Armstrong v. Lakeridge Resort Ltd., 2017 ONSC 6565

Following a jury Trial in which the Plaintiff recovered $68,250 in damages, Justice Salmers ruled on the quantum of costs and disbursements to be paid by the Defendant.  Specifically, the Court commented on whether the Plaintiffs’ disbursement in purchasing adverse costs insurance ought to be payable by the Defendant.   

Date Heard: October 11, 2017 | Full Decision [PDF]

In the last few years, this hot topic has become more prevalent in personal injury litigation given the rise of Plaintiffs garnering additional security in the form of adverse costs protection (in the event of a negative result at Trial).  The Plaintiffs’ bar has adamantly feels, and rightfully so, that adverse costs insurance helps to level the playing field with the insurers by ensuring that all Plaintiffs have access to justice and can pursue litigation, which can be a risky endeavour should said litigation be unsuccessful.  Adverse costs insurance helps to eliminate some of that risk by protecting Plaintiffs from the financial costs burden of unsuccessful litigation, which often deters Plaintiffs from initiating or engaging in that litigation in the first place.

Justice Salmers refused to rely on Justice Milanetti’s decision in Markovic v. Richards, et al. (2015), in which the Court held that the premium paid for adverse costs insurance ought not to be payable by the Defendant as a compensable disbursement.  Justice Milanetti referred to the disbursement as “entirely discretionary” and that it “does nothing to advance the litigation, and may in fact even act as a disincentive to thoughtful, well-reasoned resolution of claims”.  In the subject matter, at paragraph 21, Justice Salmers disagreed:

Without costs insurance, the fear of a very large adverse costs award would cause many Plaintiffs of modest means to be afraid to pursue meritorious claims.  It is in the interests of justice that Plaintiffs be able to pursue meritorious claims without fear of a potentially devastating adverse costs award.  Additionally, I am satisfied that it was reasonable for the Plaintiffs to have advanced their claims as they did because there were genuine triable issues on all claims that were advanced.  Accordingly, the claim for the costs insurance premium will be allowed.

Justice Salmers held that the Plaintiffs’ disbursement for the premium for adverse costs insurance was a proper disbursement.  The purpose of this article is to alert Plaintiffs, and their counsel, of the Court’s acceptance of the nature of the insurance premium as a compensable disbursement and to ensure that the herein case is relied upon to substantiate that claim.


Read the full decision [PDF]
Written by

Steven Arie Glowinsky was called to the Ontario Bar in 2010 and is the Founder and Principal Lawyer at Glowinsky Law in Toronto, ON.