ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-07-0842460A1
DATE: 20120523
B E T W E E N:
CYNTHIA BAIRD, GORDON BAIRD, LAURIE BAIRD and KRISTA HERBERT
Plaintiffs
- and -
MELHAM ABOUIBRAHIM, NORTH YORK CHEVROLET LTD. O/A KIA OF NEWMARKET, WAWANESA MUTUAL INSURANCE COMPANY and DANIELLE HENDRY Defendants
Michael Burgar, for the Moving Party Defendants Melham Abouibrahim and Danielle Hendry
- and -
LOMBARD GENERAL INSURANCE COMPANY OF CANADA
David N. Delagran, for the Third Party
Third Party
HEARD: December 22, 2011
RULING oN COSTS
GILMORE J.
Overview
[ 1 ] This is a costs ruling in relation to a rule 20 motion for summary judgment in a third-party claim related to the priority of motor vehicle insurance coverage. The motion was heard December 22, 2011 and the ruling released February 16, 2012. The summary judgment motion was in the context of a third-party claim brought in the name of Lombard’s insureds against Lombard for coverage. Lombard acknowledged a duty to defend and the dispute related to priority of coverage as between Lombard and The Personal, who insured the personal defendants Danielle Hendry (“Danielle”) and Melham Abouibrahim (“Melham”).
[ 2 ] The motion proceeded by way of summary judgment on undisputed facts and the result of the ruling was that the Lombard policy was determined to be first-loss insurance for the purpose of section 277 of the Insurance Act . As such, the moving party defendants Danielle and Melham were owed a defence and indemnity from Lombard in relation to the main action claims against them. Lombard’s motion was dismissed.
The Positions of the Parties
[ 3 ] The moving party seeks full indemnity costs in the amount of $39,312.22 inclusive of disbursements and taxes. They do so on the basis that there are special rules related to costs which apply in this context because of the unique nature of a liability insurance contract. As such, the moving party seek full indemnity costs incurred during the course of the defence in the main action on their behalf to date.
[ 4 ] The moving party submits that it is well established in Ontario that a liability insurer has the right to recover from another liability insurer a pro rata share of the cost of a defence where both insurers have concurrent duties to defence. This is based on a principle of equitable subrogation and the mutual obligation of both insurers to conduct a defence of the insureds and pay for it. The moving party submits that the principle in Broadhurst and Ball v. American Home Assurance Company, (1990) 1990 6981 (ON CA) , 76 D.L.R. (4 th ) 80 (C.A.) at page 89, dictates an outcome where Lombard pays for the defence of the insured to-date in full. Therefore the moving parties should be entitled to their full indemnity amount of $39,312.22 in relation to both the defence of the main action to date and the third-party claim related to insurance coverage or the priority of coverage of the Lombard policy.
[ 5 ] In the alternative, the moving parties submit that given the ruling dated February 16, 2012 which dispenses with the third-party claim in its entirety, there is no reason why costs should not now be fixed for the entirety of the third-party action against Lombard.
[ 6 ] The third-party submits that the appropriate costs award, if any, is for costs of the motion on a partial indemnity basis in the amount of $3,000.00. Lombard submits that the nature of the motion does not support a claim for costs because the motion did not relate to the existence of a duty to defend, but rather related to the priority of coverage. The issue as between the two insurance companies and the insureds’ Hendry and Abouibrahim did not incur any expense nor does counsel claim that they did.
[ 7 ] The third party also submits that there ought to be no costs of the motion because it related to areas of the law previously not canvassed by legal authorities, and that cases decided under section 277 of the Insurance Act are not common nor are they consistent. The motion was argued by senior counsel who agreed that the court’s decision turned upon its interpretation of the applicable law given that the issue before the court was one that was not settled. Generally, motions involving novel legal issues do not result in costs consequences to the unsuccessful party.
[ 8 ] Lombard also submits that The Personal cannot collect its costs of the action because of the delay in proceeding with its motion. The Personal has been defending the action since June 2007 yet has provided no explanation why they waited almost five years to bring the motion. Discoveries were completed and the trial record in the main action was served in December 2011. The third party submits that delay is a factor which the court may take into account in the exercise of discretion to award costs under rule 57.01(1)(i).
[ 9 ] Finally, the third party submits that the amounts claimed by counsel for The Personal are excessive and that the Bill of Costs submitted is not proper in that there is no breakdown of fees for the various tasks involved in the action or the motion, save and except a counsel fee for attendance on the motion and drafting of costs submissions. Dockets were not provided. Lombard is left in the position of being unable to surmise the reasonableness of the time claimed to have been spent and should not be placed in this position.
Ruling
[ 10 ] I agree with the third party that it is important to acknowledge the difference between a motion involving a duty to defend and that related to priority of coverage. The contractual obligation to fully and completely indemnify the insured for defence costs does not exist between two different insurers.
[ 11 ] A priorities motion relates to which insured is required to defend first when both have exposure to the claims of the plaintiff up to their respective policy limits. The motion relates simply to the order in which they are to pay. As such, the insured is never at risk of exposure to costs as they are on a duty to defend the motion.
[ 12 ] I agree with Lombard that the delay in bringing this motion is not adequately explained and while the matter was not entirely novel, it was an area of law on which there was not significant cases or agreement. As such, I reject the moving party’s submission for full indemnity costs from the date of commencement of the action but also reject the third party’s submission that $3,500.00 in costs would be sufficient. While the motion did not take long to argue, it required the usual preparation. It was argued efficiently because of the experience and preparedness of senior counsel.
[ 13 ] In all of the circumstances, I order that the third party pay costs in the amount of $10,000.00.
C.A. Gilmore J.
Released: May 23, 2012