"Appraisal"- A Legal Update- Canada
May 2023
This is the 22nd iteration of this reference / research paper that was first published in 1996.?
The contents of this paper have been published on LinkedIn for public access along with all the latest revisions. Additionally, it has been cataloged in the Great Library of the Law Society of Upper Canada, as well as in the libraries of the County of Carleton Law Association, the Middlesex Law Association, and the Hamilton Law Association.
"Insurance Acts" have been formulated and approved by our regional lawmakers with the aim of governing the insurance industry. These acts establish a structure for the functioning of the insurance sector in Canada. In Canada, every property policy includes obligatory "Statutory Conditions" that encompass clauses that affect the process of filing claim.
The Statutory Condition we are focusing on in this white paper is what is known as “Appraisal” or “Dispute Resolution” (DR).??The name appended to the process will vary depending on the province where the loss occurs.??
In this white paper we will refer to “Appraisal” many times and where we do this will also extend into “Dispute Resolution” (DR).??
While this paper is focused primarily on a process triggered by one statutory condition it should not be lost on anyone that several other statutory conditions also apply to a loss situation.??
An insurance policy is a legally binding agreement between two parties. The insured party pays a premium to secure coverage against potential losses. The policy document outlines specific terms, conditions, and exclusions that are integral to the claims process.
The goals of this article are to:
1.?????Explain how the Appraisal or Dispute Resolution process works.
2.?????Provide suggestions on how the process can work effectively.
3.?????Highlight key legal judgments that help frame and direct the appraisal process.
PROVINCIAL INSURANCE ACTS
The various Insurance Acts embrace common language on the goals of this process which can include determining:
1.?????The value of the property insured.
2.?????The value of the property saved.
3.?????The amount of the loss.
Beyond this, the wordings within each provincial Act define how the process is to work.??And for the most part it follows the historical language that has been in place for decades.??Each Act should be reviewed for its own idiosyncrasies.??Some differences you might find across Canada includes:
1.?????In British Colombia and Alberta, they renamed the “Appraisal” Statutory Condition to-- “Dispute Resolution”. Appraisers for each side are re-named to- “Dispute Resolution Representatives”.??
These representatives?cannot?be the named insured nor an employee of the insurer.??(King v. Aviva et al, BCSC, Skolrood, J., June 10, 2022).
2.?????B.C. has also a built-in requirement that when a disagreement arises on the amount of the loss the insurer is required, within 21 days, to provide notice to the insured of their option to use the dispute resolution process.
3.?????Manitoba, Newfoundland, P.E.I. and Nova Scotia have all made changes in recent years to their Acts where they now require the appraisers and the umpire to be “impartial”.??Their wording also requires them to be “disinterested parties”.??Several of the provinces have also legislated the umpire must be “competent”.??
4.?????Manitoba also has included at S. 123(3) of their Act a provision that opens the door for any party not happy with the outcome of an appraisal to seek a re-hearing.??(We are not aware of any situations where this has happened, but it seems to be an option available).
5.?????Statutes in Saskatchewan, Alberta and Manitoba specifically exclude hail insurance contracts from this process.
6.?????In Alberta, if the appraisers cannot agree on the choice of an umpire each appraiser must submit three choices to the Superintendent for Insurance.??The regulator will select the umpire.
It is interesting to observe that while many provinces in Canada have made changes in recent years to this process the last time Ontario visited the wording was in 1966.??Prior to that date the appraisers appointed had to be?“[c]ompetent and disinterested”?but for unexplained reasons they?removed?these qualifiers from the Act in 1966.??Anecdotally, we have been told that by making these changes it would allow the insured to self-represent in a dispute.??This would achieve the legislative goals to achieve a timely, cost-effective solution.
THE SELECTION PROCESS
1.????The Appraisers??
In Ontario, there are?no?restrictions on who can be picked by either side to act as their appraiser.??Anyone can be appointed as an appraiser including self-representation by the insured.??It is, however, more common to see a public adjuster or a lawyer act as the chosen appraiser for the insured party.??(Campbell et al V. Desjardins Insurance Co. et al, Ont. Court of Appeal, Feb. 15, 2022).
More recently, despite no requirement to do so, some insurers in Ontario are appointing appraisers who are new to the file but who also has experienced in acting in this dispute resolution process.??
As you move away from Ontario, other jurisdictions have different rules in place on who can and cannot be picked as an appraiser.??(King v. Aviva et al, BCSC, Skolrood, J., June 10, 2022).
What should you consider when choosing an appraiser to represent your interests?...?
§??An early step would be to confirm the professional status of the appraiser.??If h/she a licensed adjuster (public or independent)???If they are not licensed by the government to act as an “adjuster” it is an area for caution.?(Insurance Council of Manitoba- K.W. Munroe- May 2, 2022).
§??Is the appraiser experienced in the appraisal process???How many times have they been in this role???Do they have any references with respect to their experience level.??A complete curriculum vitae / resume should be obtained.
§??Has the appraiser acted for just insureds or also for insurers?
§??Has the appraiser acted previously as an umpire??
§??Has the appraiser taken or provided instruction on topics of mediation / arbitration or appraisal?
§??Has the appraiser ever been disqualified in the past to be part of this process???
§??Have they had any appraisals / DR processes subject to appeal? Results? Decision?
§??Does the appraiser have the knowledge, skill, and experience to deal with the key issues in dispute.??Has the appraiser attained any credentials on any specific technical areas???
§??Each appraiser is attempting in this process to persuade the umpire to agree with their position on issues.??Does your appraiser have strong, professional advocacy / debating skills???There should be a marriage of good communication skills with the technical expertise of the appraiser.??
§??What are the qualifications and competencies of the other appraiser.??Are you matching up strength against strength?
§??Does your appraiser have strong knowledge, skill, and experience with the ….
*???????Appraisal process- or engaging in a tribunals, hearings, mediations, or arbitrations?
*???????Insurance policy contract and interpretation of coverage?
*???????Statutory Conditions.??
*???????Proof of loss form.?
*???????Replacement Cost Endorsement (RCE).
*???????Guaranteed Rebuilding Cost Endorsement (GRE).
*???????Actual Cash Value (ACV).
*???????Co-insurance clauses.
*???????Building construction scoping and pricing.
*???????Contents remediation and replacement cost.??Depreciation rates- ACV?
*???????Equipment and machinery repairs / replacement.?
*???????Business interruption policies.
*???????H.S.T.?
*???????Current case law.
2.????The Umpire
Once the appraisers are selected, they can quickly assess if there are any opportunities to resolve the disputed issues related to the loss amount. If the appraisers reach an agreement on some of the contentious matters, it can facilitate the appraisal process.??Introducing new appraisers may help achieve this outcome more easily.??However, in most cases, the divergent opinions are already apparent by the time the appraisers are appointed.??It is at the discretion of the appraisers to decide whether to convene a meeting to discuss and address the discrepancies.?(Senator v. Intact, Ont. Superior Court, Divisional Court, Jan. 11, 2021).
The statutes require a short time frame for both appraisers to agree on appointing an umpire (15-days).??By joint consent that can be extended. The starting point for selecting an umpire usually starts with each appraiser proposing several names.??In many cases the appraisers reach a consensus on a choice.??The process should be collaborative and not limited to pushing forward one choice. (Wawanesa Mutual V. S. Falahatparvar, 2023 ONSC 1355, Ont. Superior Court, Speyer J., Feb 4, 2023).
If the appraisers cannot agree on a choice, the selection process in most Provinces requires that a motion court judge to decide on the appointment.??At that time, written and oral arguments are made advocating for each side’s preferred selection as an umpire.??
1.????Trudeau V. Royal Insurance Company, Ontario Court- General Division, P. Hurley, March 3,1999.??
????????????“The applicants concern is to avoid an umpire who apparent affiliation or relationships to the other side would raise an apprehension of bias.??Yet, it proposes two candidates who it would appear from reading between the lines of the correspondence, could not be said to have acted for one of the parties.??The failure to agree on what, by experience, appear to be capable candidates because of the fear or reasonable apprehension of bias leaves the court with the option of appointing Mr. Gibson, whom, according to the evidence as being both an umpire on many occasions involving appraisal issues.??Mr. Gibson will be named umpire…costs to the respondent’s payable forthwith…”.
9.?????(Giammaria v. Economical Mutual, Ont. Superior Court, S. Vella, Feb. 5, 2021)
10.??Aviva V. Cunningham, Ont. Superior Court, C. Braid, Oct 22, 2021.
11.??Vincent V. Economical Mutual, Ont. Superior Court, T. Carey, Oct. 27, 2021.
12.??4811837 Manitoba Ltd. et al V. Wynward et al, Ont. Superior Court. W.D. Newton, August 3, 2022.??(Costs of $4,000 awarded against the insured).??The insured refused to agree to appoint an umpire as they believed an errors and admissions action against the broker should be incorporated into either this process or tried alone with no appraisal.??Judge found ‘appraisal’ was mandatory and gave the insured 10 days to choose one of the two appraisers nominated by the insurer.
Choosing the right umpire to orchestrate a resolution is critical.??Consideration should be given to…
§???This process flows from the contract of insurance.??Therefore, it is not unusual to choose an umpire who has previous work experience in the insurance litigation arena- whether it’s as a loss adjuster or in the legal profession.??Having said that, it is appropriate in the selection process to explore an umpire’s working life background to determine if there could be a reasonable apprehension of bias or partiality.??
The common dictionary definition of “bias” includes “….?[p]rejudice in favor of a person, thing or group compared with another usually in a way to be unfair; or showing an inclination or prejudice for or against someone or something.”??
When considering “partiality” the dictionary defines this as “….?[u]nfair bias in favor or one thing or person compared with another; favoritism; a particular liking of fondness for something.”
In considering these factors in selecting an umpire you may wish to inquire whether an umpire has ever had a decision overturned because of bias or partiality.??
