$100,000 in punitive damages was awarded against an insurer for alleging fraud against its insured in respect of a fire loss in circumstances which the Court described as a "high-stakes litigation strategy".

[2012] O.J. No. 2869

2012 ONSC 2206

Ontario Superior Court of Justice

P. Lauwers J.

June 22, 2012

This case involved a fire loss at the insureds' home. The garage and its contents were destroyed and smoke penetrated the house. In one action the insureds claimed that Strone Construction was liable for the deficient remedial work and in another action the insureds claimed that their insurer was responsible for Strone's poor work. They also claimed for the loss of personal property and for additional living expenses.

The case turned on factual issues as to whether the house had been completely or acceptably restored. A legal issue was whether the insurer was liable to the insureds for deficiencies and incompleteness or acceptability of the house repairs carried out by Strone. The insurer took the position that the insureds' claims must fail on the basis of fraud. In particular the insurer alleged that the proof of loss that was sworn by the insureds was replete with false statements.

The Court found that the insureds had proven their claim and that the insurer had not proven fraud. The Court awarded punitive damages against the insurer on the basis that fraud allegation was late breaking and was only made after the action was started. The Court found that this was a high-stakes litigation strategy designed to intimidate the insureds. The insurer was ordered to pay $100,000 in punitive damages to the insureds.