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By: Faiza Tariq, Associate |
Introduction
In a recent decision[1], the Ontario Court of Appeal (“ONCA”) had to determine whether the trial judge erred in finding that an insurer underpaid its insured for damaged personal property. The ONCA dismissed the insurer’s appeal, refusing to interfere with the trial judge’s assessment of the value of the insured’s claim or with his conclusion that the insurer had waived performance with a clause in the policy requiring the insured to provide a sworn “proof of loss” form.
The Trial
On February 26, 2011, the contents of a home owned by the insured were damaged in a fire. The insurer paid considerably less for personal property than what the insured claimed to have lost. The trial judge ordered the insurer to compensate the insured for a loss of personal property close to the amount claimed by the insured.
The Appeal
On appeal, the insurer argued that the trial judge should not have allowed the claim at all, because the insured failed to complete a sworn “proof of loss” form required by the policy. However, the ONCA found that on the evidence before the trial judge, it was open to him to find that the insurer had waived its right to strict compliance with this policy requirement.
Next, the insurer argued that the trial judge erred in declining to order an appraisal under section 128 of the Ontario Insurance Act. The insurer contended that the statutory appraisal process was mandatory but could not be undertaken due to the absence of a sworn proof of loss. The ONCA disagreed, noting that although section 128 signals a preference for appraisal, that section also gives the court discretion to decide whether an appraisal should be ordered. In this case, the trial judge did not err in deciding he had sufficient evidence to assess the value of the insured’s claim, and that it would be more expeditious to do so instead of ordering an appraisal. The ONCA also noted that an appraisal would not decide all the issues between the parties.
Lastly, the insurer disagreed with the amount awarded to the insured. However, the ONCA held that the trial judge was entitled to prefer the insured’s expert evidence with respect to the value of the property claimed, over that of the insurer.
Conclusion
This is a well-reasoned decision, which should provide useful guidance for insurers and insureds on several issues, including the common requirement in policies for the insured to file a sworn “proof of loss”. As the trial judge noted, the purpose of a “proof of loss” is to provide detail regarding items claimed and their value. In this case, the insured provided a signed but unsworn list of contents claimed, and a more expansive “Schedule of Loss”. The insurer had the opportunity to question the insured about these documents. Overall, the insurer had a chance to assess the insured’s claim. The consumer protection objectives of the Insurance Act would not be furthered by dismissing a claim where the insured had provided a signed (but unsworn) document in support of its claim.
However, this decision should not be seen as giving blanket permission for insureds to not comply with minimum policy requirements. If the insurer had not paid out a portion of the claim without a sworn proof of loss, and if the insured had not provided signed documents in support of his claim, the insured may have been held to strict compliance with the policy’s terms. Therefore, it is advisable for insureds to seek legal counsel to ensure they have fulfilled their obligations in a claim, including any applicable policy terms.
Footnotes
[1] Stewart v Bay of Quinte Mutual Insurance Co., 2024 ONCA 730.
Faiza Tariq is an associate at Theall Group LLP and is developing a broad commercial litigation practice. Prior to joining Theall Group LLP, Faiza articled at a prominent litigation boutique in downtown Toronto. During her articles, Faiza worked on a class action, cross-border IP litigation, employment law disputes, real estate litigation and commercial disputes, including assisting with a complex trial on the Commercial List. She also wrote an article entitled ‘Municipalities Do Not Owe a Duty of Care to Developers to Protect Their Economic Interest During Rezoning Application Process’ which was published in the Ontario Bar Association’s Real Property Law section.
Photo courtesy of Cullan Smith at Unsplash