§???The umpire must be impartial and independent.??
The dictionary definition of “impartial” suggests someone who?“[t]reats all rivals, or disputants equally; fair and just”.??The definition for “independent” includes someone who is “[f]ree from outside control; not depending on another’s authority; not depending on another for livelihood or subsistence…”.??
(Campbell et al V. Desjardins Insurance Co., Ont. Superior Court, Smith M., Oct 30, 2020.)????and????Giammaria V. Economical Mutual, Ont. Superior Court, Vella S., Feb. 5, 2021).
§???The umpire is in control of the process.??Senator Real Estate??V.??Intact, 2021 ONCA, OSC (Divisional), Jan. 11, 2021;?J. Truscott et al??V.??CoOperators Insurance, 2022 ONSC, OSC, Goodman A., Feb 4, 2022; (Arvanitopoulos V. Wawanesa Insce. Co, Ont. Superior Court, Perell P. April 29, 2022); (Aviva Insurance Co. V. Cunningham et al, Valente M., November 8, 2022);?(J. Truscott et al V. CoOperators General Insce. Co., Ontario Court of Appeal, April 19, 2023).????
§???What is the umpire’s experience in leading an appraisal process???How many appraisals has an umpire candidate led??
§???Does the umpire have the right knowledge, skill, and experience with respect to the issues in dispute???
§???Guidance on the proper conduct of the Appraisal process is available from our courts, and staying updated with their decisions is crucial. The umpire in charge of the Appraisal must be aware of the scope and limitations of this process and refrain from making decisions that fall within the purview of a fact-finding court trial. Instead, the umpire should leverage their expertise and knowledge to resolve the disputed issues. The umpire plays a crucial role in the majority decision-making process as the deciding vote.
§???The umpire must be very clear about their role.??The umpire is not conducting an arbitration nor are they hearing evidence in the fashion of a courtroom setting.??An appraisal is a process to determine values.??(Madhani v. Wawanesa Mutual Insurance Company, 2018 ONSC 4248, Divisional Court, July 10, 2018,?and –?(Matti v. Wawanesa Mutual Insurance Company, 2009 ABQB 451, W.P. Sullivan)- and- (Arvanitopoulos V. Wawanessa Insce. Co, Ont. Superior Court, Perell P. April 29, 2022)- and- (Aviva Insurance Co. V. Cunningham et al, Valente M., November 8, 2022).??
§??It is important for the umpire to be aware of any new insurance contract language that might impact interpreting a situation.??An example would be changes in the past 5-years in some policy definitions. (Replacement Cost Endorsements / Flood Endorsement / Actual Cash Value etc.).??
§??Does the umpire have any legal experience???This will help ensure that the process is alive to staying in their lane and not making decisions that are for a court to decide. (B. Kenney V. Johnson Inc. and Unifund, June 24, 2020, NSSC, S.C. Norton.)
§???During the appraisal, the umpire governs the civility of the process.???Everyone involved in this process should be treating each other with dignity and respect.??Both sides should come away from the process feeling they had appropriate opportunity to advocate their position.??The process must be conducted in a manner which demonstrates both judicial and procedural fairness.??(Campbell et al V. Desjardins Insurance Co., Smith M., Oct 30, 2020).??(Arvanitopoulos V. Wawanesa Insce. Co, Ont. Superior Court, Perell P. April 29, 2022).
§??Like a trial judge, the umpire usually listens to both sides during the Appraisal process. However, the umpire may choose to adopt either a passive or active approach when asking questions, depending on the case. The umpire may need to expand their line of questioning to form an opinion, utilizing their own expertise and knowledge. This decision is made on a case-by-case basis.
§??It is significant to emphasize that the umpire does?not?reach independent conclusions on the issues. There must be two out of the three people in this process in agreement for any number(s) to be binding.??(Desjardins General Insurance V.??Campbell, 2022 ONCA, OSC (Divisional), Feb. 15, 2022.) -and-?(Aviva Insurance Co. V. Cunningham et al, Valente M., November 8, 2022).??
The goal for any appraiser in this process is to persuade an umpire that their point of view on a damage issue(s) is a preferable choice. (Desjardins General Insurance V.??Campbell, 2022 ONCA, Ontario Divisional Court, Feb. 15, 2022.).??Good facts should lead to good decisions.??But no one should under-estimate how important it is for the appraisers to professionally advocate their point of view.?
3.??Appraisal Costs
Once the Appraisal or DR mechanism is triggered, the policyholder and insurer are required to pay 100% of their own appraiser’s costs.??In addition, each side is required to pay 50% of the umpire’s costs. This could include travelling / accommodation and the expense of renting a location to conduct the appraisal.
In the USA, on more complicated losses, it is not unusual for the umpire to engage their own expert to help guide an informed decision.??One side or another may dispute this being necessary but if the umpire feels that bringing in an expert will assist in arriving at a fair and impartial valuation there is nothing to stop the umpire from doing this.??And the costs of this would be added to the umpire’s fee and it would be split equally between both appraisers.??(To our knowledge, this has not happened in Canada but it’s not to say that it could not happen if it was helpful to the decision-making process.)
It is not unusual for an umpire to request an ‘Agreement’ up front where both appraisers sign and agree to the payment of fees.??There may also be a request for a retainer sum to be paid up front.??Or there could be an Agreement signed requiring the insurer to pay umpire fees out of any potential funds which may be released to the insured.??If an umpire’s account for services is not paid the remedy the collection would be to put it into the hands of a motion court judge where not only would payment be ordered but there would likely be “costs” charged to the party failing to comply with the statutory conditions.
HOW DOES ‘APPRAISAL’ WORK???
A proof of loss form must be filed?before?the process can be initiated.??This submission should comply with the provisions laid out in Statutory Condition #6 (Requirements of the Insured Following a Loss).??If the insured refuses to file a proof of loss, a Court can order one to be completed so that the appraisal process can be initiated.??(Vincent V. Economical Mutual, Ont. Superior Court, T. Carey, Oct. 27, 2021).
A letter (notice) by either the policyholder or the insurer is all that is required to start the Appraisal process.??In this letter, the party making the demand would formally identify who will be acting as their appraiser in this process.??The other party then has?7 clear working days?to appoint their chosen appraiser.
With both appraisers picked, they have?15-days?to agree on their choice of an umpire.??This time can be extended by the consent of both appraisers.??The appointment of the umpire doesn’t mean that both appraisers cannot continue to work with each other on negotiating solutions to the issues in dispute.??Settlement meetings between both appraisers can be conducted on a “Without Prejudice” basis.
If matters are not resolved quickly, the umpire will bring both appraisers together and the umpire will set out the process and establish timelines to be followed on disclosure of information and key dates.??There is nothing in the Acts which defines a specific process.??
Typically, an appraisal begins with a conference call involving the umpire. During this call, the issues at hand will be discussed, and the next steps will be determined by both sides. This may include an early release of some documentation to the umpire, allowing them to familiarize themselves with the relevant issues. Additionally, time may be allotted for the appraisers to meet and attempt to resolve any issues in dispute. However, whether this meeting is productive is ultimately up to the appraisers themselves.?
In short order, the umpire will set a deadline date for the submission of a ‘brief’ of documents that each party will rely upon at the appraisal.??Nothing further should be submitted past this deadline.??The brief can include:
§???A narrative setting out the matters in disagreement and the appraiser’s arguments to support their viewpoint.
§???Insurance policy details.??Underwriting file if applicable.
§???Statements of fact.??Or ‘Will Say’ statements.
§???Photographs / videotape / 3D.
§???Repair estimates.
§???Analytical charts comparing pricing and differences of opinion on the scope of damage.
§???Expert reports or opinions to support a point of view.??Engineers, surveyors, accountants etc.??Curriculum vitae on experts should form part of any submission.
§???Financials statements- if needed.
§???Proofs of loss / payment list.
§???Key correspondence / emails, if applicable. This should be limited to key points that go to determining the “amount of loss”.???
§???Relevant case law, articles, or other material that might support an opinion.
The significance of the brief of documents should not be overlooked as it serves as the umpire's initial introduction to the case. To prevent unnecessary expenses, it is advisable for the appraisers to agree beforehand on submitting shared documents and avoid any redundancies. It is crucial to provide clarity to aid the umpire in comprehending each side's?perspective.
Neither appraiser should gain any advantage when submitting the document brief.??A simultaneous exchange should be orchestrated by the umpire, so all parties are getting the information at the same time.??This can be done in a paper format or electronically.??There may be reasons to step outside this process and that’s in the hands of the umpire.
Most umpires require that the appraisers do?not?communicate one-on-one with the umpire.??Both appraisers and the umpire should be dealing with the same information flow.??There is, however, no hard rule on this and there may be occasions when the umpire feels it is appropriate to speak to one side or the other in the same fashion you might see in an arbitration or mediation.??This is, however, an area for caution.??Any actions like this must stand a test of procedural fairness.??(New Dawn Enterprise V. Northbridge et al, Supreme Court of Nova Scotia, J. Arnold, Jan. 17, 2020)????and (Birmingham Business Centre v. Intact, Ont. Superior Court- Divisional Court (Appeal), Oct. 15, 2018).??
The umpire is fully in charge of the entire process. (Aviva Insurance Co. V. Cunningham et al, Valente M., Ont. Superior Court, November 8, 2022.) … and …?(J. Truscott et al V. CoOperators General Insce. Co., Ont. Court of Appeal, April 19, 2023).????
The appraisal process can be very dynamic.??For the umpire to be the majority decision-maker the process may include:
§???Attending and completing a building site inspection. This visit might include the policyholder and/or experts from either side.??A visual examination might be very important to truly understanding the issues in dispute.??Statutory Condition #10 might be at play if a site inspection is refused, or a motion could be brought forward under Rule 32 of the?Rules of Civil Procedure (Ont).???(Arvanitopoulos et al V. Wawanesa Mutual Insurance Company, Ont. Superior Court, B. McAfee, Nov. 4, 2021).??and (Arvanitopoulos V. Wawanesa Insce. Co, Ont. Superior Court, Perell P. April 29, 2022)?and (Aviva Insurance Co. V. Cunningham et al, Ont. Superior Court, Valente M., November 8, 2022.)
