Every week, Bell Temple LLP selects and reports on interesting and relevant decisions from the Ontario Superior Court of Justice, Ontario Court of Appeal, and Supreme Court of Canada.
This week’s case reports are written by Devon McIntyre
Spencer v. Martin and Hillyer, 2023 ONSC 6353
https://www.canlii.org/en/on/onsc/doc/2023/2023onsc6353/2023onsc6353.html
This recent decision concerns the questions of whether solicitor client privilege and/or confidentiality are attached to any portion of an adverse costs insurance policy.
The Respondent law firm Martin & Hillyer Associates acted for the Respondent Belton in a personal injury action brought by Belton against the Applicant Spencer. Martin & Hillyer held an adverse costs policy (the “policy”) with policy limits of $100,000 to respond to the trial outcome of Belton’s action by paying for the firm’s disbursements and/or the trial costs owed by Belton to Spencer in the event the action did not succeed. The claim proceeded to a trial which lasted over eight weeks, and Belton’s action was ultimately dismissed. Belton was ordered to pay nearly $470,000 in fees and disbursements to Spencer. Martin and Hillyer’s own disbursements were just shy of $66,000.
Spencer brought an application to determine whether the $100,000 limits of the policy should be divided on a pro rata basis between the costs awarded to her and Martin and Hillyer’s disbursements. In the process of arguing this Application, Martin and Hillyer refused to produce an unredacted copy of the policy, taking the position that the policy terms contained privileged or confidential information with respect to not only Belton (who waived solicitor client privilege) but other clients of the firm. Spencer brought a further discreet Application on the question of whether the policy was subject to privilege seeking and Order that it be produced.
As part of their argument in this Application, Spencer produced a copy of another publicly-filed adverse costs policy from the same insurer which, based on the size and location of various clauses, the Court accepted as appearing to be identical to Martin and Hillyer’s policy, with the exception of the schedules contained in the policy. The Court drew an inference that the standard clauses in the two policies were identical.
Martin & Hillyer argued that if an unredacted copy of the policy was produced, it could result in information being disclosed regarding the advice the firm was giving to its clients, the communications the firm was having with its, what clients were required to do for the firm as their lawyers, and/or what duties Martin and Hillyer owed to its client. Martin and Hillyer claimed that this would not only be disclosed to the Applicants and their lawyers, but potentially to parties to other action in which Martin and Hillyer were acting as counsel. Martin and Hillyer admitted however that the redactions they had made to their policy did not include any particular communications between solicitors and clients, but rather “references” to types of communications that take place between the law firm and its clients.
Ultimately the Court determined that the nature of the clauses in the policy were common knowledge for that type of adverse cost coverage contract, and were effectively already available in the public domain. It was further decided that aside from the schedules of client names and premiums, the redacted portions of the policy did not contain any privileged or confidential communication and that an Order to produce it would not prejudice any of Martin Hillyer’s future clients.
Treiers v. Kmith, 2023 ONCA 751
https://www.canlii.org/en/on/onca/doc/2023/2023onca751/2023onca751.html
The plaintiff in this matter brought a personal injury claim against the defendant in relation to a motor vehicle accident. In his Statement of Claim the plaintiff sought $425,000 in damages, which included a claim for “special damages” and “out-of-pocket expenses”, though neither were particularized. At trial it was decided that the plaintiff did not meet threshold as he had not suffered a “permanent and serious injury”, accordingly he was not entitled to non-pecuniary damages. At the very end of the trial however, the plaintiff moved to amend his Statement of Claim to particularize his special damages to include a claim for loss of income. This amendment was allowed and at the conclusion of the trial the only damages awarded to the plaintiff were $1,680 for loss of income, however he was also awarded $40,000 for his costs of the action.
In awarding costs to the plaintiff, the trial judge emphasized the defendant’s failure to make any offer to settle the claim before trial, other than an offer made for a dismissal of the action, which the trial judge characterized as a “demand for surrender.” The plaintiff appealed but later abandoned the trial judge’s decision and the defendant cross-appealed the trial judge’s cost award.
On appeal, the defendant pointed out that the only portion of the plaintiff’s claim that was ultimately successful was the claim for loss of income, which had not been specifically pleaded prior to trial. As a result the defendant argued that they did not have a reasonable opportunity to make an offer prior to trial that could have taken into account the possibility of damages being awarded based exclusively on loss of income. The Court of Appeal accepted this argument from the defendant and set aside the trial judge’s cost award, substituting it with an Order that not costs of trial were payable by either party.
