Wawanesa Mutual Insurance Co. refused to pay a 10% administration fee levied by the Nova Scotia Department of Transportation and Infrastructure Renewal for overhead expenses related to remediation of third party damage to government owned property. This case stemmed from an October 24, 2008 motor vehicle accident in which a vehicle owned by Wawanesa’s insured veered off the road and collided with a wooden culvert belonging to the Province. The culvert was damaged and the Province spent $669.40 to repair it. Added to this cost was a 10% “administration/overhead fee” of $66.94 which Wawanesa refused to pay. Wawanesa argued that the calculation bore no rational connection to the damages claimed and that the percentage was arbitrarily derived.

At chambers, the judge found that the 10% administrative fee was a reasonable overhead charge and that such a modest percentage did not contain any element of profit.

On appeal, the Court of Appeal recognized that overhead expenses are recoverable as part of the cost of effecting repairs to one’s damaged property. While the Court acknowledged Wawanesa’s complaint that the Province failed to offer any evidence to explain or justify how they chose 10% as being a fair and appropriate administration fee, it found that extra administrative tasks were actually undertaken by the Province to process the claim as a result of the accident and that the cost of the extra work was quantifiable and bore a logical correlation to the initial cost of repairs. In view of the small amount of the claim, no further evidence was required to satisfy the trier of fact as to why the Province chose 10% as being a fair and appropriate percentage to charge.