§???The umpire does NOT issue ‘Orders’ in their role.??The umpire cannot force either side to obtain new information or produce information from their files.??They are left with the information in the briefs, interviews of witnesses in the meeting of the appraisal panel and arguments from both appraisers to influence their opinion.??
On occasion, there are arguments raised about the lack of disclosure of evidence.??This could relate to arguments that the insured has not complied with what’s required under Statutory Condition #6.??Or perhaps the appraiser for the insured is arguing the adverse appraiser is not disclosing something in the insurer file.??If an appraiser is seeking more complete disclosure their remedy is to go to a motion court judge for a decision.??(Arvanitopoulos V. Wawanessa Insce. Co, Ont. Superior Court, Perell P. April 29, 2022).
§???There may also be a delay if the insurer is requesting an ‘Examination Under Oath’?(EUO) of the insured.??If the examination relates to information required by Statutory Condition #6 and the determination of the “amount of loss” it is unlikely an appraisal process is going to run in front of an EUO.??Any disagreements on this could end up in motion court for guidance and instruction.
In advance of the Appraisal, the appraisers should determine a witness list.??This can include fact or expert witnesses.??Included could be:?
§??Experts are not HIRED GUNS.??They must show independence and impartiality. Their opinions must be objective and unbiased.??If the witness / expert does not follow these principles the umpire will take this into account when assigning ‘weight’ to their presentations and material.
§??The role of each appraiser is to influence the umpire to lean towards their opinions.??As this process unfolds the umpire is alive to questions of-- Do they believe all? Some???Or nothing of what they are hearing???Therefore the briefs, and the advocacy of the appraisers is very important to the process.
The umpire plays a key role in creating an Agenda for the appraisal panel hearing and establishing the rules of engagement for the process. It's important for the umpire to determine which witnesses will be called and in what order they will present their evidence. The parties should not be surprised by the witnesses or documents relied upon during the appraisal. The umpire can set a deadline for witnesses and reports to be submitted, typically 7-10 days prior to the appraisal date, to ensure both sides have sufficient time to prepare.
In the appraisal process, the only individuals with decision-making authority are the two appraisers and the umpire. Witnesses may be allowed into the appraisal panel meeting on a case-by-case basis and may be asked to leave after providing their testimony. Alternatively, all witnesses may be present in the room, and the umpire can facilitate a dynamic exchange of information and questions. Regardless of the approach, it is important to maintain a structured and orderly process, and this is the responsibility of the umpire.
In assessing the role and actions of the umpire, consideration might be given to the often-quoted wording in?Regina V. Sussex Justice; Ex Parte McCarthy, 1924, 1 Kings Bench:
“It is of fundamental importance that justice should not only be done but should manifestly and undoubtedly be seen to be done.”
This concept is reinforced in?Kane V. Board of Governors for UBC, Supreme Court of Canada, 1980?where our top court analyzes the fairness of an administrative tribunal and sets out some guiding principles.
The decision of?Senator Real Estate Holdings Ltd. V. Intact Insurance Co., Ont. Superior Court of Justice, Divisional Court (appeal), Jan. 11, 2021,?deals with an attempt to overturn an appraisal decision.??This appeal court decision speaks to “procedural fairness” and the “duty of fairness” in conducting the appraisal process.??
At the start of a session the umpire will outline how the session will be conducted.??These opening remarks set the ground rules for everyone who may be in the room.??In the Covid 19 era (2020-2021) most appraisals moved to a ‘virtual’ environment.??That provided some challenges, but our courts have recognized that we all should be leveraging technology.??
In a virtual environment, the umpire might consider rules such as:
§??All witnesses should be counselled that there is an expectation that they will “tell the truth. The whole truth.??And nothing but the truth.”
§??Any witness on camera should be alone.??There should be no one else in the room with them who might be able to ‘coach’ the witness off-camera.
§??There is to be no audio or videotaping of any session.??This rule should extend to ALL dialogue with the appraisers and witnesses.?
§??Witnesses and appraisers should not talk over each other.??If someone has a question to ask of someone who is speaking, they can raise their hand on camera. The umpire will allow the question at the appropriate time.??Or there are technology solutions where you can pose a question in a chat room etc.??There must be order within the process.
§??The umpire would be hosting the call and it should be understood by any witness that if they cannot control themselves or listen to the umpire then he has the authority to ‘mute’ a microphone to regain control.
After the opening remarks, many umpires adopt a mediation approach to resolving issues. Both sides are given appropriate, uninterrupted time to present their arguments. The umpire then facilitates a discussion between both appraisers and/or their witnesses. This is an interest-based approach, like mediation procedures. As the discussion progresses, most umpires gradually shift to a "rights-based" approach, in which the umpire provides an opinion on an issue. The umpire's opinions may stimulate further discussion to see if some common ground can be developed between everyone or one of the two appraisers. This part of the process typically takes place after all evidence has been presented, with only the umpire and appraisers present in the room. It is not uncommon for disagreements to arise regarding the scope of the loss.
The role of the umpire is to provide an impartial and fair determination of the value of the loss or damages, based on the evidence presented by both appraisers. The umpire is not a trier of fact and cannot make determinations on issues outside the scope of the appraisal process. If an issue requires a determination of fact, such as whether certain goods were on the premises at the time of the loss, it may be more appropriate to have that issue resolved in a court of law.?(Gebara V. Economical Insurance Company, Ont. Superior Court, Feb 1, 2017, ONSC 801???and???Zgrablic V. State Farm, Ont. Divisional Court, March 27, 2019).??
Most Appraisal sessions are concluded in one-day.?
Most Appraisals cover many separate matters in disagreement.??The umpire might choose to try and settle the issues one-by-one.??As each item is debated, situations may occur where:?
§??Both appraisers and the umpire reach unanimous agreement.
§??The appraiser for the insurer and umpire agrees.
§??The appraiser for the insured and the umpire agree.
The Award Document is a legally binding document and the final numbers agreed upon by the appraisers and the umpire are binding on both parties. It is important for both parties to carefully review and understand the terms of the Award Document before signing it. Once signed, it is difficult to challenge or change the final settlement.
§???Each umpire brings with them their own ‘style’ of managing / directing the process.??Some umpires prefer to review the briefs in detail; listen to the evidence presented and then write out their opinion on the matter concluding with their views on what the amount of loss should be.??If one of the two appraisers agree with the umpire, then the matter is settled.??If neither appraiser agrees the dialogue would continue until a majority decision is reached. This process is seen frequently in Nova Scotia and Alberta but not in Ontario. (New Dawn Enterprise V. Northbridge et al, S.C.N.S., J. Arnold, Jan. 17, 2020)????and???(Campbell et al V. Desjardins Insurance Co., Ont. Superior Court, Smith M., Oct 30, 2020)???and???(Intact V. Parsons, Alberta Court of Appeal, April 1, 2021)????and??(Arvanitopoulos V. Wawanessa Insce. Co, Ont. Superior Court, Perell P. April 29, 2022).
The appraisers and umpire do wish to be judicious with their time.??If the quality of the briefs is strong with lots of documents this allows the process to get immediately down to the issues at hand.??Each appraisal takes on its own dynamics.??In mediations, it’s common for breaks to be built into the process to caucus with experts.??This also can form part of an appraisal session.???It can take on any form the umpire wishes to achieve the goal of reaching a “reasonable solution” to the issues at hand.
And what is “reasonable”???A dictionary definition of this includes:
??????????????….?having sound judgment; fair and sensible.??As in “no reasonable person could have objected”.??Sensible, rational, logical, fair-minded, just, equitable, intelligent, wise, level-headed, practical, realistic; sound, well-reasoned, valid, commonsensical, plausible, credible, believable.”
(Desjardins General Insurance V.??Campbell, 2022 ONCA, Ontario Divisional Court, Feb. 15, 2022.)?commented that:
“….[t]his reflects the premium put on collaboration and efficient process because, as discussed earlier, the process creates incentive for the parties to present?reasonablevaluations to the umpire to maximize the prospect that theirs will be chosen.”?(Emphasis by author)
The final numbers arrived at by the umpire and appraisers do not need to be justified to anyone, as the process they follow is informal and flexible. The final decision is reached when two out of three parties agree, and it is not the decision of one individual. While reasons are typically not provided in an appraisal, there is no rule against the umpire issuing reasons. The Award document should aim to provide clarity and can include details such as whether advance payments made by the insurer are included in the agreed amounts. The appraisers and umpire should work together to create a clear and concise Award document, which is typically one or two pages long. However, if all parties agree, written reasons can also be included as part of the findings. In Ontario, this is a rare occurrence.
Managing multiple issues and numbers during an appraisal can be challenging. To ensure accuracy, the umpire should establish a process to ensure that all parties agree on one version of the calculation before signing the award document. This may involve both appraisers reviewing and signing off on the math to ensure that there are no discrepancies.?
The appraisal process is confidential, and witnesses are not required to take an oath. No official transcript is taken by a court reporter. The parties involved should not expect any information shared or presented during the process to be disclosed in any future legal proceedings. In other words, the outcome of one appraisal cannot be used as a precedent for future cases.
LEGAL CASE REVIEW
We always look to our courts for guidance on how to conduct appraisal matters, and in the past five years, there have been several cases that have clarified or provided instruction on key points. It is important to remember that the insurance policy is a contract that binds both parties, and they have a duty to act in good faith. When the insured purchases the policy, they agree to use a mechanism to resolve disputes over the amount of loss quickly and efficiently without going to court. Despite some seemingly conflicting decisions, the courts have consistently upheld these guiding principles.
