“After The Event” Insurance Policy Considered By Court When Assessing Costs

“After the Event” insurance policies are obtained in order to provide costs and disbursements protection to a Plaintiff bringing a matter to trial.


A common policy would provide for $100,000 in coverage to cover any adverse costs awarded to the Defendant, as well as to cover any of the Plaintiff’s own disbursements.


In Clubine v. Panigua, the Plaintiff was injured in a motor vehicle accident, and subsequently commenced formal legal proceedings. Prior to trial, ICBC’S lawyer had made a formal offer to settle. At trial, the court award was less than the amount of this offer.


ICBC’S lawyer argued that the Plaintiff should only be entitled to costs and disbursements up to the date of the formal offer to settle, and that the Defendant should be entitled to costs and disbursements after the date of the formal offer to settle.


Counsel for the Plaintiff argued that the Plaintiff should receive costs throughout the entirety of the proceedings.


Typically, the Court considers the following factors as elucidated in Rule 9-1(6) of the Supreme Court Civil Rules when assessing costs :


(a) whether the offer to settle was one that ought reasonably to have been accepted, either on the date that the offer to settle was delivered or served or on any later date;


(b) the relationship between the terms of settlement offered and the final judgment of the court;


(c) the relative financial circumstances of the parties; and


(d) any other factor the court considers appropriate.


In the case at bar, however, the Court also considered the factor of the “After the Event” insurance policy held by the Plaintiff.


The court did not award any post-trial costs to the Plaintiff, and granted the Defendant costs and disbursements after the date of the formal offer to settle, commenting :


[27] On the costs application it was disclosed that the plaintiff purchased adverse cost insurance known as “After-the-Event” (“ATE”) insurance prior to trial. In submissions the plaintiff explained that the ATE insurance would cover the defendant’s disbursements and costs from the date of the offer if costs were awarded against the plaintiff, and would also pay for the plaintiff’s disbursements incurred but not awarded from the date of the offer. It will not pay for the plaintiff’s costs following the date of the offer.


[28] The defendant submits that the ATE insurance effectively undermines the intent of the offer to settle rule. It allows a plaintiff to avoid the punitive costs consequences of the rule, ignore reasonable offers to settle, and with impunity take their chance at trial. The winnowing function of the costs rules is obviated by ATE insurance; doubtful cases can proceed through litigation without risk of adverse costs consequences. I conclude in this case that this insurance had such an effect.


[29] The ATE insurance in this case strongly weighs in favour of the defendant’s costs application.


[30] The defendant made reasonable efforts to settle this matter. The plaintiff’s failure to accept the reasonable offer to settle should have costs consequences. The ATE insurance held by the plaintiff is a factor that further weighs against costs following the event in these circumstances. 


[31] The offer was open to the eve of trial, July 22, 2016. In these circumstances the plaintiff is entitled to only his pre-trial costs of $6,500 plus disbursements. The defendant’s application is granted and she is entitled to the costs and disbursements of the trial.

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