Executive Summary: Key Legal and Evidentiary Issues

• W. James D. Helmer brought a claim against Economical Mutual Insurance Company for the balance of endorsement 6558 under a commercial fire insurance policy, after three of his buildings were destroyed by fire on October 21, 2015.
• Central to the dispute was whether Economical was obligated to pay the balance of the endorsement given that the reconstructed building differed in height from the original structures.
• The jury found that Economical had promised to pay the balance of endorsement 6558 provided the plaintiff rebuilt a code-compliant structure, regardless of height.
• Costs were contested on the question of scale — whether full indemnity, substantial indemnity, or partial indemnity costs were appropriate given Economical's conduct during the litigation.
• Economical's aggressive litigation conduct, including refusing to produce the adjuster for discovery, seeking voluminous contractor records unused at trial, and naming plaintiff's counsel personally in pleadings, was considered by the court in fixing costs.
• Pre-judgment interest was ordered at an averaged rate of 2.15% over the ten-year period, rather than at the flat statutory rate of 0.8%, given the significant variation in applicable rates from 2016 to 2025.

Facts of the case

On October 21, 2015, three interconnected historic buildings owned by W. James D. Helmer in an old historical area of Ottawa were destroyed by fire. Helmer held a commercial fire insurance policy issued by Economical Mutual Insurance Company ("Economical"), which included endorsement 6558 — a provision covering various post-fire expenses, including the cost of upgrades required to meet applicable building code and zoning bylaws at the time of the fire. The policy had an overall value of $500,000. Helmer initially commenced proceedings against both Economical and his insurance broker, Carr & Company Insurance Brokers Ltd., for negligence in failing to recommend adequate fire insurance coverage, seeking the full replacement cost of approximately $4.9 million. The claim against Carr & Company was settled before trial pursuant to a Pierringer agreement, and any costs related to that claim were deducted from the costs award. After that settlement, the remaining dispute centred solely on Economical's refusal to pay the balance of endorsement 6558, which stood at $339,146 at the time of the Amended Statement of Claim dated November 12, 2024, and was reduced to $327,162 by the time of trial. Economical did not dispute the amount but denied its obligation to pay, arguing that the reconstructed building — three storeys rather than two — was a different type of structure than what had originally stood on the site. Legal proceedings ran from 2016 until trial in early 2026, spanning nearly ten years.

Policy terms and contractual clauses at issue

The primary contractual provision at issue was endorsement 6558 to Helmer's commercial fire insurance policy. This endorsement covered a range of post-fire costs, including amounts required to bring the rebuilt structure into compliance with the building code and zoning bylaws in effect at the time of the fire. Economical's position was that its obligation to pay the balance of the endorsement was contingent on the type of structure rebuilt — specifically, that the replacement building had to match the original structures in height. Helmer's position, ultimately accepted by the jury, was that Economical had promised to pay the balance of the endorsement so long as the new structure was code-compliant, regardless of whether it replicated the original height. The court noted that this promise was consistent with the complicated nature of replacing three century-old buildings that had been joined together on a single lot, and the difficulty in isolating which costs were specifically attributable to meeting current building code and zoning bylaw requirements.

Reasoning and analysis

Justice Smith considered the costs factors set out in Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, including: the degree of success, the amounts claimed and recovered, the complexity and importance of the matter, unreasonable conduct by any party, the applicable scale of costs, any offers to settle, the principle of indemnity, time spent, and the amount a losing party would reasonably expect to pay. On success, the court found that Helmer was completely successful — the jury awarded him the full amount claimed, and the judgment was reduced on consent to $327,162, exactly what he sought at trial. On complexity, both parties agreed the issues were above average in complexity, involving questions of contract interpretation, promissory estoppel, construction requirements, building code and bylaw compliance, and expert evidence. On Economical's conduct, the court found that Economical had defended aggressively: it refused to consent to proposed amendments that were ultimately granted, initially refused to produce the adjuster for discovery until a motion was prepared, made repeated refusals to answer questions during examinations for discovery, named plaintiff's counsel personally in an attempt to have him removed as counsel of record, and sought production of records from every contractor and subcontractor involved in the reconstruction — records that were never referred to at trial. While the court found this conduct caused the plaintiff to incur substantial legal costs, it stopped short of characterizing it as reprehensible, scandalous, or outrageous under the standard from Davies v. Clarington (Municipality) et al, 2009 ONCA 722, and therefore declined to award full indemnity costs across the board.

On the question of offers to settle, Economical made no written offer to settle at any point during the ten-year proceeding. A without prejudice email from the insurance adjuster was found not to constitute an offer with cost consequences under the Rules. Helmer made a Rule 49 offer on April 18, 2024, for $339,146 plus $50,000 in costs, totalling $389,146, open for acceptance until October 15, 2025 — approximately 19 months. Because the offer was withdrawn before the commencement of trial in January 2026, it did not meet the technical requirements of Rule 49.10. However, under Rule 49.13, the court considered the offer in its discretion, finding it was very reasonable — effectively the exact amount the jury found Economical had promised to pay — and that it weighed in favour of awarding costs on a substantial indemnity basis from the date the offer was made. Relying on Baker v. Blue Cross Life Insurance Company of Canada, 2023 ONCA 842, the court affirmed that no category of case automatically attracts substantial indemnity costs, but that trial judges retain discretion to assess costs based on the overall litigation dynamic. Given that Helmer had suffered a tragic fire with insufficient coverage to rebuild and was forced to finance the shortfall caused by Economical's refusal to honour its promise, the court gave the principle of indemnity greater weight. On pre-judgment interest, the applicable statutory rates under section 128 of the Courts of Justice Act, R.S.O. 1990, c. C.43, varied from 0.8% in 2016 to 3.3% in 2025. The court exercised its discretion under section 130(1) to award interest at the averaged rate of 2.15% over the ten-year period, finding this just given the substantial variation over time.

Ruling and overall outcome

The plaintiff, W. James D. Helmer, was entirely successful. The jury award, reduced on consent, was $327,162. Economical was further ordered to pay costs fixed at $200,000 plus HST of $26,000, plus disbursements of $50,000 inclusive of HST, and pre-judgment interest on the jury award at the rate of 2.15% from October 21, 2015 to February 6, 2026, totalling $72,370. The total amount ordered in Helmer's favour across all heads — jury award, costs, and pre-judgment interest — was $675,532.