The Court of Appeal has brought some clarity to time limits for appraisals under the Insurance Act.

In 56 King Inc. v. Aviva, the plaintiff commenced a claim against its Insurer seeking coverage for damage to commercial property arising from a windstorm, as well as damages for breach of the Insurer’s duty of good faith in handling the claim.

The Statement of Claim was issued in February 2014. Sometime in late December or early January 2016, the Insurer admitted coverage. Three weeks later, the Insurer elected an appraisal under Section 128 of the Insurance Act. The plaintiff rejected the appraisal on the basis that it was too late and because the bad faith claim could not proceed by appraisal. The Insurer brought a motion to determine whether an appraisal should be ordered.

See All in Good Time: No Time Limit on Appraisals Under the Insurance Act for a summary of the motion judge’s findings.

In short, Justice Lofchik granted the Insurer’s motion. Justice Lofchik emphasized that the appraisal wording in Section 128 of the Insurance Act is mandatory and that the appraisal process must be continually available, noting no timeline that an election for appraisal must be made by. Justice Lofchik also found the appraisal did not prevent the plaintiff’s from having the issue of bad faith determined at trial.

The plaintiff appealed the motion judge’s finding as follows:

  1. The motion judge did not have jurisdiction to make the order because the matter must be brought by application and not by motion;
  1. The two-year delay prior to the demand for appraisal is a bar to an appraisal; and
  1. The effect of the motion judge’s decision is to bifurcate the trial.

The Court of Appeal rejected all submissions and found for the Insurer.

Importantly, with respect to delay, the Court stated the legislation signals a decided preference for appraisal, but the language of Section 128 does give the Court discretion to curb abuse. In the case at hand, the Court found no abuse on the part of the Insurer, noting the appraisal was requested within three weeks of the Insurer’s admission of coverage.

This Court of Appeal decision is distinguished from prior decisions of the Court which dismissed Insurer’s requests for appraisal due to the requests being brought too late. (see 1633092 Ontario Ltd. and Ouellette Estate v. North Waterloo Farmers Mutual Insurance Company)

It remains to be seen what will be considered “abuse” such that a Court will find an insurer is out of time for an appraisal.

See 56 King Inc. v. Aviva Canada Inc., 2017 ONCA 408