An Ontario Superior Court judge has ordered an insurance group to pay a majority of the legal expenses Ed Houghton incurred while participating in the Collingwood Judicial Inquiry.
In a ruling issued last month, Justice Mohan Sharma ordered the Municipal Electric Association Reciprocal Insurance Exchange (MEARIE) to pay $690,000 total to Epcor and Ed Houghton to settle the lawsuit filed to recover the legal costs.
Houghton was the CEO of Collus Powerstream from 2000 to 2016, which was the electrical utility for Collingwood, insured by MEARIE. Collus Powerstream was sold to Epcor at about the same time the Collingwood Judicial Inquiry was called to look into the 2012 sale of 50 per cent of Collus to Powerstream (to create Collus Powerstream) and the subsequent spending of the proceeds of the sale.
Houghton was granted participant status in the inquiry and was interviewed as a witness for both the first and second phase of the inquiry hearings.
He was questioned about his work as the CEO of Collus Powersteam and also as the director of public works and chief administrative officer for the Town of Collingwood, both positions he held within the timeline investigated by the inquiry.
According to the lawsuit against MEARIE, Houghton incurred $591,115 in legal fees during his participation in the inquiry, which was called in February 2018 and ended in November of 2020.
In 2018, Houghton asked MEARIE to cover his costs to participate in the inquiry on the basis that he was insured as a director and officer of the utility company at the time.
MEARIE denied Houghton’s request at the time.
According to the court documents, MEARIE claimed Houghton’s request was not covered because the inquiry was not a criminal or quasi-criminal proceeding.
Houghton asked Epcor to cover his inquiry legal costs on the grounds he would be insured as a former director or officer of the corporation. Epcor purchased Collus Powerstream in 2018.
Epcor also denied Houghton’s request, but a subsequent lawsuit led an Ontario Superior Court Justice Markus Koehnen to rule in favour of Houghton. Epcor and Houghton settled with Epcor paying Houghton $475,000 to cover some of his inquiry costs and the cost of his application against Epcor to recover costs ($117,000).
As a result, Epcor and Houghton brought a lawsuit against MEARIE for their legal costs, arguing they should have paid Houghton’s bill in the first place.
Justice Sharma agreed, basing his decision on the documents outlining insurance coverage for Collus Powerstream and its directors and officers.
The ruling states the inquiry was an official proceeding under the Municipal Act, and while it was not solely against Houghton, it involved him and his work enough to warrant coverage.
The judge ordered MEARIE to pay $690,000 to Epcor, including a reimbursement of $475,000 for the money Epcor paid to Houghton and $215,000 to cover some of Epcor’s legal fees related to the lawsuit between Houghton and Epcor.
Justice Sharma stated he would not order a payment from MEARIE that would produce a windfall for either Epcor of Houghton; instead the ruling was for reimbursement of funds paid.
