An insurer who refuses to participate in a mediation requested by a plaintiff in respect of a motor vehicle accident claim continues to risk increased exposure to costs. The Ontario Court of Appeal recently repeated that augmented cost awards are warranted where the insurer declines to mediate despite its obligation to do so pursuant to section 258.6 (1) of the Insurance Act.
Williston considered an appeal by the plaintiff of the Trial Judge’s cost award in a motor vehicle accident claim. The plaintiff sought augmented cost awards on the basis that the defendant had refused repeated requests to engage in mediation pursuant to s.258.6 of the Insurance Act. The trial judge denied this request on the basis that the defendant was not an insurer.
The Court of Appeal allowed the appeal and increased the plaintiff’s cost award for success at trial. The court unanimously held that an augmented cost award was appropriate in the circumstances as the plaintiff had repeatedly requested mediation and the insurer of the Municipality never agreed to participate, despite its obligation to do so pursuant to s.258.6(1) of the Insurance Act.
The Court of Appeal rejected the submission that the requirement to mediate under the Insurance Act was not engaged because no counsel was appointed by the Municipality’s insurer to defend the claim, finding that there was an insurer that was involved and who had knowledge of the claim.
The plaintiff repeatedly requested mediation and the insurer never agreed to participate despite its obligation to do so. The court applied the decision of the Ontario Court of Appeal in Keam v Kaddey, 2010 ONCA 565, commenting that the award should reflect the censure of the Court and provide “appropriately significant recovery”. In this case, the cost award of $60,000.00 was increased by $20,000.00.
This decision serves an important reminder that an insurer responding to a motor vehicle claim must consider the potentially significant consequences of refusing to mediate a claim, perhaps even where it appears that mediation at that juncture will not be fruitful. The response to such requests for mediation need to be carefully managed so as to minimize the risk of cost sanctions seen here. To date, factors such as whether mediation would have been productive at the time it was requested by the plaintiff do not appear to have been considered in the analysis.