Mann v. Jefferson 2019 ONSC 422, 2019 CarswellOnt 1435

The Plaintiff was seeking compensation for damages sustained as a result of a motor vehicle collision. He had been in a previous collision 3 years prior, which was not the subject of this action, and had been off work since. During the examination in chief of the Plaintiff, counsel sought to introduce evidence relating to two litigation loans the Plaintiff had taken out. The first related to the prior collision, and the second related to the second collision. No evidence in regards to the Plaintiff’s economical situation was led prior, other than general statements.

Plaintiff’s counsel argued that as a matter of public policy, the interest on the loans (if not the principle too) should be recoverable as damages, therefore the evidence concerning these loans is admissible. Since the Defendants were given notice in both the Notice of Action and Statement of Claim, there was no prejudice. The fact that a Plaintiff had to borrow money to survive and treat is just as foreseeable to the Defendants as other losses which are either unknown or uncertain at the time of the collision, but which develop after, and are awarded as foreseeable at trial as injuries develop and damages crystalize. It would be prejudicial to the Plaintiff not to inform the jury about these loans of last resort.

Defendant’s counsel argued that the Plaintiff’s need to borrow money to fund litigation is not foreseeable to the Defendant at the time of the accident and therefore not recoverable. To award anything for the principle would be double recovery as the amounts paid for medical or rehabilitation expenses are recoverable as special damages, amounts used for living expenses are recoverable as loss of income, and interest on those items is already provided for by pre-judgment interest. Public policy weighs against the inclusion of the loan principle and interest in the calculation of damages, as its effect would be to negate the pre-judgment interest sections of the Courts of Justice Act (“CJA”) and encourage the funding of litigation through loans at exceedingly high interest rates.

Justice Trimble started his analysis with foreseeability, citing Mustapha v. Culligan of Canada, 2008 SCC 27, wherein the Supreme Court of Canada defined “reasonably foreseeable” as a “real risk”, i.e. “one which would occur to the mind of a reasonable man in the position of the defendan[t] . . . and which he would not brush aside as far-fetched.” He then considered prior jurisprudence on the issue, and came to the conclusion that principle and interest on loans taken after the accident are too remote and/or not foreseeable to the Defendant to be recoverable as damages.

Justice Trimble further held that public policy also suggests that interest on loans used to pay post-accident medical, therapy and personal expenses, should not be recoverable as damages for the following reasons:

  1. Pre and post-judgment interest is statutorily imposed by the CJA, and indemnifies the Plaintiff’s loss of use of money and out of pocket expenses at statutorily mandated rates. Allowing interest on litigation loans recoverable as disbursements, nullifies s. 128(4) which provides that pre-judgment interest does not accrue on costs;
  2. Awarding interest on these loans as damages would allow the Plaintiff to recover through the back door that which is not recoverable as a disbursement on the current state of the law;
  3. The Plaintiff bears the onus to establish that they are impecunious. Assets must be utilized first, as they have much lower costs than the interest rates on these loans;
  4. This is a public policy issue of significant importance, requiring more research and fuller argument than possible in the middle of a jury trial; and 

Allowing recovery of interest charges as damages, or costs, would create an incentive to borrow money at astronomical interest rates, far in excess of commercially available rates, to fund litigation related expenses, and pass these charges onto the tortfeasor.

Irina Rosca
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Irina Rosca received her law degree from the University of Windsor – Faculty of Law. After articling at a full service, national firm on Bay Street, she joined Greg Monforton and Partners as an Associate in 2018, where she practices exclusively in the field of personal injury. Irina is passionate and committed to protecting the rights of her clients and fighting to secure the compensation they deserve. In her spare time, Irina enjoys giving back and volunteering within her community.