Is interest paid on litigation loans recoverable from the Defendant?

A recent New Brunswick Court of Appeal decision allows an injured person to claim interest on a litigation loan to be recovered as a disbursement in the court action. In Leblanc v. Doucet 2012 NBCA 88, a plaintiff was seriously injured when he lost control of his motorcycle due to another vehicle crossing the center line. The injured person was not able to finance his lawsuit claiming compensation as a result of his injuries. Accordingly, he approached a litigation lender who loaned him more than $26,000 to finance his court action. The loan incurred interest exceeding $12,000. The injured plaintiff sought to recover the interest from the defendant.

The New Brunswick Court of Appeal held that interest could be recoverable as a disbursement item in a court action. In reaching this conclusion, the Chief Justice, writing for a unanimous panel wrote: “the appellant, Francis Leblanc, lacked the means to finance his action in damages against the respondents. His impecuniosity compelled him to take out loans from an independent third party to cover litigation expenses, all for the purpose of securing access to justice. While there is no provision in the rules of the court that expressly allows interest on such loans as a “disbursement”, sub-para 2(14) of the Tariff “D” of Rule 59 fills in the gap. It suffices that those loans were necessarily incurred to secure the just determination of the proceeding and that the interest rates were “reasonable”.

This case represents a move in the right direction in allowing injured parties to recover reasonable expenses incurred in the normal and usual conduct of a personal injury action.

At our Ottawa accident law firm, our clients occasionally seek funding from lenders to support their court actions. Our lawyers routinely seek to recover the interest paid on the loans from the defendants.

Our law firm focuses on personal injury and accident cases and provides free consultations to victims of accidents. We work on a contingency fee basis which allows any injured person access to justice with our qualified and experienced personal injury lawyers. For a free consultation and to learn more about our no fee until you win retainer agreements, call us at 613-315-4878.