COURT FILE NO.: CV-19-27362

DATE: 20221213

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Cope Construction Limited carrying on business as Promus Windsor

Plaintiff

– and –

Travelers Insurance Company of Canada and the Dominion of Canada General Insurance Company

Defendant

Tom Serafimovski, for the Plaintiff, (Responding Party)

Christopher I.R. Morrison, for the Defendant, Dominion of Canada General Insurance Company, (Moving Party)

HEARD: May 19 and 27, 2022, and written submissions on June 3, 2022

reasons on motion for summary judgment

verbeem j.

I) NATURE OF THE MOTION

[1] This is a summary judgment motion by the defendant, the Dominion of Canada General Insurance Company (“Dominion” or “the Insurer”).[^1] The determination of the motion engages the issue of whether, in the absence of an express contract between them, an insurer responding to a first party property damage claim by its insured, is legally obligated, in contract or tort, to make direct payment to a contractor retained by its insured to repair/restore the insured’s damaged property. In its action, the plaintiff, a contractor, alleges that the insurer is so obliged. The defendant insurer, Dominion, posits that it is not and a trial is not required to arrive at that conclusion.

[2] As a result, Dominion moves pursuant to r. 20.01(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), for summary judgment dismissing the action, on the basis that there is no genuine issue requiring a trial with respect to the claims that the plaintiff asserts against it. The context in which the motion is brought follows.

II) NATURE OF THE ACTION

[3] In the action, the plaintiff, Cope Construction Limited carrying on business as Promus Windsor (“Promus” or “the Contractor”), claims damages from Dominion in the amount of $159,330.76 as the value of restoration work it performed in 2018, to repair water damage to a portion of a commercial plaza located at 1690 Huron Church Road, Windsor, Ontario (“the Property”). During that time, the Property was owned or leased by the non-party 1886384 Ontario Ltd. (“188” or “the Insured”).

[4] At the time the Property sustained damage, Dominion insured 188 against loss or damage to the Property pursuant to a commercial general liability policy that included “broad form” first party coverage for property damage and loss.

[5] Generally, Promus alleges that both 188 and Dominion contracted with it to repair the Property and that Dominion agreed to pay Promus directly for the repair costs, as a term of their contract.

[6] In May 2018, while repair work was ongoing, Dominion made an advance payment to 188 and the Royal Bank of Canada (a first mortgagee and the loss payee named in the insurance policy). The payment was made on the basis of the actual cash value (“ACV”) of the loss calculated at 80 percent of an estimate that Promus prepared in February 2018, with respect to anticipated repair/restoration costs. Prior to that payment and unbeknownst to Dominion, Promus arranged for a representative of 188 to execute an “Authorization and Direction to Pay Certificate” in March 2018 (two months prior to the payment), through which 188 authorized the repairs set out in Promus’ estimate and further authorized Promus to invoice its insurer (identified in the document as Travelers[^2]) directly for the amount of the estimate less a deductible ($2,500) and HST; and authorizing payment of the invoice as “submitted and approved by Travelers”. Neither 188 nor Promus provided a copy of the Authorization and Direction to Pay Certificate to Dominion or otherwise notified Dominion of its existence until August 29, 2018.

[7] On July 12, 2018, Promus approached Dominion about an interim payment for the ongoing repair work to the Insured’s Property, which was still in progress. Dominion advised Promus that it had already advanced an ACV amount to 188 and the Royal Bank and directed Promus to discuss its interim payment request directly with 188.

[8] 188 made an assignment in bankruptcy on August 1, 2018, without paying any amount to Promus. Promus now looks to Dominion to pay the value of the services it performed at 188’s Property for 188’s benefit, on the following bases.

[9] In its amended statement of claim, Promus alleges that Dominion is responsible for paying it for the full value of the restoration work that it performed to 188’s Property, both in contract and in tort (negligence and conversion).

