Tag: Interest on Disbursements

Interest on Disbursements Allowed in Significant Injury Claim

Update – May 17, 2013 – the below decision was upheld on appeal this week. You can click here to read about this development
____________________________________________________________________
A developing area in BC relating to personal injury law is the ability of a Plaintiff to recover interest charged on disbursements.  Prosecuting personal injury claims, particularly claims with complex injuries, can be an expensive business.  Disbursements can quickly add up to tens of thousands of dollars.  These expenses are often financed through a line of credit which can accrue significant interest over time.
Although the BC Court of Appeal has yet to weigh in on this subject, it appears the law is shifting to allow interest on disbursements to be recovered in personal injury litigation in this Province.  Reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, allowing such a result.
In today’s case (Chandi v. Atwell) the infant Plaintiff was severely injured in a 2004 collision.  The case settled for $900,000 plus costs and disbursements.  Following settlement ICBC took issue with many of the Plaintiff’s disbursements.  The parties had these assessed by the BC Supreme Court.  While some reductions were made the Court ultimately upheld many of the Plaintiff’s disbursements including a medico-legal assessment which alone cost almost $17,000.
The Plaintiff incurred over $25,000 in disbursement interest.  In allowing this expense the Court provided a useful summary of the law at paragraph 71 of the reasons for judgement with District Registrar Cameron coming to the following conclusion:
[73]         While the current state of the law mandates that I make some allowance for the interest expense in my view I am not bound to award full indemnity for the amount of interest charged to the Plaintiff. I am not bound by Basi v. Atwal and with the greatest of respect I decline to follow it.
[74]         In the law of costs it is still only in the relatively rare case that full indemnity is provided to the successful party. Only disbursements that are necessary and reasonable in amount are recoverable.
[75]         In my view the Registrar should endeavour, wherever possible, in assessing the amount to allow for a specific type of disbursement to strive for consistency unless the application of that principle would work a real hardship or unfairness in a particular case. To attain that consistency I will make an allowance for disbursement interest based upon Registrar’s rates with the calculation of the total amount to be akin to the calculation of interest payable on special damages pursuant to the relevant provisions of Court Order Interest Act.
For more on this topic you can click here to accessed my archived ‘interest on disbursement’ posts.  This case is also worth reviewing for the Court’s comments at paragraphs 49-53 on ‘transcription fees‘ finding that this is a disbursement of convenience, not necessity, and therefore not allowable.

Interest on Disbursements: The Uncertainty Continues

The BC Court of Appeal released reasons for judgement today in a case addressing the recoverability of interest on disbursements in personal injury lawsuits.  It was anticipated that the Court would set out a firm answer to this issue.  Unfortunately the question remains unanswered as the BC Court of Appeal held that “this is not the right case to address the issue“.
In today’s case (Milne v. Clarke) the Plaintiff was injured in a motor vehicle collision.  The case settled but following this the parties could not agree whether the interest charges on disbursements for private MRI’s were recoverable.  Ultimately Mr. Justice Burnyeat held that this was a recoverable disbursement finding as follows:
[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.
ICBC appealed this as a test case hoping to get a firm answer from the BC Court of Appeal.  The Appeal was dismissed with the Court finding that there was insufficient material before them to address the issue.  The Court provided the following reasons:





[13] There is, as Mr. Justice Frankel observed, divergent authority on the recoverability of interest on disbursements under Rule 57(4) (now Rule 14-1(15)).  There may be different answers to that question depending upon the circumstances of the charge, the time and purpose for which the charge was incurred, and the circumstances that caused counsel to pay the bill, but this must be a question for another case.  It is clear from the fresh evidence that in this case the recoverability of the interest paid by counsel requires an interpretation of the settlement agreement.  One question is whether the amount in issue is properly characterized as a claim for special damages rather than disbursement, and is thus captured within the agreed sum.  Another question is whether, on a correct interpretation of the settlement agreement, the amount in issue is recoverable as “a necessary and reasonable disbursement”.  The judge, having been presented with the case as an application of Rule 57(4), did not deal with either of these issues.

[14] To look at it another way, it was intended that this appeal would be concerned with the recoverability of interest as a disbursement under Rule 57(4).  On the material before us, the case turns on the characterization of the charge as a disbursement or special damages, and the interpretation of several terms of the settlement agreement, on only one of which the law on Rule 57(4) might be a reference point, and even there is not directly engaged.

[15] In our view this is not the right case to address the issue raised in the leave application.  While that issue is of interest to the profession, its answer must await a case that directly engages the rule, in the context of a proper factual matrix rather than a hypothetical.






