Civil Litigation - Costs - Insurance. Forest Hill Fine Homes Inc. v. Heartland Farm Mutual Insurance Co.
In Forest Hill Fine Homes Inc. v. Heartland Farm Mutual Insurance Co. (Ont CA, 2023) the Court of Appeal set out the costs principle where an insurer fails in their duty to defend an insured:
 The parties agree that if full indemnity costs are ordered that they be fixed in the amount of $10,000. However, the appellant submits that full indemnity costs are not warranted. In the circumstances of this case, we see no reason to depart from the basic principle that, where an insurer breaches its duty to defend, it must pay the full indemnity costs incurred by the insured to enforce that duty: Godonoaga v. Khatambakhsh (2000), 2000 CanLII 16891 (ON CA), 50 O.R. (3d) 417 (C.A.); E.M. v. Reed (2003), 2003 CanLII 52150 (ON CA), 171 O.A.C. 145. Therefore, the appellant is to pay the respondents their costs of the appeal in the amount of $10,000, inclusive of disbursements and applicable tax.. Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale)
In Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale) (Ont CA, 2021) the Court of Appeal held that the fact of a well-funded insurer was not adequate alone to justify a denial of a costs award to a successful defendant (athough the appeal court ultimately supported the zero costs award against the successful defendant):
(a) A David and Goliath Situation
 The trial judge said that:
Modest complainants are always at the mercy of the economics of litigation. This is not a lucrative area for a personal litigator. It is not unexpected that a plaintiff such as Anna Przyk could end up against an insurer such as Aviva, an insurer of retirement homes with a head office in Kentucky. This could be characterized as a “David and Goliath" situation. Access to justice could be threatened by the resources of the opposing side. The trial judge cited no authority for the proposition that the existence of insurance could be relied on in the way that he did. In my view, the trial judge erred in principle in his reliance on the fact that Rushdale was insured by Aviva, and the implications he derived from that fact.
 There is no doubt that a party who is being defended by an insurer has resources to conduct the defence. But what is relevant to the question of costs is not the existence of defence-facilitating resources, but how the resources were used in the litigation. I draw this conclusion for three reasons.
 First, although the factors listed in r. 57.01 are non-exhaustive, they all relate to the nature of the issues in the litigation, the result, and to the way a party behaved in the litigation. None point to the identity or resources of the party. Nor do the provisions of r. 49.10, which set out cost consequences for failure to accept an offer to settle, support the view that the resources of the party making or refusing the offer is relevant.
 Second, it would be wrong to punish a successful party, or their insurer, by using the existence of insurance as a reason to deny an award of costs on the theory that insurance, by resourcing the defence, could threaten access to justice, without considering whether there was improper litigation conduct by the successful party that in fact did interfere with access to justice for the unsuccessful claimant.
 Third, it is wrong to leap to the conclusion that a plaintiff with a modest claim against an insured defendant is necessarily in a David and Goliath situation without examining the circumstances. Proceedings should not be stereotyped: Kerr v. Danier Leather Inc., 2007 SCC 44,  2 S.C.R. 331 at para. 69. An apparently tilted playing field might be levelled in a number of ways, such as through contingency fee arrangements, third party litigation funding, or adverse costs insurance.
 Ms. Pryzk was not denied access to justice. She took her case to trial, and although the arrangements through which this occurred were not explored, there is no doubt that Ms. Przyk was represented by experienced counsel at trial. The trial judge noted that “(t)he case for the plaintiff was well-presented”. Both sides called experts. Nothing in the trial judge’s reasons supports the view that Ms. Przyk’s case was prejudiced by a mis-match of resources.
 Moreover, the trial judge overlooked the fact that Ms. Przyk had obtained adverse costs insurance, and that Rushdale’s request was for costs only to the extent covered by the insurance available to Ms. Pryzk under that policy. Rushdale did not seek any amount from Ms. Przyk personally.
 The trial judge made no finding of conduct in the litigation that would justify depriving Rushdale of costs. He did not, for example, cite any conduct that unnecessarily lengthened the proceedings, any improper, vexatious or unnecessary steps taken on its behalf, or any refusal to admit something that it should have. On the contrary, he noted that “(b)oth sides treated this particular case seriously”, and that the parties had agreed before trial to the quantum of damages, allowing the trial to be confined to the issue of liability. In other words, neither any resource advantage due to the fact that Rushdale was insured by Aviva, nor Aviva’s conduct of the defence, resulted in anything other than responsibly conducted litigation.
 Accordingly, the trial judge erred in principle in relying on the fact of insurance as a reason to deny costs to Rushdale as the successful party.