Litigation Insurance Does Not Prevent an Order for Security for Costs

The fact that a plaintiff obtains litigation insurance does not prevent a court from making an order for security for costs.

In Shah v. Loblaw Companies Ltd., 2015 ONSC 5987 (S.C.J.), the plaintiff claimed he slipped and fell on a mat at a grocery store in 2012.  At the time of the incident he was a permanent resident of Canada, but his permanent resident card expired in 2013.  He returned to India and did not returned to Canada.  The defendants brought a motion for security for costs.  In response, the plaintiff secured a Legal Protection Certificate and Indemnity Agreement.  He opposed the motion for security and argued that the insurance plan was sufficient security for the defendants.

The Court rejected the plaintiff's argument.  The policy contained a number of exclusions where the insurance proceeds would not be paid, such as where the plaintiff does not accept his counsel's recommendation to accept an offer to settle, decides to represent himself, fails to attend a defence medical examination, provides materially misleading information and so on.  The defendants had no control over the circumstances and if the policy were cancelled, the defendants would have no security in the event of an adverse costs award against the plaintiff. 

Justice Lemon comments that other judges have considered the existence of insurance as a factor in determining whether security for costs should be awarded, but that the circumstances of the case and terms of the policy should be considered.  It would seem important to obtain production of such a policy in the event that the plaintiff raises such an issue in response to a motion for security for costs.