Interest on Disbursements in Injury Claims Recoverable "As a Matter of Principle"


Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, illustrating a welcome development in BC personal injury law.
As discussed on previous occasions, injury lawsuits can be expensive and oftentimes individuals rely on their lawyers to finance the costs necessary to prosecute their claim.  These costs can easily add up to tens of thousands of dollars and significant interest can accrue on these expenses (called disbursements).  After claim settlement or trial a debate often arises as to who should pay the interest on disbursements.
Earlier this year Mr. Justice Burnyeat held that “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.” Last week a case was released going further holding that in the appropriate circumstances interest charged by lawyers for financing disbursements can be recoverable as a disbursement.
In last week’s case (Basi v. Atwal) the Plaintiff was injured in a motor vehicle collision.  The Plaintiff hired a lawfirm that financed the prosecution of the claim.  The lawfirm did so through a line of credit which in turn charged interest.  The interest was passed on to the client.  After settlement ICBC argued that the interest charged was not a reasonable disbursement.  Registrar Bolton disagreed and provided the following instructive reasons:
…In… Milne v. Clarke [2010], BCSC 317, the learned judge quite clearly says that the successful party is entitled to interest on a specific disbursement where the provider of the service in question had charged interest to counsel for that party.
I see no reason in principle to distinguish this decision on the basis that in the Milne case, the interest has been charged by the provider of the service to the law firm and, therefore indirectly to the client, whereas here the interest is being charged directly by the lawyers pursuant to an agreement they have with their own bank.
So I am satisfied that the charge is potentially proper, give the appropriate circumstances.  Here, the circumstances are that the law firm has an arrangement with its own bank to fund disbursements.  They are funded on the basis of an agreement of paying six percent over prime.  I am satisfied that that is a reasonable interest rate in these circumstances…
So to summarize: first of all, I accept that the principle of allowing interest is one that the law recognizes, at least since this decision of Mr. Justice Burnyeat.  Secondly, I am satisfied that the accounting that would be required to satisfy the court that the charge does relate specifically to this particular file, has been properly done.  Thirdly, I am satisfied that the interest rate being charged by the bank is reasonable…
In those circumstances, that only leaves the question of amount to be decided…as a matter of principle, or law, I suppose, I am satisfied that a claim for interest here is proper.
As readers of this blog know, I like to link to the full judgments of the cases discussed here.  As of the date I write this post Basi v. Atwal remains unpublished.  I will link to the case should this change but in the meantime am happy to e-mail a full copy of the case to anyone who may need it.

Can Interest on Unpaid Special Damages be Recovered in a Personal Injury Claim?


Special damages are out of pocket expenses incurred as a result of the intentional or negligent actions of others.  In personal injury lawsuits the most common special damages relate to medical treatments such as physiotherapy, massage therapy, medications and similar expenses.
When a Plaintiff pays their own special damages and succeeds at trial they are entitled to be reimbursed for these expenses along with a modest amount of interest under the Court Order Interest Act.  What about expenses that were not paid before trial where the medical providers charge interest on the unpaid accounts?  Can a plaintiff recover damages for these additional expenses?  Reasons for judgement were released today by the BC Supreme Court considering this issue.
In today’s case (Bortnik v. Gutierrez) the Plaintiff sued for injuries sustained as a result of a 2007 BC motor vehicle collision.  Mr. Justice Myers found that the Plaintiff had “exaggerated his injuries“.  Despite this finding the Court concluded that the Plaintiff suffered “some minor whiplash injuries as a result of the accident” and awarded the Plaintiff $20,000 for his non-pecuniary damages.
The Plaintiff also was awarded damages to account for the expenses related to some of his post accident chiropractic treatments.  The plaintiff did not pay these accounts before trial and the chiropractor charged interest on the unpaid accounts.  The Plaintiff asked the court to award damages to account for this interest.
Mr. Justice Myers refused to make this award finding as follows:

[54]    It appears to me that the plaintiff acted reasonably in seeking chiropractic treatment.  I would allow the expenses until December 31, 2009, when he was largely recovered.

[55]    With respect to interest, while counsel have found some authority dealing with interest on disbursements, counsel advise they have not found any case dealing with interest on special damages.  I therefore approach the matter on first principles.

[56]    If the plaintiff had paid the chiropractor, he would have been limited to interest as provided by the Court Order Interest Act, R.S.B.C. 1996, c. 79.  Assuming that interest on special costs may in some instances be recoverable as damages – something which I need not decide – it follows from my finding that the plaintiff has not proved a past wage loss that he cannot hold the defendants responsible for his inability or failure to pay the bills as they became due and owing.  He therefore is not entitled to claim interest as damages.

The BC Supreme Court has recently allowed interest on disbursements levied by service providers to be recovered in a personal injury case.  In that decision the Plaintiff’s ability to pay for the disbursement was also a relevant factor.  Today’s case leaves the door open for a similar result in appropriate circumstances for unpaid special damages.

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.

  • 1
  • 2

Contact

If you would like further information or require assistance, please get in touch.

ERIK
MAGRAKEN

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.

“Work hard, be kind and enjoy the ride!”
Erik’s Philosophy

Disclaimer