Full indemnity costs not payable to a plaintiff who succeeds with third party action against insurer

The court declined to award full indemnity costs to a judgment creditor who successfully pursued a coverage claim against insurers of a contractor who could not satisfy a judgment.

Insurance law — Commercial general liability insurance — Property damage — Coverage — Exclusions; Costs.

Tragger v. Intact Insurance Co., [2026] A.J. No. 175, Alberta Court of King’s Bench, February 18, 2026, M.J. Lema J.

A plaintiff obtained judgment against a contractor for faulty workmanship but was unable to collect any of the judgment. The plaintiff then successfully invoked s. 534 of the Insurance Act, RSA 2000, c. I-3, for coverage under some of the policies issued by the contractor’s insurers. The plaintiff then sought full indemnity costs against the insurers.

The plaintiff relied on duty to defend cases in support of its application for full indemnity. The court found that the circumstances were distinguishable and noted the plaintiff had not relied on any cases dealing with indemnity. In any event, even if it had been a duty to defend case, the court would have declined to award full indemnity costs on the basis of West Van Holdings v. Economical Mutual Insurance Co, 2019 BCCA 110, where the court of appeal held there was no principled basis to award full indemnity costs to a plaintiff seeking to enforce a duty to defend. As there was nothing worthy of censure in the insurers’ conduct, there was no basis to award the plaintiff solicitor-client or enhanced costs.

The plaintiff was awarded a lump-sum discretionary amount for their solicitor-client costs arising from the coverage action. The court found that the “thrown away” costs associated with attempts to enforce the judgment fell outside the scope of proceedings against the insurers.

This case was digested by Michael J. Robinson and edited by Steven W. Abramson of Harper Grey LLP.  If you would like to discuss this case further, please feel free to contact them directly at [email protected] or [email protected].