“Reprehensible conduct” not required for special costs.

On January 19, 2017, the BC Supreme Court ordered a long-term disability insurer to pay indemnificatory costs of a trial, after finding that it wrongly denied Noha Tanious her disability benefits.

Ms. Tanious, who suffered from multiple sclerosis, obtained an order requiring the insurance company to pay her long-term disability benefits under a disability policy.  At trial, the Court accepted that Ms. Tanious suffered a disability and had been unable to work since 2011.  Ms. Tanious then brought an application seeking solicitor-client costs for the action.

In allowing the costs award, the Court chose to exercise its discretion and allowed Ms. Tanious full indemnification of her legal fees.  The Court noted that disability insurance claims have unique characteristics that distinguish them from other personal harm cases.  The legal costs Ms. Tanious incurred in obtaining her contractual benefits under the policy substantially deprived her of the full benefit of the disability insurance contract.

The Court also concluded that the coverage issue in the case at bar was not fundamentally different in principle than the coverage issues in third party proceeding cases where courts have awarded special or solicitor and client costs in addition to the insurance benefits payable under the terms of the policy.

The costs decision can be found at: Tanious v. Empire Life Insurance Co., 2017 BCSC 85.