



COURT OF APPEAL FOR ONTARIO

CITATION: Williston v. Hamilton (Police
    Service), 2013 ONCA 296

DATE: 20130507

DOCKET: C55390

Gillese, Blair and Rouleau JJ.A.

BETWEEN

Dale Williston

Plaintiff (Appellant)

and

City of Hamilton operating as Police Services and
    Preston Gabriele

Defendants (Respondents)

Sumitra Lagoo and Efstathios Balopoulos, for the
    appellant

Kieran C. Dickson, for the respondents

Heard: March 21, 2013

On appeal from the judgment of Justice James A. Ramsay of
    the Superior Court of Justice, dated September 16, 2011, with reasons reported
    at 2011 ONSC 5400.

Rouleau
    J.A.:

A.

Overview

[1]

The appellant appeals the trial judges cost award. Leave to appeal was
    granted by a panel of this court on April 19, 2012.

[2]

The costs decision arises from motor vehicle litigation wherein the
    trial judge concluded that the respondents were responsible for 100% of the
    damages to the appellant, in the agreed-upon amount of $100,000. The trial
    judge awarded the appellant partial indemnity costs fixed at $60,000. The
    appellant had also sought an augmented award of costs on the basis that the
    respondents had refused repeated requests to engage in mediation pursuant to s.
    258.6 of the
Insurance Act,
R.S.O.
1990, c. I.8. The trial judge denied this request and it is this refusal to grant
    an augmented cost award that is the subject of the appeal.

B.

Facts

[3]

Section 258.6(1) provides that a person making a claim for damages for
    injury arising from the use or operation of an automobile, and an insurer that
    is defending an action on behalf of an insured or that receives a notice under s.
    258.3(1)(b) in respect of a claim, shall participate in mediation if the other
    party so requests. Pursuant to s. 258.6(2), a failure to comply with a request
    to mediate shall be considered by the court in awarding costs.

[4]

This court considered this provision in
Keam v. Caddey
, 2010
    ONCA 565, 103 O.R. (3d) 626, and, at para. 29, determined that where an
    insurer breaches s. 258.6(1), s. 258.6(2) requires the trial judge to
    ascertain the appropriate remedial costs penalty in the circumstances.

[5]

In the present case, the trial judge declined to make an augmented cost
    award because he concluded that the provision only applied to insurers. He
    determined that the respondents were not insurers either as named defendants to
    the action or by way of subrogation. This finding was likely based on the fact
    that the action had been defended throughout by the legal services division of
    the City of Hamilton, rather than outside counsel.

C.

Positions of the parties

[6]

The appellant submits that the trial judge erred in ruling that s. 258.6
    did not apply because the respondents were not insurers either as named
    defendants or by way of subrogation. The ruling was made without either party
    having raised the issue. Further, had the issue been raised, the appellant
    would have provided ample evidence that s. 258.6(2) had been engaged in the
    circumstances of this case. In support of that submission, the appellant has
    tendered fresh evidence showing that the respondents were insured; that the
    respondents had confirmed to the appellant that there was coverage and advised
    of its limits; and that the appellant had made requests for mediation engaging
    the obligations outlined in s. 258.6(1).

[7]

The respondents acknowledge that the issue was not raised in submissions
    before the trial judge and candidly stated that the trial judges basis for
    rejecting the claim for augmented costs came as a surprise to both parties.
    However, they maintain that the trial judge was correct and that the appellant did
    not establish that s. 258.6(2) applied in the circumstances of this case.

D.

Analysis

[8]

For the reasons that follow, I would allow the appeal.

(1)

Fresh Evidence

[9]

The appellants claim arose from a motor vehicle accident in Ontario
    where insurance is mandatory pursuant to the
Compulsory Automobile
    Insurance Act
, R.S.O. 1990, c. C.25, s. 2(1). After the collision, the
    appellant sought and obtained confirmation from the respondents that there was insurance
    coverage.

