ATE Legal Expense Premium a “Compensable Disbursement”

The battle over who pays the premium for After the Event Insurance (“ATE”) has been raging for a few years now as lawyers and judges consider how ATE fits within personal injury costs and disbursements.  In the most recent case on point, Stewart et al. v. Wood et al.[1] (“Stewart”), we see the Court clearly acknowledging the access to justice issue in finding that the ATE premium is a compensable disbursement.   This will be welcome news to the plaintiff personal injury bar.

I’m not sure the Court knew what to make of ATE when it first hit their radars in 2015.  Madam Justice Milanetti had the first kick at the can in Markovic v. Richards[2] (“Markovic”) and determined that the purchase of ATE was a personal choice on the part of the plaintiff and not a cost to be born by the defendant.  Regrettably, for the those who purchase ATE, this was an unfortunate finding because Markovic was later relied upon by a number of Judges in the months and years that followed.  Was this because the Judges themselves took a good hard look at the issue and determined it was not compensable or was it easier to follow the path already taken?  I suspect it was probably a little bit of both.

Fortunately, one Judge took the road less travelled in Armstrong v. Lakeridge Resort Ltd.[3] (“Armstrong”).  In his 2017 decision, Mr. Justice Salmers required the defendant to pay the ATE premium, noting that:

 “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.”

Justice Salmers allowed the claim for the ATE premium, concluding “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.”

In Stewart, Justice Tausendfreund rejects Markovic and the decisions which rely upon it, instead favouring the approach in Armstrong.

“I find adverse costs insurance to be an “access to justice” issue.  For that reason, I hold it to be a compensable disbursement to be included as a costs obligation payable to the Plaintiffs. This amount is $1,458.”

The Stewart case was settled just prior to trial for $75,000 with costs to be assessed.  Submissions were made in writing.  Ultimately, Tausendfreund J. ordered the defendant pay costs to the plaintiff of $75,000 plus HST of $9,750 and disbursements fixed at $29,070.  In the result, the costs exceeded the amount of the settlement with the Court concluding “that the mere fact that this so does not render such an award as inappropriate”.

There is little doubt that defence counsel will continue to rely on Markovic, and the decisions which follow it, as grounds to reject the ATE premium.  This is curious. I’ve long been struck by the irony in their refusal to pay the ATE premium when they are the first to clamor for payment of costs from the ATE policy when they win.  In any event, the argument that Armstrong is the lone wolf in the forest is no longer a valid defence to payment of the ATE premium.  Add Stewart to the mix and the winds may be shifting.


Armstrong v Lakeridge – Ruling on Costs

Stewart et al V. Wood

[1] Stewart et al. v. Wood et al., 2019 ONSC 3931 (CanLII)

[2] Markovic v Richards et al., 2015 ONSC 6983 (CanLII)

[3] Armstrong v. Lakeridge Resort Ltd., 2017 ONSC 6565 (unreported)



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