COURT FILE NO.: CV-18-7695-0000
DATE: 2022-10-25
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
9491716 CANADA INC. c.o.b. FUTURE I WIRELESS
Plaintiff
- and -
GORE MUTUAL INSURANCE COMPANY
Defendant
COUNSEL: Saad Suleman, for the Plaintiff Andrew L. Tam, for the defendant
HEARD: October 3, 2022
REASONS FOR DECISION
C. Chang J.
[1] The plaintiff brings this motion for summary judgment on its claim against the defendant insurer for payment of insurance proceeds pursuant to the applicable commercial coverages policy bearing policy no. 9024783 (the "Policy").
Preliminary Evidentiary Issue
[2] The defendant raised a preliminary evidentiary issue in both its factum and at the outset of oral argument. It sought an order striking out the affidavit of David LeBlanc sworn March 4, 2022, which was proffered by the plaintiff in reply to the defendant's responding motion materials. Mr. LeBlanc is the Vice President of National Fire Adjustment Company ("NFAC"), the corporation retained by the plaintiff to appraise its claimed insurable loss in this matter.
[3] The defendant's objection to Mr. LeBlanc's affidavit was that it constituted improper opinion evidence and was an improper attempt to insulate Rod Hammond (an employee of NFAC) from cross-examination.
[4] Notwithstanding its said objection, the defendant did not seek to cross-examine Mr. LeBlanc on the contents of his said affidavit (including, without limitation, the opinions expressed therein) and did not seek to examine Mr. Hammond pursuant to rule 39.03. I was advised that Mr. Hammond was unable to swear his own affidavit because he retired before the defendant served its responding materials on this motion.
[5] In addition, the defendant raised the issue for the first time in its factum, which is dated more than five months after it was served with Mr. LeBlanc's affidavit.
[6] That said, based on the contents of that affidavit, Mr. LeBlanc's opinions are not based on his own observations or involvement in the relevant activities of the parties, but, rather, are based upon his review of Mr. Hammond's file and information provided by the plaintiff's representatives after this motion was initially brought.
[7] In the circumstances, I am not prepared to strike out Mr. LeBlanc's affidavit; however, I am unable to give much (if any) weight to his evidence.
Facts
[8] Both parties agree that none of the material facts in this matter is in dispute.
[9] The plaintiff and the defendant insurer are parties to the Policy, which provides, among other things, the following,
[i]n the event that any of the property insured be lost or damaged during the policy period by an insured peril, the [defendant] will indemnify the [plaintiff] against the direct loss or damage so caused.
[10] On July 20, 2017, a toilet at the plaintiff's business premises backed up, causing water damage. The Policy was in force at that time and the water damage was an insured peril under the Policy. The plaintiff sought indemnification under the Policy in respect of cellphone stock that it claimed was affected by the toilet back-up.
[11] The defendant insurer took the position that some of the subject stock was "obviously affected" by water, some of it may have been affected by water and the remaining stock was unaffected by water. It also invoked the appraisal procedure provided for in s. 128 of the Insurance Act, R.S.O. 1990, c. I.8, as amended.
[12] The parties' respective appraisers advanced differing views on the value of the plaintiff's stock affected by the toilet back-up and the matter was submitted to an umpire for determination.
[13] As part of the applicable process before the umpire, the parties agreed to a sampling inspection procedure, given that the cost to test all of the allegedly affected cellphones would be prohibitive. Following that sample testing, all applicable cellphones have remained in the plaintiff's possession.
[14] There are three categories of cellphone stock in issue before me:
a) cellphones that the parties have accepted as obviously water-damaged (the "Obviously Damaged Phones"), the total actual cash value of which is $18,000.00;
b) cellphones that the parties have accepted as likely water-damaged (the "Likely Damaged Phones"), the total actual cash value of which is $17,400.00; and
c) cellphones that the parties dispute as being damaged or not (the "Disputed Phones"), the total actual cash value of which is $69,600.00.
[15] One of the plaintiff's phone systems was also water damaged, the actual cash value of which is $300.00.
[16] The defendant has already agreed to indemnify the plaintiff pursuant to the Policy for the Obviously Damaged Phones, the Likely Damaged Phones and the water-damaged phone system in the total amount of $35,700.00.
[17] The umpire issued an amended appraisal award dated December 17, 2019 (the "Appraisal Award"), which outlined his findings respecting, among other things, replacement values for the cellphones, depreciation rate and percentage of cellphones "subject to water damage leaving that equipment without value". The Appraisal Award also stated the following:
It is the insured's position that all of the phones were rendered valueless, whether they sustained water damage or not, on the basis that the insured should not be selling any of the phones given his inability to determine which 20% sustained water damage. If the insured's position prevails then this Tribunal assess the loss to the insured at $105,000.00.
