In Sanson v. Paterson (Ont CA, 2023) the Court of Appeal considered the 'splitting' of legal costs by under and primary insurers, here in a personal injury judgment:
[54] The Security National appellant takes issue with the order against Security National of one third of the costs in part on a substantial indemnity scale due to the respondent’s offer to settle. Before this panel, relying on Jungwirth v. Robertson, 2011 ONSC 3021, the Security National appellant submits that an under insurer does not have to contribute costs where the primary insurer has not offered its policy limits. It submits that Mr. Paterson could have resolved the case within his policy limits.
[55] We disagree. As stated by Goudge J.A. in this court’s decision in Burns v. Hedge (2001), 2001 CanLII 4718 (ON CA), 146 O.A.C. 333 (C.A.), at paras. 43-44, there is no need for a primary insurer to tender its policy limits to warrant a costs award against an under insurer. Maximum flexibility is afforded the trial judge in such circumstances. We would not interfere with the trial judge’s discretionary order.
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