Be In Christ Church of Canada O/A Welland Brethren in Christ Church v. Intact Insurance Company
[Indexed as: Be In Christ Church of Canada v. Intact Insurance Co.]
Ontario Reports
Ontario Superior Court of Justice
Edwards J.
December 20, 2019
149 O.R. (3d) 604 | 2019 ONSC 7412
Case Summary
Insurance — Fire insurance — Appraisal — Insurer obtaining quotes for cost to repair fire damage — Insured hiring experts to assess insurer's appraisal — Insurer refusing to cover experts' fees as not required within the meaning of the policy — Proof of loss was required and coverage for fees was within the parties' reasonable expectations.
Insurance — Property insurance — Coverage — Interpretation and construction — Insurer obtaining quotes for cost to repair fire damage — Insured hiring experts to assess insurer's appraisal — Insurer refusing to cover experts' fees as not being required within the meaning of the policy — Proof of loss was required and coverage for fees was within the parties' reasonable expectations.
A fire occurred at the applicant's premises while a valid policy of insurance was in place with the respondent. The respondent obtained three quotes from contractors to repair the damage, and proposed to pay the applicant the lowest amount. The applicant felt that it lacked the expertise to assess the proposal and so hired a professional quantity surveyor, whose estimate for the damage exceeded the highest quote obtained by the respondent. The parties disagreed as to whether the respondent was obliged to pay the surveyor's fees. The policy provided for "necessary and reasonable fees paid to professionals for producing and certifying any information that may be required by the Insurer in order to arrive at the loss payable". The respondent took the position that it alone decided when such professionals were required. The applicant sought a ruling that the fees be covered.
Held, the application should be allowed.
The respondent was ordered to pay the fees. The coverage provision was ambiguous as to what was "required by" the insurer. The applicant had been paying a premium for the coverage and did not have the expertise to deal with a significant loss such as caused by the fire. It was reasonable for the applicant to expect that the provision extended coverage to retain experts to assist in such a situation. It was also reasonable for the respondent to expect that the applicant might require such assistance and was willing to purchase such coverage. The policy provided that after a loss, the insured was required to deliver a proof of loss as soon as practicable. As such, it was the particulars of the loss that was "required by" the insurer and not the professional's services or their fees, and so it was the particulars that triggered coverage.
Cases referred to
Algonquin Power (Long Sault) Partnership v. Chubb Insurance Co. of Canada, [2003] O.J. No. 2019, [2003] O.T.C. 446, 50 C.C.L.I. (3d) 107, [2003] I.L.R. I-4212, 123 A.C.W.S. (3d) 358, 2003 CanLII 44422 (S.C.J.); Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., [2016] 2 S.C.R. 23, [2016] S.C.J. No. 37, 2016 SCC 37
APPLICATION for a declaration of insurance coverage. [page605]
Gordon McGuire, for applicant.
Bevin E. Shores, for respondent.
D.L. EDWARDS J.: —
Background
[1] This matter turns on an issue of interpreting the wording in an insurance policy.
[2] The facts are simple and not disputed.
[3] A fire occurred at the premises of the applicant on February 24, 2019 while a valid policy of insurance was in place with the respondent. The loss was reported to the respondent, Intact.
[4] The respondent retained EllisDon to prepare a "scope" document and then obtained three quotes from contractors to perform the work. These quotes ranged from $1,272,180.35 to $1,912,034.32. Intact proposed to pay the Church the lower estimate.
[5] The Church was concerned that it lacked the expertise to critique EllisDon's scope and desired to hire professionals to assist them. It asserted to Intact that a coverage extension in the policy called "Edge Complete 2.0 Endorsement" extended coverage for those professional fees. Intact disagreed.
[6] The Church retained a professional quantity surveyor, Lakeland Consulting Inc., to assist it in critiquing EllisDon's scope. Their fees were $22,588.70.
[7] Lakeland concluded that the appropriate estimate was $2,347,727. This is $1,000.000 more than the amount that Intact proposed to pay the applicant for the loss.
[8] The parties agree that the question for me to determine is whether professional fees must be required by Intact to be covered under the Professional Fees Extension.
The Policy
[9] Under Commercial Property Policy Conditions Requirements After a Loss, the insured was required as soon as practicable to deliver to Intact, a proof of loss "giving a complete inventory of the lost or damaged property and showing in detail quantities, costs, actual cash value and particulars of amount of loss claimed".
[10] Under summary of coverages, "Professional Fees" is listed under a basket section which collectively had a total limit of $500,000 coverage for each occurrence.
[11] Under the same section, the critical wording which I must interpret is set forth:
This Form is extended to cover reasonable fees charged by auditors, accountants, lawyers, architects, surveyors, engineers or other professionals retained [page606] by the Insured, for the purpose of producing or certifying particulars or details of the Insured's business and that are required by the Insurer in connection with loss or damage caused to insured property by an insured peril.
This extension only applies to necessary and reasonable fees paid to professionals for producing and certifying any information that may be required by the Insurer in order to arrive at the loss payable under this Form.
This Extension does not include the fees and cost of public adjusters.
Position of the Parties
[12] Intact takes the position that it is only those professionals that it requires that are covered by this provision, whereas the Church asserts provided it retains a professional to obtain the particulars that Intact requires, then the insurance policy provides coverage.