[10]

When
    the appellant sought augmented costs pursuant to s. 258.6(2) of the
Insurance
    Act
, he had no reason to expect that there would be an issue as to whether
    the section applied in the circumstances. He quite reasonably expected that the
    insurer had been involved in the defence of the claim, was aware of the appellants
    several requests for mediation and had refused to accede to these repeated
    requests.

[11]

Although
    the respondents opposed the appellants request for augmented costs at first
    instance, they did so on the basis that such costs were not warranted. The
    respondents did not suggest to the trial judge that he could not make the award
    because no insurer was involved in the defence of the action or in the refusal
    to mediate. The appellant was, therefore, taken by surprise by the trial
    judges ruling and cannot be faulted for not having filed any material to
    confirm the applicability of s. 258.6(2) of the
Insurance Act
.

[12]

Before
    ruling as he did, the trial judge ought to have raised his concern with the
    parties and given them an opportunity to address the issue of whether the
    insurers obligation to mediate had been engaged. Had the trial judge done so,
    the appellant would no doubt have sought permission to file relevant material. Because
    the trial judge did not provide this opportunity, it is appropriate, in my
    view, for the appellant to file on appeal the fresh evidence touching on this
    issue.

(2)

The Applicability of
    s. 258.6 of the
Insurance Act
to this Case

[13]

Section
    258.6 of the
Insurance Act
reads as follows:

258.6(1)
    Mediation

A person making a claim for loss or damage from bodily injury
    or death arising directly or indirectly from the use or operation of an
    automobile and an insurer that is defending an action in respect of the claim
    on behalf of an insured or that receives a notice under clause 258.3(1)(b) in
    respect of the claim shall, on the request of either of them, participate in a
    mediation of the claim in accordance with the procedures prescribed by the
    regulations.

258.6(2)
    Failure to comply

In an action in respect of the claim, a persons failure to
    comply with this section shall be considered by the court in awarding costs.

[14]

Pursuant
    to s. 258.6(1), an insurer that is defending an action in respect of the claim
    on behalf of an insured or that receives a notice under clause 258.3(1)(b) in
    respect of the claim must participate in mediation if requested by the
    plaintiff. The respondents argue that there was no basis for concluding that an
    insurer defended the action. The only evidence was that the action was defended
    throughout by the legal services division of the City of Hamilton. As a result,
    the appellant has not established that the section applies to them. Further,
    the respondents argue that the appellant has not established that the insurer
    ever received the s. 258.3(1)(b) notice referred to in s. 258.6(1). Finally,
    the respondents argue that the appellant has not established that the insurer
    was asked to mediate.

[15]

The
    s. 258.3(1)(b) notice is a written notice that a plaintiff must serve on the
    defendant, advising the defendant that the plaintiff intends to commence an
    action. It is to be served within 120 days of the incident, or such longer
    period as may be allowed by the court. The fresh evidence shows that the appellant
    sent the s. 258.3(1)(b) notice to the City on November 17, 2006.

[16]

Once
    the City received the notice, it was required by s. 258.3(2) to give a copy of
    the notice to the insurer within seven days of receiving the notice. In light
    of the statutory requirement, it is reasonable to presume that the respondents
    did in fact transmit the notice to the insurer.

[17]

Section
    258.4 of the
Insurance Act
then provides that an insurer who receives
    a s. 258.3(1)(b) notice is to promptly inform the plaintiff whether there is a
    motor vehicle liability policy issued by the insurer to the defendant and, if
    so, what the liability limits under the policy are and whether the insurer will
    respond under the policy to the claim.

