Full Indemnity - Re: Notice of Application

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Date Retrieved:	2024-05-04
CLNP Page ID:	1649
Page Categories:	[Cost Awards]
Citation:	Full Indemnity - Re: Notice of Application, CLNP 1649, <3u>, retrieved on 2024-05-04
Editor:	Sharvey
Last Updated:	2021/09/14

Coventree Inc. v. Lloyds Syndicate 1221 (Millenium Syndicate) (Costs), 2011 ONSC 6660 (CanLII)

[3] The claim for costs on a full indemnity scale is based on the understanding that "where an insurer wrongfully denies its duty to defend, it will be liable to pay substantial indemnity costs" (Axa Insurance (Canada) v. Ani-Wall Concrete Forming Inc., 2007 CanLII 56478 (ON SC), [2007] O.J. No. 4975, at para. 30 referring to E. M. v. Reed, [2003] O.J. No. 1791 (C. A.); and, Godonoaga (Litigation Guardian of) v. Khatambaksh (2000), 2000 CanLII 16891 (ON CA), 50 O. R. (3d) 417 (C.A.). To put the insured in the same position it would have been in had the contract of insurance been performed, the insured would have to recover full indemnity costs. The case before the court is not one based on the duty of the insurer to provide a defence to a claim that may fall within the policy (College of Massage Therapists of Ontario v. Frank Cowan Company Ltd., [2010] I.L.R. I-4979 (S. C. J.) at p. 3). It is one where the costs of the defence were claimed as an item insured under the policy. Where an insured has been required to go to court to obtain the costs of a defence, as a claim under the policy, costs of the requisite application have been awarded on a full indemnity basis (Deloitte & Touche Inc. v. Bennett, [2006] O.J. No. 2797, at paras. 11 and 17).

[4] This is not invariably the case. This court has refused to grant costs on a full indemnity scale when the issue raised was not one of a duty to defend (Caneast Foods Ltd. v. Lombard General Insurance Co. of Canada, [2007] O.J. No. 3253, at para. 4; and, Axa Insurance (Canada) v. Ani-wall Concrete Forming Inc, supra, at paras. 36 and 40)). In the case being considered here, the issue did not concern whether, in the normal course, the insurance contract would respond to the claim made. It was acknowledged by both parties that the claim was a “Claim", a "Loss" and represented "Costs of Defence", as those terms were defined in policy. Rather, the issue was whether, during the process of negotiating the contract, the insurer had agreed to waive its right to rely on a notice of the claim provided to another insurer, under a earlier policy, as a basis to deny coverage. This was a legitimate question with respect to the interpretation of the policy that the insurer should be able raise without incurring an exposure to substantial indemnity costs (Solway v. Lloyd's Underwriters, [2005] O.J. No. 5465 (S.C.J.) as referred to in Axa Insurance (Canada) v. Ani-wall Concrete Forming Inc, supra, at paras. 37 and 38).

Hobbs v. Hobbs, 2008 ONCA 598 (CanLII)

[29] On January 25, 2008, the motion judge ordered Mr. Hobbs to pay his wife the costs of the motion for contempt against him on a full indemnity scale in the total amount of $26,572.17, including disbursements and GST.

[30] Since I would not allow Mr. Hobbs’s appeal on the merits of the motion for contempt, he requires an order for leave to appeal the costs order. See Courts of Justice Act, R.S.O. 1990, c. C.43, s. 133(b).

[31] Mr. Hobbs accepts that his wife is entitled to costs on a full indemnity scale but claims the quantum ordered by the motion judge is excessive.

[32] In order to succeed on an application for leave to appeal an award of costs, strong grounds must be shown. In Brad-Jay Investments Ltd. v. Szijjarto (2006), 2006 CanLII 42636 (ON CA), 218 O.A.C. 315 at para. 21 (C.A.), leave to appeal to S.C.C. refused, 2007 CanLII 67861, this court said:

Leave to appeal a costs order will not be granted save in obvious cases where the party seeking leave convinces the court there are “strong grounds upon which the appellate court could find that the judge erred in exercising his discretion”.

[33] As to the grounds upon which an appellate court should set aside a costs order, Arbour J. said in Hamilton v. Open Window Bakery Ltd., 2004 SCC 9 (CanLII), [2004] 1 S.C.R. 303 at para. 27:

A court should set aside a costs award on appeal only if the trial judge has made an error in principle or if the costs award is plainly wrong. (Duong v. NN Life Insurance Co. of Canada (2001), 2001 CanLII 24151 (ON CA), 141 O.A.C. 307, at para. 14).

[34] While the quantum of the costs award is on the high side I cannot find that there are strong grounds upon which to conclude the motion judge erred in exercising his discretion. I may well have come to a different conclusion on the quantum. However, that is not enough. I cannot say that the quantum is so high that a court could find that it constitutes error in principle or is plainly wrong.

[35] I would not grant leave to appeal the costs award.