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Costs Award Confirmed in Bogus Bad Faith Claim
Published in the October 2006 issue of Litigation Notes - View Article
In a previous issue of Litigation Notes(April, 2006) we commented on the case of DiBattista v. Wawanesa Mutual Insurance Company. The case related to a fire which occurred some nine years ago. The plaintiffs’ home was severely damaged. Their insurer, Wawanesa, resolved the property claims through a statutory appraisal process and retained contractors to effect repairs.
The plaintiffs were not satisfied and brought an action against Wawanesa and the contractors, alleging a wide range of wrongful conduct, including unfair and deceptive acts along with shoddy repair work. They alleged mental stress and emotional injury and sought damages. A subrogated claim for $8,000 was advanced on behalf of the Ontario Health Insurance Plan (“OHIP”) After a 70 day trial, a jury found the defendants to be without fault and assessed the plaintiffs’ damages at zero. The defendants had incurred total costs in excess of $1M and sought recovery against both the plaintiffs and the Ministry of Health (“Ministry”), which administers OHIP.
In virtually every claim for personal injury advanced in Ontario is included the subrogated interest of OHIP for the cost of health care services provided the injured party. An interesting issue arises when such a claim is advanced and the plaintiff’s action is dismissed: If costs are to be awarded against the individual plaintiff, should the Ministry also be subject to a costs award?
The issue is addressed by Regulations passed under the Health Insurance Act. Regulation 552 stipulates that where a person insured under OHIP obtains a judgment in an action in which he has included a subrogated claim on behalf of OHIP, certain cost consequences follow. In particular, section 39(6) provides that OHIP shall bear the same proportion of the taxable costs otherwise payable by the insured person . . . as the recovery made on behalf of [OHIP] bears to the total recovery of the injured person . . . or where no recovery is made, as the assessed claim of [OHIP] bears to the total damages of the injured person assessed by the court.”
There is precedent for imposing an obligation to pay costs upon the Ministry. In 1997 the Ontario Superior Court of Justice decided the case of Marchand v. Public General Hospital of Chatham. In Marchand. The plaintiff’s personal injury action was dismissed, but the trial judge did assess damages at approximately $1.1M. He also assessed OHIP’s interest at approximately $150,000, or 12% of the total assessment. OHIP had discontinued its action about midway through a very lengthy trial. The trial Judge found the Ministry was responsible for 12% of the costs incurred up to the date of the discontinuance.
In DiBattista, the defendants sought to have the Ministry bear the costs awarded to them, on the basis that the Ministry should be jointly and severally liable with the plaintiffs, who presumably, were not in a position to pay.
The trial judge awarded costs against the plaintiffs only and that decision was confirmed by the Court of Appeal . The Court held that Section 39(6) of Regulation 552 has no application where there has been no assessment of OHIP’s interest and the plaintiffs’damages have been assessed at zero. Furthermore, it would be unreasonable to hold OHIP, with a subrogated claim of $8,000, liable for costs in excess of $1 million.
DiBattista v. Wawanesa Mutual Insurance Company, 2006 CanLII 33544