The insurer's position is that the claim would be made up of the actual cash value of the phones that were obvious total losses as set out in paragraph 3 above, plus the actual cash value of the 20% of the phones which sustained water damage. Should the insurer's position prevail this Tribunal assess the loss of the telephones at $35,400.00, and the loss of the telephone system at $300 on an actual cash value basis, for a total of $35,700.00.
[Emphases in original]
[18] All of the parties' respective appraisers and the umpire signed the Appraisal Award.
[19] The quantum of the plaintiff's loss from the toilet back-up is either of the two amounts set out in the Appraisal Award – i.e., $105,000.00 or $35,700.00 – minus the $5,000.00 deductible under the Policy.
[20] Despite references in both the evidence and the factums to a "co-insurance penalty", counsel confirmed during oral argument that this is not a live issue for determination. Again, the plaintiff's loss in this matter is either $105,000.00 or $35,700.00, minus the $5,000.00 deductible.
Parties' Respective Positions
[21] The plaintiff submits that there is no genuine issue requiring a trial that it should be indemnified under the Policy for all of the Obviously Damaged Phones, the Likely Damaged Phones, the water-damaged phone system and the Disputed Phones.
[22] According to the plaintiff, indemnity for the Obviously Damaged Phones and the Likely Damaged Phones is provided for under the "direct loss" portion of the indemnity provision of the Policy and indemnity for the Disputed Phones is provided for under the "damage so caused" portion of the indemnity provision of the Policy. For the latter, argues the plaintiff, although the Disputed Phones may not have been directly damaged, they were exposed to moisture and, as a result, are all unsaleable and consequentially valueless.
[23] The plaintiff also raised a contra proferentem argument in its factum, but abandoned same in oral argument, acknowledging that there is no applicable ambiguity in the indemnity provision of the Policy.
[24] The defendant insurer admits its obligation to indemnify the plaintiff for the Obviously Damaged Phones, the Likely Damaged Phones and the water-damaged phone system, but denies any similar obligation respecting the Disputed Phones. It submits that there are genuine issues requiring a trial, as the plaintiff has failed to discharge its burden of proving that any of the Disputed Phones are subject to indemnification.
[25] Specifically, the defendant insurer admits that indemnification under the Policy includes phones that are both water-damaged (i.e., the Obviously Damaged Phones) and phones that were exposed to moisture (i.e., the Likely Damaged Phones). However, the defendant insurer denies any liability for the Disputed Phones, as the applicable testing showed no indicia of any water damage whatsoever to these cellphones. Indeed, submits the defendant insurer, the Disputed Phones were stored on tables and shelves at the time of the toilet back-up and, as such, not exposed to any applicable moisture.
[26] The defendant insurer also submits that I should grant so-called "boomerang summary judgment" and dismiss both the plaintiff's motion and its action.
Issue
[27] The sole issue that I must determine on this motion is whether there is a genuine issue requiring a trial that the Disputed Phones are subject to indemnification pursuant to the Policy; specifically, the "damage so caused" provision.
Law
[28] The applicable law respecting summary judgment is well settled.
[29] The relevant rules under the Rules of Civil Procedure provide as follows:
20.01(1) – a plaintiff may, after the defendant has delivered a statement of defence or served a notice of motion, move with supporting affidavit material or other evidence for summary judgment on all or part of the claim in the statement of claim;
20.01(3) – a defendant may, after delivering a statement of defence, move with supporting affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim;
20.02(2) – in response to affidavit or other evidence on a motion for summary judgment, a responding party may not rest solely on its pleadings, but must set out, in affidavit or other evidence, specific facts showing that there is a genuine issue requiring a trial;
20.04(2) – the court shall grant summary judgment accordingly if:
i) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence, or
ii) the parties agree to have all or part of the claim determined by, and the court is satisfied that it is appropriate to grant, summary judgment; and
20.04(2.1) – in determining whether there is a genuine issue requiring a trial, the presiding judge may exercise any of the following powers, unless it is in the interests of justice for such powers to be exercised only at trial:
i) weighing the evidence,
ii) evaluating the credibility of a deponent, and
iii) drawing any reasonable inference from the evidence.
[30] In order for there to be no genuine issue requiring a trial, the motion judge must be able, on the motion, to reach a fair and just determination on the merits, i.e., when the motion process – as opposed to the trial process: 1) allows the motion judge to make the necessary findings of fact; 2) allows the judge to apply the law to the facts; and 3) is a proportionate, more expeditious and less expensive means to achieve a just result. These principles are interconnected. (See: Hryniak v. Mauldin, 2014 SCC 7, at paras. 49-50)
[31] In deciding a motion for summary judgment, the motion judge should: 1) first determine if there is a genuine issue requiring a trial based only on the evidence before her/him, without resort to r. 20.04; and 2) if there appears to be a genuine issue requiring a trial, the motion judge should then determine if the need for a trial could be avoided by using the enhanced powers under r. 20.04 (see: RBC v. 1643937 Ontario Inc., 2021 ONCA 98, at para. 24).
