

John Rossos & Grace Tsang, BridgePoint Financial Services | June 24, 2014 | Posted in Commentary

On May 28th, 2014, Justice Gropper of the British Columbia Supreme Court approved a Litigation Funding Agreement (“LFA”) in the class action Stanway v. Wyeth Canada Inc. This represents the first time a B.C. court has approved a third party financing agreement for class actions.


Lenworth Scarlett and Belair Insurance Company Inc. - FSCO Appeal P13-00014

Toronto | November, 28 2013 | Posted in Court Decisions

This appeal concerns the monetary limits set by section 18 of the SABS–2010 and the Minor Injury Guideline, the MIG. Belair Insurance Company Inc. appeals Arbitrator John Wilson's March 26, 2013 preliminary issue order that Mr. Lenworth Scarlett's medical and rehabilitation claim is not subject to the $3,500 limit for minor injuries. It appeals on the basis that the Arbitrator failed to apply the appropriate tests, inappropriately placed the burden of proof on Belair, and breached procedural fairness. It seeks either an order that Mr. Scarlett is subject to the limit, or that a new arbitration hearing be ordered before a different arbitrator.


Chandi v. Atwell, 2013 BCSC 830

Vancouver | May 13, 2013 | Posted in Court Decisions

On May 15, 2013, the Supreme Court of British Columbia released its decision on the appeals in Chandi v. Atwell ("Chandi") and MacKenzie v. Rogalasky ("MacKenzie") and allowed the plaintiffs to recover interest on loans obtained to fund disbursements. During the assessment of disbursements, the registrar allowed the plaintiffs in Chandi to recover the interest charged by the third party lender and the law firm while in MacKenzie, the registrar disallowed the interest sought to be recovered.

Arguments during both appeals, which were heard together, focussed on the BC Supreme Court's 2010 decision in Milne v. Clarke. In Milne, the plaintiff sought to recover interest charged on a MRI invoice. The Court found that if the invoice giving rise to the interest charge could be assessed as an appropriate disbursement, then the interest itself could be recoverable as a disbursement. Further, the Court found that the interest charged flowed from the necessity of litigation.


Lenworth Scarlett and Belair Insurance Company Inc. [FSCO A12-001079]

Toronto | March 26, 2013 | Posted in Court Decisions

On March 26, 2013, the first decision from the Financial Services Commission of Ontario concerning the Minor Injury Guidelines ("MIG") was released. In this decision, Arbitrator Wilson found that the insured was entitled to seek benefits beyond the MIG limit because "[w]hen the totality of his injuries is assessed, they come outside of the MIG." The arbitrator appears to narrowly interpret the application of the MIG by finding that the insured was not subject to the MIG because he had pre-existing conditions and suffered, in addition to the soft tissue injuries, psychological impairments as a result of the motor vehicle accident. Arbitrator Wilson felt that the insurer had failed to meet its onus of proving that the insured fell within the MIG and disregarded evidence to the contrary as to the severity of the insured's injuries. The decision instructs counsel that use of the MIG must be restricted. As Arbitrator Wilson wrote:

"The insurer is in effect mandated to make an early determination of an insured's entitlement to treatment beyond the MIG. In essence, because of the necessarily early stage of the claim when the MIG is applied, the determination must be an interim one, one that is open to review as more information becomes available.

What it is not is the "cookie-cutter" application of an expense limit in every case where there is a soft tissue injury present. Such does not respond either to the spirit of the accident benefits system or the policy enunciated in the Guideline of getting treatment to those in need early in the claims process." (emphasis added)


LeBlanc v. Doucet and the New Brunswick Power Corporation, 2012 NBCA 88

New Brunswick | July 26, 2012 and October 18, 2012 | Posted in Court Decisions

On October 18, 2012, the Court of Appeal of New Brunswick released its decision in LeBlanc v. Doucet and permitted the plaintiff to recover interest on its litigation loans where the funds were spent on court approved disbursements. The plaintiff was of limited means and required a loan in order to advance his action. Prior to obtaining the litigation loans from a private lender, the plaintiff had attempted to obtain loans from financial institutions, but was denied because the litigation was perceived as too risky. The decision is seminal to individuals considering obtaining litigation loans to help them advance their litigation or otherwise face settling their litigation prematurely or even abandonment.


