Any delay caused by the pandemic could not justify a departure from the agreed terms: court
In a recent judgment, the Ontario Court of Appeal overturned a lower court's decision that reduced the interest payable by an injured passenger from a motor vehicle accident.
In Steinberg v. Adderley, 2024 ONCA 167, Rudolf Steinberg was injured while a passenger in a motor vehicle that was involved in an accident in October 2011. He pursued claims as a result, including seeking statutory accident benefits and commencing a tort action against the driver of the other vehicle.
Steinberg obtained five loans totalling $65,500 from BridgePoint Financial Services to cover expenses while pursuing claims related to the accident. These loans carried compound interest rates between 20 percent and 24 percent and were not contingent on litigation success but were secured against any settlement funds.
The crux of the dispute emerged when Steinberg, having settled an accident benefits claim for $1.25 million and paid BridgePoint $70,000, sought to limit the interest payable on his loans. Arguing that the accruing interest, which stood at $312,936.18 as of June 5, 2023, was unconscionable, he invoked the Unconscionable Transactions Relief Act. However, the motion judge found the loan agreements contractually sound, attributing the substantial interest accrued to Steinberg’s litigation delays and rejecting the unconscionability claim.
The appellate court agreed with BridgePoint’s challenge to the motion judge’s decision to grant Steinberg a $75,000 interest reduction. Citing the finding that the loans were not unconscionable, the court held there was no legal basis for altering the interest owed. Additionally, the court noted that any delay caused by the COVID-19 pandemic could not justify a departure from the agreed-upon loan terms, emphasizing that courts should not intervene to alter contract terms or mitigate imprudent agreements.
The court concluded that the motion judge committed an error in both the basis for reducing the interest and not allowing a full argument on the impact of COVID-19 delays. The court allowed the appeal and vacated the previous order, reducing the interest owed by Steinberg.
