D.E. v. Unifund Assurance Company, 2015 ONSC 175

COURT FILE NO.: CV-13-495144

DATE: 20150108

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: D.E. and l.e., Applicants

AND:

UNIFUND ASSURANCE COMPANY, Respondent

BEFORE: Stinson J.

COUNSEL: Vusumzi Msi, for the applicants

Thomas J. Hanrahan, for the respondent

HEARD: by written submissions

COSTS ENDORSEMENT

[1] In my decision released September 11, 2014, I granted the applicants’ request for a declaration that the respondent had a duty to defend and indemnify them under their comprehensive homeowners policy in relation to claims made against them in an underlying action (the “Action”). This endorsement addresses the parties’ written submissions in relation to the costs payable arising from my earlier decision.

[2] There is no dispute between the parties that the applicants are entitled to be fully reimbursed for their solicitor’s account for defending the Action, and to recover partial indemnity costs in relation to the application. The issues between them concern, and their submissions focused on, the appropriate quantum for each.

[3] I will deal first with the factors relevant to assessing costs in this matter. The applicants point out that they were seeking to require the respondent to defend and indemnify them in connection with the Action, in which damages of $3.5 million are claimed. While this amount was not itself in issue in the application, the risk at which the applicants stand in the Action is certainly a relevant factor when considering the importance of the application and the issues. The significance of the applicants’ risk in the Action supports the proposition that considerable effort on the part of applicants’ counsel was warranted. This favours a more generous award of costs.

[4] With respect to the complexity of the application, I would describe it as a matter of moderate complexity. The contents of the policy in dispute and the legal regime governing its interpretation were not entirely straightforward. While the issues were relatively narrow, they were not unsophisticated. Again, this supports a more generous award of costs.

[5] With respect to the reasonable expectations of the unsuccessful party, the respondent had to know that the applicant would treat the matter seriously and would incur a commensurate level of legal expense. The amounts claimed should come as no surprise.

[6] Turning to the topics of time spent and the principle of indemnity, I will deal first with the legal expenses incurred by the applicant in relation to the Action.

[7] I agree with the submission of the respondent that 4.6 hours (or $1,610) of the expense claimed by the applicants preceded the point at which they became involved in the Action as potential personal defendants. As such, that cost is outside the scope of the insurance policy and must be borne by them personally.

[8] As to the remaining expense incurred by the applicants in defending the Action, I disagree with the submission of the respondent that it should be divided equally as between the applicants and their daughter. Rather, I consider that the bulk of the time subsequent to the applicants becoming involved, was devoted to addressing their specific concerns. Therefore, after deducting $1,610 from the $8,015 claimed, I would attribute $5,000 of the remaining $6,405 to the work associated with defending the interests of the applicants. To that sum I would add HST of 13% ($650) and 2/3 of the disbursement expenses of $234.40 ($156.27). In the result, I would award the applicants a total of $5,806.27 for indemnity for their legal expenses in relation to defending their interests in the Action.

[9] I turn now to the costs of the application.

[10] The respondent argues that excessive time was spent in preparing the original notice of application and the subsequent factum. With respect, I disagree. Both were important aspects of this matter and required proper deliberation and drafting. While a modest reduction might be appropriate, the elimination of 15.4 hours as suggested by the respondent is, in my view, unwarranted. I would reduce the time spent by a total of 6.4 hours, which results in total time spent of 50 hours. At an hourly rate of $350 this equates to $17,500. Since that calculation is on a substantial indemnity basis, the partial indemnity equivalent is $12,250. To that sum must be added HST of 13% or $2817.50, for a total on account of fees of $15,067.50. According to the applicants’ bill of costs, disbursements totaling $645.17 were incurred. I approve that sum. I therefore award the applicants costs of the application itself in the total amount of $15,712.66.

Disposition

[11] The total costs award in favor of the applicants is therefore $4,426.27 on account of the expenses incurred by them in defending the Action, plus $15,712.67 in relation to the application, for a total of $20,138.94. I order the respondent to pay that sum to the applicants within 10 days.

Stinson J.

Date: January 8, 2015