Can Interest on Disbursements be Recovered in BC Injury Litigation?

As I’ve written before, personal injury litigation can be an expensive business.
It usually costs thousands of dollars if not tens of thousands of dollars to bring an injury claim to trial in the BC Supreme Court.  I’m not talking about lawyers fees here either.  What I’m referring to is the cost of gathering evidence for presentation in court.  To succeed in Court usually expert opinion evidence is required to address many areas that frequently come up in injury litigation such as diagnosis of injury, prognosis, disability etc.   Expert medical reports usually cost anywhere from hundreds to tens of thousands of dollars.
These significant disbursements are often funded by personal injury lawyers or on a line of credit.  When a Plaintiff is successful in their personal injury claim they can recover their reasonable disbursements from the opposing party.  But can the interest on these disbursements be recovered?  Reasons for judgement were released today by the BC Supreme Court, Vancouver Registry addressing this topic.
In today’s case (Milne v. Clarke) the Plaintiff was injured in a 2005 BC Car crash.  In advancing his claim private MRI’s were arranged between 2005-2006.  These cost $975 a piece.
The claim settled in 2009 for $170,000 plus costs.  By the time of settlement the costs of the MRI’s with interest came to almost $4,000.  The Plaintiff sought this amount from the Defence and the Defence refused to pay.
Ultimately the matter went before a Master of the BC Supreme Court who held that the interest was not recoverable.  The Plaintiff appealed.  Mr. Justice Burnyeat reversed the Master’s ruling finding that interest on disbursements can be recoverable.  Specifically the Court reasoned as follows:

[4] In support of the submission that the Learned Registrar erred in principle, Mr. Milne submits that the law which was binding on the Learned Registrar is set out in McCreight v. Currie, [2008] B.C.J. No. 2494, where ….  In allowing the interest, Registrar Young concluded:

… The plaintiff really had no choice but to pay the interest given that she did not have the funds to be retaining experts and paying for their reports up front.  I suppose the defendant’s choice was that the defendant could have offered to pay for the report up front once it was disclosed to him, but no offer was forthcoming.  Given this was the only way to finance the obtaining of a report, I find this to be a reasonable expense and I will allow it.

[6] Rule 57(4) of the Supreme Court Rules provides that, in addition to determining fees, the Registrar must:

(a)   determine which expenses and disbursements have been necessarily or properly incurred in the conduct of the proceeding, and

(b)   allow a reasonable amount for those expenses and disbursements.

[7] In support of the application, it is said that Mr. Milne had no means of paying for the required M.R.I. scans other than to borrow money from the provider and that, since the cost of the M.R.I. had already been agreed upon, so too should the interest on the unpaid accounts rendered by the provider of the M.R.I. images.  Here, it is the provider of the M.R.I. and not counsel for Mr. Milne who is charging the interest on the invoices.

[8] I find that the Learned Registrar erred in principle.  The December 29, 2009 decision was clearly wrong.  First, even if the Learned Registrar was not bound by the decision inMcCreight, I am not bound by the decision reached by the Learned Registrar herein.  I am satisfied that the statement set out in McCreight accurately represents the law in British Columbia.  Second, the decision in Hudniuk relates to the question of whether disbursement interest is a head of damage and not to the question of whether it is recoverable as costs on an assessment.

[9] 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.

This judgement is a welcome development for people advancing personal injury claims in BC as the Court’s reasoning provides greater certainty that successful Plaintiffs can recover interest charged on reasonable disbursements incurred in the course of litigation.

bc personal injury law, disbursements, Interest on Disbursements, Milne v. Clarke, Mr. Justice Burnyeat, recovering interest on disbursements, Taxing Disbursements

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Personal Injury Lawyer

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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