Leslie A. Wright

Following a successful application declaring that an insurer owed a duty to defend, the applicant sought costs of $23,228.50 on a substantial indemnity basis.

The respondent did not dispute the applicant’s responsibility to fund its own defence but challenged the number of hours claimed.

The court considered the principles governing costs under Rule 57 and the Court of Appeal guidance emphasizing fairness and reasonableness rather than full indemnification.

The court found some duplication of effort and reduced the claimed amount.

Costs were fixed at $20,000 inclusive of HST plus disbursements.

The applicant sought a declaration that the respondent insurer owed it a duty to defend and indemnify in a slip-and-fall action brought by customers allegedly injured in the applicant’s store.

The applicant had been named as an additional insured under a contractor’s commercial general liability policy covering janitorial operations.

The insurer refused to defend, arguing the pleadings alleged independent negligence by the occupier and that issue estoppel applied because earlier litigation had rejected contractual indemnity claims against the contractor.

The court held that issue estoppel did not apply because the earlier proceedings addressed contractual indemnity rather than the insurer’s duty to defend.

Applying the pleadings rule, the court concluded the factual allegations potentially fell within policy coverage because the incident arose from janitorial operations, thereby triggering the duty to defend.

The insurer was ordered to indemnify the applicant for defence costs incurred in the underlying action.