Frequently Asked Questions?
1.???????What is the intent of Appraisal???The intention is to provide a quick, cost-effective resolution to a claim dispute on the amount of a loss.?
a.?Barrett v. Elite Insurance Co., 1987 50 O.R. (2d) 186, Ont. Court of Appeal.?The umpire?“[t]here is a clear intention apparent in the legislation to reach an expeditious resolution of questions of value for insurance purposes.”
b.??Shinkaruk Enterprises Ltd. V. Commonwealth Insurance Co. et al, Saskatchewan
Court of Appeal, June 28, 1990.
c.??O’Brien et al V. Lloyds et al, Alberta Queen’s Bench, Dec. 23, 1991.
d.??What is appraisal? -?Black’s Law, Tenth Edition, Thomson Reuters, 2009.?
e.??Madhani v. Wawanesa Mutual, 2018 ONSC 4282, Ontario Superior Court, Divisional Court (appeal), July 10, 2018.
f.?Birmingham Business Centre v. Intact, Ont. Superior Court- Divisional Court (Judicial Review), Oct. 15, 2018).??
In this decision the judicial review stated in part:
-The award is intended to be a??“[f]inal and binding determination of the loss.”
-The Courts have afforded this process “substantial deference”. Unless there is proof of some sort of misconduct or the appraisers exceeded their jurisdiction the award is going to stand.
-The appraisal requires,?“[n]either a hearing, a consideration of evidence, nor reasons.”
g.??Campbell et al V. Desjardins Insurance Company, Ont. Superior Court, Smith M., Oct 30, 2020.
h.??Westland Insurance Co. V. Pounden, BC Court of Appeal, April 16, 2021.??
i.??Kutlarovski et al V. Aviva Insurance Co. and First on Site Restoration, CJ Conlan, Ont. Superior Court, Endorsement on a Motion, October 14, 2021.?An endorsement on costs was also ordered by the judge in the amount of $2,500.?(Jan. 18, 2022).??
J.??(Desjardins General Insurance V.??Campbell, 2022 ONCA, Ont. Divisional Court, Feb. 15, 2022.).??
k.??(King v. Aviva et al, BCSC, Skolrood, J., June 10, 2022).
2.??????Is a final release or a final proof of loss required after a decision is reached???No.??The appraisal process is triggered by a statutory condition.??It usually requires a determination on the “amount of loss”.??Once that is completed an Award Document should be all that is required to finalize the amount of loss.??There may, however, be ancillary issues that are not part of the appraisal process.??These could include coverage disputes, allowances for interest, uninsured losses etc.??Anything negotiated outside this process may require a final release to conclude all legal actions.??
a.??Westland Insurance Company V. Pounden, BC Court of Appeal, April 16, 2021.??The insurer had provided the insured with a final proof of loss form to be completed and submitted after a two-years of dealing with a claim.??The insured did not sign it.??The appeal court affirmed the motion court judge’s ruling that, “The intentional non-delivery of a proof of loss should not be permitted to frustrate the dispute resolution process.”
b.??Vincent V. Economical Mutual, Ont. Superior Court, Carey T., October 27, 2021.??A judge can order that a proof of loss be delivered by the insured within a short period of time.??
c.??Wawanesa Mutual V.??Cormier, New Brunswick Queen’s Bench, Dysart R., July 22, 2021.??A?“[c]ompleted proof of loss”?was filed by the insured to initiate the appraisal process.??After an award was arrived at the insurer wanted the insured to sign a further proof of loss reflecting the final award numbers. The insured refused.??The insurer refused to release funds.??The judge concluded there was no jurisprudence to require the insured to sign the proof of loss given they had submitted a completed proof to begin the process.
3.??????An Appraisal is not an arbitration.??There is no duty in this process to conduct a hearing.??It is an appraisement of value.??The function of the appraisers and/or umpire is not to hear evidence but to arrive at a decision that is based on using their own skill and experience. Legal issues or broader issues between the parties in the action are resolved in a court of law.
a.???Krofchick et al V. Provincial Insurance Co., Ontario High Court- Divisional Ct.- Southey, Steele & Craig, November 9, 1978.
b.???Shinkaruk Enterprises Ltd. V. Commonwealth Insurance Co. et al, Saskatchewan Court of Appeal, June 28, 1990.
c.???Matti V. Wawanesa Mutual Insurance Co., Queen’s Bench of Alberta, Justice W.P. Sullivan, May 14, 2009.
d.???Winnipeg Regional Health et al V. Temple Insurance Co., Queen’s Bench of Manitoba, McCaulay J., April 21, 2011.
e.???Madhani v. Wawanesa Mutual Insurance Company, 2018 ONSC 4282, Ont. Superior Court of Justice- Divisional Court- Judicial Review- July 8, 2018.
f.????Birmingham Business Centre v. Intact, Ont. Superior Court- Divisional Court (Judicial Review), Oct. 15, 2018.??
g.???Desjardins et al V. Campbell et al, Ont. Court of Appeal, Feb. 15, 2022.
h.???Aviva Insurance Co. V. Cunningham et al, Valente M., November 8, 2022.??
4.??????Can an appraisal session turn into arbitration??Yes.??But there must be clear consent?of both parties.??They must understand that in moving from one dispute mechanism to another the governance also changes.??The applicable Insurance Acts governs the appraisal session whereas the arbitration process is ruled by the Arbitration Act within the jurisdiction.?
a.?Andrews V. General Accident Assurance Co. of Canada, Alberta Queen’s Bench, Fruman J., Nov. 22, 1993.??
5.??????Can either side elect ‘Appraisal’ if there are policy coverage issues at play???Yes?and No.??Each case must be judged on its own merits.??If there are many issues at play a trial may be the preferred solution.??For the most part our courts will put the matter into appraisal to determine the amount of loss.??Can this extend to situations where the insurer claims the insurance policy is void???Yes.???Interpretation of coverage and policy term is for a ‘trier of fact’ and not the ‘Appraisal’ venue.??There should be no delays in the process to determine the amount of loss.?
a.???Viam Construction Ltd. V. Zurich Insurance Company, British Columbia Court of???Appeal, 1984, 6 C.C.L.I.)
b.???David V. Canadian Northern Shield, British Columbia Supreme Court, I.L.R. 1306, 1994.
c.???Bnei Akiva Schools V. Sovereign General Insurance Company, Ont. Superior Court, Justice M.D. Faieta, Jan. 14, 2016, ONSC 383.
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d.???Agro’s Foods Inc v. Economical Mutual Insurance Co., 216 ONSC, 1169 S.C, Ontario Superior Court, March 24, 2016, Justice C. Braid.
e.???2343697 Ontario Inc, Z. Marciniak et al V. Aviva Canada et al, Ont. Superior Court, Myers F.L., May 21, 2019.??
f.????Celan & Zambito V. Greenclean Restoration et al., Ont. S.C., Dawe J., March 12, 2020.
g.???DiPerri V. Wawanesa Insce. Co, Ont. Superior Court, June. 29, 2021.
h.???(King v. Aviva et al, BCSC, Skolrood, J., June 10, 2022).??A strata loss with multiple insurers involved and two DRP’s was ordered to proceed with a cooperation agreement signed by insurers.
i.?????(Aviva v. Cunningham et al, Ont. Superior Court, Valente M, November 8, 2022).??The insured’s appraiser refused a site inspection and wanted a predetermination of the methodology to determine actual cash value.??Both were refused in this motion and the appraisal was ordered to proceed.
a.???A. Seed V. ING Halifax, Ont. Court of Appeal, Nov. 10, 2005.
b.???Canadian Northern Shield V. Edwards International, B.C. S.C., Affleck J., August 11, 2011.
c.???Greer V. Co-Operators General Insurance, (1999) O.J. No 3118.
d.???56 King Inc. V. Aviva Canada, Ont. Superior Court, Lofchik T., 2016 ONSC 7139 Can. LII.?This decision was appealed. The?Ont. Court of Appeal decided May 16, 2017.??The motion court judge?did?have jurisdiction to make an order to send this matter to appraisal.??The Statutory Conditions impose no time limit on the insurer’s right to invoke appraisal.??The wording of the Act shows a clear preference to use appraisal to resolve issues on the amount of loss.??The fact a judge “may appoint an appraiser or umpire” was simply to allow the court to ensure there was no abuse of the process.
e.???2343697 Ontario Inc, Z. Marciniak et al V. Aviva Canada et al, Ontario Superior Court., Myers F.L., May 21, 2019.??This matter had already gone through Examination for Discoveries and a failed mediation.??Appraisal remains the “[p]referred process for quantifying damages in property loss cases.”??Using appraisal will “[l]imit and narrow the issues left for the trial.”
f.????Celan & Zambito V. Greenclean Restoration et al., Ont. Superior Court, Dawe J., March 12, 2020.
g.???Kutlarovski V. Aviva Canada et al, Ontario Superior Court., C.J. Conlan, October 14, 2021.
7.??????Does a proof of loss have to be filed before ‘Appraisal’ can be triggered???Yes!??There have been arguments regarding whether an incomplete proof of loss can still initiate the appraisal process. While the cited cases suggest that the proof of loss must be "complete," this area remains a gray zone that the umpire can address before the appraisal session. It is worth noting that the primary objective of the appraisal process is to provide a prompt and efficient resolution.
a.???LeBlanc V. The Co-Operators, Ontario District Court, 1993.
b.???Gerballa V. State Farm, Ont. Superior Court, Spence J., June 30, 2000.?
c.???Dumitrascu V. State Farm, Ont. Superior Court, Healey J., April 9, 2014.
d.???Lauzon V. Axa Insurance, Ontario Superior Court, Glithero J., Nov. 27, 2012
e.???Hale V. Peel Maryborough Mutual, Ontario Superior Court, DiTomaso G., May 13, 2014.
f.????Campbell et al V. Desjardins Insurance Co., Ont. Superior Court, Smith M., Oct 30, 2020.
