Executive Summary: Key legal and evidentiary issues

• Whether BridgePoint’s litigation loan agreements apply to accident benefits (AB) settlement funds or only to tort settlement funds

• Determination of priority between BridgePoint’s loan repayment claim and outstanding legal fees

• Accuracy and enforceability of prior agreement on legal fees made in Mr. Steinberg’s absence by his former counsel

• Legitimacy of partial payments already made by Masgras PC and their impact on the remaining funds

• Potential conflict arising from lack of disclosure of earlier fee payments when settlement terms were approved

• No final winner yet, as the application will proceed to a full hearing to resolve these outstanding issues

Facts of the case

BridgePoint Financial Services Limited Partnership I provided litigation loans to Rudolf Steinberg, who was involved in personal injury litigation following a motor vehicle accident. Mr. Steinberg settled his accident benefits claim for $1.25 million, with funds initially held in trust by Masgras Professional Corporation (Masgras PC), his legal representatives.

Over $409,000 from this settlement remains with the Accountant of the Superior Court of Justice. The main issue revolves around whether BridgePoint’s loan agreements entitle it to recover funds from the accident benefits settlement, or if those agreements only apply to tort settlement proceeds.

BridgePoint contends it is entitled to repayment from the AB settlement, but acknowledges legal fees have priority. However, the legal fees (agreed at 33% of the AB settlement, or $412,500, plus disbursements and HST) exceed the funds on hand, suggesting no amount would remain for BridgePoint. Complications arose when it was revealed that Masgras PC had already paid itself $225,796.96, raising questions about disclosure and the validity of the prior fee agreement.

Outcome

The court decided the application should proceed to argument. There remains a live issue regarding how much, if any, of the $409,983.13 is available to repay BridgePoint after proper allocation of legal fees. Some previously paid fees reduce the outstanding balance, possibly leaving about $184,983.13 "up for grabs."

Further, the application’s outcome will impact a related Toronto action where BridgePoint challenges Masgras PC’s earlier disbursements. The Toronto action will be transferred to Thunder Bay and held in abeyance pending resolution of this application, ensuring consistent decisions across related proceedings.

The parties were directed to schedule two half-day hearings to argue the application. There is no final winner yet — the case will proceed to a full hearing to resolve the outstanding legal and evidentiary issues.