Fridays with Rogers Partners
At our weekly meeting, Sarah Sevier discussed the recent decision of the Ontario Court of Appeal, Stewart v. Bay of Quinte Mutual Insurance Co., 2024 ONCA 730.
FACTS
This case involved an appeal from Bay of Quinte Mutual Insurance Co. (“BQMI”) regarding a judgment awarded to the estate of Mr. Dennis Lynch (“Lynch”) after a fire severely damaged his home on February 26, 2011.
Pursuant to an insurance policy, BQMI paid Lynch $220,000 for the damage to his home, but only $60,000 for its contents, which was considerably less than the claimed value.
In response to these payments, Lynch successfully sued BQMI for an additional $51,000, which was the the difference between the value of his lost personal property determined at trial and the amount already paid out under the policy.
Notably, Lynch’s main claim for negligent underinsurance was dismissed.
ISSUES ON APPEAL
BQMI appealed advancing three issues:
- the trial judge erred by allowing the claim for loss contents to proceed despite Lynch’s failure to deliver a sworn proof of loss;
- the trial judge should have ordered an appraisal under s. 128 of the Insurance Act; and
- there was an error in assessing the actual cash value (“ACV”) of the lost property.
HOLDING
Appeal dismissed.
ANALYSIS
The trial judge did not err in allowing the claim to proceed despite the absence of a sworn proof of loss.
BQMI argued that Lynch’s failure to provide a sworn proof of loss warranted the denial of the claim. BQMI submitted that Lynch failed to comply with the policy provision stating th`at following a covered occurrence, “an insured is required to deliver as soon as practicable to the insurer a proof of loss verified by a statutory declaration, including a complete inventory of the destroyed and damaged property, detailing quantities, costs, actual cash value, and particulars of the amount of loss claimed.” Further, BQMI noted that this condition is statutorily mandated for all property insurance contracts in Ontario under s. 148 of the Insurance Act.
Despite the failure to comply, the Ontario Court of Appeal (“ONCA”) agreed with the trial judge that Lynch’s signed but unsworn list of contents provided to BQMI in 2011 coupled with a later detailed “Schedule of Loss” compiled by an expert appraiser constituted sufficient proof of loss, given that BQMI waived its right to strict compliance with the policy.
Pursuant to s. 131 of the Insurance Act an insurer’s conduct can waive strict compliance with contractual requirements and there was evidence that BQMI acted under the policy based on unsworn proof of loss documentation.
The ONCA agreed with the trial judge that the BQMI waived its right to perfect compliance as they had the opportunity to examine Lynch under oath in 2013 and review the “Schedule of Loss” but failed to do so. Further, despite BQMI presenting letters as evidence which indicated they had told Lynch that a signed and notarized proof of loss was necessary for payment, BQMI made a $50,000 payment without such proof of loss.
Importantly, the ONCA emphasized that the Insurance Act does not mandate a strict form for proof of loss. Instead, the method of presenting proof should be interpreted considering the Insurance Act’s overarching purpose of consumer protection.
The trial judge did not err in declining to order an appraisal under s. 128 of the Insurance Act.
BQMI submitted that using ACV in this case was a reversible error because appraisal should have been ordered pursuant to s. 128 of the Insurance Act. However, the ONCA found the language in the s. 128 to be permissive, stating that a judge “may appoint an appraiser or umpire, as the case may be, upon the application of the insured or of the insurer.” Accordingly, the trial judge had discretion to pursue ACV over the appraisal mechanism.
The ONCA also concurred with the trial judge’s reasoning that conducting an ACV assessment, rather than appointing an appraiser, was an efficient means for settling the indemnity claims given the comprehensive evidentiary record available. Accordingly, the ONCA found no reason to interfere with the trial judge’s decision.
The trial judge did not err in assessing the ACV of the lost personal property.
BQMI contended that there was no reliable evidence for the trial judge to determine the ACV of Lynch’s property losses. However, the ONCA affirmed that there is no single method for calculating ACV under insurance policies.
The ONCA upheld the trial judge’s acceptance of Lynch’s evidence regarding ACV over that of BQMI, finding no palpable or overriding error in the decision. The court acknowledged the trial judge’s discretion to prefer Lynch’s testimony from an expert adjuster, who estimated the ACV at approximately $134,053, finding it more reliable and credible than BQMI’s evidence. For context, BQMI’s evidence came from an auctioneer, who valued the property at about $20,000 but admitted to being unfamiliar with the legal definition of ACV.
KEY TAKEAWAYS
- Insurers should be careful in how they respond to loss documentation submitted by insureds.
- Courts have the discretion to appoint appraisers and will consider the unique circumstances of each case when deciding to appoint an appraiser or use a different evaluation method.
- There is no prescribed method for calculating ACV and choosing one form of evidence at trial does not constitute a palpable or overriding error on appeal.