The appellant appealed a trial judgment determining his net entitlement to insurance proceeds following a house fire.
The trial judge had allowed the insurer to set off an overpayment for the house's replacement cost against the appellant's damages for contents, despite the insurer failing to plead set-off as an affirmative defence.
The Divisional Court held that the trial judge erred in law by allowing the unpleaded set-off, as it caused trial unfairness and prejudiced the appellant's litigation and settlement strategy.
The appeal was allowed in part to set aside the set-off, but dismissed regarding the trial judge's factual findings on artwork valuation and additional living expenses.