[10] From a contractual perspective, Promus alleges that it was retained by 188 and Dominion to complete restoration work at the Property for an estimated cost of $230,420.89, inclusive of HST. It further alleges that it was an expressed or implied term of the contract that Dominion would directly pay Promus for its services. Promus alleges that the ACV proceeds that were paid to 188 ought to have been paid directly to it or, alternatively, made co-payable to 188 and Promus because the ACV advance “was to have been paid to cover the cost of the restoration work completed by” Promus. Promus submits that the existence of its contract with Dominion is supported by other instances in which Dominion paid its invoices for repair services effected to the property of other Dominion insureds in the context of claims unrelated to 188’s loss.

[11] Promus also alleges that Dominion owed it a duty of care “to ensure that Promus was paid for its work”, pursuant to which, at the very least, Dominion was required to issue cheques co-payable to 188 and Promus, for any amounts payable under the Policy “on account of repairs”. It alleges that Dominion breached its duty of care by failing to include Promus as a payee on the ACV advance payment cheque and by failing to advise Promus that it intended to make an ACV advance payment to the Insured and loss payee.

[12] Finally, Promus alleges in its amended statement of claim that the ACV funds that Dominion advanced to the Insured and loss payee actually belong to Promus and that Dominion wrongfully converted the proceeds by transferring them to the wrong parties. As a result, the plaintiff alleges that Dominion is liable in conversion. As will be detailed later below, during its oral submissions the plaintiff’s theory of conversion evolved into something that is not supported by the material facts plead in its amended statement of claim. In its factum and submissions, Promus also advances a theory of liability in unjust enrichment that was not expressly identified in its amended statement of claim.

[13] Dominion denies liability on the basis that it did not contract with Promus, at any time. Instead, it alleges that its only contractual relationship was with its Insured (188) and the Royal Bank as loss payee. Dominion alleges that Promus was retained directly by 188, who was Promus’ only contracting partner, at all times. Dominion asserts that Promus has no right of action against it because Dominion did not own the Property, Promus did not perform any services for Dominion’s benefit, Promus did not contract with Dominion to perform any services, and Dominion is not a party to any agreement between 188 and Promus.

[14] Further, Dominion posits that it did not owe the plaintiff a duty of care and alternatively, pleads that it did not breach any duty that it did owe, nor did it engage in conversion. It pleads that, at all times, it acted in accordance with the terms of the contract of insurance between itself and its Insured.

[15] Dominion now brings this motion for summary judgment dismissing the action against it on the basis that there is no genuine issue regarding its alleged liability that requires a trial to determine. Conversely, Promus posits that the defendant has failed to meet its onus to establish that a trial is not required to determine the issues in the action.

[16] For the reasons that follow, I am satisfied that Dominion has met its onus to show that there is no genuine issue that requires a trial in order to justly and fairly determine Promus’ action. The available record adequately allows me to determine that the action should be dismissed because: a contract for the repair of the Insured’s Property (and payment for Promus repair services) was not made between Promus and Dominion; Dominion did not owe Promus a duty of care to “ensure Promus was paid for the services” it performed pursuant to its restoration contract with 188; Promus was not the “true owner” of any funds formerly or currently held by Dominion; and Dominion was not unjustly enriched by Promus’ services because it did not receive a benefit from those services and the contract of insurance between Dominion and 188 provides a juristic reason for the payments under the Policy that Dominion made and did not make.

[17] I will explain my conclusion by first reviewing the factual matrix disclosed by the evidence, including the nature of the contract of insurance between Dominion and 188 and the corresponding obligations that contract imposed on them. I will then detail the parties’ positions and the legal principles applicable to the defendant’s motion. Next, I will determine the motion by applying those principles to each of the causes of action pled in the statement of claim, or otherwise advanced in the plaintiff’s oral submissions.

