Court File and Parties

COURT LOCATION: Thunder Bay COURT FILE NO.: CV-13-0024-00 DATE: 2023-06-30

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Rudolph Steinberg, Jakob Steinberg and Amanda Steinberg, Minor by their Litigation Guardian, Rudolph Steinberg, Plaintiffs v. Pamela Adderley, Defendant

HEARD: July 27, 2022 with additional submissions on June 9, 2023

BEFORE: Justice B. Warkentin

COUNSEL: Mark Stoiko, for the Plaintiffs Ruby Egit, for the non-party, BridgePoint Financial Michael Blott for the non-party, Estate of Allan Blott Lori Kruse, for the non-party, Estate of Christopher Hacio

Reasons on Motion

Background of the Litigation and this Motion

[1] This litigation began in 2013 after the plaintiff, Rudolph Steinberg was injured in a motor vehicle accident in October 2011. Mr. Steinberg’s first counsel, the late Christopher Hacio died prior to completing the litigation. Mr. Steinberg thereafter retained the late Allan Blott who passed away recently. Mr. Steinberg is currently represented by Mark Stoiko at Masgras Law in Toronto. His initial counsel at Masgras Law, Paul Deluca has also passed away.

[2] On the advice of the late Mr. Hacio, Mr. Steinberg obtained five litigation loans from BridgePoint Financial Services Limited (BridgePoint). The five loans totaled $65,000.00. Interest was payable at rates of either 20% or 24% per annum, compounded semi-annually from the date on which each of the loans was advanced. As security for the loans, Mr. Steinberg granted BridgePoint a general and continuing security interest in his eventual settlement funds. The loans were not contingent on success in the litigation.

[3] With each of the five loans, Mr. Steinberg signed an Irrevocable Authorization and Direction that required any new counsel to be bound by the provisions of the loan agreement for the balance owing on the loans together with any accrued interest. The debt was to be paid from settlement proceeds from the motor vehicle litigation. With loans four (May 9, 2014) and five (December 10, 2014), Mr. Steinberg was provided a summary of projected amounts owing on the loans including accrued interest over a two-year period and was required to sign an acknowledgement confirming the future loan balance should it not be repaid within the two years.

[4] I became involved in this litigation after Justice D. Shaw, who had been case managing the litigation, retired in 2021. My role has been to assist the various plaintiff’s counsel and BridgePoint to resolve their respective claims for legal fees and disbursements and repayment of the outstanding litigation loans. It was hoped that a resolution on fees and the litigation loan would enable Mr. Steinberg to settle the litigation with the defendant.

[5] Current and former counsel for Mr. Steinberg and BridgePoint were prepared to negotiate a resolution, however, Mr. Steinberg was unwilling to reach a resolution with BridgePoint that included payment of accrued interest.

[6] On May 22, 2022, Mr. Steinberg paid BridgePoint the sum of $70,000.00. He has refused to consider any further payment to BridgePoint.

[7] Absent a resolution, I agreed to hear a motion to determine the quantum of legal fees owing to present and past plaintiff’s counsel as well as to determine the interest owing to BridgePoint that would be payable from any recovery from the litigation. The issues to be argued were set out in my endorsement of June 29, 2022 that limited the scope of the motion.

[8] The motion was argued on July 27, 2022. By that time Mr. Steinberg had received payout of his accident benefits claim in the amount of 1.25 million dollars. At the motion, BridgePoint submitted that my decision should include an order that the BridgePoint debt be paid by Mr. Steinberg from the accident benefits settlement. Mr. Steinberg’s lawyer objected. I informed counsel that my endorsement of June 29, 2022 did not include that issue as part of the motion, however, I invited Mr. Steinberg’s lawyer to bring a companion motion as soon as possible and if I had not yet rendered a decision on the July 27, 2022 motion, I would address that issue in my reasons. I reserved my decision.

[9] Mr. Stoiko agreed that the plaintiff would address that issue in a motion if agreement with BridgePoint was not reached. No motion was brought.

[10] During argument on the July 27, 2022 motion, Mr. Stoiko referenced the case of Davies v. The Corporation of the Municipality of Clarington, 2021 ONSC 6449 (dated September 28, 2021) in which Regional Senior Justice M. Edwards made certain comments regarding the fact that high rates of interest accruing on litigation loans may interfere with a plaintiff’s ability to settle the litigation. It was Mr. Stoiko’s position that RSJ Edward’s comments regarding the high interest charged by litigation financers was support for his argument that the interest rate charged to Mr. Steinberg was unconscionable.

[11] The issue that RSJ Edwards was asked to determine, however, was not whether the interest on litigation loans was unconscionable. The motion was to determine whether defendant’s costs, in litigation where they were entitled to costs by a liability plaintiff (who received an amount less than the defendant’s offer to settle), should be paid by the litigation lenders. RSJ Edwards dismissed the defendant’s motion. Counsel noted that the Davies decision was under appeal.

[12] Prior to rendering my decision on this motion, I was advised by BridgePoint counsel that the Davies appeal was being argued on September 21, 2022. I agreed to delay my decision on the motion until the Court of Appeal decision was released. It was anticipated that the Court of Appeal would comment on the legitimacy of interest rates charged by litigation lenders.

[13] On September 29, 2022, Justice Fitzpatrick found the plaintiff, Rudolph Steinberg in contempt of court for refusing to abide by multiple court orders that he attend defence medical examinations. Justice Fitzpatrick dismissed Mr. Steinberg’s claims in this litigation with costs. Mr. Steinberg has appealed this decision and the appeal is pending.

[14] On May 26, 2023, the Court of Appeal rendered its decision in Davies. The Court upheld the decision of RSJ Edwards but did not address whether the rates of interest on litigation loans was unconscionable.

