By: Dylan J. Cox, Litigation Associate

The Ontario Insurance Act (“the Act”) requires that every property insurance contract in the province give the parties a right to require that disagreements about the amount of an insured loss be resolved via an appraisal process.[1] Other provinces’ insurance statutes contain similar provisions.[2] However, the principles applicable to appraisals are often not well understood. Northbridge General Insurance Corp. v. Ashcroft Homes-Capital Hall Inc.[3] seems to be the latest example of this. In that case, an Ontario judge terminated an appraisal, and in the course of doing so, reviewed the principles applicable to appraisals.

The Facts

Ashcroft Homes involved a condominium tower built by Ashcroft that caught fire during construction. Northbridge, the insurer for the tower, exercised its right to an appraisal after the parties’ positions on the extent of the covered loss diverged dramatically.

Northbridge and Ashcroft each appointed appraisers, who in turn agreed on an umpire. Northbridge’s appraiser was an employee of the company, and Ashcroft’s appraiser was its public adjuster.

A year and a half into the process, Ashcroft got impatient with a perceived lack of progress and sought to replace its appraiser with legal counsel. Given the significant values in dispute and the complexity of valuation reports that had been exchanged, Ashcroft’s counsel also sought to have the umpire adopt formal procedures akin to an arbitration for the hearing and testing of evidence.

Northbridge opposed those requests. It argued that it would be inappropriate for the parties to have legal counsel involved because the appraisers and the umpire were supposed to collaborate and decide collectively as something akin to an “Appraisal Tribunal”.

Unfortunately, when these procedural matters were brought before the umpire, he declined to decide them. Instead, he held that they involved legal issues beyond his narrow jurisdiction to quantify values in dispute. The issues then came before the court in the form of an application by Northbridge to regularize the appraisal proceeding, and a counter-application by Ashcroft to terminate it.

Principles Governing Appraisals

The court agreed to terminate the appraisal, but found that all parties were to blame for what it called a “procedural shipwreck.” Ashcroft, Northbridge and the umpire each failed to appreciate key principles applicable to appraisals:

  • An appraisal is not an arbitration. It is a collaborative process, not an adjudicative one. It is meant to result in an expeditious and binding determination of narrow issues, namely the pre and post-loss value of property insured and the amount of the insured loss.
  • The umpire has wide discretion to use common sense to control the process. In some cases, such as where the underlying loss is substantial, structuring the appraisal like an arbitration may be appropriate. In other cases, a less formal process may be warranted (e.g., replacing witness testimony with an informal discussion).
  • The umpire’s discretion to control the process is not unlimited. The process must be fair to the parties, in light of the circumstances at hand (e.g., the amounts in dispute).
  • The umpire’s role is to be an impartial decision maker. By contrast, the role of the appraisers is to be partisan advocates for the party that appointed them. It is therefore perfectly acceptable for legal counsel to act as an appraiser. Since appraisers are not disinterested, they do not form any sort of “tribunal” with the umpire.


Ashcroft Homes is necessary reading for any insured thinking about invoking an appraisal. The right to an appraisal is a powerful tool that should be exercised with care. If the insurer elects an appraisal, the insured will typically have no choice but to participate. However, if the insurer has not done so and the insured is worried about the quantum of its claim being determined via a process less formal than a trial, it should not elect an appraisal. The umpire may impose a less formal process, and a court will typically defer to the umpire’s decision. The umpire’s quantification of the loss will also be final, except for in rare cases where the procedure followed was unfair to one of the parties.

Moreover, there are many coverage issues an appraisal cannot determine, such as whether an insured has complied with a pre-condition to coverage or whether the policy excludes coverage. Those issues must be decided by a court. If an appraisal is invoked, the court action may be put on hold until the appraisal is complete. Thus, if there are disputes on issues that fall outside of the appraisal, an insured should carefully consider if an appraisal would serve its interests.


[1] See sections 128 and 148(2) of the Ontario Insurance Act, RSO 1990, c I.8.
[2] For example, see section 29 of the BC Insurance Act, RSBC 2012, c 1.
[3] 2021 ONSC 1684.

Dylan J. Cox is an associate at Theall Group LLP and maintains a broad commercial litigation practice. Prior to joining Theall Group LLP, Dylan articled at a prominent litigation boutique in downtown Toronto where he worked on commercial litigation, appellate, class actions and insurance law files. Dylan graduated from the University of Toronto law school and was called to the Ontario bar in 2016.

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