III) THE FACTUAL MATRIX DISCLOSED BY THE EVIDENCE

(a) The Witnesses

[18] The evidence primarily comes from the respective affidavits (and exhibits) and cross-examinations of Promus’ principal Ed Cope and Dominion’s former employee Doug Hawkins (the adjuster involved in 188’s claim). The only other witness, Attilio Sandre, is a former Director of Property Claims for Allstate Insurance Company of Canada, whom the plaintiff proposes as an “expert” on the applicable standard of care, in the event a duty of care is recognized. I will address his evidence later below.

[19] The evidence of Mr. Hawkins and Mr. Cope discloses the following narrative.

(b) The Damage to 188’s Property

[20] The plaintiff claims monetary damages for the value of repair/restoration work it performed in 2018, to repair water damage to a portion of a commercial property owned or leased by the non-party, 188. The water damage to the Property resulted from a January 4, 2018 pipe burst at the Property which caused significant flooding.

(c) Nature of the Insurance Contract Between Dominion and 188

[21] At the time of the damage, 188 was the named insured under a policy of insurance entitled “The Canadian Commercial Policy” issued by Dominion for a one-year term commencing September 16, 2017 (“the Policy”). The Policy’s declaration page describes 188 as a “commercial building owner” and names Royal Bank of Canada (“Royal Bank”) the first mortgagee, as a loss payee under the policy. Through the Policy, Dominion as insurer extended multiple forms of coverage to 188, including “broad form” insurance against loss or damage to property.

[22] A contract of insurance is a contract of indemnity: see Gore Mutual Insurance Company v. Carlin, 2018 ONCA 628, at para. 21, pursuant to which Dominion, as the insurer, had a duty of good faith to facilitate the Insured’s claim: see Gore, at para. 22. Pursuant to the Policy, Dominion was obligated to indemnify 188 for losses resulting from covered perils identified in the Policy. For the purpose of this action, there is no dispute that 188’s property damage loss occasioned through water damage fell within the scope of the broad form coverage.[^3]

[23] Absent the express consent of the Insured and loss payee, the Insurer must pay the proceeds of indemnity under the Policy to the Insured and the loss payee. The terms of the Policy do not afford Dominion, as insurer, a unilateral discretion to determine or select the manner in which it will make payment of the proceeds of indemnity payable to its Insured.

[24] Dominion’s obligation to indemnify 188 for loss or damage to its property is set out in section 1 of the Policy’s “COMMERCIAL BLDG, EQUIP & STOCK BRD FORM” as follows:

Indemnity Agreement

1. In the event that any of the property insured be lost or damaged by the perils insured against, the Insurer will indemnify the Insured against the direct loss so caused to any amount not exceeding whichever is the least of:

(a) the actual cash value [“ACV”] of the property at the time of loss or damage;

(b) the interest of the Insured in the property;

(c) the amount of insurance specified in the “Declarations” in respect of the property lost or damaged.

[25] The presumptive ACV basis of the Insurer’s obligation to indemnify the Insured, is also prescribed by “statutory and policy condition number 20” of the Policy, which is stated to apply to all perils insured by the insurance contract. Condition 20 provides:

BASIS OF SETTLEMENT

20. Unless otherwise provided, the Insurer is not liable beyond the actual cash value of the property at the time any loss or damage occurs and the loss or damage shall be ascertained or estimated according to such actual cash value with proper deduction for depreciation, however caused, and shall in no event exceed what it would then cost to repair or replace the same with material of like kind and quality.

[26] The Policy includes an “Enhancer Endorsement” which, among other things, identifies the circumstances in which the “basis for settlement” between the insured and the insurer will be amended from ACV to replacement cost as follows:

3. REPLACEMENT COST

(i) The Insurer agrees to amend the basis of settlement from actual cash value to “replacement cost” subject to the following provisions:

(a) “replacement” shall be effected by the Insured with due diligence and dispatch;

(b) settlement on a “replacement cost” basis shall be made only when “replacement” has been effected by the Insured and in no event shall it exceed the amount actually and necessarily expended for such “replacement”;

(c) failing compliance by the Insured with any of the foregoing provisions, settlement shall be made as if this endorsement had not been in effect;

[Emphasis added.]