[15] Subsequent to Justice Fitzpatrick’s dismissal of Mr. Steinberg’s claims and the Davies decision by the Court of Appeal, two further case conferences were held before me to discuss whether a decision on the July 27, 2022 motion was still required. Current and former counsel for the plaintiff reached an agreement on the payment of their fees from the accident benefits recovery and that resolution is set out in my endorsement of June 9, 2023.

[16] The only issue remaining before me is the quantum of interest owing by Mr. Steinberg to BridgePoint for the litigation loans. Mr. Steinberg’s counsel was directed to bring a separate motion to address the issue of whether the amount owing to BridgePoint must be paid from the accident benefits settlement. That motion has been scheduled before a different judge.

Trial Delay

[17] Mr. Steinberg was scheduled to attend defence medical examinations in Toronto in 2018 and this action was scheduled to proceed to trial in November 2018. The defence medical examinations were cancelled when Mr. Steinberg claimed he was unable to travel to Toronto because of his injuries. The trial was then struck from the trial list while the issue of attendance at defence medical examinations was determined.

[18] On November 21, 2021, Justice Shaw found that Mr. Steinberg was physically able to travel to Toronto for defence medicals and required him to attend. However, Justice Shaw provided Mr. Steinberg an opportunity to provide further submissions on the effect of the Covid-19 pandemic on his ability to travel safely (Steinberg et al v. Adderley 2021 ONSC 7811).

[19] Justice Shaw retired shortly after rendering this decision. Justice Fitzpatrick was assigned carriage of the litigation as the trial judge. On April 27, 2022, Justice Fitzpatrick found that Mr. Steinberg was able to safely travel to Toronto for the defence medical examinations and ordered him to do so (Steinberg et al v. Adderley 2022 ONSC 2596). Mr. Steinberg refused, resulting in the subsequent contempt motion by the defendant and the dismissal of Mr. Steinberg’s tort action.

Position of the Parties

[20] It was Mr. Steinberg’s position that interest should be capped at 1.5 times the principal borrowed and that any additional interest charged/owing was unconscionable. His counsel also argued that since he had repaid the principal, the interest should have stopped accruing thereafter.

[21] BridgePoint claimed that as at July 11, 2022 the amount outstanding to Bridge Point was $298,044.29 with interest accumulating at the rate of $176.41 per day. They noted that the $70,000.00 paid by Mr. Steinberg was not applied to the principal borrowed but was applied to the first litigation loan and thereafter to the interest that had accumulated on that loan.

[22] BridgePoint also noted that Mr. Steinberg had received legal advice prior to borrowing the money and signed an acknowledgement that set out the interest that was accumulating on the loans. In other words, Mr. Steinberg was at all times aware of the debt he had incurred and the liability he was undertaking, therefore his argument that the interest rate was unconscionable was not supported by the evidence.

[23] It was BridgePoint’s position that their loans were valid, and the outstanding principal and interest was owed by Mr. Steinberg.

[24] On June 9, 2023, I asked BridgePoint to provide me the outstanding amount owing to BridgePoint including accrued interest as at the beginning of the Covid-19 pandemic and a current statement of account. The debt as at March 30, 2020 was $233,096.34 and the debt as at June 5, 2023 was $312,936.18 (after credit for the $70,000.00 paid in May 2022).

Finding re: Interest Owing to BridgePoint

[25] I am prepared to provide a modest amount of relief to Mr. Steinberg due to delay that happened because of the Covid-19 pandemic. However, as set out above, Mr. Steinberg had an opportunity to bring this litigation to a conclusion in 2018 but refused to attend defence medical examinations. This resulted in the scheduled trial being adjourned. It was later determined by two different judges that Mr. Steinberg’s refusal to attend those defence medical examinations was unreasonable. His continued refusal to attend resulted in this action being dismissed with costs against Mr. Steinberg.

[26] I find that the litigation loans are contractually sound. Mr. Steinberg cannot now claim that the interest rate is unconscionable in light of the legal advice he received when obtaining the loans and based upon his signed acknowledgment on two different occasions where he acknowledged the quantum of interest that would accrue with time.

[27] I also find that it was Mr. Steinberg’s conduct in refusing to advance this litigation that has exacerbated the accrual of interest.

[28] But for Mr. Steinberg’s conduct, the interest on the loans would have been significantly lower had this action proceeded to trial in 2018 or had he complied with subsequent court orders. It is also probable that the action would have resolved after 2018, either by trial or resolution had Mr. Steinberg abided by the court orders to attend defence medical examinations.

[29] From early in the pandemic, BridgePoint was willing to entertain a reduction in the interest payable on the loans due to the pandemic, but Mr. Steinberg has refused to consider any payment other than what he has already made. BridgePoint has asked me to fix the amount of that reduction.

[30] I find that the BridgePoint loan and accrued interest is payable by Mr. Steinberg. In light of the delay that occurred in the litigation as a result of the pandemic, as noted in the order of Justice Shaw, I reduce the interest owing on the BridgePoint loans in the amount of $75,000.00 which is the approximate amount of interest that accumulated during approximately 1.5 years.

[31] I make this finding on the specific factors of this case. At the outset of the pandemic, travel between Thunder Bay and Toronto was at first impossible after March 2020, and later challenging for individuals deemed at risk of contracting the Covid-19 virus. I find that there was a legitimate delay in the progress of the litigation because of that issue.

Costs

[32] If the parties are unable to agree on costs, they shall provide written submissions on costs, not to exceed 5 pages together with Bills of Costs. Counsel for the plaintiff shall provide their submissions within 30 days and counsel for BridgePoint within 30 days after the plaintiff’s submissions.

The Honourable Justice B. R. Warkentin J.

Released: June 30, 2023