Apportionment of Costs Based on Insurance Policy Limits

The decision in Hummel v. Jantzi, 2020 ONSC 3052, dealt with the apportionment of costs between defendants following a trial.

The action arose out of a motor vehicle accident. The trial judge, Justice G.E. Taylor, found the defendant driver to be 80% liable and the defendant tavern to be 20% liable.  Contributory negligence on the plaintiff was assessed at 25%. The damages were assessed at approximately $12 million.

The defendant driver had insurance policy limits of $1 million. The tavern had insurance policy limits of $2 million.

Prior to trial, the defendant driver offered to contribute its limits of $1 million in exchange for a release. This was not accepted. However, the defendant driver agreed with the plaintiffs’ request to make an advance payment of $1 million.

The defendant tavern offered to contribute $500,000 plus costs.

The plaintiffs made an offer to both defendants in the amount of $2.8 million.

On the issue of costs, the defendant driver argued that the trial was solely about the liability of the tavern. Justice Taylor did not agree, noting that the defendant driver did not make a formal admission of liability for the accident, nor did he agree on the plaintiffs’ damages.

That being said, Justice Taylor said that the tavern would have been better off to accept the plaintiffs’ offer and must bear responsibility for the choices made.

Notwithstanding the amount of the judgment, it appeared that the plaintiffs accepted the sum of $3 million to be paid in satisfaction of the judgment, with the defendant driver paying $1 million and the tavern paying $2 million.

Justice Taylor noted that costs awarded to a plaintiff are frequently apportioned as between defendants on the basis of their respective degrees of fault. However, this is not a rule of strict application.

Costs are sometimes allocated on the basis of the respective insurance limits of the responsible parties. Costs are also sometimes ordered to be paid equally even though there is a significant difference in the apportionment of liability. His Honour noted that one of the purposes of the modern costs rule is to encourage settlement.

Justice Taylor said that it was reasonable for the defendant driver to offer to contribute his policy limits. Although it was open to the tavern to proceed to trial and not offer to contribute its limits, it was unsuccessful.

Justice Taylor held that it is fair and equitable to require the defendants to contribute to the plaintiffs’ costs in proportion to their respective policy limits. As a result, the defendant driver was ordered to pay one third of the costs and the tavern was ordered to pay two thirds of the costs.