More often than not, we see insurer’s not assessing files properly or make reasonable offers in an effort to resolve personal injury matters, despite the obvious flaws in the defence’s case and the strength of the plaintiff’s case. Insurers can afford this practice due to the fact that they can afford the negative risks of a trial, whereas a plaintiff is less likely able to do so. As a result, plaintiffs are often forced to make significant compromise, in light of the inherent risk of a trial, and insurers will stall the case until the very end.

By Florence W.M. Chiu of CBLAW posted in Court Decisions on Tuesday, May 6, 2014.
Justice Served

Justice Served

More often than not, we see insurers not assessing files properly or make reasonable offers in an effort to resolve personal injury matters, despite the obvious flaws in the defence’s case and the strength of the plaintiff’s case. Insurers can afford this practice due to the fact that they can afford the negative risks of a trial, whereas a plaintiff is less likely able to do so. As a result, plaintiffs are often forced to make significant compromise, in light of the inherent risk of a trial, and insurers will stall the case until the very end.

In Ross v. Bacchus, the court pointed out the insurer’s tactics and penalized it with a significant costs award, which is almost equivalent to the damages awarded. In this case, the plaintiff was seriously injured in a motorcycle accident. After a six day trial, the plaintiff was awarded $248,000 in damages, composed of $145,000 in pain and suffering and $103,000 for past income loss and loss of earning capacity. The plaintiff asked for $140,000 for costs, and another $60,000 for the defendant’s failure to comply with its obligation under the Insurance Act to participate in a mediation and to settle claims expeditiously.

The insurer made an offer of $40,000 two years prior to the trial and withdrew it about seven months later. In an effort to resolve the matter, the plaintiff made significant compromise in the months prior to trial and made an offer of $94,065 plus interest and costs and requested a mediation. The offer was reciprocated with a minimal increase in the defence offer to settle for $30,001 plus interest and costs. In an effort to resolve the matter, the plaintiff made a further compromise with an offer to settle for $79,065 plus interest and costs.

The insurer reluctantly participated in a mediation, a month prior to the trial, as it is required to do so under the legislation. However, it attended the mediation without an intention to settle and maintained their position of $30,001 plus interest and costs.

In his decision for costs, Justice Ramsay, of the Ontario Superior Court of Justice, noted that the “It is clear to me that the defendant’s participation in mediation was a sham. It refused to participate in any meaningful sense. It did not comply with s.258.6 of the Act”. Justice Ramsay went on to state that “I infer that it took a six-day trial with all its attendant risk for the sake of $50,000. This is a litigation strategy that the defendant could well afford, but the plaintiff could not. I infer that the insurance company conducted itself this way in hopes of intimidating the plaintiff and deterring other plaintiffs who have meritorious case. It did not attempt to settle the action expeditiously as required by s.258.5 of the Insurance Act”.

Justice Ramsay awarded the $140,000 in costs and by reason of refusal to mediation, he awarded another $60,000, for a total costs award of $217,000 plus HST.

It is a relief to see the court seeing through the tactics of the insurers and penalizing them for their actions. Hopefully, this can send a message to insurers to act accordingly and make good faith attempts to resolve matters in a timely manner, as it is required to do so under the legislation.

Florence W.M. Chiu