Court Clarifies Recovery of Interest on Disbursements

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Update November 17, 2014 – in Reasons released today the BC Court of Appeal overruled the below decisions and found interest on disbursements cannot be recovered.
 
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Prosecuting an injury claim to trial often involves thousands if not tens of thousands of dollars in disbursement expenses.  If a litigant is victorious can they claim interest on these expenses?  Two competing judgement were heard together on appeal clarifying this issue (Chandi v. Atwell).  In short, Mr. Justice Savage held that interest on disbursements can be recoverable.  The Court provided the following reasons:
[28]         In Milne, the plaintiff was injured in an automobile accident. Following the injury, the plaintiff had three M.R.I. examinations over three years. An account was rendered to the solicitor for the M.R.I. examinations, which included interest on the unpaid balances. The account was paid.
[29]         The action was settled for an agreed sum, plus costs. The matter of costs was referred to the registrar, who ruled that the interest component of the M.R.I. account could not be recovered as part of a cost assessment. The appeal came to the Supreme Court as an appeal of the decision of a master sitting as a registrar of the court.
[30]         Mr. Justice Burnyeat considered various decisions of registrars and masters, which were in apparent conflict….
[32]         Mr. Justice Burnyeat held as follows:…
the law in British Columbia is that interest charged by a provider of services where the disbursement has been paid by counsel for a party is recoverable as is the disbursement. The interest charge flows from the necessity of the litigation. If the disbursement itself can be assessed as an appropriate disbursement, so also can the interest owing as a result of the failure or inability of a party to pay for the service provided. In order to obtain the M.R.I., it was necessary to pay not only the $975.00 cost but also the interest on any unpaid balances that were not paid immediately. The cost plus interest was the cost of obtaining the M.R.I. The claim for interest should have been allowed.
[70]         To the extent that Burnyeat J. preferred the reasoning in McCreight to the reasoning in the other cases, I note that of these cases, only Hudniuk was from a fellow judge. Hudniuk is obiter dicta in an oral ruling delivered to counsel while considering a jury charge. When confronted by conflicting decisions from masters and registrars and obiter dicta from a fellow judge in an oral ruling that was at best nisi prius, Burnyeat J. was bound to decide the correct interpretation according to his best lights, which he did: R. v. Pereira, 2007 BCSC 472 at para. 48, citing Young v. Bristol Aeroplane Co., [1944] 2 All E.R. 293 (C.A.).
[71]          In the result, judicial comity persuades me that I should follow the decision in Milne. There is nothing in the interests of justice that persuades me to exercise my discretion to depart from this practice.

bc injury law, Chandi v. Atwell, Interest on Disbursements, MacKenzie v. Rogalasky, Rago

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When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.

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