Ruling denies insurance defendants' claims for substantial indemnity costs amounting to $214,000
The Ontario Superior Court of Justice has denied substantial indemnity costs in a case seeking damages in connection with insurance claims for the loss of a hunting camp and outbuildings by fire in November 2018.
In this case, the plaintiffs requested damages from the defendants, Commonwell Mutual Insurance Group and Finnegan Insurance Brokers Ltd. Under Ontario’s Insurance Act, 1990, the parties agreed to appraise the hunting camp’s value at $32,918.26.
While the plaintiffs received a cheque for $54,000, they claimed the replacement value was over $140,000. Alleging bad faith on the defendants’ part, the plaintiffs added that Commonwell failed to prevent closing the file while the issues with the insurance policy remained live.
The plaintiffs asserted that Finnegan acted in bad faith, failed to ensure the insurance policy sufficiently protected the property, and failed to advise that the policy would not cover the replacement cost for destroyed buildings on the property.
The defendants filed summary judgment motions for nonsuit to dismiss the plaintiffs’ claims. The defendants argued that replacement insurance was unavailable for the type of property, which they had explained to the plaintiffs. The defendants added that the Superior Court had referred the matter to arbitration.
Claims denied
Last Feb. 19, in Jordan v. Commonwell Mutual Insurance Group, 2025 ONSC 1086, the Ontario Superior Court granted the summary judgment motions and dismissed the plaintiffs’ claims against all defendants.
The court ruled that a Superior Court judge’s October 2022 order, binding on all parties, clearly sent this matter to arbitration. The court held that the insurance policy governed the course of this case in the event of disagreement.
The court saw no credible evidence supporting the plaintiffs’ allegations that the defendants had been negligent, that Commonwell had acted in bad faith, or that Finnegan had failed to explain the policy’s limits.
The court noted that plaintiff J. Jordan:
- presumed the policy pertained to replacement value insurance
- did not discuss this presumption with the defendants
- understood the policy was “cash value only” before the claim’s issuance
- believed the defendants and police presumed him responsible for apparent arson
The court said this belief lacked evidentiary support and made no sense considering the settlement cheque for $54,000, which was an appropriate amount that should have resolved the relatively simple claim.
The court added that the evidence did not support the plaintiffs’ claim for damages and revised claim seeking $10 million, which lacked any factual basis. The court noted that the appraisal award valued the hunting camp at $32,918.26.
Cost award
Relying on r. 49.10 of Ontario’s Rules of Civil Procedure, 1990, the defendants sought substantial indemnity costs for alleged reprehensible conduct. Commonwell asked for $116,286.80, while Finnegan wanted $97,714.39.
On July 14, in Jordan v. Commonwell Mutual Insurance Group, 2025 ONSC 4173, the Ontario Superior Court fixed each defendant’s costs at $10,000, including disbursements. The court said the circumstances – including Jordan’s and his counsel’s conduct – fell short of what would justify substantial indemnity costs.
The court found that this case:
- was uncomplicated
- had a short trial
- involved narrow issues
- did not require the calling of a defence
- featured offers to settle out of court from both sides
The court deemed the requested costs disproportional to the claim and the reasonable time needed for preparation and trial. The court saw no necessity for four counsel to appear with attendant trial expenses.
The court noted that the property was rarely used and would not have fallen under replacement value insurance coverage.
The court accepted that pursuing a multimillion-dollar claim was imprudent and counterproductive when settlement attempts failed. However, the court said this filing did not affect the trial’s length or the issues’ complexity.
