To date, the Ontario Court of Appeal has not weighed in directly on this issue, either way. Therefore, it is unclear where the courts stand on this issue in Ontario; however, a recent lower court decision shows a movement closer to British Columbia’s stance of non-recovery rather than New Brunswick’s.
Herbert v. City of Brantford, 2010 ONSC 6528
This was a costs judgment following a trial decision that the Defendant City was 40% liable to the Plaintiff, and the Plaintiff was found 60% liable in contributory negligence. The parties had agreed on the quantum of damages before the trial. The Court asked for written submissions on costs and the parties disagreed on whether interest incurred on an account for an expert report would be an allowable disbursement. In deciding that the interest was indeed recoverable the Court noted the following:
- The account of an expert is ultimately the responsibility of the client and that such accounts could be quite formidable with complex matters and serious injuries.
- Many individuals face “access to justice” issues and these issues need to be addressed, and quoted from Chief Justice McLachlin’s public addresses on the subject.
- Bourgoin v. Ouellette et al stood for the proposition that interest was an allowable disbursement.
- It is permissible pursuant to the Solicitor’s Act R.S.O. 1990 CS. 15 for interest to be charged on a solicitor’s account. Therefore, the Court asked, is it not comparable that interest be charged on an expert account?
- Interest charged on unpaid expert amounts is in a way, an additional means of financing the litigation. Without that financing there would be difficulty in citizens accessing justice as the Chief Justice observed. Litigants may very well not be able to afford otherwise pertinent expert opinions and testimony.22
The Court concluded that: “Therefore, although interest on outstanding expert reports and review is not specifically provided for in the Tariffs and Rules, it will be allowed in litigation of this magnitude”.23
The Defendant in this case was granted leave to appeal the costs decision solely on the issue of the compounding interest awarded.24 The Court of Appeal noted that:
there was a dearth of evidence as to the actual financial circumstances of [the Plaintiff] and his family. Despite this, he went on to find that it would have been difficult, if not impossible, for him and his family to carry the cost of the approximately $42,000.00 in expert fees. In the circumstances of this case, we do not agree that the evidence relied upon by the trial judge supports this exceptional order. [emphasis added] 25
Note that the Court of Appeal does not say that interest is not recoverable. The Court of Appeal simply noted that the evidence and facts of that particular case did not support such an order. While leave to appeal was granted, no appeal decision was released.
Giuliani v. Region of Halton, 2011 ONSC 5119
The Plaintiff was involved in a traffic accident and was held to be 50% responsible for the accident. The Plaintiff sought to recover $229,984.28 in disbursements. Of that amount, the Plaintiff sought in excess of $92,700.00 as interest on a loan made for the purposes of funding the litigation. The Plaintiff’s lawyer submitted an affidavit stating that the loan was necessary as the law firm could not afford to carry the disbursement through to trial, and without such a litigation loan the Plaintiff would have been precluded from taking her case through trial.
However, the Plaintiff herself did not provide an affidavit or any evidence to support the assertions that without the loan she would not have had access to the courts. The Court was critical of the amount of interest charged on the loan (42% calculated monthly with an effective annual interest rate of 51.10%). The concept of reasonableness governs the Court’s treatment of disbursements. The Court found that the interest payments in this particular situation were unreasonable. The Court concluded that “an award of interest in this case would likely have an adverse impact on other defendants’ decisions to proceed to trial or to appeal”. The Court declined to award interest based on these particular facts. It is important to note that Justice Murray was critical of the Plaintiff’s claim for costs in general. She sought over $550,000.00 in costs for a damages award of $375,000.00.26 He was also critical of the costs (including the “excessive” time docketed) claimed by Plaintiff’s counsel stating that they raised a “number of troubling issues”.27
Warsh v. Warsh, 2013 ONSC 1886
In this family law matter, the Plaintiff had retained counsel to assist her; however she later became a self-represented litigant. The Plaintiff sought as a disbursement $13,000.00 she claimed to have paid in interest on amounts she had borrowed to pay her lawyers. She stated that she owes more than $10,000.00 on each of a line of credit and a credit card (with rates of 7.75% and 19% accordingly) along with a debt owed to her son Steven of $10,000.00 (no interest rate provided).