The Law
[13] The Supreme Court of Canada in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, [2016] S.C.J. No. 37, set out the principles applicable to policy interpretation:
(a) the primary interpretive principle is that where the language of the insurance policy is unambiguous, effect should be given to that clear language, reading the contract as a whole;
(b) where the policy's language is ambiguous, general rules of contract construction must be employed to resolve that ambiguity. These rules include that the interpretation should be consistent with the reasonable expectations of the parties, as long as that interpretation is supported by the language of the policy; it should not give rise to results that are unrealistic or that the parties would not have contemplated in the commercial atmosphere in which the insurance policy was contracted, and it should be consistent with the interpretations of similar insurance policies;
(c) only if ambiguity still remains after the above principles are applied can the contra proferentem principle be employed to construe the policy against the insured. A corollary of this rule is that coverage provisions in insurance policies are interpreted broadly and exclusion clause is narrowly.
[14] Also, "if a policy is clear and unambiguous, but is contrary to the reasonable expectations of both parties, the court may override the wording of the policy where to do otherwise would be inconsistent with the purpose of the coverage, would virtually nullify the coverage, and would be contrary to the reasonable expectations of the ordinary person as to the coverage contracted. [page607] An interpretation in accordance with reasonable expectations applies only where the insurer would otherwise be pocketing the premium without assuming any risk": Algonquin Power (Long Sault) Partnership v. Chubb Insurance Co. of Canada, [2003] O.J. No. 2019, 2003 CarswellOnt 1941 (S.C.J.), at para. 130.
Analysis
[15] The parties agree that this is a coverage provision and not an exclusion or condition. It is clearly coverage for which the applicant has been paying a premium.
[16] The applicant raised six reasons as to why its interpretation of the contract was valid.
[17] In my view, they are all different approaches to the primary question. Is the provision ambiguous and if so, utilizing general rules of contract construction what is the correct interpretation?
[18] I find that the provision is ambiguous. Read literally, it could mean that it is the fees and not the services of the professionals that are required by Intact that are covered. Read another way, it is the particulars or details of the insured's business that is required by Intact and coverage is for the fees of professionals retained by the insured to obtain this information.
[19] Also, one must ask whether that provision must be read in conjunction with the provision of the policy that requires the insured to provide particulars of its loss as soon as possible. Is that the details "required by the insurer" or is it some other separate requirement of the insurer that it can impose solely because of this provision?
[20] The respondent asserts that for the purposes of interpreting this provision the fees of the professional and the retainer of the professional is synonymous. In other words, "fees" means "retainer" of the professionals, so it is the retainer of those professionals that the insurer requires that is meant by that provision. That in itself implies that the provision is ambiguous.
[21] The Church has been paying a premium for this coverage. It does not have the expertise to deal with a significant loss such as caused by the fire. It is reasonable that it expected that this provision provided it with coverage to retain experts to assist in such a situation. It is also reasonable that Intact would expect that the Church might require such assistance and for which it purchased insurance coverage and paid a premium to Intact.
[22] I find that when one considers the reasonable expectation of the parties and the language of the policy as a whole, I am satisfied that the provision is intended to cover professional fees incurred by the insured in order to obtain particulars of the loss which the insurer requires by virtue of the Commercial Property Policy Conditions Requirements After a Loss provision. [page608] It is the particulars of the loss that is required by the insurer and not the professional's services or their fees. The obligation to provide those particulars is a mandatory obligation upon the insured by virtue of that provision. Therefore, those particulars are "required by the insurer" and triggers coverage.
[23] I note that the third paragraph of that provision specifically excludes public adjusters from the ambit of this provision. Public adjusters are individuals who advocate on behalf of the insured. Why would they be excluded if the discretion lies with the insurer as to which professionals the insured may retain, and for which there is coverage?
[24] The respondent submits that the fact that Intact has the discretion to instruct the insured to hire the professionals for whom there would be coverage does not mean that there is no coverage or insurance. The applicant asserted that the power to deny coverage basically meant that there was no insurance coverage.
[25] I find that the insured would not have reasonably expected such a result for a coverage for which it was paying a premium. That is an unreasonable interpretation of the provision.
[26] The applicant asserted that the interpretation suggested by Intact departed from the ordinary meaning of professional fee coverage. A review of the cases show that the language varies from insurance policy to policy, but the concept remains consistent. The fees covered are for professionals retained by the insured to assist in providing the insurer with details of the loss. Indeed, several cases make that assumption without even opining on that issue.
[27] However, because of my interpretation of the provision, I need not rely upon that basis in concluding that the Church's interpretation of the provision is the correct interpretation.
Summary
[28] I find that the professional fees must not be required by Intact for them to be covered under the Professional Fees Extension.
[29] The parties have settled the issue as to whether the quantity surveyor's fees are reasonable and necessary.
[30] I order that the respondent pay to the applicant the sum of $22,588.70, being the fees of the quantity surveyor.
[31] If the parties cannot agree upon costs, the applicant's cost submissions shall be delivered within 14 days; the respondent's submissions within ten days and any reply within five days thereafter. Cost submissions shall be limited to three pages.
Application allowed.
End of Document