Disbursement Interest Claim Fails for Lack of Evidence Proving Necessity

While the law in BC presently does allow interest on disbursements to be recoverable in the right circumstances, a prerequisite for recovery is an evidentiary foundation proving that it was necessary to incur the interest claimed.  Reasons for judgement were released this week by the BC Supreme Court, Kelowna Registry (Babb v. Doell) rejecting such a claim due to a lack of evidence.  In reaching this decision Master McDiarmid provided the following reasons:
[11]         A claim for interest by a party entitled to costs might in some circumstances be characterized as necessary, for example, in a situation where the incurring of disbursements such as filing fees or daily hearing fees could only be done by obtaining some funding. Interest could also be a proper disbursement when it was reasonably incurred in the conduct of the proceeding even if, strictly speaking, avoidable. In Franzman, evidence was led which satisfied me that the disbursement interest which the plaintiff agreed to pay to her lawyers as part of a fee agreement was proper and I allowed, as a disbursement, the amount of interest calculated at 6%.
[12]         Most written retainer agreements contain provisions for payment of interest on unpaid accounts. Many retainer agreements contain provisions which are binding as between lawyer and client, for the payment of some disbursements at a rate higher than the rate allowed by registrars when assessing party/party costs. Even in contingency retainer agreements, plaintiffs often agree to and have the means to pay disbursements and do so.
[13]         Unlike in Franzman and in Chandi (Guardian ad litem) v. Atwell, 2013 BCSC 830, the decision relied on by the plaintiff, there is no evidence before me to assist in me establishing either the necessity or the propriety of the plaintiff’s claim for interest.
[14]         As noted above, the onus of proving either the necessity or propriety of disbursements is on the party claiming those disbursements. Absent such evidence, I am unable to make a determination that the interest claimed was either necessary or proper. Accordingly, the claim by the plaintiff for interest is denied.