Commercial liability clients do not have to settle personal injury lawsuits even if the defendants are perceived as having deep pockets, a recent Court of Appeal for Ontario ruling suggests.
“A litigant, or its insurer, even if wealthy, is not obliged to pay a settlement just because it has been sued; it is entitled to have the claim determined by the court,” Justice Benjamin Zarnett wrote for the Court of Appeal for Ontario in Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), released Apr. 28.
The case began in 2015, when Anna Przyk was injured after slipping and falling on a sidewalk near an entrance to The Court at Rushdale, a retirement home. Przyk filed a personal injury lawsuit in Ontario against The Court at Rushdale and lost. A jury found the retirement home was not liable.
The Court at Rushdale was insured by Aviva, which sought costs on a partial indemnity basis.
In a decision on the issue of costs, released Dec. 24, 2019, Ontario Superior Court Justice Alan Whitten ruled that both parties should pay their own costs. In his decision, Whitten cited several reasons why the defendant should not receive any of its costs.
The Court of Appeal for Ontario ruling on Apr. 28, 2021, ultimately upholds the end result of the original 2019 ruling. However, the appeal court took issue with most of Justice Whitten’s reasons.
For example, Justice Whitten criticized Aviva for not offering to settle, other than offering a no-costs dismissal of the plaintiff’s claim. That was among some of the “errors in principle” that the Appeal Court cited in the original 2019 cost ruling.
“Now we have a Court of Appeal decision that vindicates Aviva,” the defendant’s lead counsel, Todd McCarthy, senior partner with Flaherty McCarthy LLP, told Canadian Underwriter in an interview after the Appeal Court ruling was released. “All Aviva did on behalf of its insured was take a principled position on the evidence that there was no liability on the part of its insured, The Court At Rushdale,” he said.
In the original 2019 cost award ruling, Justice Whitten described the lawsuit as a “David and Goliath” situation.
Essentially, the failure to settle meant that the plaintiff had “no choice but to push on to trial,” Justice Whitten wrote.
“Being a large market shareholder is not without social responsibility,” Justice Whitten wrote of Aviva. “Size should not be wielded to oppress deserving litigants as that would encroach upon the broader social interest of access to justice.”
The judges hearing the appeal thought differently.
“It is wrong to leap to the conclusion that a plaintiff with a modest claim against an insured defendant is necessarily in a David and Goliath situation without examining the circumstances. Proceedings should not be stereotyped,” Justice Zarnett wrote for the Court of Appeal for Ontario.
“Technically, the defendant’s appeal to the Court of Appeal for Ontario was dismissed,” McCarthy told Canadian Underwriter. “However, the Appeal Court decision was a completely successful result for the defendant, because we sought to have the Court of Appeal review and comment on errors in law.”
One reason why the lower court declined to award costs is the “importance of the issue.” That specific part of Justice Whitten’s decision was not overturned on appeal, which is why the appeal is dismissed.
Przyk’s lawyer had argued that her case related to elder care, which is a “burgeoning area of the law,” Justice Whitten wrote. “Coincidental with such growth is a need for the law of negligence to apply in new situations involving our elderly.”
“A novel issue that involves the public interest can support a no-costs order as an exception to the general approach that a successful party will receive their costs,” Justice Zarnett wrote for the appeal court.
Zarnett added that Whitten “was well-positioned to determine whether the case raised an important and novel issue. His decision to accept that it did, and to rely on that factor to make a no costs award, is entitled to deference. It is not tainted by any error in principle.”
Rule 57 of the Ontario Rules of Civil Procedure lists more than a dozen factors that courts may consider when deciding whether or not to award costs. One of those factors is the importance of the issues.
The defendant argued the case was not novel but rather an ordinary occupier’s liability claim.