(iii) In this extension,

(a) “replacement cost” means the cost of replacing, repairing, constructing or re-constructing (whichever is the least) the property on the same site with new property of like kind and quality and for like occupancy without deduction for depreciation; and

(b) “replacement” includes repair, construction or re-construction with new property of like kind and quality.

[27] In accordance with the ordinary meaning of the language used in section 3 of the Enhancer Endorsement, the Policy, unambiguously prescribes that the obligation to effect “replacement” rests with the insured rather than the Insurer. Until the insured effects replacement within the meaning of section 3(iii)(a) of the Enhancer Endorsement, the Insurer’s indemnity obligation to the insured for its loss remains on an ACV basis. Once the insured effects “replacement”, the basis of settlement for the insured’s claim becomes “replacement cost” within the meaning of section 3(iii)(a) of the Enhancer Endorsement.

[28] Finally, the conditions of the Policy expressly afford the Insurer an option to directly effect repair of the damage to the insured’s property, on its own, instead of making any payment to the insured. Specifically, “statutory and policy condition number 13” of the Policy which is stated to apply to all perils insured by the insurance contract, provides:

REPLACEMENT

13. (1) The Insurer, instead of making payment, may repair, rebuild or replace the property lost or damaged, giving written notice of its intention to do so within thirty days after receipt of the proof of loss.

(2) In that event, the Insurer shall commence to repair, rebuild, or replace the property within forty-five days after receipt of the proof of loss, and shall proceed with all due diligence to completion of the work.

[29] In written submissions, the parties agree that in this case, the Insurer did not elect to directly “repair” the Property in accordance with condition 13.

[30] I now turn to the case-specific circumstances.

(d) The Emergency Services Work

[31] On January 8, 2018, and prior to Dominion’s involvement in the loss, Jun Hao, the daughter of the principal of 188, contacted Promus and requested that it perform “emergency services” at the Property, which were necessitated by the flood. Mr. Cope, attended the Property the same day and determined the scope of emergency services, required. At Promus’ request, Ms. Hao executed an authorization on behalf of 188[^4] pursuant to which, among other things, 188 agreed that in the event that its “insurance company” did not provide insurance coverage for the emergency services completed by Promus, 188 would pay Promus’ eventual invoice for the emergency services it performed. Through the “authorization”, 188 also agreed to: promptly “endorse or remit any cheque issued co-payable” between Promus and 188 to, or in favour of, Promus; agreed to have Promus carry out water extraction, emergency drying, cleaning and debris removal and disposal services; and acknowledged that the authorization constituted a contractual agreement between 188 and Promus.

[32] Despite being contacted and retained by 188 and expressly contracting with 188, Promus alleges that “Travelers Canada”, hired it to perform emergency services at the Property on January 8, 2018. However, there is no evidence that Dominion and Promus interacted or communicated on January 8, 2018.

[33] Dominion acknowledges that on January 8, 2018, 188 submitted a claim for loss to it regarding property damage to the Property resulting from the burst pipe and flood. At the time of the loss, Dominion was one of several Canadian licensed insurers that comprised “Travelers Canada”. On January 9, 2018, Doug Hawkins, an adjuster with Dominion/Travelers Canada, assumed carriage of the claim on behalf of the Insurer. Dominion’s first written response to 188’s claim was by correspondence dated January 11, 2018.

[34] On January 12, 2018, Mr. Hawkins met with Mr. Cope at the Property, together with the principal of 188 and a real estate broker. Mr. Hawkins deposes that from his perspective, emergency services were clearly necessary in order to mitigate further damage to the Property, since there was a substantial amount of standing water in the basement of the flooded building and the walls and ceiling evidenced water damage.