The insured delayed submitting a proof of loss until reconstruction was completed.??On a motion, a judge ruled the submission was within the control of the insured.??“As soon as practical” can have a wide interpretation.
g.?????Senator Real Estate Holdings Ltd. V. Intact Insurance Co., Ont. Superior Court of Justice, Divisional Court (appeal), Jan. 11, 2021.??An interim proof of loss had been filed.??The “numbers” being claimed were “TBD”.??This still allowed the appraisal process to continue forward.??
h.?????Vincent V. Economical Mutual, Ont. Superior Court, T. Carey, Oct. 27, 2021.?A court can order a proof of loss to be filed.
i.??????Truscott V. CoOperators Insurance Co. et al, Ont. Superior Court, A.J. Goodman, Feb 4, 2022.??This case speaks to interim and final proofs of loss.??
j.??????Marsden V. Desjardins Insurance Co., Ont. Superior Court, B. MacNeil, January 4, 2023.
k.?????J. Truscott et al V. CoOperators General Insce. Co., Ontario Court of Appeal, April 19, 2023.?
8.?????Can the insured file more than one proof of loss???Yes.??Statutory Condition no. 6 does not prevent the filing of more than one proof of loss.
a.?????R. Hale V. Peel Maryborough Mutual, Ontario S.C., DiTomaso G., May 13, 2014.
b.?????Gerballa V. State Farm, Ontario S.C., Spence J., June 30, 2000.?
c.?????(J. Truscott et al V. CoOperators General Insce. Co., Ont. Court of Appeal, April 19, 2023).??A leading decision. Multiple interim proofs of loss can be utilized in the appraisal process.??Clarity needs to be established on what exactly is being decided upon in a hearing.??Appraisals are not necessarily a “one-shot deal”.
One thing to consider is that if you file a new proof of loss the insurer does have the right to take 60 days to investigate the content of the documents.??In many cases, the insurer waives that right. But beware that a new proof of loss filed can impact the timing of an appraisal.??
9.?????Can the insured delay the proceedings if they are demanding a response to a proof of loss they have filed???No.??
a.???Letts V. Aviva, Ont. Superior Court, James M., November 19, 2010.?
The insured had filed an extensive list of damaged items.??The insured refused to move forward in the appraisal process until the insurer had responded with a position on items submitted.??The fact the insurer had not responded did NOT allow the insured to delay entering the process.
10.??Does the “allegation of fraud” abort the ability of either side to embark on the ‘Appraisal’ process???No!??If an election is made the matter must go forward keeping strictly in mind the process that is to be followed.??This creates interesting dynamics for the umpire but there is no choice but to go the ‘Appraisal’ route if the process is triggered.
a.??Arlington Investments Vs. Commonwealth Insurance Company, B.C. Court of Appeal, I.L.R.,1-1901, 1985.
b.??Shinkaruk Enterprises Ltd. Vs. Commonwealth Insurance Co. et al, Sask. Ct. of Appeal, June 28, 1990.?
C¨?Lauzon V. Axa Insurance Co., Ont. Superior Court., Glithero J., November 27, 2012.
d.??Pinder V. Farmers Mutual Insce. Co (Lindsay), Ont. Superior Court, Vallee J., January 25, 2019.??
e.???Frenchie’s Farm V. Peace Hills Insurance Co., Court of Appeal, Manitoba, Jan. 21, 2022.
11.????After an award is made by an Appraisal does that end the process requiring compliance with Statutory Condition #6- Requirements of an Insured After a Loss???No.??Are there genuine issues relating to this condition that require a trier of fact to decide? A trier of fact weighs evidence, evaluates the credibility of witnesses, and draws reasonable inferences from the evidence.??
Statutory Condition #6 is very clear on the requirements of the insured after a loss.??There should be best efforts by the insured to comply.??Where an umpire feels there has been an incomplete effort to comply this it can be a factor in weighing the evidence and impact the umpire’s preferences when deciding.??
a.?????Gebara V. Economical Mutual Insurance Co., Ont. Superior Court, Doyle A., Feb.1, 2017, ONSC 801.
“As stated in?Sagl v. Cosburn, Griffiths and Brandham Insurance Brokers Ltd.,2009 ONCA 388 (CanLII), [2009] O.J. No. 1879, the Ontario Court of Appeal stated, that the onus to recover for loss is on the insured, on a balance of probabilities, that the loss occurred and the amount of the loss.??“The onus does not shift to the insurer merely because the insurer raises the defence of fraud”. (para. 15.)??See also?Shakur v. Pilot Insurance Co. (1990)?1990 CanLII 6671 (ON CA),74 O.R. (2d) 673 (Ont. C.A.). At para. 76, the Court stated:
It is common ground that in the preparation of the proof of loss, an insured owes a duty to the insurer of honesty and accuracy. Indeed, the policy in this case, reproduced above at para. 30, expressly states that the policy is void if the insured “intentionally concealed or misrepresented any material fact relating to this policy before or after a loss.” Once fraud is established, no matter the amount, the entire claim under the proof of loss is forfeited:?Britton v. Royal Insurance?(1866), 4 F&F 905 at p. 909;?Alavie v. Chubb Insurance Co. of Canada?(2005),?2005 CanLII 5331 (ON CA), 195 O.A.C. 7 (C.A.), at para. 5;?Dimario v. Royal Insurance Canada, (1987) 26 O.A.C. 370 (Ont. Div. Ct.), at para. 7. This rule follows from the general principle that a contract of insurance is one of utmost good faith: see?Insurance Law in Canada?at p. 9-16.”
b.???Pinder V. Farmer’s Mutual Insurance Co. (Lindsay), Ontario Court of Appeal, June 25, 2020.
This was the appeal from the reasons set out on Jan. 25, 2019, following a jury trial.????The trial resulted in a denial of the entire claim of the insured based on Statutory Condition #4 (Material Change in Risk) and Statutory Condition #7 (willful false statements).??The Appeal Court upheld the appeal on the material change issue but remained firm on the impact of the insured swearing a proof of loss where a significant number of content items were either not owned or did not exist.??A “partial indemnity” cost award of $430,000 was awarded against the insured in this case.
c.???Zgrablic V. State Farm, Ont. Divisional Court, March 27, 2019.??An appraisal award of ‘0’ was made for additional living expenses. It was conceded the insured had a further right to have a trier of fact interpret policy coverage and the damage award.
d.???Frenchie’s Farm and Ranch Ltd. v. Peace Hills Insurance Co., Court of Appeal of Manitoba, Jan. 21, 2022.??This was not an appraisal matter. It was an action where the insurer took the position the insured’s entire building and contents claim was “vitiated” by a failure to make best efforts in completing two proof of loss forms.??The insured’s evidence at trial was not credible or plausible.??The claim was over-inflated with no proof of when and where items were not purchased.??Statutory Condition #7 allowed for the entire claim to be struck.??And the appeal court affirmed the trial judge’s decision that went on to not allow relief from forfeiture (Section 130 of the Act) where someone may have “imperfectly” complied with the statutory condition.
e.???Qureshi o/a ATQ Fashion v. RSA, Ont. Superior Court, J. Speyer, Aug. 31, 2022.??7-day trial.??Two water damage claims were turned away as?“[h]e had provided no reliable evidence as to the value of the loss.”
12.????When a party elects to go through the Appraisal process does it change the normal limitation period that might exist on the policy???The simple answer is “No”.??Most property policies contain a one or a two-year limitation period on fire losses.??Someone electing Appraisal or perhaps filing a proof of loss at the last minute does not extend the prescription date.??An insurer may consider granting an extension to avoid either party incurring unnecessary legal costs but any waiver or extension in this area should be?clearly communicated between both parties.
a.?????Sadema Lumber Products Limited V. Hanover Insurance Company, Ont. Supreme Court, 1-1381, April 27, 1981.?
b.?????Feist V. Gore Mutual Insurance Company, Ont. Gen. Div., Jan. 10, 1991.
c.???Terraco Industrites V. Sovereign General Insurance Company, Alberta Queen’s Bench, March 1, 2006.
d.???DK Manufacturing V. CoOperators General Insurance Co., Ont. Superior Court, Stinson J., June 20, 2016, ONSC 3983.
e.???Vincent V. Red River Mutual, Court of Appeal, Manitoba, May 25, 2021. The insured filed a demand letter on the last day of prescription. They did so in the face of being told about the limitation period. They argued filing the demand their right to recover the value of their loss was extended.??Appeal court did not agree. Matter was dismissed.??
a.???Malholtra V. State Farm, Supreme Court of Canada, March 27, 2014.
b.???S.W.H. Investment Inc. et al V. Lloyd’s Underwriters, Ont. Superior Court of Justice, Nishikawa J., July 31, 2018.
c.???Campbell et al V. Desjardins Insurance Co., Ont. Superior Court, Smith M., Oct 30, 2020.??
A tornado damaged three dwellings.??Three actions were started and bundled together to seek advice from a motion court judge on how the appraisal process was to proceed.