[32] The following well-settled principles also apply:
a) the parties are required to "put their best foot forward";
b) the motion judge is entitled to presume the completeness of the evidentiary record and that there will be nothing further if the issue were to proceed to a trial;
c) once the moving party has shown that there is no genuine issue requiring a trial, the burden shifts to the responding party to show that its claim has a real chance of success; and
d) the motion judge must "take a hard look" at the evidence to determine whether there is a genuine issue requiring a trial.
(See: Broadgrain Commodities Inc. v. Continental Casualty Company, 2018 ONCA 438, at para. 7; James v. Chedli, 2021 ONCA 593, at para. 31; Dia v. Calypso Theme Waterpark, 2021 ONCA 273, at para. 25; and Summa Engineering Limited v. Selectra Contracting Ltd., 2017 ONSC 6380, at para. 25, aff'd 2018 ONSC 5733)
Analysis
[33] Based on the evidence before me, I am unable to make a fair and just determination of the plaintiff's claims on the merits. There is a genuine issue requiring a trial; namely, to what extent, if any, did the Disputed Phones suffer damage caused by the toilet backup.
[34] In short, there is no evidence before me respecting the existence or absence of damage to any of the Disputed Phones resultant from the toilet backup. Although this is the result of the parties' agreement to engage in only sample testing of the Disputed Phones, this nonetheless leaves me with no evidence of damage, one way or the other, to that category of cellphones.
[35] The highest and best evidence before me on this point are the results of the sample testing. This is not sufficient for me to determine the issue on this motion. In addition, I am not prepared on this record to make any factual inferences that any of the Disputed Phones that were not tested did or did not suffer water damage.
[36] As such, I am unable to find, as requested by the plaintiff, that all of the Disputed Phones suffered damage. In addition, I am equally unable to find, as requested by the defendant insurer, that none of the Disputed Phones suffered any damage whatsoever.
[37] Turning to the second part of the two-step approach set out in RBC v. 1643937 Ontario Inc., I find that the need for a trial cannot be avoided by using the enhanced powers under r. 20.04.
[38] Simply put, given the complete lack of any evidence respecting the existence/absence of damage to any of the Disputed Phones:
a) there is no applicable evidence to weigh on this issue;
b) any issues of credibility will not generate the missing evidence out of thin air; and
c) there is no evidence from which to draw any applicable inference(s), reasonable or otherwise.
[39] Therefore, both the plaintiff's motion for summary judgment and the defendant's request for boomerang summary judgment are denied.
Disposition
[40] The plaintiff's motion for summary judgment is dismissed.
[41] The defendant insurer's request for boomerang summary judgment is denied.
[42] Given the binary nature of the issues in this matter and the fact that this action was commenced in 2018, proportionality dictates that I make orders pursuant to rule 20.05 in order to ensure that this action proceeds expeditiously to trial. I therefore make the following orders:
a) unless otherwise ordered or directed by the trial judge, the facts set out at paras. 8-19 of this endorsement are not in dispute;
b) the sole issues to be tried in this matter are:
i) How many, if any, of the Disputed Phones were damaged by water/moisture from the toilet backup and to what extent?
ii) If there is such damage, to what extent does that damage render the Disputed Phones, or any of them, valueless?
c) the parties shall comply with the following timetable going forward:
i) any applicable testing of the Disputed Phones (whether jointly, individually or otherwise) shall be completed by no later than December 31, 2022,
ii) the parties shall exchange any expert reports respecting the said testing by no later than February 28, 2023,
iii) the parties shall exchange any affidavits of documents and schedule A productions respecting the issues identified in para. 42(b) above by no later than March 31, 2023,
iv) the parties shall complete any examinations for discovery respecting the issues identified in para. 42(b) above by no later than April 28, 2023,
v) any undertakings given at the said examinations for discovery shall be answered by no later than June 30, 2023,
vi) any motions arising from outstanding undertakings, refusals and/or questions taken under advisement shall be brought by no later than August 31, 2023,
vii) the deadline for setting this matter down for trial shall be December 29, 2023, and
viii) should the parties elect not to proceed with documentary and/or oral discoveries referred to in paras. 42(c)(iii) and (iv) above, then they are to attend to having this action set down for trial by no later than December 30, 2022.
Costs
[43] I urge the parties to agree on costs. Failing such agreement, the parties are to make their respective written costs submissions (limited to two pages, excluding cost outlines and offers to settle) and deliver same as follows:
a) defendant by no later than 4:00 p.m. on November 3, 2022;
b) plaintiff by no later than 4:00 p.m. on November 10, 2022;
c) there shall be no reply; and
d) the said written submissions are to be sent through the Milton Administration Office.
C. Chang J.
Released: October 25, 2022