Court File and Parties
COURT FILE NO.: CV-013-475810 DATE: 20170706 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Christopher Hoang, a Minor by his Litigation Guardian, San Trieu, and San Trieu, personally, Plaintiffs – AND – The Personal Insurance Company of Canada, Defendant
BEFORE: Justice E.M. Morgan
COUNSEL: Geoffrey Adair and Jeffrey Hernaez, for the Plaintiffs Wayne Morris and Terry Liu, for the Defendant
HEARD: Costs submissions in writing
Costs Endorsement
[1] On June 13, 2017, I granted summary judgment in favour of the Plaintiffs in this action. I held that the Defendant is liable for the amounts awarded to the Plaintiffs in the underlying action brought by the Plaintiffs against the Defendant’s insured, Can Hoang. In the result, the Defendant was ordered to pay the Plaintiff, Christopher Hoang, $1,753,978.22, and the Plaintiff, San Trieu, $20,000, plus interest and costs.
[2] As an insured party, Mr. Hoang was represented at trial in the underlying action by counsel appointed by the Defendant. While the Defendant thereby acknowledged its duty to defend, it resisted its duty to cover the insured’s liability once the judgment was announced in the underlying trial. The successful Plaintiffs were forced to bring a claim under section 258(1) of the Insurance Act directly against the Defendant to have the insurance money payable under Mr. Hoang’s motor vehicle policy applied toward satisfaction of the judgment. They were successful in that claim and deserve their costs.
[3] Under the circumstances, counsel for the Plaintiffs seek costs on a full indemnity basis rather than on the usual partial indemnity scale. They do not base this on anything done by counsel for the Defendant in the conduct of the action or the motion before me, and indeed they could not; the Defendant and its counsel did nothing to unduly prolong this matter, and they did not conduct the litigation in a way which made it more expensive or more onerous on the Plaintiff than necessary. What counsel for the Plaintiffs argues is that an insurance company that denies coverage, and is then found to have done so wrongfully, should compensate its insured (and, by extension, those to whom the insured is found liable) for the full costs of enforcing that coverage.
[4] It is probably fair to say that every successful claimant in a civil action feels that he or she should not have had to sue to get what they deserved in the first first place, and yet the courts do not routinely award full indemnity costs. The general policy is to award partial indemnity costs to successful parties: Foulis v. Robinson (1978), 21 OR (2d) 769, at para 16 (Ont CA). This typically applies unless there is an offer to settle that was rejected by the unsuccessful party, or some special circumstance or egregious conduct or unreasonable position taken by the unsuccessful party in the course of the litigation that prompts costs on a higher scale. Since none of those factors are present here, it is crucial to Plaintiffs’ counsel’s submissions that insured parties and insurance companies be considered in a different light than other litigants.
[5] There is some authority for such special consideration. In E.M. v. Father Francis Reed et al., at para 22, the Court of Appeal stated that, “Entitlement to solicitor-and-client costs in the third party proceeding flows directly from the unique nature of the insurance contract…” This court indicated in Deloitte & Touche Inc. v. American Home Assurance Co., at para 15, that once there is a finding that “coverage applied to the respondent [insured parties]…costs of the Application relating to the preliminary coverage issue are properly payable on a full indemnity basis”. In E.M., supra, at para 23, Gillese J.A. drew some comfort from the observation that “English jurisprudence also appears to support the award of solicitor-and-client costs in such situations”. She quoted approvingly from R. Merkin, Colinvaux’s Law of Insurance, 7th ed. (London: Sweet & Maxwell, 1997) at 405, for the proposition that,
The assured is entitled to any costs reasonably incurred by him in resisting a claim, by way of damages, where the insurers wrongfully repudiate liability on the policy, and the insurers will face liability for any costs incurred by the assured in forcing the insurers to admit liability under the policy.
[6] This view is both authoritative and logical. One purchases an insurance policy for coverage in the event of liability, and it is the premium payable under the policy that is the cost of that coverage. Insurance companies are by their nature constantly involved in litigation, and it would be unfair and burdensome to make their customers pay a premium plus legal fees in order to obtain the coverage they bought. The premium is presumed to reflect the insurance company’s risk. If it chooses to attempt to reduce that risk by engaging in litigation over its obligation to provide coverage it should be made to fully compensate the successful party if it loses.
[7] Counsel for the Plaintiffs has submitted a Bill of Costs seeking a total of $72,050.51 in full indemnity costs. Counsel for the Defendant takes no issue with the number of hours that Plaintiffs’ counsel put in to the case, but is of the view that the hourly rates are a bit high (at least insofar as the partial indemnity scale is concerned). For full indemnity costs, the actual hourly rates stated by Plaintiffs’ counsel are $700 for lead counsel with 48 years’ experience, $350 for counsel with 7 years’ experience, and $275 for counsel with 1 year’s experience.
[8] Rule 57.01(1)(0.b) of the Rules of Civil Procedure authorizes me to take into account “the amount of costs that an unsuccessful party could reasonably expect to pay…” I would be surprised if Plaintiffs’ counsel’s hourly rates were beyond the expectations of an experienced litigation party like the Defendant. They strike me as well in line with current rates for the civil litigation bar.
[9] I will exercise my discretion under s. 131 of the Courts of Justice Act to round off the amount of costs sought by Plaintiffs’ counsel. The Defendant shall pay the Plaintiffs $72,000 in costs, inclusive of fees, disbursements, and HST.
[10] Since both Plaintiffs used the same counsel, I see no need to divide the costs award between them.