Application by Third Party Defendant Guardian Insurance Company of Canada (“Guardian”) for a determination of whether it could claim credit for costs awarded to the University of Western Ontario (“UWO”) as against another Third Party Defendant, was dismissed where the Court found that the costs were in respect of different time periods in the underlying action and UWO had not been over-indemnified

Hanis v. University of Western Ontario, [2006] O.J. No. 2696, Ontario Superior Court of Justice

On October 21, 2003, the Court granted summary judgment in favour of UWO and various individual Defendants against Guardian. The Court had declared that Guardian owed a duty to defend UWO in respect of the action and that Guardian had failed to honor that duty. The Court had ordered that UWO was entitled to be compensated for the expenses incurred by it in defending the main action prior to trial, at trial, and up to the time of the commencement of the appeal from the trial judgment. In the course of judgment, the Court had indicated that Guardian would be entitled to a credit with respect to portions of UWO’s claim for defence costs which UWO had received in a settlement with the other Third Party Insurers. Guardian brought an application for a determination of whether it could claim credit for these costs.

On the application, UWO argued that Guardian was not entitled to receive the credit as the funds received from the other Third Party Insurers were attributable to the legal defence costs incurred by UWO in defending the action, not in prosecuting the Third Party action which was the subject of these proceedings. UWO further submitted that the money obtained by UWO from the Third Party Insurers only indemnified UWO for costs incurred over a certain time period and that such costs had not been claimed against Guardian. The Court was satisfied that UWO had not been over-indemnified by the Court award against Guardian. As a result, there was no reason in equity for the Court to intervene as requested by Guardian to deduct the credit from the award that UWO obtained against Guardian. In the result, Guardian’s application for credit was dismissed.

In the result, the Plaintiff’s claim was dismissed.

To stay current with the new case law and emerging legal issues in this area, subscribe here.