Executive Summary: Key Legal and Evidentiary Issues

• Default judgment was sought due to the defendant’s failure to deliver a Statement of Defence.

• The enforceability and lawfulness of high-interest litigation loan agreements were central to the dispute.

• The triggering of repayment obligations hinged on the occurrence of a “Material Adverse Change” as defined in the loan agreements.

• The defendant’s arguments regarding improper service and requests for adjournment were rejected.

• Previous court decisions upheld the validity of the loan terms and denied claims of unconscionability.

• The amount of costs awarded was adjusted from full indemnity to substantial indemnity as conceded by the plaintiff.

Facts of the case

Bridgepoint Financial Services Limited Partnership I (“Bridgepoint”) brought a motion for default judgment against Rudolf Steinberg after he failed to file a Statement of Defence and was noted in default. The dispute arose from five litigation loan agreements entered into by Mr. Steinberg with Bridgepoint between 2013 and 2014, totaling $65,000, with interest rates of 20% and 24% compounded semi-annually. These loans were intended to fund Mr. Steinberg’s personal injury litigation against Pamela Adderley, stemming from a 2011 motor vehicle accident.

The loan agreements stipulated that repayment would be triggered by a “Material Adverse Change,” a term left to Bridgepoint’s discretion. The critical event occurred when Mr. Steinberg’s lawsuit against Ms. Adderley was dismissed in 2022 for his failure to attend court-ordered defence medical examinations. His subsequent appeals, including to the Supreme Court of Canada, were unsuccessful. Following the dismissal, Bridgepoint demanded repayment of the loan and accrued interest in June 2023. Notably, Mr. Steinberg had previously paid $70,000 to Bridgepoint in 2022 after receiving a settlement from a related statutory accident benefits claim.

Discussion of policy terms and prior decisions

The litigation loan agreements’ enforceability, particularly the high interest rates and the “Material Adverse Change” clause, were previously scrutinized in related proceedings. In June 2023, Justice Warkentin determined the loans were contractually sound and that Mr. Steinberg, having received legal advice and acknowledged the interest terms, could not later claim unconscionability. Although the interest was initially reduced by $75,000 due to the pandemic, the Court of Appeal reversed this reduction, holding that, absent a finding of unconscionability, the court had no authority to vary the interest under the Unconscionable Transactions Relief Act (UTRA).

Procedural history and positions of the parties

Bridgepoint commenced the present action in April 2024 for repayment, interest, and costs. Service of the Statement of Claim was effected by mail as ordered by the court. Mr. Steinberg was noted in default in November 2024 and did not attempt to set aside the default or defend the action. At the hearing, Mr. Steinberg, representing himself, argued for an adjournment to retain counsel and claimed he had not been properly served, stating he checks his mailbox infrequently. He also mentioned potential claims against his former lawyers.

Bridgepoint maintained that all procedural and substantive requirements had been met: Mr. Steinberg agreed to the loan terms, the dismissal of his action constituted a Material Adverse Change, repayment was demanded, and the interest rates had been upheld as lawful. With no defence filed, the facts were deemed admitted.

Ruling and outcome

The court denied Mr. Steinberg’s request for an adjournment, finding he had ample opportunity to respond or set aside the default. The court confirmed that the dismissal of the underlying litigation was a Material Adverse Change, triggering the repayment obligation. The lawfulness of the interest rates had already been settled in prior decisions. The court accepted Bridgepoint’s calculations of the amount owing and issued judgment accordingly, except for the costs, which were set at $11,292.08 on a substantial indemnity basis, rather than full indemnity, as conceded by Bridgepoint. In conclusion, Bridgepoint was the successful party, and the judgment included the principal, interest, and the specified costs award. The exact total monetary award beyond the costs amount is not specified in the decision.