Splitting the Bill: Apportioning Plaintiffs’ Costs Between Insurers

By Sarah Sevier

In the recent decision Stenton v. Estate of El Rifai, 2025 ONSC 6806, the Ontario Superior Court of Justice addressed the apportionment of plaintiffs’ costs between responding insurers following the settlement of a complex motor vehicle case, emphasizing that insurers’ conduct throughout the litigation can, and should, influence the allocation of costs.

Background

On May 25, 2019, a head-on collision occurred between vehicles driven by Joseph Stenton and Khaldoun El Rifai after Mr. El Rifai crossed a solid yellow line. Mr. El Rifai and his wife, who was in the front passenger seat, died, and their three children in the back seat were seriously injured.

Mr. Stenton and his wife, pursuant to the Family Law Act, R.S.O. 1990, c. F.3, as well as the three children sued the El Rifai estate for their injuries. Mr. El Rifai’s insurer, Town & Country Mutual Insurance Company (“Town & Country), had insured Mr. El  Rifai  for $1,000,000 in third-party liability coverage, which was to be apportioned between the Stentons’ claims and the children’s claims. Mr. Stenton also sued his own insurer, Co-operators General Insurance Company (“Co-operators”), under the Ontario Family Protection Endorsement (“OPCF”) coverage, claiming that Mr. El Rifai was underinsured.

Both insurers were involved in discussions shortly after the accident. On June 8, 2022, Town & Country offered to tender its limits, subject to agreement on apportionment as between the plaintiffs and a condition that the estate would not be pursued beyond policy limits. However, Co-operators continued to defend the action by contesting liability and damages, conducting surveillance, requesting medical examinations and engaging in mediation.

Nonethless, on December 22, 2023, Co-operators agreed to the proposed apportionment of Town & Country’s limits. The matter ultimately settled on January 25, 2025, with Co-operators paying $1,000,000 plus costs, and Town & Country paying $50,000 to the Stentons, with the remainder allocated to the children’s claims.

Issue

How should the plaintiffs’ $275,000 in legal fees be apportioned between Town & Country and Co-operators?

Legal Framework

Under s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, the costs of and incidental to a proceeding are in the discretion of the court, which may determine by whom and to what extent such costs shall be paid. The factors guiding this discretion are set out in Rule 57.01 of the Rules of Civil Procedure.

Case law further confirms that courts exercise broad discretion in allocating costs based on the circumstances, a principle that the Court in this matter briefly discussed.

For example, in Broadhurst & Ball v. American Home Assurance Co., [1990] O.J. No. 2317, 1990 CanLII 6981 (ON CA), the Court of Appeal held that when an excess insurer is “plainly at risk,” it is equitable for it to bear a portion of the costs; accordingly, the costs were split equally between the primary and excess insurers. Similarly, in Bernard v. Lamarsh, 2019 ONSC 6327, the court ordered the primary and excess insurers to share costs equally, noting that the primary insurer, despite agreeing to contribute the policy limits (which had been statutorily reduced due to a policy breach) remained at risk throughout the litigation.

By contrast, in Riddoch v. Anderson, [1991] O.J. No. 2667, the primary insurer was not required to pay costs after offering its limits, as the Court found that it could “do nothing more” in the litigation. Likewise, in Ward v. Dingwall, 2014 ONSC 126, where two defendants’ insurers had tendered their policy limits and a third insurer continued to drive the litigation, the Court held that the third insurer was responsible for 80% of the costs, with the other insurers bearing the remaining 20%, reflecting their more limited involvement after tendering their limits.

Application

The Court held that the key principle emerging from the case law is that the insurer driving the litigation should bear the costs associated with it.

As such, the Court divided the litigation into four stages. It found that Town & Country was responsible for 75% of the costs incurred up to June 2022, when it offered its limits, while Co-operators bore the remaining 25%, as the claim was being advanced against both insurers during this period. For the next two stages, when Co-operators took the lead in defending the action, Town & Country was responsible for 25% of the costs and Co-operators for 75%. Co-operators was then solely responsible for the costs associated with the final procedural stage.

As a result, the Court determined that Town & Country would bear approximately one-third of the total fees, with Co-operators covering the remainder.

In reaching its conclusion, the Court emphasized that a key purpose of a costs award is to promote reasonable conduct throughout litigation, and made several observations.

First, although both insurers submitted Bills of Costs, the Court stressed that the time spent by defence counsel should not be given undue weight, as doing so could incentivize insurers with an ongoing duty to defend to under-engage in an effort to minimize their eventual cost exposure.

Second, the Court noted that insurers who act reasonably, such as by offering to tender policy limits early, should not be penalized; rather, such conduct should be encouraged and reflected in the apportionment of costs.

Finally, the Court observed that Co-operators ultimately paid the majority of the damages to Mr. Stenton, supporting the conclusion that Co-operators was the party prolonging the proceedings and should therefore bear a correspondingly greater share of the fees.

Takeaways

This decision underscores that acting reasonably throughout litigation is a key factor courts consider when apportioning costs. Insurers who take proactive, responsible steps, such as promptly offering to tender policy limits, may be viewed favorably. Conversely, insurers who engage in unnecessary or avoidable actions that extend proceedings risk being assigned a disproportionately larger share of the costs.

Ultimately, the case highlights that the primary purpose of cost awards is not merely financial compensation, but to encourage prudent, efficient, and cooperative conduct by insurers, ensuring claims are resolved fairly and without undue delay.