In Diperri v. The Wawanesa Mutual Insurance Company, Justice Myers of the Ontario Superior Court stayed the action and required the plaintiffs to advance their claim by way of appraisal under s.128 of the Insurance Act RSO 1990, c I.8.
Background
The plaintiff’s home suffered a water loss on July 8, 2013. The defendant, Wawanesa Mutual Insurance Company, insured the plaintiffs for losses to their goods as a result of the flood.
During the restoration, the plaintiffs allege that various items went missing from their home and/or storage. As a result, the plaintiffs sued their insurer in tort and bailment.
The plaintiff’s insurance policy with the defendant is subject to Statutory Condition 11 under the Insurance Act that requires parties to resolve specified disputes by appraisal under s.128 of the statute. Statutory Condition 11 states the following:
Appraisal
11. In the event of disagreement as to the value of the property insured, the property saved or the amount of the loss, those questions shall be determined by appraisal as provided under the Insurance Act before there can be any recovery under this contract whether the right to recover on the contract is disputed or not, and independently of all other questions. There shall be no right to an appraisal until a specific demand therefor is made in writing and until after proof of loss has been delivered.
The plaintiffs filed for a proof of loss and the parties then used an appraisal to value some of the plaintiffs’ damaged goods. The plaintiffs also claim that a significant amount of their goods were never returned and sue for this loss as well.
In the statement of claim, the plaintiffs seek $226,000.00 for the damaged and lost goods, as well as other claims with respect to their recovery against the defendant, including aggravated and punitive damages. The claim was made against Wawanesa Mutual Insurance Company, but did not include the adjuster or the company who stored the plaintiffs’ goods. The plaintiffs conclude that their insurer is liable for the sub-bailment or negligent conduct of its sub-bailors, bailee, and contractor.
In an initial appraisal, the umpire stated that it will be up to the plaintiffs to decide whether or not they want to pursue action against any responsible party, including Wawanesa Mutual Insurance Company. Wawanesa Mutual Insurance Company will then advise if they wish to have the appraisal hearing reconvened.
The insurer has attempted to initiate the remainder of the appraisal hearing, but the plaintiffs have claimed that they are not seeking payment under their insurance policy but are instead claiming damages through independent causes of action that are not subject to the appraisal remedy.
Analysis
Quoting Bnei Akiva School v. Sovereign Insurance Co., 2016 ONSC 383 and 2343697 Ontario Inv. v. Aviva Insurance Company of Canada, 2019 ONSC 3106, Justice Myers stated that an appraisal will be required to value disagreements of the type set out in Statutory Condition 11 even where there are other issues between the parties in litigation.
There isn’t any case law that directly covers the issues in question, but Verlysdonk v. Premier Petrenas Construction Co. Ltd. et al., 1987 CanLII 4217 states that an appraisal to value insured loss does not prevent or preclude the insured from suing in tort the third part who caused the loss. Justice Myers stated that as long as the plaintiffs’ rights to bring a claim for any heads of damages not covered by the appraisal remain intact, the plaintiffs will not be prejudiced by having to resolve the valuation of the lost goods in a quick and affordable manner.
Justice Myers stated that the issue comes down to the interpretation of Statutory Condition 11. Statutory Condition 11 provides for an appraisal to be help when “there is disagreement concerning the value of the property insured, the property saved or the amount of loss.” The missing and damages goods from the plaintiffs’ home were property insured as they were property saved from the effects of the water loss. In another sense, damages caused to the plaintiffs’ goods by the insurer or its contractors as part of the process of determining and mitigating the plaintiffs’ insured loss is an amount of the loss.
Further, the initial appraisal umpire believed that this was a matter that could be dealt with under the process that had already commenced. The umpire stated that Wawanesa Mutual Insurance Company could unilaterally reconvene the appraisal hearing to process and deal with the losses. Therefore, Justice Myers concluded that the claim against Wawanesa Mutual Insurance Company for losses caused to the plaintiffs’ property removed from the house to allow the insured restoration to begin falls within the language of Statutory Condition 11.
Justice Myers granted the insurer’s motion and held that the claim was subject to appraisal under s.128 of the Insurance Act. Justice Myers stayed the action until completion of the appraisal and held that the Statutory Conditions controlled the result. The plaintiffs were ordered to pay the defendant its costs on a partial indemnity basis fixed at $3,000.00.
