C.A. Penalizes Insurer For Refusing to Mediate

In Williston v. Hamilton (Police Service), 2013 ONCA 296, the Court of Appeal considered whether to make an “augmented award of costs” on the basis that the defendant, the City of Hamilton, had refused requests to engage in mediation pursuant to s. 258.6 of the Insurance Act. The trial judge, Mr. Justice James A. Ramsay, had denied the plaintiff’s request. However, the Court of Appeal saw things differently: it increased the partial indemnity costs award made at trial from $60,000 to $80,000.

The underlying lawsuit arose out of a motor vehicle accident. The defendant had refused to participate in mediation. In-house counsel at the City of Hamilton had responded to the plaintiff’s overtures by saying that “it would pass the request for mediation onto its principals, but would not recommend mediating until further discovery, production, and a medical exam had been done.”

(The Court of Appeal noted that the City’s letter had not identified who the “principals”were and “did not suggest that the legal services division of the City was not in a position to accept the request for mediation on behalf of the insurer.”)

Section 258.6(1) of the Insurance Act requires insurers to participate in mediation in motor vehicle cases, if requested to do so:

A person making a claim for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile and an insurer that is defending an action in respect of the claim on behalf of an insured or that receives a notice under clause 258.3(1)(b) in respect of the claim shall, on the request of either of them, participate in a mediation of the claim in accordance with the procedures prescribed by the regulations.

The main basis of Justice Ramsay’s refusal to penalize the City of Hamilton was his finding that it was not an insurer. However, this had apparently not been argued before him by the City. In the Court of Appeal, the plaintiff was allowed to adduce additional evidence which showed that the City was, in fact, insured. The Court found that the legal services division of the City of Hamilton was authorized to respond on behalf of the City’s insurer. Accordingly, the Court of Appeal was satisfied that there had been a refusal by the insurer to comply with its obligations under s. 258.6(1) and that an augmented costs award was warranted.

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