Pastore v. Aviva Canada Inc., 2012 ONCA 642

Toronto, Ontario | September 27, 2012 | Posted in Court Decisions

On September 27, 2012, the Court of Appeal released its decision in Pastore v. Aviva Canada Inc. One of the issues before the Court concerned the interpretation of s.2(1.1)(g) of The Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996 ("SABS"): was it reasonable that a person could be designated catastrophically impaired under s.2(1.1)(g) where only one out of four categories concerning functional limitation was found to have a marked impairment? The Court of Appeal determined that such a designation could be made. The decision is significant to individuals who would not otherwise meet s.2(1.1)(g) and thereby gain access to better benefits because their overall assessment for catastrophic impairment due to mental or behaviour disorder is not found to be marked or extreme impairment, but are found to have such an impairment in at least one of the four functional limitation categories.


Cornie v. Security National (2012 ONSC 905)

Kitchener, Ontario | February 8, 2012 | Posted in Court Decisions

The recent Ontario Superior Court of Justice decision, Cornie v. Security National speaks directly to the extended delays being experienced by injured individuals who are attempting to resolve disputes with their insurers over the funding of med/rehab services through the FSCO mediation process. This decision provides that a delay of more than 60 days will be viewed as a "failed" mediation enabling claimants to proceed to arbitration.


Giuliani v. Region of Halton, 2011 ONSC 5119

Milton, Ontario | August 31, 2011 | Posted in Court Decisions

On August 31, 2011, the Ontario Superior Court of Justice rejected the recovery of interest on a third party litigation loan financing the cost of disbursements in Giuliani, a personal injury action. Although at first blush it appears this decision is inconsistent with recent Canadian case law allowing interest to be recovered on third party financing for disbursements and treatment costs, one could argue that the Giuliani decision is: (i) correct on its facts; and (ii) consistent with Bourgoin (Bourgoin v. Ouellette, [2009] N.B.R. (2d) TBEd. FE.013), Herbert (Herbert v. City of Brantford, 2010 ONSC C04-12047), and other court decisions allowing recovery for interest costs where third party financing arrangements are reasonable and facilitate access to justice.


Herbert v. The City of Brantford (2011 ONSC 4066 (CanLII))

Brantford, Ontario | June 28, 2011 | Posted in Court Decisions

The Ontario Superior Court costs decision in Herbert v. The City of Brantford established that interest charged by experts on their outstanding reports was a recoverable cost, however Justice Whitten left it up to counsel to determine an "appropriate" rate of interest to be incurred. Defence counsel argued for post judgment interest while plaintiff's counsel argued that the actual rates charged by the various experts (ranging from 1.0% to 2.0% per month) were appropriate. The issue reverted back to Mr. Justice Whitten who rejected the defendant's argument and allowed the plaintiff to recover the full amount charged by its experts.


Herbert v. The City of Brantford (2010 ONSC C04-12047 (CanLII))

Brantford, Ontario | November 23, 2010 | Posted in Court Decisions

This Ontario Superior Court decision held that interest charged by various experts on their accounts was recoverable as an assessable cost against the defendant. This decision builds upon those of Bourgouin and McCreight in recognizing that the onerous costs borne by plaintiffs and their counsel in pursuing a claim could deter access to justice where the costs incurred - including financing charges - are not recoverable.


Milne v. Clarke, [2010] BCSC 317

Vancouver, British Columbia | March 19, 2010 | Posted in Court Decisions

The British Columbia Supreme Court provided wide discretion to allow counsel to recover the financing cost incurred for disbursements due to the failure or inability of a party to pay for the cost of the service.


Bourgouin v. Ouellette, [2009] CanLII 27242

Edmundston, New Brunswick | February 6, 2009 | Posted in Court Decisions

The New Brunswick Court of Queen's Bench held that interest charged on a disbursement loan was recoverable by the plaintiff where the funding arrangement is directly between the plaintiff and a third party financier. The court referred to the Rules of Civil Procedure but seemed to rely on the broader social policy objective of access to justice to allow full recovery of the expense.


McCreight v. Currie, 2008 BCSC 1751

Kelowna, British Columbia | December 19, 2008 | Posted in Court Decisions

This decision was cited in Milne v.Clark (above) where the British Columbia Supreme Court allowed a plaintiff to recover the cost of financing that she incurred for obtaining an MRI.


Sorokin v The Wawanesa Mutual Insurance Company, (2008) 92 O.R. (3d) 314

Barrie, Ontario | May 5, 2008 | Posted in Court Decisions

This decision by the Ontario Superior Court of Justice held that interest is a benefit and not a penalty under the Statutory Accident Benefits Schedule of the Insurance Act (Ontario). This lends authoritative support for the proposition that costs incurred to finance the cost of benefits that have been improperly terminated/denied or exhausted are recoverable against the first party or tort insurer.


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