Archives > March 2020

SCC ruling lays foundation for litigation funding as an access to justice tool

Monday, March 30, 2020 @ 9:27 AM | By Larry Herscu for The Lawyer’s Daily


The Supreme Court of Canada’s unanimous decision in a corporate insolvency case is the first time the country’s top court has contemplated third-party litigation funding and it’s anticipated that the judgment will provide much-needed guidance for other areas of law, including personal injury.

The top court’s decision in 9354-9186 Québec Inc. v. Callidus Capital Corporation was issued from the bench in late January with reasons to follow. In brief, the SCC looked at whether Companies’ Creditors Arrangement Act debtors, whose only assets are litigious claims, need to obtain creditor approval for litigation financing by way of a plan of arrangement.

At trial, the judge ruled that such an approval was not necessary, but a unanimous Quebec Court of Appeal disagreed. While we eagerly await the written reasons, the fact that the SCC reinstated the decision of the Quebec Superior Court opens the door for more creative and accessible solutions for access to justice.

There’s no doubt that it’s increasingly difficult for the average litigant — whether a plaintiff or corporation — to hire legal representation. In Manitoba, legislation was recently introduced to provide more affordable options for legal information and representation while ensuring appropriate public protections are in place.

This speaks to the core of the problem — litigation is too expensive — and third-party litigation funding enables plaintiffs to withstand the length of time it takes their counsel to negotiate fair settlements on their behalf.

Third-party litigation funding is well established in other common law jurisdictions where doctrines of maintenance and champerty existed, such as the United Kingdom and Australia. Not only is third-party funding endorsed by the judiciary and policymakers, but it is also viewed as a vital access to justice tool.

While Canada may be behind some of our common law counterparts, the opportunities for third-party litigation funding are increasing with new lenders entering the market and evolving case law. Besides class action funding, several decisions have led courts down the path of addressing third-party funding and access to justice in personal injury matters.

In 2009, the Court of Queen’s Bench of New Brunswick (Bourgoin v. Ouellette [2009] N.B.J. 164) recognized the interest on a litigation loan as part of the plaintiff’s disbursements in a civil action involving a motor vehicle accident.

The judge noted the only option that seemed to be open to the plaintiff “in order to have access to justice, claim his rights and obtain such a considerable settlement, was to get a loan from a financial institution able to support his allowable disbursements for the duration of the action.”

Justice Thomas E. Cyr acknowledged that while the interest rate charged by the funder was high, the institution agreed to finance the case at an elevated risk to itself.

“Seahold Investments Inc. was the institution which agreed to do it, at a very high interest rate, but also at an elevated risk to itself. It must be noted that the Bank of Nova Scotia did not want to take on this risk for a lesser amount,” Justice Cyr wrote.

In 2012, in LeBlanc v. Doucet and the New Brunswick Power Corporation 2012 NBCA 88, the Court of Appeal of New Brunswick allowed the personal injury plaintiff to recover $14,000 in interest on litigation loans used to finance disbursements. At the time of the motor vehicle accident, the plaintiff was a 17-year-old student living with his parents and unable to pay the cost of litigation.

In a 2014 costs decision in National Bank Financial Ltd. v. Potter 2014 NSSC 264, the successful plaintiffs claimed disbursements of more than $312,000, which included over $80,000 in interest on litigation loans.

In 2015, the Ontario Superior Court extended the principles developed in the class action context to single-party commercial litigation. In the matter of Schenk v. Valeant Pharmaceuticals International Inc. 2015 ONSC 3215, Justice Thomas J. McEwen considered whether the rules against maintenance and champerty prohibited a plaintiff of limited means from contracting with a litigation funder, who covered all legal fees and disbursements in exchange for a portion of the recovery.

McEwen held that such an agreement was not per se champertous, and there was “no reason why such funding would be inappropriate in the field of commercial litigation.”

As both the case law and attitudes around third party litigation funding continue to evolve, the door is open for more creative and equitable access to justice solutions for Canadian plaintiffs.

As litigation funders and members of the bar eagerly await the SCC’s written decision in Callidus Capital Corporation to provide more clarity and guidance around the rules and regulations surrounding litigation funding, there is no doubt the decision from the bench sets a precedent for access to justice.

