Markovic v. Richards, 2015 ONSC 6983

Released November 12, 2015 | Full decision [CanLII]

This was a post-trial decision of Justice Milanetti on two discrete issues relating to costs. The first issue was whether the premium paid for by the plaintiff for after the event (ATE) insurance was compensable as a disbursement. The second issue was whether the new pre-judgment interest rate set out in section 258.3(8.1) of the Insurance Act was retroactive and applied in this case.

With respect to the ATE insurance premium, the plaintiff argued that the premium she paid should be compensable as a disbursement and should be reimbursed by the defendant. The plaintiff provided two cases from the UK in support of her position. Justice Milanetti distinguished the UK cases from the case before her by noting that there had been an overhaul of the system for financing the cost of personal injury litigation via legislative reform in the UK. In the UK, legislation allows for a claimant to recover the cost of the ATE insurance premium from the defendant if his or her claim succeeds.

Justice Milanetti stated that this is not the situation here in Canada and no such overhaul has been done by the government, the Law Society or insurers. Justice Milanetti reasoned that the premium should not be a compensable disbursement as it is entirely discretionary, does nothing to advance the litigation and may in fact even act as a disincentive to thoughtful, well-reasoned resolution of claims.

With respect to the applicable prejudgment interest rate, Justice Milanetti was provided conflicting case law on the issue. Justice Milanetti preferred Justice Toscano Roccamo’s decision in El-Khodr v. Lackie (to Justice MacKenzie’s decision in Cirillo v. Rizzo) and supported the view that the Ontario Court of Appeal’s decision in Somers v. Fournier confirmed that prejudgment interest was akin to a head of damage and hence a matter of substantive law and therefore not to be applied retroactively. Therefore, the applicable interest rate in this case was the pre-January 2015 rate of 5% per annum from the date of notice.

 

Read the full decision on CanLII

Karen Vigmond
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