Law Times

Page 10 November 13, 2017 • Law Times www.lawtimesnews.com Decision reflects a trend that may continue Insurer ordered to pay plaintiffs' entire legal bill BY MICHAEL MCKIERNAN For Law Times A Toronto lawyer says insurers should factor in the risk of additional expenses when deny- ing coverage after a judge award- ed two plaintiffs full indemnity costs following their success in court. In Hoang v. The Personal Insurance Co., Ontario Supe- rior Court Justice Edward Mor- gan ordered the insurer to pay the plaintiffs' entire legal bill of $72,000 after concluding the company was liable for amounts awarded against its insured in favour of the accident victims at a separate trial. "This is definitely a trend and one I can see sticking," says Al- exandra Wilkins, a lawyer with the Toronto office of insurance litigation boutique Samis and Company, who was not involved in the case. Full indemnity cost awards are rare and normally reserved for cases involving extremely poor conduct by one party, Wilkins explains. But she says this decision suggests insur- ance companies will be treated differently from other litigants, following the lead of two B.C. decisions issued in the last year: Williams v. Canales and Tani- ous v. The Empire Life Insur- ance Company, where insureds were awarded what the province terms "special costs" after suc- cess in coverage disputes with their insurers. The judge in Hoang ac- knowledged that the actions of the insurer during the litigation did not warrant an exceptional costs sanction. However, he reasoned that it was appropriate to depart from the normal partial indemnity scale in this case because of the unique relationship between an insurer and its insured. Andrew Murray, a personal injury and appellate lawyer at Lerners LLP, is less convinced that the Hoang case has set a strong precedent for full indem- nity costs in coverage cases, in part due to the discretionary na- ture of costs decisions. "You can't read too much into any particular decision," says Murray, a partner in the firm's London, Ont. office. The case has its roots in a tragic 2004 accident involving a man named Can Hoang and his six-year-old son Christopher. The father dropped off the child and a group of older children at a busy intersection in downtown Toronto while he went to find a parking space. However, Christopher ran into the street to chase a hat that was blown off his head and was struck by a car, leaving him with a severe brain injury. A marathon of litigation fol- lowed, culminating in a 2012 jury verdict that found no neg- ligence on the part of the driver that struck Christopher but at- tached some of the blame for the child's injuries to his father, due in part to his poor choice of drop-off spot and lack of super- vision. That left Christopher and his mother, acting as his litigation guardian, with only one option to collect on the $1.8-million damages and costs award grant- ed at trial: pursuing Can Hoang and his insurer, The Personal. Although the insurance com- pany had acknowledged its duty to defend the father, it resisted the duty to cover his liability, arguing that the use of the car was "incidental" to the parent's negligence. That in turn took the accident out of the realm of his auto in- surance policy, which required the negligence to arise "directly or indirectly from the use or op- eration" of a motor vehicle, the insurer reasoned. But Morgan rejected that argument and sided with the plaintiffs in a summary judg- ment motion. Geoffrey Adair of Adair Bar- risters LLP in Toronto acted for the plaintiffs on the coverage issue, and he tells Law Times that his clients were pleased with both the summary judgment motion and the costs decision for bringing the long-running case closer to a successful fin- ish. He says the growing line of authority in favour of full in- demnity costs is good news for plaintiffs who have to fight their insurers for coverage. "When an insured has to chase the insurer, whether it's for a duty to defend or for indem- nity, they are likely to get full in- demnity costs," he says. The plaintiffs in Hoang will have to wait a little longer to seal the result, as the coverage deci- sion is currently under appeal, with a hearing due in the spring. Wayne Morris, a partner at insurance defence boutique Dutton Brock LLP, acted for The Personal, and he says there is a large body of case law that sup- ports the idea that insurers "are as entitled as any other corpo- rate entity to litigate in court and have the same rules applied to them as everyone else." When it comes to the costs is- sue, Morris says, he has trouble with the judge's analysis. "If the basis of the decision was that insurers have a particu- lar obligation to their customers, then, with respect, it is f lawed, because the plaintiffs were not customers of The Personal In- surance Company," he says. "It's coincidental that these plaintiffs are related to the insured, but it's more typical that in these kinds of cases, the plaintiff is a stranger to the policyholder and their in- surance company." LT FOCUS Alexandra Wilkins says full indemnity cost awards are rare and normally reserved for cases involving extremely poor conduct by one party. 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