Justice Lauwers noted that it is arguable that Rule 24(12) in conjunction with Rule 24(11)(e) and (f) of the Family Law Rules could be construed to give the Court such jurisdiction, however: “I am reluctant to award costs on loans to cover legal fees as a proper disbursement. Ms. Warsh referred me to no Ontario cases that have permitted such a recovery. Quite understandably, the matter was not properly argued.”[emphasis added] 28
Justice Lauwers also noted that Section 128(4)(c) of the Courts of Justice Act, specifically excludes an award of pre-judgment interest on an award of costs and that allowing interest on litigation loans to be received as a disbursement could “create a perverse incentive on litigants to borrow to finance lawsuits”. This would have the effect of reversing s.128(4) of the Courts of Justice Act for practical purposes by making a form of pre-judgment interest payable on costs. However, the discretion of the court under s.130 of the Courts of Justice Act is also quite broad.29
Justice Lauwers noted:
In my view, Ms. Warsh was not impecunious. Further, the parties had assets that could have been utilized to assist in providing her with some legal assistance at much lower cost than credit card interest rates. 30
In my view the policy implications of awarding interest on litigationcosts as a disbursement are significant and I decline to exercise my discretion to make such an award where the issue has not been properly argued and where a more fulsome policy development process is plainly required.31 [emphasis added]Justice Lauwers did not conclude in this case that interest is not recoverable in all circumstances. Instead he chose not to exercise his discretion to allow the recovery of interest on the facts of this particular case (the Plaintiff was not impecunious, she had other means) and without proper argument on this issue.
Poile v. Collins 2015 ONSC 916
This case settled on the morning of trial with costs to be agreed or assessed. Despite this however, the Court was asked to fix costs pursuant to Rule 57 of the Ontario Rules of Civil Procedure. The Plaintiff sought as a disbursement, $3,379.30 for interest incurred on a litigation loan of $15,425.89 made in three separate advances. The Plaintiff was charged an effective annual rate of interest of 28.3%. There was no evidence provided about the financial circumstances of the Plaintiff.
The Plaintiff attempted to rely on Leblanc v. Doucet but the Court distinguished that case as there was affidavit evidence before the Court in Leblanc concerning the financial circumstances of the Plaintiff. The Court made note of the relevant framework for deciding what is fair and reasonable for costs and that the expectation of the parties concerning the quantum of a costs award is a relevant factor as well as issues of proportionality. 32
The Court also addressed, in obiter, the access to justice argument in LeBlanc, stated that:
In my view, [“access to justice”] could be used to attempt to create an obligation to pay any and all types of expenses that permit person to enforce their rights in court. However, Tariff A, Part II, item 35 incorporates a principle of “reasonableness”. Strictly speaking “Access to Justice” is an absolute kind of entitlement. It is difficult to reconcile an absolute entitlement with concepts of reasonableness. The legislature has determined to temper the ability of the Court to order disbursements paid to those that are reasonably necessary to pursue the action. 33
Justice Fitzpatrick then cited the following from Warsh v. Warsh 2013 OJ No. 1474 at paragraph 34
In my view the policy implications of awarding interest on litigation costs as a disbursement are significant and I decline to exercise my discretion to make such an award where the issue has not been properly argued and where a more fulsome policy development process is plainly required.[emphasis added]Justice Fitzpatrick concluded that:
I agree with that approach given the evidence before me in this matter”34 and that “[b]ased on the record before me I cannot find that it was reasonable for the Plaintiff to expect the defendant to pay interest costs on a litigation loan. I, like Lauwers J. (as he then was) in Warsh, decline to exercise my discretion to allow this disbursement. 35 [emphasis added]Once again, the Court did not hold that interest is never recoverable. On the facts of this particular case Justice Fitzpatrick was reluctant to allow the recovery based on the evidence provided. However, the obiter comments on “access to justice” and its applicability to interest recovery could reveal reluctance on behalf of at least some of the judiciary in Ontario to grant interest recovery on this basis.