Category: Litigation Loans

Steinberg v. Adderley, 2024 ONCA 167

The plaintiff was injured in a motor vehicle accident in October 2011. He took out five litigation loans from BridgePoint totaling $65,500. The loans had compound interest rates ranging from 20% to 24%. The plaintiff settled his accident benefits claim for $1.25 million. His tort action was dismissed due to contempt of an order to attend medical assessments. BridgePoint sought $312,936.18 from the plaintiff on the loans and accrued interest. The motions judge reduced the interest amount based on delay caused by the COVID-19 pandemic. The Ontario Court of Appeal reversed the motion judge’s decision and held that BridgePoint was entitled to the full amount it sought for principal and interest. It reasoned that once the motion judge found that the loan transactions were not unconscionable there was no basis to vary the interest owing. Litigation delay due to the COVID-19 pandemic could not be an independent basis to reduce the interest owing under loan agreements that the motion judge had found to be contractually sound. The loan agreements called for interest to continue until the loans were paid and to allow the pandemic to reduce a contractual interest would be to rewrite the agreements.

Davies v. The Corporation of the Municipality of Clarington, 2021 ONSC 6449

After a trial lasting more than 140 days in this class action, the defendants were successful in beating their offers to settle, and as a result they obtained a costs award that totaled in excess of $3.4 million. The plaintiff resided in Poland and was impecunious. During the course of the litigation he received advances from four different litigation loan providers. It was estimated that the outstanding loans had an accrued principal and interest owing in excess of $6 million. The defendants, believing they would not recover against the plaintiff, sought to recover their costs award against the litigation loan providers since their loans allowed the litigation to proceed and may have prevented settlement due to high interest rates. Justice Edwards declined to make any award against the non-party litigation providers in this case, but acknowledged that litigation loan providers may be liable for
costs awards in proper circumstances.

Justice Edwards directed that loan documentation must be listed in a plaintiff’s Schedule B. By listing it there, the defendant is put on notice of a potential claim on the loan interest if the plaintiff is awarded costs at trial. In certain cases (such as personal injury actions) if a defendant refuses an advance payment to the plaintiff, the defendant is more likely to become liable for interest on the plaintiff’s litigation loan as a disbursement. Second, the defendant should put the loan provider on notice that they may become responsible for costs as soon as possible. In the present case, the defendants did not provide notice to the loan providers until after trial despite knowing of the loans for years prior.

Mann v. Jefferson, 2019 ONSC 422

The plaintiff commenced an action for damages arising from a motor vehicle accident. During the plaintiff’s examination in chief, his counsel sought to examine him concerning two litigation loans he took out following the subject accident, and to introduce into evidence the two loan agreements and discharge statements. The plaintiff argued that interest on the loans (and perhaps even the principle) is, or should be recoverable damages; therefore, evidence concerning the loans was admissible. The defendants objected. Justice Trimble held that the evidence was not admissible. He reasoned that the litigation loan-related expenses were too remote and not reasonably foreseeable to the defendants. Therefore, they could not be advanced as damages in the action and evidence relating to them was not relevant and not admissible.