[35] Promus eventually provided an estimate for emergency services work to “Travelers” and 188, dated January 10, 2018 (pre-dating Dominion’s site attendance) in the amount of $89,535.15 plus HST ($11,639.44) for a total of $101,173.59. At the time Dominion received it, the estimate had already been approved by 188. In his evidence, Mr. Cope asserts that the estimate was “accepted” by both 188 and “Travelers”. However, there is no evidence that Dominion expressly “accepted” or “rejected” the estimate or that it expressly entered into, or indicated that it intended to enter into, a contractual arrangement with Promus to directly pay for the emergency services to the Insured’s Property.

[36] Promus completed the emergency services work on February 2, 2018. On February 22, 2018, Promus issued an invoice which, on its face, was ostensibly made out “to” 188 with “Travelers Insurance” identified as a separate “ship to” addressee. The invoiced amount totals $101,173.59, consistent with Promus’ estimate. That invoice remained unpaid for several months.

[37] On or about July 12, 2018, Mr. Cope raised the issue of the outstanding invoice with Mr. Hawkins. In turn, Mr. Hawkins raised the outstanding invoice with 188 and advised Ms. Hao that Dominion recommended payment of the invoice by 188. Further, in order to resolve the long-standing unpaid invoice, Mr. Hawkins advised Ms. Hao that Dominion was willing to pay the invoiced amount less HST to Promus, provided that 188 expressly consented to it doing so. He inquired if 188 authorized and agreed to Dominion paying $89,534.15 to Promus “to resolve this issue”. 188 then communicated its consent to Dominion. As a result, on July 13, 2018, Dominion issued a cheque directly to Promus in the amount of $89,534.14, once it received the express consent of 188 to do so. Mr. Cope deposes that 188 separately paid the associated HST directly to Promus.

(e) The Repair/Restoration Contract Between 188 and Promus

[38] After the emergency services work was completed on February 2, 2018, Mr. Hawkins requested that Promus provide an estimate for the restoration work necessary as a result of the water damage. Promus subsequently prepared an estimate dated March 5, 2018, which totalled $180,043.70 (including HST in the amount of $20,712.94) with some items still “open”.

[39] By email correspondence dated March 8, 2018, Mr. Hawkins advised 188: about the content of Promus’ estimate and its amount; that since 188 is a commercial enterprise, the Policy would not pay HST; that Dominion was prepared to pay an advance to 188 on an ACV basis calculated as at 80 percent of the cost of repairs (less HST) as set out in Promus’ estimate ($159,330.76 x 80% = $127,464.61); and that 188 had the opportunity to claim replacement cost under the Policy by having repairs to the Property completed and if it did so, Dominion would indemnify 188 to a maximum of the $159,330.76 (the amount of the estimate less HST). Finally, Dominion expressly advised 188 that if it chose to pursue replacement cost, it (188) could contract with Promus to complete the repair work or any other firm that it wanted to utilize. Dominion did not actively participate in the Insured’s selection of a contractor to complete the repair work.

[40] On March 11, 2018, 188 advised Dominion that it wanted to claim replacement cost pursuant to the Policy by having repairs completed and that it (188) also wanted to contract with Promus to complete the work. On March 14, 2018, Dominion advised Promus that 188 decided to proceed with the estimated repair work through Promus. Dominion requested that Promus contact 188 to provide it with a “plan to complete the work” and further requested that Promus advise Dominion with respect to the timeline for the finalized estimate based on the open items contained in the original estimate. Promus responded the same day and advised Dominion that it would follow up with 188’s representative regarding a “repair schedule/work plan” and “repair authorization paperwork” and that it would complete the estimates on the open items.

[41] Dominion did not advise Promus that: it was contracting, or that it intended to contract, with Promus; it guaranteed that Promus would be paid by 188, or that it intended to satisfy its obligation to indemnify its Insured under the Policy, by making “indemnity payments” directly to Promus.

