TRAGGER v INTACT INSURANCE COMPANY

This decision concerned costs following a prior decision in which the Plaintiffs, David Alexander Tragger and Hypocrite Productions Inc. (“Tragger”), successfully established insurance coverage under Section 534 of the Insurance Act, RSA 2000, c I-3, against the Defendants, Intact Insurance Company and Royal & Sun Alliance Insurance Company of Canada (collectively, the “Insurers”).

Tragger sought solicitor-client costs on the basis that, as judgment creditors standing in the shoes of the insured, they were entitled to full indemnity. The Insurers argued that such principles were inapplicable and that no basis existed for enhanced costs.

Justice Lema distinguished the duty to defend from the duty to indemnify, noting that, despite Tragger’s reliance on duty to defend jurisprudence, the proceeding concerned indemnity. The Court highlighted that, absent misconduct, there is no principled basis to award full-indemnity costs in indemnity disputes. Lema J. further emphasized that insurance contracts do not imply an obligation to fund the costs of enforcing coverage and that costs are not a remedy for breach of contract.

Applying Rules 10.29 and 10.31, the Court found that the Insurers conducted the litigation reasonably and efficiently, including proceeding by Agreed Statement of Facts and a streamlined hearing, and that no misconduct justified enhanced costs. Lema J. declined to make a determination on post-judgment interest, noting that such claims were not properly before the Court. Justice Lema also rejected the Plaintiffs’ claim for “thrown-away” enforcement costs, holding that such costs fall outside the scope of the coverage proceeding and must be addressed in the underlying Action.

The Court awarded lump sum costs of $38,000, reflecting partial indemnity for the coverage proceeding.