Giammaria v. Economical Mutual Insurance Company, 2021 ONSC 963

Court File and Parties

COURT FILE NO.: CV-19-00623566 DATE: 20210205 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Nando Giammaria and Margherita Giammaria, Plaintiffs/Responding Parties AND: Economical Mutual Insurance Company, Defendant/Moving Party

BEFORE: VELLA J.

COUNSEL: Bernie Romano, for the Plaintiffs/Responding Parties Adam Bucci, for the Defendant/Moving Party

HEARD IN WRITING: February 5, 2021

DECISION RE APPOINTMENT OF UMPIRE

Background

1This is a motion by Economical Mutual Insurance Company (“Economical”), for an order, pursuant to section 128(5) of the Insurance Act, R.S.O. 1990. C. I.8 for the appointment of an umpire. It was heard in writing on consent of the parties.

2The action arises out of an alleged water loss, which took place at 24 Grenadine Court in North York, Ontario on or about August 8, 2018. This is a rental property owned by the plaintiffs (the “Giammarias”).

3The Giammarias were insured, at the material time, by Economical pursuant to a rent dwelling policy of insurance, bearing policy number 30155862 (hereinafter “the Policy”).

4On March 9, 2020, Economical exercised its right under the Policy to move the matter to an appraisal, where an umpire could ultimately determine the valuation of the loss. Mr. Baxter was appointed as the appraiser for Economical and Mr. Porter was appointed as the appraiser for the Giammarias.

5However, despite efforts, the appraisers could not agree on the appointment of an umpire.

6Economical now puts forward a list of 4 candidates for the court’s consideration for appointment as the umpire.

7The Giammarias have put forward their own list of 3 candidates for the court’s consideration.

8The respective appraisers find reason to challenge each other’s list of candidates. Therefore, it falls to the court to choose an umpire who would be best suited to this important task based on a review of their resumés, and the affidavit evidence.

The Law

9Section 128 of the Insurance Act sets out a scheme to resolve disputes in certain situations in which an insurer and an insured cannot agree. Section 128 provides that:

(1) This section applies to a contract containing the condition, statutory or otherwise, providing for an appraisal to determine specified matters in the event of disagreement between the insured and the insurer.

(2) The insured and the insurer shall each appoint an appraiser, and the two appraisers so appointed shall appoint an umpire.

(3) The appraisers shall determine the matters in disagreement and, if they fail to agree, they shall submit their differences to the umpire, and the finding in writing of any two determines the matters.

(4) Each party to the appraisal shall pay the appraiser appointed by the party and shall bear equally the expense of the appraisal and the umpire.

10Section 128(5)(b) of the Insurance Act vests power in this court to appoint an umpire in the event the appraisers cannot agree on the selection of an umpire:

(5) Where,

(b) the appraisers failed to agree upon an umpire within 15 days after their appointment;

a judge of the Superior Court of Justice may appoint an appraiser or umpire, as the case may be, upon the application of the insured or of the insurer.

11There is very little jurisprudence to guide the court’s exercise of discretion. Fortunately, there are comparable statutory provisions in the legislation of other provinces.

12In Matti v. Wawanesa Mutual Insurance Co., 2009 ABQB 451 (“Matti”), the court stated:

Therefore, a properly appointed umpire, much like an expert witness at trial, should be an expert in the field at issue between the parties. The expert’s expertise can come either from special training, or from sufficient experience. (at para. 8)

13In addition, it is important that the umpire be impartial (Matti, at para. 13). This concern of perceived bias generally falls along the lines of a perceived apprehension of bias against insurers or a perceived apprehension of bias against insureds, as a class.

14I would add that past experience of a candidate as an umpire would also be a good indicator of the candidate’s suitability both from a perspective of impartiality and skill. This is because the appointment of an umpire is generally chosen by the respective appraisers of the insured and insurer and experience as an umpire would be a valuable asset.

Analysis

15The parties agree that the skill that would be most suitable in selecting the ideal candidate is experience in the valuation of the proposed repairs. Impartiality is also identified as a key consideration. Indeed, when one looks at the respective critiques offered by the appraisers and their clients, many of the candidates are attacked by reason of having a reasonable apprehension of bias.

16In reviewing the respective candidates against the primary considerations (in this case) of experience in the valuation of the proposed repairs, impartiality, and experience as an umpire, I have concluded that the most appropriate candidate for this position from the two lists is George Milnes.

17Mr. Milnes’ resumé reveals a depth of experience in the valuation of claims within an insurance context of approximately 30 years. For example, he has conducted consulting services and conducted property claims audits while with another insurance company in the early years of his career and was a claims manager for the Ontario New Home Warranty program where he managed claims and conducted claim audits.

18He also has considerable experience acting as an appraiser under section 128 of the Insurance Act and in the last four years as an umpire.

19The chief complaint levied against Mr. Milnes by Economical’s appraiser was that he believes that Mr. Milnes had a reasonable apprehension of bias against insurers. This is because, in the past, Mr. Milnes has occupied insurance adjuster positions or as an appraiser where he acted for insureds. For example, from 2005 to 2019 he acted as an appraiser under section 128 of the Insurance Act for insureds. However, this is too narrow a view of Mr. Milnes experience. According to his resumé, from 1988 to 2005 he acted for insurers including, from 1999 to 2005 as an appraiser for insurers under section 128 of the Insurance Act. Furthermore, from 2017 to 2019 he was selected by both insureds and insurers to act as an umpire under the Insurance Act. Finally, since 2019 he has acted full-time as an appraiser and umpire under section 128 of the Insurance Act and no longer solicits or accepts assignments to act solely as an adjuster. He will now only act as an adjuster as defined by the Insurance Act when first appointed as appraiser and further investigation is required.

20It appears that Economical’s appraiser formed his concerns about Mr. Milnes without having the benefit of Mr. Milnes’ resumé. Rather, the appraiser relied on his personal knowledge of knowing Mr. Milnes as an adjuster in 2005 to 2017 for insureds. However, in my view that is an overly narrow view of Mr. Milnes’ 30-year career in the insurance field and his current position.

21Mr. Milnes has spent good parts of his career acting for insurers and insureds, respectively, leading to his current situation where he is acting full-time as an appraiser and umpire. Mr. Milnes satisfies the criteria of having experience in valuing claims as an appraiser under section 128 of the Insurance Act, experience as an umpire, and a background of having represented the interests of insurers and insureds respectively over the course of his long career.

Disposition

22Therefore, this court orders that Mr. George R. Milnes is appointed as an umpire pursuant to section 128(5) of the Insurance Act.

Costs

23This seems to me to be a situation in which the parties should bear their own costs. However, if the parties do not agree, they may provide me with their cost outlines and brief written submissions by February 12, 2021.