Fresh on the heels of the recent win for plaintiffs on the issue of disclosure in Jamieson v. Kapashesit1, we are pleased to announce another resounding plaintiff victory on the legal expense insurance front. In what will no doubt be a game changing decision on point, in Armstrong v Lakeridge Resort Ltd.2, Ontario Superior Court Justice Salmers rejected the existing case law, ordering the defendant to pay the LISC Legal Expense Insurance premium.
Since the introduction of legal expense insurance several years ago, the plaintiff personal injury bar has unsuccessfully sought the recovery of premiums as an assessable disbursement in successful trial or settlement outcomes. In a disappointing decision in 2015 representing the Court’s first (albeit cursory) consideration of the issue, Madam Justice Milanetti found in Markovic v. Richards3 that the premium was not payable by the defendant, noting that it was “nothing more than a discretionary expense”. Markovic has been successfully relied on by defence counsel ever since as the seminal decision on this issue.
In a considerably more articulate commentary on the subject in Armstrong, Justice Salmers soundly rejected the defence’s reliance on the Markovic finding:
“Relying on Markovic v. Richards et al, 2015 ONSC 6983 (CanLII), defence counsel submitted that the plaintiffs’ disbursement for costs insurance should not be allowed. With respect, I disagree. In this case, the costs of advancing even the claims on which the plaintiffs were successful were extremely large. Also, in general, even the strongest claim of a plaintiff may not be successful depending on how the evidence comes out and how it is perceived by a trier of fact. 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.”
Access to justice is the fundamental underlying principle of legal expense insurance, which Markovic, and those who have relied upon it, have overlooked. Justice Salmers correctly acknowledges that trial cost exposure denies many plaintiffs the right to pursue their legal claims to trial, giving insurers the unfair ability to obtain results based on a plaintiff’s fear of costs exposure and not the merits of the case. Legal expense insurance offers the clear solution. At the same time, insurers have been eager to recoup their losses from these policies and press relentlessly for their disclosure (see Jamieson). In essence, this decision clearly establishes that if insurers want to benefit from the product when they win, they should be prepared to fund it when they lose.
Could the Court’s continued reliance on Markovic have brought the administration of justice into disrepute? Arguably, yes. At its core, legal expense insurance promotes and ensures a plaintiff’s inalienable right to a trial by affording them to ability to reject unreasonable offers.
We believe Armstrong represents the clear evolution of the Court’s understanding and appreciation of legal expense insurance and its merits. We applaud Justice Salmers for taking the other fork in the road and congratulate Donald Harvey of Jane Conte & Associates for his win in Armstrong and this result. We are very proud of our association with their achievement.
The decision in Armstrong has not yet been appealed and we will continue to monitor this case. We hope that this is yet another sign that the Courts are alive to the ability of legal expense insurance, like LISC Legal Cost Protection®, to level the playing field and provide much needed support to injured plaintiffs facing the daunting cost exposure of their litigation.