Court File and Parties

CITATION: Zochowski v. Security National Insurance, 2016 ONSC 553

COURT FILE NO.: CV-15-521377

DATE: 2016-02-01

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ludwick Zochowski, Plaintiff

AND:

Security National Insurance Company o/a TD Insurance Meloche Monnex and David Lex Arbesman, Defendants

BEFORE: Justice Edward P. Belobaba

COUNSEL: Eric J. Adams for the Plaintiff Marc D. Isaacs for the Defendant Security National

HEARD: December 7, 2015

Clarification and Costs Award

Clarification

[1] In a short Endorsement released on December 30, 2015, I answered a limitations question in favour of the defendant insurer.[^1] I concluded that the plaintiff was time-barred in claiming that the insurer provide a defence or fund his defence costs in an underlying personal injury action. What was not clear was whether the plaintiff was time-barred in claiming indemnification.

[2] Counsel for the parties ask that I clarify my reasons in this regard so that an appropriate order can issue. I am pleased to do so.

[3] The plaintiff is time-barred in claiming that the insurer provide a defence or fund his defence costs in the Tubis Action. I have made no finding about whether the plaintiff is time-barred in claiming indemnification once the Tubis Action, which is just at the discovery stage, has been decided or settled. Today the claim for indemnification is premature.

[4] The action against the defendant insurer is dismissed but without prejudice to the plaintiff bringing a claim for indemnification if and when appropriate. The limitations question relating to indemnification may be decided at that time.

[5] Order to go accordingly.

Costs award

[6] As I have just explained, I only decided the limitations issue as it relates to the duty to defend. I did not decide the limitations issue as it relates to a duty to indemnify, which includes such related issues such as the merits of the denial of coverage and relief from forfeiture. The indemnification component, described as “premature” by the defendant insurer, will no doubt be addressed in the context of the adjudication or settlement of the Tubis Action and the Arbesman solicitor’s negligence action.

[7] It is therefore only fair that the costs award herein should be limited to the duty to defend component that was heard and decided, recognizing however that the defendant also prepared and filed materials dealing with the indemnification aspect. Thus, in my view, a fair and reasonable costs award would fix and direct that costs (on a partial indemnity basis) be payable forthwith for the duty to defend component and that an appropriate portion of the costs incurred by the defendant on the indemnification component be payable “in any event of the cause.”

[8] My costs calculation proceeds as follows. I begin by noting that the defendant’s senior counsel is charging an hourly rate of only $225. The fact that defendant counsel’s “actual hourly rate” is $300 (no doubt because of the caps imposed by his insurance company-client) does not mean, given his years of experience, that the $300 “partial indemnity rate” set out in the Grid cannot be awarded. In other words, I am prepared to attribute to senior counsel a $300 hourly rate rather than the suggested $225 hourly rate. The appropriate partial indemnity claim for the summary judgment motions and the action is $40,303 inclusive of fees, disbursements and taxes.

[9] However, in my view, a fair and reasonable costs award, assuming the defendant had prevailed and the action was dismissed in its entirety, would be about $32,000. Having reviewed the defendant’s dockets, I find that about three-quarters of the time was devoted to the summary judgment motions that were before me – that is about $24,000. I find that about one-third of this amount was directed to the duty to defend issue and two-thirds to the indemnification issue – in other words, about $8000 for the duty to defend question and about $16,000 for the indemnification/notice/relief from forfeiture issues. I further find that about $5000 of this $16,000 can be described as costs wasted by defence counsel on the indemnification component that has now been deferred.

[10] Having made these calculations and having reviewed the factors set out in Rule 57.01(1), I therefore conclude that it is fair and reasonable to award $8,000 in costs payable on the duty to defend issue and $5000 in costs payable on the deferred indemnification issue.

[11] Costs are therefore fixed at $8,000 all-inclusive payable within 60 days by the plaintiff to the defendant insurer; and at $5000 all-inclusive payable in any event of the cause by the plaintiff to the defendant insurer but only after the Tubis and Arbesman actions have been judicially decided, settled or otherwise concluded. The defendant is of course free to pursue its claim for any costs not addressed herein as and when appropriate.

[12] Order to go accordingly.

Belobaba J.

Date: February 1, 2016

[^1]: Zochowski v. Security National Insurance, 2015 ONSC 7881.