Larry Herscu is the president and founder of the Easy Legal Group of Companies, a Canadian legal financing corporation. Its lending solutions service the personal injury sector, including plaintiffs with pending injury claims. Services are delivered through Easy Legal Finance Inc. and Rhino Legal Finance Inc.

COVID-19 Update – Easy Legal Group of Companies: Message from the President & CEO

The COVID-19 pandemic is currently impacting Canadians both, personally and professionally; including our families, business partners and clients.

While we are all doing our part to curb the spread, we appreciate that during these situations, operational expenses can be restrictive and/or limited.

We further anticipate that the insurance marketplace will most likely seize this as an opportunity to delay and/or defer settlements, placing a further strain on your cash flow.

We are here to help.

The Easy Legal Group of Companies (composed of the Easy Legal and Rhino Legal brands) remain committed to working with our lawyer partners during these uncertain times. We are operating remotely to maintain uninterrupted service levels, and as a supplement to our traditional file-specific disbursement loans, we also offer fully-deferred medical legal assessment contracts and lawyer loans to ease the financial burden you may be facing.

We are here to support you throughout, so please reach out with any questions or concerns you may have.

Larry Herscu
President & CEO

The Easy Legal Group of Companies

B.C. government faces uphill challenge rebuilding public trust in ICBC

B.C. government faces uphill challenge rebuilding public trust in ICBC

By Kirsten McMahon

British Columbia’s plan to drastically overhaul the government-run Insurance Corporation of British Columbia (ICBC) requires careful consideration as the results could have significant effects on motor vehicle accident victim compensation, says Larry Herscu, president and CEO of Rhino Finance Inc.

“This sounds quite similar to what the Ontario government did back in the early 1990s when switching to a no-fault system,” he warns. “With that in mind, I think there’s a great deal B.C. can learn from Ontario and the slow, systematic changes and tweaks that have been made since no-fault was introduced in 1989.”

When the B.C. government announced the major changes to ICBC in February, Herscu says he received an influx of calls and emails from concerned stakeholders and those in the industry questioning what these changes will mean.

“Understandably, many people are concerned and wondering whether the government is going to try to make these changes retroactively on any claims occurring now,” he says.

“The good news, at least, is that the B.C. government has said this legislation, if passed, will apply to claims made after May 1, 2021,” Herscu notes.

At the time of the announcement, B.C. Attorney General David Eby said the legislation is a fundamental restructuring of ICBC that will keep car insurance rates low and stable. It’s estimated that the changes will save the average driver about $400, starting in May 2021, Global News reports.

“The no-fault model coverage will also significantly increase the amount of care and recovery benefits available to anyone injured in a crash, providing enough care for a lifetime for those who need it, to a maximum of at least $7.5 million, up from $300,000 today,” the article states.

“The most seriously injured will get even more care and recovery benefits, including a new permanent impairment benefit that will provide financial compensation of up to $250,000,” it continues.

While the legislation appears positive on its face, critics warn a no-fault system will punish young people and will mean those with the worst injuries in crashes will not receive the benefits they need.

Accident victims who still have complaints or disputes about their claim, benefit payments or fairness issues will not need a lawyer to have them resolved, states the government’s press release.

They will have recourse through:

  • the Civil Resolution Tribunal, which is independent of ICBC;
  • the B.C. ombudsperson; and
  • the upcoming ICBC fairness officer, who will be appointed by government to ensure greater independence from ICBC.
Herscu says the changes will restrict how much injured parties can receive in wage losses because they will be based on average earnings of $50,000 per year. As well, stay-at-home parents and students will not be entitled to wage-loss benefits.

Rhino Legal provides financial support to those who have been hurt in an accident while they await a fair settlement and Herscu knows all too well how devastating it can be when someone’s income is reduced, delayed or stopped due to an accident.

“You hope ultimately that your insurer is going to take care of you, but it’s a lengthy process. And if your benefits are exhausted or denied, it’s devastating,” he says.

Even if the province has the best intentions with the new insurance regime, Herscu says the government has an uphill challenge in rebuilding the public’s trust in the beleaguered ICBC.

“I don’t doubt that the government has the wherewithal to implement positive change –– the question is what is it going to look like on paper and in practice,” he says.

“My main concern is that those who have been hurt in a motor vehicle accident get the compensation they deserve as quickly as possible,” Herscu adds.