14.???What happens if one party does not agree to participate in the process???In these situations, the party initiating the process would apply to the court for the appointment of an appraiser to act for the other side.??If the two appraisers could not reach a mutual agreement on the choice of umpires, it’s back to the judge to have an umpire appointed.??
a.??Trentmar Holdings Ltd. et al V. St. Paul Fire and Marine Company, Ont. Supreme Court, 1984.?The policyholder’s court-appointed appraiser refused to show up for the Appraisal session with the umpire.??This appraiser felt he had “no instructions” so he was not prepared to participate.??The ‘Appraisal’ went ahead and when the umpire and appraiser for the insurer reached consensus on damage issues, they executed an award document effectively concluding these issues as “two out of three” appraisers/ umpire had agreed.??So, despite the lack of cooperation by one appraiser this matter concluded in a way that precluded further costs of litigation on damage issues.
b.??Saskatchewan Government Insce. V. Town of Nipawin et al, Saskatchewan Court of Appeal, Dec. 31, 1998.
c.??A. Seed V. ING Halifax, Ont. Court of Appeal, Nov. 10, 2005.??Several delays led into the start of the appraisal process. When the appraiser for the insured was not granted an adjournment, he walked out on the appraisal session.??The Umpire and appraiser for the insurer continued the process and reached an agreement on the amount of loss. The Court of Appeal upheld the award. The failure to grant an adjournment did not breach procedural fairness.???
d.??S.W.H. Investment Inc. et al V. Lloyd’s Underwriters, Ont. Superior Court of Justice, Nishikawa J., July 31, 2018.??The insured had three residential properties all burned in one fire.??The insurer determined only two of the properties were insured. They were suing their insurance broker for coverage on property #3.??The insured refused to go to appraisal.??The judge ordered them into the process to determine the amount of loss on the insured properties.??He also ordered the appointment of an appraiser within 30 days of his decision.
e.??Arvanitopoulos et al V. Wawanesa Mutual, Ont. Superior Court, P. Schabas, November 29, 2019.??The insured had appointed an appraiser who refused to act due a lack of agreement by the parties on the terms and conditions of the appraisal.??The judge ordered the appraiser to act and for the process to commence.??Costs of $6,547.04 were awarded to the insurer.
f.??Celan & Zambito V. Greenclean Restoration et al., Ont. Superior Court, Dawe J., March 12, 2020.??The insured had their house repaired following a fire. They sued the contractors and the insurer. They refused to engage in the appraisal process.??The Judge ordered the insured to appoint an appraiser within 7-days. A failure to do so meant the appraiser for the insurer could make the appointment of an appraiser for the insured.??The judge also imposed a timeline to appoint an umpire within 30-days.?
g.??Diperri et al V. Wawanesa Insce. Co, Ont. Superior Court, Myers F. June 29, 2021. An appraisal concluded ruling on the amount of loss from a flood claim.??The insured alleged that undamaged contents put into storage were not returned.??There was an action initiated in tort.??The judge ordered the quantification of the undamaged contents back to the appraisal process to determine damages.?
h.??Kutlarovski V. Aviva Canada, Ont. Superior Court ,C.J. Conlan, October 14, 2021- The insured refused to participate in the appraisal process on a windstorm claim.??The judge endorsed a motion to compel the insured to participate in the process.??The court awarded $2,500 in costs against the insured for bringing to motion.
i.??Furtado v. Economical Mutual, Ont. Superior Court, Endorsement by Case Manager, W.S. Chalmers, Dec. 16, 2021.??The judge ordered both appraisers to meet in person or by video conference to determine issues in dispute.
j.??Truscott V. CoOperators Insurance Co. et al, Ont. Superior Court, A.J. Goodman, Feb 4, 2022.??The insured had concluded an appraisal on the building loss but refused to attend a second session to resolve damages relating to a valuable paper claim. The umpire and appraiser for the insurer went ahead with the appraisal and reached a majority decision. The award was upheld by the trial judge.??A subsequent appeal (Truscott V. CoOperators, ONCA 267, Ont. Court of Appeal, April 19, 2023)?allowed for additional damage claims to be considered).
k.??7174721 Canada Inc. et al V. Kase Insurance Inc. et al, Sutherland P. March 22, 2022.??Insured refused appraisal because the insurer had not provided all particulars of a repair estimate.??Judge defined what is a “disagreement” which has a “low threshold”.??Three elements are needed to go forward in the process- a demand in writing: a proof of loss and a disagreement.??The judge ordered the insured to appoint an appraiser.
l.??King v. Aviva et al, BC Supreme Court, Skolrood, J., June 10, 2022.??The insured was ordered to participate in appraisal including nominating someone to act on her behalf.??
m.?4811837 Manitoba Ltd. et al V. Wynward et al, Ont. Superior Court. W.D. Newton, August 3, 2022.??(Costs of $4,000 awarded against the insured).??The?insured refused to agree to appoint an umpire as they believed an errors and admissions action against the broker should be incorporated into either this process or tried alone with no appraisal.??Judge found ‘appraisal’ was mandatory and gave the insured 10 days to choose one of the two appraisers nominated by the insurer.
n.??Aviva Insurance Co. V. Cunningham et al, Ont. Superior Court, Valente M., November 8, 2022.??The insured’s appraiser argued against a site inspection. They also argued that the two appraisers needed to identify specific matters in disagreement.??The judge pushed both these issues back to the umpire to decide upon and direct the process.
15.??Can you argue about whom either side picks as an appraiser???No.??Either side can pick whoever they wish depending upon the provincial statute.
a.???Matti V. Wawanesa Mutual Insurance Co., Queen’s Bench of Alberta, W.P. Sullivan, May 14, 2009.
?b.???Ice Pork Genetics V. Lombard Canada et al, Menzies J., Court of the Queen’s Bench of Manitoba, April 1, 2010
c.???Campbell et al V. Desjardins Insurance Co., Ont. Superior Court, Smith M., Oct 30, 2020.???Then???Desjardins et al V. Campbell et al, Ont. Court of Appeal, Feb. 15, 2022
The umpire appointed felt that both appraisers being appointed in a matter were not disinterested parties and this did not create an independent panel.??A motion court judge ruled that in Ontario either side could pick whomever they wished to serve as appraisers. The umpire has no authority over who is chosen to be an appraiser. This was affirmed by the Ontario Court of Appeal.?
a.???A. Seed V. ING Halifax, Ont. Court of Appeal, Nov. 10, 2005.
b.???Aviva Insurance Co. V. Cunningham et al, Ont. Superior Court, Valente M., November 8, 2022.??A petition was made to the court by the insurer to remove the insured’s appraiser for failing to participate in the process ordered by the umpire.??The judge disagreed but admonished the professional conduct of the insured’s appraiser.
a.???Regina V. Mohan, Supreme Court of Canada, 1994 (expert test)
b.???Trudeau V. Royal Insurance Company, Ont. Court- General Division, Hurly P., March 3, 1999:?
c.????Matti V. Wawanesa Mutual, Court of Queen’s Bench, Alberta- Sullivan W.P., July 4, 2009.
d.???265 Commercial Ltd. V. ING Insurance Co., Nova Scotia Supreme Court, Edwards F., Dec. 14, 2009.
e.???Intact V. Galaxy Home Furnishing Corporation, Ont. Superior Court, Whitten A., November 26, 2019.
The appraiser for the insured failed to appear in motion court to argue the appointment of an umpire.??The judge appointed the umpire and awarded costs against the insured of $2,500.??The judge also issued an order ensuring both parties were going to pay 50% each of the umpire’s fee for services.
f.?????E.B. Kenney V. Johnson / Unifund Insurance, Nova Scotia Supreme Court, S.C. Norton, June 24, 2020.The insured did not feel the appraisal process should be initiated where one of the issues was a Guaranteed Rebuilding Clause.??The judge found the authorities cited were persuasive that the process should continue.??
g.???Giammaria V. Economical Mutual, Ont. Superior Court., S. Vella, Feb. 5, 2021.???The judge opined that?“[p]ast experience as an umpire would also be a good indicator” when you are in the selection process.
h.???B. Vincent V. Economical Mutual, Ont. Superior Court, T. Carey, Oct. 27, 2021.??
This involves 3 separate losses that happened in 2011.??The insured was ordered to deliver a proof of loss within 14 days. They were ordered to appoint an appraiser. They were ordered to agree and appoint an umpire failing which the judge ordered the appointment of a specific umpire that he named.
i.?????Kutlarovski V. Aviva Insurance et al. Ont. Superior Court, C. Conlan, Oct. 14, 2021.?“Does this court on these facts and wording…. [h]ave any choice but to grant the relief…”.?The judge ordered this matter into the appraisal process.
j.?????Aviva Insurance Co. V. Cunningham, Ont. Superior Court, C. Braid, Oct. 22, 2021.?The court named the appointment of an umpire in relation to two dates of loss for the same policyholder.??
k.?????4811837 Manitoba Ltd. et al V. Wynward et al, Ont. Superior Court. W.D. Newton, August 3, 2022.??Judge found ‘appraisal’ was mandatory and gave the insured 10 days to choose one of the two appraisers nominated by the insurer in the motion.??If the insured did not choose the judge would make an appointment of either umpire proposed.
l.??????Wawanesa Mutual V. S. Falahatparvar, 2023 ONSC 1355, Ont. Superior Court, Speyer, J., Feb. 24, 2023.?The insurer offered up only one name for an umpire. The court refused the request and order the two appraisers to be collaborative in picking from multiple choices.
18.??Does an umpire have to declare any previous dealings or relationships with either party to the appraisal process???Usually, the appraisers directly ask the umpire to name any conflicts they may have before deciding on the appointment.??And specific questions can be directed at the umpire to clarify any questions the appraisers may have on anything that might affect the ability of the umpire to serve.??This is done at the front end of the process.??It is also inherent that any appraiser who has a conflict of any kind should declare it.
A ‘potential’ umpire being proposed by an appraiser can be served a Witness Summons in advance of a Motion Court dealing with the appointment of an umpire.??This could be done to question bias or a potential conflict of interest.??Or any other questions that do NOT relate to the process the umpire intends to follow in the case.??This rarely ever happens but it has been done.
a.???Malholtra V. State Farm, Supreme Court of Canada, March 27, 2014.
b.???Phyllum Corporation V. Dominion of Canada Insurance Co., Ontario Court of Appeal, Dec. 9, 2014.
a.?????Rikoff V. Portage La Prairie Mutual Insce., 2005 SKQB 54.
b.????Agro’s Foods Inc v. Economical Mutual Insurance Co., Ontario Superior Court, ONSC 1169 S.C, Justice C. Braid, March 23, 2016,??
c.?????2129152 Ontario Inc. V Aviva Insurance Co., Ont. Superior Court, ONSC 4713, Brown C., Aug 23, 2017.?
a.???Royal Insurance Co. of Canada V. Brown (unreported), B.C. County Court, April 28, 1985.
b.???Peak V. Herald Insurance Company, 48 C.C.L.I., 210, 1991.
c.???Northbridge General Insce. Co V. Ashcroft Homes et al, Ont. Superior Court, Perell J., Feb. 11, 2021.??“[t]he umpires?may?permit viva voce testimony under oath and may receive affidavit evidence but he or she is not required to do so.”??
