Insurance company defendants may be awarded costs, in certain circumstances, if an injured plaintiff loses their case at trial.
Losing in a civil trial is not as simple as it may appear, says Barrie-area litigator Steve Rastin. Many plaintiffs are actually awarded significant damages by juries, but still end up “losing” because of considerations unknown to the jury such as the deductible, collateral deductions and formal Offers to Settle, he says.
In other words, sometimes juries think they are giving money to the plaintiff when the award actually results in the plaintiff being ordered to pay money to the other side, says Rastin, adding this can be a harsh reality.
A recent court decision may provide some relief however, as it held that cost awards in personal injury cases must be fair and reasonable and cost awards should not become “a profit-generating device for insurance companies,” he says.
Rastin, senior counsel at Rastin Gluckstein, points out that in Dorah v. Dyal, the trial judge cut insurer Aviva’s cost claim in half. He says he views the Dorah decision as a positive step in discouraging what has been a growing practice risk that has discouraged plaintiffs from taking their meritorious cases to trial.
‘Highlights the Inherently Unfair Playing Field’
“I commend the judge in this case for having the courage to say cost awards should not be allowed to become a profit centre,” he tells LegalMattersCanada.ca. “This case essentially highlights the inherently unfair playing field that personal injury claimants find themselves fighting on.”
In considering the costs endorsement application in Dorah v. Dyal, Justice Markus Koehnen said he had “serious concerns” about the billing rates the insurer claimed and adjusted the costs downward.
“The first adjustment arises because Aviva internal counsel did not record their time but only estimated it after the fact,” he wrote. “The second adjustment ensures that the cost award indemnifies Aviva for its actual costs and does not turn cost awards into a source of profit for them.
Following the four-week jury trial, the plaintiff received an award totalling $652,521, the judgment states. However, when statutory deductibles were applied, the net award of damages plus prejudgment interest came to $191,228.65.
Because Aviva had offered to settle the case for $250,000 prior to the trial, the insurer was entitled to claim costs under Rule 49 of the Rules of Civil Procedure since its offer was more than the net damages the plaintiff received.
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