[18]

The
    fresh evidence contains a November 21, 2007 letter to the appellant advising
    that the policy limits under Guarantee Company of North America Policy
    #A197970 for 2005 are $10,000,000.00. There are no coverage issues. This
    letter was authored by the City of Hamiltons legal services division and
    states that it is in response to correspondence received from the appellants
    solicitor dated November 16, 2007. The appellants November 16, 2007 letter
    does not appear to be in the record before us. It is, however, reasonable to
    conclude that it inquired about the Citys insurance coverage, and the Citys
    response to the appellant containing the insurance details was sent in
    compliance with the insurers obligation under s. 258.4 of the
Insurance
    Act
.

[19]

From
    this chain of correspondence, and taking into account the statutory
    requirements, the only reasonable conclusion is that the insurer was fully
    apprised of the claim and had received the s. 258.3(1)(b) notice. It is, in my
    view, highly unlikely that a solicitor for a sophisticated insured such as the
    City of Hamilton would send a letter to a plaintiff representing that there are
    no coverage issues without having first obtained confirmation to this effect
    from the insurer.

[20]

I
    turn now to whether the request to mediate pursuant to s. 258.6(1) was sent to
    the insurer. The appellant wrote to the legal services division of the City of
    Hamilton on February 3, 2011, and formally requested private mediation pursuant
    to s. 258.6(1) of the
Insurance Act
. When made by the plaintiff, the
    s. 258.6(1) mediation request is directed to the defendants insurer. No response
    was received from the legal services division of the City. There was no
    suggestion that the legal services division of the City was not in a position
    to accept such a request on behalf of the insurer.

[21]

On
    July 7, 2011, the appellant sent the Citys legal services division a further
    request for mediation pursuant to s. 258.6(1) of the
Insurance Act.
This
    time, the Citys legal services division responded and questioned the utility
    of mediation. It stated that it would pass the request for mediation onto its
    principals, but would not recommend mediating until further discovery,
    production, and a medical exam had been done. The letter did not identify who
    the principals were and, as with the previous request, did not suggest that
    the legal services division of the City was not in a position to accept the
    request for mediation on behalf of the insurer.

[22]

A
    third letter requesting mediation was sent by the appellant on July 19, 2011. Although
    no specific reference to s. 258.6 is made in the letter, the tenor of the
    letter makes it clear that the appellant was renewing his request for
    mediation.

[23]

This
    record allows for no other reasonable conclusion but that the legal services
    division of the City of Hamilton was, at a minimum, holding itself out to the
    appellant as being authorized by the insurer to provide the response required
    of an insurer upon receipt of a s. 258.3(1)(b) notice and to respond on the
    insurers behalf to mediation requests made pursuant to s. 258.6(1). The
    respondents filed nothing suggesting otherwise, nor did they indicate what
    arrangement existed between the legal services division of the City of Hamilton
    and the insurer.

[24]

As
    a result, the appellant was justified in dealing with the legal services
    division of the City of Hamilton as representing both the City and the insurer.
    I conclude therefore that s. 258.6(2) applies in the circumstances of this case
    because the insurer failed to respond to a request to mediate, as required by
    s. 258.6(1).

Remedy

[25]

In
    my view, an augmented cost award was warranted in the circumstances of this
    case. The appellant repeatedly requested mediation and the insurer never agreed
    to participate, despite its obligation to do so pursuant to s. 258.6(1).

[26]

As
    set out in
Keam
, at para. 32, the award should reflect the censure of
    the court and provide appropriately significant recovery. In
Keam
, the
    court determined that increasing the quantum of the fee portion of the costs
    awarded to the appellants was warranted and it increased the fee award from
    $110,000 to $150,000 plus applicable taxes.

[27]

In
    the present case, the fee portion of the trial costs, on a partial indemnity
    basis, was $41,183.60. In my view, a $20,000 increase is appropriate, thus raising
    the total cost award from $60,000 to $80,000. I would also award the appellant
    costs of the appeal, including the leave to appeal motion, fixed in the global amount
    of $15,000 inclusive of disbursements and applicable taxes.

Paul Rouleau J.A.

I agree E.E. Gillese
    J.A.

I agree R.A. Blair
    J.A.

Released: May 7, 2013