In a decision of?Agro’s Foods Inc. et al V. Economical Mutual, Justice D.C. Braid, Ont., March 24, 2016, S.C. 2016 ONSC 1169?there was a motion brought forward including to stop the appraisal process.??There were significant issues of coverage relating to wind damage on a barn structure.??Did the “wear and tear exclusion” apply???During the motion, the judge heard conflicting expert evidence. And with the two sides being so far apart on the replacement cost the judge challenged whether the Appraisal process would achieve a quick settlement.??The judge went on to order the matter to a trial in front of him and put together instructions and timelines for both counsels.???In his decision the judge commented:
?????????????“The umpire in an appraisal process is not required to hold a fair hearing and hear evidence, argument of counsel or any of the trappings that one would associate with an arbitration process:?Krofchick v. Provincial Insurance?Company?(1978),?1978 CanLII 1304 (ON SC), 21 O.R. (2d) 805 (Div. Ct.).?They are permitted to hear ‘viva voce’?testimony under oath and receive affidavit evidence, but they are not required to do so.”
22.??Can a public adjuster’s fees to a policyholder form part of the insured’s claim???This will depend, of course on the policy wording if the claim is being made via a ‘professional fee’s endorsement’.??Many insurance contracts do allow for certain fees to be paid but they exclude public adjuster fees.?
a.???854965 Ontario Ltd. V. Dominion of Canada Insurance Co., Ont. Superior Court, Kennedy J., March 17, 2003.
b.???Hog Haven Inc. V. North Waterloo Farmer’s Mutual, Ont. Superior Court, MacLeod C., Aug. 22, 2016.
c.???Welland Brethren et al V. Intact Insurance Co., Ont. Superior Court, Edwards D.L., December 17, 2019.
This case involves arguments about professional fees incurred by the insured to prove their loss.??The insured paid a premium for this coverage.??Was the policy wording ambiguous???The judge concluded that the endorsement was intended for the insured to have some money available to hire their own professionals to assist them in complying with the statutory conditions.??This was the insured’s reasonable expectation.??The judge’s language interpretation followed the guidance provided in?Ledcor v. Northbridge, 2016 Supreme Court of Canada.
23.??Can restrictions be placed on the umpire as to what methods might be used to determine the “amount of loss”???For example, on an ACV argument can the umpire be instructed on what method (i.e., market value; RC less depreciation; income approach) to be used to arrive at the “amount of loss”???“No”!?
a.?????Barrett et al Vs. Elite Insurance Company, B.C. Court of Appeal, March 27, 1987.
b.?????Greer V. Co-Operators, Ont. Superior Ct., J. Shawghnessy,
?August 12,1999.??In this decision the judge said:
“There is no clause in the insurance contract which must be interpreted by this court.??I am satisfied that qualified appraisers are?quite capable?of making that determination or in the event of a dispute an umpire chosen by the appraisers can properly determine the matter.??There is?no?question of law for this court to decide and there is no need to provide directions.”
c.??Sehdev Vs. State Farm, Ont. Court of Appeal, Feb. 20, 1991.??This case affirmed the umpire’s authority to choose the valuation he preferred in determining actual cash value.
d.??Madhani v. Wawanesa Mutual Insurance Co., Ont. Divisional Court- July 10, 2018.
e.??Senator Real Estate Holdings Ltd. V. Intact Insurance Co., Ont. Divisional Court, Jan. 11, 2021.??An appraisal award was agreed upon which included a lower number on ACV than had previously been offered by the insurer.??The previous offer had not been disclosed to the insurer’s appraiser but was within the knowledge of the insured’s appraiser.??A late disclosure was made in the meeting of the appraisal panel, but this did not impact a majority decision that came in with a lower appraisal award.
f.??Intact V. Laport, Ont. Divisional Court, March 31, 2023.??The court overturned an ACV award at an appraisal.??They felt the award was “unreasonable” because it was “contrary to the indemnity principle”.??No reasons were given for the umpire’s decision on ACV.??The appeal court felt that ACV was “constrained by the indemnity principle” and quashed the appraisal award.???This decision is an outlier to several other appeal decisions, and it is under appeal now.
24.??Can the process determine value on undamaged building, contents, or stock???Yes.??Each situation can be judged on its own merits.??For example, there may be co-insurance requirements compelling a complete inventory of goods.??Or there could be an ancillary issue at play as in?DiPerri et al V. Wawanesa Insce. Company, Ont. Superior Court, Myers F., June 29, 2021.??In this case an appraisal process had concluded on damages for issues arising from a flood. A quantity of contents was “lost” in storage.??A tort action was commenced against the insurer.??The judge ordered the parties back to Appraisal to determine the amount of loss.??This was based on Stat. Condition #11 which stated, in part,?“In the event of disagreement as the value of the property?insured, the property?saved?or the?amount of loss?those questions shall be determined by appraisal….”.
25.??How important is the role “experts” have in this process???The intention of each appraiser is to get the umpire to agree with them on some or all the issues.??Umpires, like judges, are influenced by the “best evidence” that is brought before them.??You cannot underestimate how important it is to back up your opinions with the right “experts”. However, the Umpire must be alive to the qualifications of a so-called expert.??Does that person have the necessary knowledge, skill, and experience to be deemed an “expert” in a court of law? Would the person pass the test before a trier of fact???Close attention and weight need to be given to this area.??And experts who do appear in the process should be cautioned about their role to be a ‘friend’ of the appraisal panel and ensure they are providing unbiased opinions and information. This would be on a parallel track to the testing that a trier of fact might apply.
26.??Does the Appraisal process provide the authority to direct an insurer to take salvage???No!??This is not something the ‘Appraisal’ section of the Act provides the power to determine.??
a.???I.C.B.C. V. Dawd Holdings Ltd., B.C.S.C., Nov. 15,1988
27.??Is the finding of the process binding on everyone???Yes!??The process can be subject to judicial review, but the courts have consistently held that in the absence of “fraud, collusion or bias”, the decision will stand.??There can be situations, however, where the decision in appraisal can be subject to judicial review if the decision reached was “unreasonable”.??This would be an unusual situation.
a.?????Trentmar Holdings Ltd. et al V. St. Paul Fire & Marine, Rosenburg J., Ont. High Court of Justice, May 14, 1984.
b.?????Pfeil Vs. Simcoe & Erie Insurance Co., Sask. Ct. of Appeal, 1986?also affirmed an umpire’s award was binding and could not be set aside except for “fraud, collusion or bias”.
c.?????Shinkaruk Enterprises Ltd. Vs. Commonwealth Insurance Co. et al, Sask. Ct. of Appeal, June 28, 1990.?
d.?????Parslow V. Pilot Insurance Co., Ont. Court (Gen. Div.), Feb. 5, 1999,?is a case where two appraisers resolved the ACV on a building and contents without using an umpire.??A lawyer for the policyholder challenged the result.??A judicial review of the decision was demanded.??A panel of three Ontario Court justices concluded: “Wrongdoing by the appraisers has not been alleged or proved.??We can see no reason to go behind the appraisal.??The application is dismissed with costs….”
e.?????Barrett V. Elite Insurance Co., Ont. Court of Appeal, March 1997.
f.??????Peace Hills V. Doolaege, Alberta Queen’s Bench, Lovecchio S., March 23, 2005.??This case DID result in an appraisal award being set aside.??The judge explored the process that was followed in this matter and did not feel that it resulted in judicial fairness.??The decision of?Kane V. Board of Governors for UBC, Supreme Court of Canada, 1980?was used to test whether this case met the test of fairness and in this instance the judge felt it had failed.
g.?????DK Manufacturing V. CoOperators Insurance Company, Ont Superior Court, Stinson J., June 20, 206, ONSC 3983.??A motion was filed to strike two actions filed against the insurer after an appraisal award had been issued.??Reference to the?Seed V. ING Halifax case, (2002) O.J. No. 1976 (SC) where “…the case law is clear that an Umpire’s ruling constitutes a final determination of the issue and is binding on all parties”.?Once the award had been given no further sums were recoverable by the insured.
h.?????K. Madhani v. Wawanesa Mutual Insurance Co., Ont. Divisional Court; July 10, 2018.??An Appraisal award was agreed upon by the majority.??The insured appealed the award on two counts-?
?1.??That the umpire did not provide written reasons on how the process arrived at a building depreciation rate.??
2.??The contents loss was made without jurisdiction.??
