Executive Summary: Key Legal and Evidentiary Issues

• Allocation of the plaintiffs’ agreed costs between the primary auto insurer (Town & Country) and the OPCF underinsurer (Co-operators).
• Effect of Town & Country’s early, conditional tender of its $1 million limits on its continuing duty to defend and cost exposure.
• Determination that Co-operators, as OPCF underinsurer, was “driving the litigation” after primary limits were effectively exhausted.
• Interaction between third party liability limits and the Ontario Family Protection Endorsement (OPCF) in an underinsured motorist context.
• Application of Courts of Justice Act s. 131(1) and Rule 57.01 to craft a fair, non-formulaic apportionment of plaintiffs’ costs.
• Recognition that Town & Country paid only $50,000 of the Stentons’ damages while Co-operators paid the bulk and therefore should bear most of the costs.

Facts of the case

On May 25, 2019, Joseph Stenton was driving his pickup truck, towing a camper-trailer, when a vehicle driven by Khaldoun El Rifai crossed the solid yellow centre line and struck him head-on. The crash killed Mr. El Rifai and his wife and caused very serious injuries to their three children in the back seat and to Mr. Stenton. Joseph Stenton sued the Estate of Mr. El Rifai for his injuries. His wife, Charlene Stenton, brought a Family Law Act claim for loss of care, guidance and companionship. The three El Rifai children also sued both their father’s estate and Mr. Stenton, creating overlapping claims and multiple insurer involvement.

Insurance structure and policy terms

The El Rifai vehicle was insured by Town & Country Mutual Insurance Company under an automobile liability policy with $1 million third party limits. Those limits had to be shared between the Stentons and the injured children. Mr. Stenton was insured by Co-operators General Insurance Company, which had two roles: it insured him for third party liability in relation to the children’s claims, and it was the Stentons’ underinsurer under an Ontario Family Protection Endorsement (OPCF) with $2 million limits. Because the at-fault driver carried $1 million, the OPCF potentially required Co-operators to pay up to an additional $1 million to the Stentons as underinsured motorist coverage. There was also a dispute about whether a further $1 million was available under the same policy for Mrs. Stenton’s claim, which prolonged the coverage fight with Co-operators.

Progress of the litigation and settlements

Town & Country was involved immediately after the accident; Co-operators was engaged early as both liability insurer and underinsurer. The Stentons’ Statement of Claim issued in May 2021. On June 8, 2022, before discoveries, Town & Country offered to tender its full $1 million policy limits to the plaintiffs collectively, conditional on releases for the El Rifai estate. It still had to defend until those releases and allocations were finalized. Discoveries of the Stentons occurred in March 2023, and counsel attended the children’s discoveries in August 2023 to assess relative claim values for apportionment of the $1 million. By December 2023, all parties, including Co-operators, agreed that $950,000 of Town & Country’s limits would go to the children and $50,000 to the Stentons, subject to court approval. Minutes of Settlement, including Co-operators’ agreement not to pursue subrogation against the estate, were signed in October 2024. Town & Country’s role after that was largely limited to mandatory defence steps until the minors’ settlement was approved.

Role of Co-operators as underinsurer

Co-operators increasingly drove the litigation as the underinsurer. It conducted surveillance of Mr. Stenton, arranged independent medical examinations, and challenged the plaintiffs’ damages, including at mediation where its offer was well below the amount it ultimately paid. On December 22, 2023, Co-operators agreed to the apportionment of Town & Country’s limits and withdrew its allegations of negligence against Mr. Stenton. Shortly afterwards, it offered its full $1 million OPCF limit plus costs. The action, set down for a February 2025 jury trial, settled on January 25, 2025. Under the settlement, Co-operators paid $1,000,000 to the Stentons as underinsurer, and Town & Country paid $50,000 from its primary policy. The balance of Town & Country’s $1 million and related costs went to the children, who also obtained a separate settlement from Co-operators as Mr. Stenton’s liability insurer. The parties agreed the Stentons’ costs would be $275,000 all-inclusive, plus $5,000 in pre-judgment interest on costs, the PJI to be paid solely by Co-operators.

Cost apportionment principles and application

On the motion, the only issue was how to divide the $275,000 agreed costs between Town & Country and Co-operators. Justice Nicholson reviewed authorities on allocating costs between primary and excess or underinsurers and emphasised that the key question is which insurer was effectively “driving the litigation” and protecting its own financial interests. Defence dockets were treated as a secondary factor, to avoid incentivising under-defence. Town & Country had recognised early that its limits would be exhausted and offered to tender them; it did not contest liability, did not serve defence medicals, and had no real interest in how its $1 million was divided once exhaustion was clear. Co-operators, by contrast, ran discoveries, surveillance, medicals and mediation, and actively resisted the Stentons’ damages until it paid its OPCF limits. The court accepted that, from the June 2022 tender onwards, the real dispute for the Stentons was with Co-operators, not Town & Country. The parties divided the case into four stages. Using those stages as a guide, the court ordered Town & Country to pay 75% of the plaintiffs’ costs incurred up to its June 2022 tender (Stage I) and 25% of the costs from then until the October 2024 Minutes of Settlement (Stages II and III). Co-operators was to pay the remaining 25% of Stage I, 75% of Stages II and III, and 100% of the costs after the Minutes to approval of the minors’ settlement (Stage IV).

Outcome and total recovery

Applying those percentages to the $275,000 agreed costs, the court fixed Town & Country’s share at $88,000 (rounded) and Co-operators’ share at $187,000 (rounded), with Co-operators also paying the $5,000 pre-judgment interest on costs. In combination with the damages payments, Joseph and Charlene Stenton were the successful party, receiving $1,000,000 from Co-operators under the OPCF, $50,000 from Town & Country, $275,000 in costs, and $5,000 in pre-judgment interest, for a total monetary outcome of $1,330,000 in their favour.