Keam v. Caddey, 2010 ONCA 565

• Jurisdiction: Ontario
• Court: Court of Appeal (Ontario)
• Judge: Rosenberg, Goudge and Feldman, JJ.A.
• Citation: 2010 ONCA 565,(2010), 267 O.A.C. 296 (CA)
• Date: 11 August 2010
• Subject Matter: INSURANCE,PRACTICE

Keam v. Caddey (2010), 267 O.A.C. 296 (CA)

MLB headnote and full text

Temp. Cite: [2010] O.A.C. TBEd. SE.004

Glen Keam and Heather Keam (plaintiffs/appellants) v. James Caddey and Alma Jean Caddey (defendants/respondents)

(C51735; 2010 ONCA 565)

Indexed As: Keam v. Caddey

Ontario Court of Appeal

Rosenberg, Goudge and Feldman, JJ.A.

August 31, 2010.

Summary:

The Keams successfully sued the Caddeys for damages suffered in a motor vehicle accident. Prior to trial, the Keams twice asked the Caddeys, as represented by their insurer, to participate in mediation. Contrary to its statutory obligation, the insurer refused, on the basis that it did not believe that Mr. Keam's damages would meet the statutory threshold. The trial judge accepted the insurer's position as legitimate and declined the Keams' request for substantial indemnity costs as a remedy for the insurer's failure to participate in mediation. The Keams appealed.

The Ontario Court of Appeal allowed the appeal and increased the quantum of the fee portion of the costs awarded to the plaintiffs at trial from $110,000 to $150,000.

Editor's Note: In a related cost assessment, reported at [2009] O.T.C. Uned. M97, the principal issue was whether the plaintiffs should receive their cost of legal services rendered at the partial indemnity or substantial indemnity rate.

Insurance - Topic 735

Insurers - Duties - Respecting settlement (including costs consequences) - At issue on this appeal was whether any cost consequence should attach to the insurer's failure to participate in statutorily mandated mediation - The defendants' insurer took the position that the claim for damages did not meet the statutory threshold and therefore there was nothing to negotiate - The Ontario Court of Appeal stated that "the legislature has disavowed [the defendants' approach] by making mediation mandatory. Rather, the legislature's approach recognizes that participation in mediation could have a salutary effect on one or both sides, with input from an experienced and respected mediator" - See paragraphs 21 to 23 - "The legislature chose not to provide a specific cost consequence for an insurer's failure to participate in mediation ... Instead, the trial judge is accorded the discretion to determine the appropriate cost consequence in each case. In summary, where an insurer breaches s. 258.6(1), s. 258.6(2) [of the Insurance Act] requires the trial judge to ascertain the appropriate remedial costs penalty" - See paragraphs 25 to 29.

Insurance - Topic 735

Insurers - Duties - Respecting settlement (including costs consequences) - The Keams successfully sued the Caddeys for damages suffered in a motor vehicle accident - Prior to trial, the Keams twice asked the Caddeys, as represented by their insurer, to participate in mediation - Contrary to its statutory obligation, the insurer refused, on the basis that it did not believe that Mr. Keam's damages would meet the statutory threshold - The trial judge accepted the insurer's position as legitimate and declined the Keams' request for substantial indemnity costs as a remedy for the insurer's failure to participate in mediation - The Ontario Court of Appeal held that the trial judge erred in law by finding that the insurer's decision was a legitimate one, as that decision constituted a breach of the insurer's statutory obligation - The court set out the factors that impacted on the magnitude of the costs penalty that ought to have been imposed, and concluded that a "significant remedial" penalty was required - The court ordered an increase of $40,000 in the costs award, to reflect the censure of the court and to provide an appropriately significant recovery for the plaintiffs - See paragraphs 30 to 33.

Insurance - Topic 3395

Payment of insurance proceeds - Actions - Practice - Costs and interests - [See both Insurance - Topic 735 ].

Practice - Topic 5259.2

Trials - General - Mediation - When required - [See first Insurance - Topic 735 ].

Practice - Topic 6931

Costs - General principles - Discretion of court - [See first Insurance - Topic 735 ].

Cases Noticed:

Young v. Young et al., [1993] 4 S.C.R. 3; 160 N.R. 1; 34 B.C.A.C. 161; 56 W.A.C. 161, refd to. [para. 13].

McCombie et al. v. Cadotte (2001), 143 O.A.C. 201; 53 O.R.(3d) 704 (C.A.), consd. [para. 25, footnote 1].

Statutes Noticed :

Insurance Act, R.S.O. 1990, c. I-8, sect. 258.5(1), sect. 258.5(5) [para. 19]; sect. 258.6(1), sect. 258.6(2) [para. 17].

Counsel:

Lawrence W. Hatfield, counsel for the appellants;

Robert H. Rogers and Matthew C. MacIsaac, counsel for the respondents.

This appeal was heard on August 11, 2010, by Rosenberg, Goudge and Feldman, JJ.A., of the Ontario Court of Appeal. In reasons written by Feldman, J.A., the Court delivered the following judgment, released on August 31, 2010.