Special costs were awarded to the insured following a determination of bad faith

10. July 2018 0

Insurance law – Disability insurance – Benefits – Good faith, breach of – Damages – Mental distress – Punitive damages – Costs – Special or increased costs

Godwin v. Desjardins Financial Security Investments Inc., [2018] B.C.J. No. 783, 2018 BCSC 690, British Columbia Supreme Court, May 1, 2018, A. Saunders J.

The insured brought an action for coverage pursuant to her disability policy as well as for mental distress and punitive damages as a result of bad faith. Just prior to trial, the insurer reinstated the insured’s benefits. The claims for mental distress and bad faith proceeded to trial where the insured was successful. The insured applied for special costs.

Special costs were awarded to the insured despite a lack of misconduct during the litigation. The court found that the insurer’s breach of the duty of good faith was reprehensible and deserving of rebuke through an award of special costs. Had the trial judge considered himself bound by the BC Court of Appeal decision in Smithies Holdings Inc. v. RCV Holdings Ltd., he would have decided that a special costs award was precluded, but he would have awarded a higher amount for punitive damages. The court concluded that the full measure of the court’s rebuke of Desjardins’ conduct necessitated both the quantum of the punitive damages that were awarded and special costs throughout.

This case was digested by Laura E. Miller, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter.

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