C.A. Says “No” to Risk Premiums in Costs

The Court of Appeal today released its decision in Ward v. The Manufacturers’ Life Insurance Company. We are familiar with this case because local lawyers Eric R. Williams and Jaye E. Hooper, who acted for the plaintiff Ward, won at trial before Ottawa judge Mr. Justice Denis J. Power. The case was a complex commercial matter, undertaken at great risk by Mr. Williams and Ms. Hooper, against a formidable team of lawyers acting for ManuLife. The trial was conducted with great skill by Mr. Williams and Ms. Hooper and produced an extremely favourable result for their client Ward (including a punitive damages award of $250,000). If ever a case warranted a “risk premium” in relation to costs, this was it.

But today, although the Court of Appeal upheld every other part of the decision of Power J., it reversed his award of a $50,000 risk premium. Justice Power had distinguished the decision of the Supreme Court of Canada in Walker v. Ritchie, holding that because of changes in the wording of Rule 57.01, such that courts may now award costs on a “full indemnity” basis, the Walker decision is no longer applicable.

Not so, said the Court of Appeal. Justices Weiler, Rosenberg and Rouleau held that “the concerns underlying the decision in Walker apply equally to the new language of Rule 57.01″.

However, we suspect that Mr. Ward and his solicitors are not too upset about having lost that part of the case, as they were able to sustain a large judgment against ManuLife. (The exact amount cannot be ascertained from the judgment, because it includes payment of various commissions in unspecified amounts. However, in addition to those commissions and the punitive damages award of $250,000 the Court of Appeal upheld awards of $150,000 for breach of fiduciary duty and $267,000 for one type of commission.) We have not summarized the remainder of the case here because, as the Court of Appeal observed, “this is a fact-driven appeal”. In a nutshell though, Ward had sold life insurance for ManuLife for 30 years. He was then fired. The trial revolved around whether ManuLife owed to Ward commissions on policies sold by him. Allegations of breach of fiduciary duty were made against ManuLife and upheld by Power J. As noted above, he also awarded punitive damages of $250,000 against ManuLife.

(It should be noted that the Court went out of its way to praise Justice Power, saying that his reasons concerning one issue “demonstrate a strong command of the trial record and contain a detailed analysis of the evidence”.)

This entry was posted in Commercial Litigation, Costs, Insurance News. Bookmark the permalink.