The Appeal Court dismissed the application.??There was no requirement for written reasons so there were no issues on judicial fairness.??Secondly, there was no finding on legal entitlement or any determination relating to legal issues with respect to the content’s loss.?
i.??????New Dawn Ent. V. Northbridge, Supreme Court of Nova Scotia, Arnold J., January 17, 2020.??This was an application for “judicial review” of an appraisal award.??The decision was struck as it was found by the judge that the umpire should not have had directly contacted a property estimator and the loss adjuster without the other side having an opportunity to have had a?“[m]eaningful opportunity to present their case fully and fairly.”??
j.??????LeTeport Wedding & Convention Centre Ltd. V. CoOperators General Insurance Co., Ont. Court of Appeal, July 29, 2020.??An appraisal was conducted to determine the amount of a flood & sewer back-up claim.??There were coverage issues which went to trial after the appraisal panel determined the amount of loss.??The award was based on the umpire and appraiser for the insured signing the document.??At the trial, the trial judge commented, “the insurer collaterally attacked the appraisal award as a means of challenging the credibility of witnesses…. [T]he purpose of appraisal is a valuation. It does not determine liability, which is the court’s function.”
k.?????Intact V. Unruh, Court Queen’s Bench Alberta, Justice Price, April 15, 2020.
l.??????Senator Real Estate Holdings Ltd. V. Intact Insurance Co., Ont. Divisional Court, Jan. 11, 2021.??The Divisional Court upheld a majority decision of the process.??
m.???Intact V.Parsons, Alberta Court of Appeal, April 1, 2021.
n.?????J. Truscott V. Co-Operators Insurance et al, Ont. Superior Court, A.J. Goodman, Feb 4, 2022.?This was an Endorsement to a pending action.??The judge ruled the umpire’s award on building and valuable papers was a full and final resolution to the amount of loss. Motions to dismiss these damage claims was granted by the judge.??The Ontario Court of Appeal overturned this endorsement –?2023 ONCA 267, April 19, 2023.
o.?????1923731 Ont. Ltd V. Co-Operators Insurance, Ont. Superior Court, A. Kaufman, April 1, 2022.??The motion court judge upheld the appraisal award on building damages and required security for costs to proceed on the main action.
p.?????Ruggiero V. Intact Insurance Company, CV-21-667898, OSCN, Myers F., Jan 10, 2021.??An endorsement was obtained after an appraisal to affirm the RC allowance in an award and to determine the additional living expenses going forward.??The judge turned aside arguments on additional costs relating to the Covid virus situation.
In Ontario, there is no mechanism to “appeal” an appraisal result.??But because the Umpire’s decision involves the exercise of power granted under statute, it is subject to judicial review under the?Judicial Review Procedure Act, RSO 1990, c. J.1 (“JRPA”).?Under the?JRPA, the Ontario?Superior Court of Justice has jurisdiction to:
“…. grant any relief that the applicant would be entitled to in… proceedings…in relation to the exercise, refusal to exercise, or proposed or purported exercise of a statutory power.”
Under section 2(4) of the JRPA, the court has the power to set aside an appraisal decision on an application for judicial review.??While most of us might consider this process an “appeal” of an appraisal decision, it is technically a judicial review which is a very fine distinction which one should be mindful of throughout the process.?
It is important to note that the judicial review application is heard in the Divisional Court which is made up of three Ontario Superior Court judges.??In Alberta, the appeal is put to a single judge in their Court of Queen’s Bench.??That judge’s decision can then be pushed, if necessary, to their Court of Appeal.?
Having said all this there was a judicial review in Ont. Divisional Court-?Groupone Insurance Services (Lloyds) V. W. Li and D. Strukan, June 3 ,2019.??It is a short decision which leaves lots of questions, but the three judges felt the outcome of an appraisal was “unreasonable”.??Both appraisers went into the appraisal debating the amount of loss in the $150-200,000 range. The result was an award of $338,000.??This was challenged and the Divisional court ordered the matter back to another umpire to come up with a decision.??This decision is an outlier and lends itself to many questions.
Two recent Ontario cases affirm the requirement that if you don’t like an award for whatever reason you need to file first with the Divisional Court for a review.
a.??J. Truscott V. Co-Operators Insurance et al, Ont. Superior Court, A.J. Goodman, Feb???????4, 2022.??This decision was subject of an appeal to the Ont. Court of Appeal who??weighed in on allowing additional interim proofs of loss.
b.??1923731 Ont. Ltd V. Co-Operators Insurance, Ont. Superior Court, A. Kaufman, April??1, 2022.
28.??Once an award has been signed, can it be re-opened???Usually- No.??But when there have been mathematical errors or an obvious mistake the umpire should be able to reopen the award to ensure judicial fairness.??If a trier of fact was to make an error like this there is a remedy to reopen the reasons for judgment. The same would apply here.
a.??????J. Truscott V. CoOperators Insurance et al, Ont. Superior Court, A.J. Goodman, Feb. 4, 2022.??
b.?????1923731 Ont. Ltd V. Co-Operators Insurance, Ont. Superior Court, A. Kaufman, April 1, 2022.
c.?????Intact Insce. Co. V. Laporte, ONSC 1828, Ont. Divisional Court, March 3, 2023.??A review of an award on ACV concluded the award number did not follow the principle of indemnity.??The award was overturned.??This is under appeal right now.
29.??If there is a subrogation action against a tortfeasor is the appraisal award considered valid proof of the amount of loss in that action???No.??There is no contract of insurance between the wrongdoer and the insured.??The question of damages in a third-party proceeding is not within the appraisal process.
a.?????Verlysdonk V. Premier Petrenas Construction et al, Ontario High Court- Divisional Appeal –Saunders, Hollingworth & Sutherland, June 5, 1987
It would be my opinion, however, that if the matter of the “amount of loss” has been subject to an appraisal process it is unlikely in a subsequent action that a trier of fact is going re-examine the issue of damages.??But efforts should be made in the initial appraisal to ensure you can demonstrate a rigid process was followed to arrive at decisions.
30.??Can an appraiser refuse to produce a document???The umpire has no authority to ‘order’ production.??If the other appraiser feels that something should be produced, they can go to motion court judge and obtain an ‘Order’.??If one of the appraisers is seeking some advantage in not producing a document the umpire can take this into consideration when he’s weighing the evidence in forming his or her opinion.
31.??Can an appraisal be done by teleconference or videoconferencing???Yes.??There is nothing that would prevent this from taking place.??It creates a few more logistical problems but there is nothing wrong with utilizing modern technology.??(Arconti V. Smith, Ont Superior Court, Myers F.L., May 21, 2020).??
32.??Can an Appraiser request to inspect or reinspect the insured property after the Appraisal process has been initiated???Yes.??Reference is made to?Rule 32 of the Rules of Civil Procedure (Ont).??It’s up to the?umpire?to determine admissibility of any new report on damages.??On a case-by-case basis the Court may decide who, other than the appraisers, may attend a reinspection.??(Arvanitopoulos et al V Wawanesa, Ont. Superior Court, McAfee B., November 4, 2021.).??And then we had Justice Perell rule that if the insurer didn’t like the terms of the previous judge on reinspection they should have appealed.??They didn’t. He dismissed a motion to reopen the inspection.??BUT he did indicate that the umpire was fully in charge of the appraisal process. It is within the umpire’s authority to control reinspection’s.??(Arvanitopoulos et al V Wawanesa, Ont. Superior Court, Perell, P., April 29, 2022).??The right to reinspection was also affirmed in- (Aviva Insurance Co. V. Cunningham et al, Valente M., Ont. Superior Court, November 8, 2022.)
33.??What is success???The primary objective of the process is to obtain the signatures of both appraisers on the award document, indicating their mutual agreement on the outcome. The Appraisal process involves some level of compromise and negotiation, where both parties may not necessarily prevail on every aspect, yet they may find the overall result satisfactory. However, there may be instances where neither side is entirely content with the outcome, but a majority decision brings the matter to a close.
CONCLUSIONS
The general insurance market in Canada is a $75 billion business.??It is an important part of our national financial system.
The value proposition of “insurance” is that a policyholder pays a premium which goes into a large ‘pot’ where every year the losses of the few are paid.??Insurance is a grudge purchase.??The policyholder is buying something they hope that they are never going to have to use.??But when something does happen there is a high expectation the insurer will be there to help them at one of the worst moments of their lives.??The Canadian insurance market settles a large volume of claims each year in an amicable fashion.??But there are always going to be situations where there is a difference of opinion on the amount of the loss.??And these differences play out at a highly charged, emotional time for the policyholder.??
Both parties to an insurance contract have the legal right to initiate the Appraisal or Dispute Resolution process, which aims to swiftly and affordably resolve disagreements related to loss valuations. This process is becoming increasingly popular at earlier stages of claim disputes. While legal rulings are the final recourse for settling disputes, the appraisal process has consistently been recognized as the preferred method for determining loss amounts.
Our appellate courts in Ontario and Alberta have been instructive.??The term "appellate" refers to the level of a court that hears appeals from lower courts. An appellate court is responsible for reviewing the decisions made by lower courts to determine if any legal errors have been made or if the decision is contrary to the law. The primary function of an appellate court is to ensure that the law is being properly interpreted and applied in lower courts.??These decisions carry weight:?
a.?????Madhani v. Wawanesa Mutual, 2018 ONSC 4282 Ont. Superior Court- Divisional Court *Appeal / Review*, July 10, 2018.
b.?????Birmingham Business Centre Inc. v. Intact Insurance Company, ONSC 6174, Ont. Superior Court- Divisional Court, Oct. 15, 2018.)
c.?????Senator Real Estate Holdings Ltd. V. Intact Insurance Co., Ont. Divisional Court, Jan. 11, 2021.
d.?????Intact V. Parsons, Alberta Court of Appeal, April 1, 2021.
e.?????Desjardins et al V. Campbell et al, Ont. Court of Appeal, Feb. 15, 2022.
f.??????J. Truscott V. CoOperators Insurance Co., 2023 ONCA 267; Ont. Court of Appeal, April 19, 2023.
The various appeal court decisions confirm that the courts provide significant deference towards the use of the "Appraisal" process as an efficient means of resolving disputes. Recent rulings by these courts reinforce their inclination to delegate matters related to determining the "loss amount" to the appraisal process.
This white paper is a constantly evolving document. It draws insights and guidance from legal rulings across Canada to improve this distinct process. The Appraisal process can prove to be a valuable tool in enhancing consumer satisfaction during times of loss disputes. As a testament to its credibility, this white paper has been cited as an "authority" in three legal cases.
Glenn Gibson?
ICD.D, CIP, FCLA, FCIAA, CFE
President & CEO
The GTG Group
C- 1. 289. 683.9534