Released April 29, 2016 | Full Decision [CanLII]
In this motion for undertakings and refusals, the plaintiff refused to answer whether he had adverse costs insurance in relation to the action. The defendant moved to compel the plaintiff to provide an answer in accordance with Rule 30.02 (3), which states:
A party shall disclose and, if requested, produce for inspection any insurance policy under which an insurer may be liable,
(a) to satisfy all or part of a judgment in the action; or
(b) to indemnify or reimburse a party for money paid in satisfaction of all or part of the judgment,But no information concerning the insurance policy is admissible in evidence unless it is relevant to an issue in the action.
Master Short took note of the definition of ‘Judgment’, which is defined in rule 1.03 to mean “a decision that finally disposes of an application or action on its merits, and includes a judgment entered into as a consequence of the default of a party.” He found the portion of the definition that encompassed default to be significant in his conclusion that rule 30.02 (3) would apply to adverse costs protection. However, that was not the end of the inquiry. Master Short opined that the purpose of Rule 30.02(3) was to save plaintiffs from pursuing practically worthless judgments in excess of available insurance coverage. In his opinion, adverse costs protection was designed to protect against an entirely different category of liability. Master Short raised a concern with respect to avoiding any breach of solicitor client confidentiality that might arise if disclosure included reporting by a lawyer to the company offering the cost protection coverage. Applying the principle of proportionality and his discretion, he held that disclosure of the existence of the coverage (including an implied disclosure obligation up to the date of trial) was sufficient, without the necessity of disclosing the extent or particulars of the coverage.
In his closing remarks, Master Short opined that policies purporting to be indemnity policies presented “a distinction without a difference” from those which provided insurance against adverse costs. He held that any contract providing similar coverage, regardless of what it is called, should be subject to the same level of disclosure.