Court of Appeal for Ontario

Date: 2017-05-23 Docket: C62968

Judges: Lauwers, Hourigan and Benotto JJ.A.

Between

56 King Inc. Plaintiff/Respondent (Appellant)

and

Aviva Canada Inc. Defendant/Moving Party (Respondent)

Counsel

Sebastian J. Winny, for the appellant

Elizabeth Bowker, for the respondent

Heard

May 15, 2017

On Appeal

On appeal from the order of Justice Thomas R. Lofchik of the Superior Court of Justice, dated November 21, 2016, with reasons reported at 2016 ONSC 7139, 62 C.C.L.I. (5th) 163.

Reasons for Decision

[1] The appellant commenced a claim under an insurance policy for damage to a commercial property caused by windstorms in July 2013. The action is for damages under the policy and damages for breach of the insurer's duty of utmost good faith in handling the claim for coverage.

[2] The statement of claim was issued on February 14, 2014. On January 25, 2016, the insurer elected an appraisal under s. 128 of the Insurance Act, R.S.O. 1990, c. I.8. The appellant rejected the appraisal on the basis that it was too late and that, in any event, the bad faith claim could not proceed by appraisal. The insurer then brought a motion requesting a declaration that the appellant's losses could be determined by appraisal. The motions judge granted the insurer's motion. His decision is the subject of this appeal.

[3] The appellant submits: (i) the motion judge did not have jurisdiction to make the order because the matter must be brought by application and not by motion; (ii) the two-year delay prior to the demand for appraisal is a bar to an appraisal; and (iii) the effect of the motion judge's decision is to bifurcate the jury trial, which the court does not have jurisdiction to do.

[4] We do not accept these submissions. First, the motion judge had jurisdiction to make the order. The appellant's action was based on claims under a policy of insurance. Likewise, in its motion, the respondent sought relief that flowed from the insurance policy. The case of Lukezic v. Royal Bank of Canada, 2012 ONCA 350, 360 D.L.R. (4th) 111, relied on by the appellant is distinguishable. In that case, the motion was for a declaration that a party was a vexatious litigant. The relief sought was pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43, which sets out a definition for "application" (s. 1(1)). Here, the relief sought is pursuant to the Insurance Act, which does not define "application." Also, a full hearing on the merits of a vexatious litigant claim would involve issues outside the claims in the action, unlike the respondent's motion in this case. Lastly, it would make no sense to require the respondent to commence a second proceeding by way of application for relief arising from the same contract of insurance.

[5] Second, we agree with the motion judge's conclusion that the appraisal process in the Insurance Act was available while the appellant's action was proceeding: Greer v Co-Operators General Insurance Co., [1999] O.J. No. 3118. The respondent argues that the statutory condition imposes no time limit on the insurer's right to invoke appraisal, while the appellant argues that the court has discretion to refuse to allow an appraisal to proceed under s. 128 of the Insurance Act, which provides that the judge "may appoint an appraiser or an umpire". The legislation signals a decided preference for appraisal, as the authorities note, but the language of s. 128 gives the court discretion to curb abuse. However, there was no abuse on the part of the respondent in this case. On the facts, the appraisal was requested within three weeks of the respondent's admission of coverage. Therefore, in any event, there was no delay.

[6] Third, we do not agree that the effect of the order is to impermissibly bifurcate the trial. The independent operation of the Insurance Act appraisal process will simply limit and narrow the issues left for the trial, which will continue.

[7] The appeal is dismissed with costs payable to the respondent in the agreed upon amount of $7,000 inclusive of disbursements and HST.

"P. Lauwers J.A."

"C.W. Hourigan J.A."

"M.L. Benotto J.A."