[42] Similarly, Promus did not advise Dominion that it subjectively believed that it was contracting with Dominion, that it expected direct payment from Dominion for the eventual restoration work that it was contracting with 188 to perform, that it expected Dominion “to ensure” it was paid, or that intended to obtain a direction to pay from 188 authorizing Dominion to pay Promus directly.

[43] Nonetheless, on March 21, 2018, at the request of Promus, Ms. Hao on behalf of 188 executed the following document:

Customers Authorization and Direction to Pay Certificate

This certificate to be signed and returned to Promus/Cope Construction Limited, for all Member companies, confirming authorization of repairs (including any necessary Emergency Repairs) in relation to Travelers Canada Insurance claim #1981200-18001 in the name of the insured(s), 1886384 Ontario Ltd.

This form will verify that the named insured on the policy of insurance (or an authorized representative of) has provided authorization for the commencement of necessary repairs as estimated by Promus/Cope Construction Limited as per estimate submitted.

Cope Construction Limited to collect policy deductible in the amount of $2,500.00 and the applicable HST on the total contract amount from the insured and invoice Travelers Canada for the remainder of the agreed estimated amount upon completion of this certificate.

AUTHORIZATION

I, “Jun Hao”, am authorizing the repairs at 1690 Huron Church Road, Windsor, Ontario according to the scope/estimate provided by Promus/Cope Construction Limited and Authorize payment of the invoice as submitted to and approved by Travelers Canada. [Emphasis in original.]

[44] The loss payee, Royal Bank, did not execute the Authorization and Direction to Pay Certificate.

[45] Neither 188 nor Promus provided a copy of the Customer Authorization and Direction to Pay Certificate to Dominion, contemporaneous with its execution, nor was Dominion specifically advised of its execution or even its existence, on a contemporaneous basis. To the contrary, the Authorization and Direction to Pay Certificate was not forwarded to Dominion until August 29, 2018.

[46] Further, Dominion did not execute any documentation evidencing a contract between Dominion and Promus for restoration of the Insured’s Property, or any documentation confirming that it would make direct payments to Promus, or otherwise ensure that Promus was paid for the restoration services that Promus contracted with 188 to perform. Promus did not request that Dominion execute any documentation consistent with the foregoing. Further, Mr. Cope testifies that he did not have discussions with Mr. Hawkins about direct payment by Dominion to Promus and Mr. Hawkins never indicated that Dominion would do so.

[47] On April 17, 2018 and May 16, 2018, Mr. Hawkins received email updates from Mr. Cope regarding the progress of the restoration work at the Property. The progress emails were prompted by status requests from Mr. Hawkins. In turn, Mr. Hawkins’ May 2018 status request was prompted by a request from the Insured, 188 for a status of the repairs. Mr. Cope provided his May 2018 progress report to both Dominion and 188. Apart from the above communications, the evidence does not disclose any other communications or interactions of substance between Dominion and Promus from mid-March 2018 to mid-July 2018.

(f) The ACV Advance Made By Dominion To Its Insured and the Loss Payee

[48] On May 18, 2018, in the absence of any knowledge of the existence and content of the Authorization and Direction to Pay Certificate and with the express consent of its Insured, 188, Dominion made an advance indemnity payment of $127,656.61 under the Policy through a cheque made co-payable to 188 and the loss payee, Royal Bank. The amount of the advanced payment was calculated on an ACV basis, as 80 percent of the cost of repairs as estimated by Promus, in March 2018.

(g) Promus’ July 2018 Revised Estimate and Its Attempt to Secure Interim Payment in July 2018

[49] On July 12, 2018, Mr. Cope, on behalf of Promus, sent email correspondence to Mr. Hawkins attaching a revised estimate to complete restoration of the Property totalling $230,420.39 inclusive of HST. Mr. Cope deposes that he also requested an interim payment at that time. There is no evidence that Promus provided Dominion with a copy of 188’s Authorization and Direction to Pay Certificate or that Promus advised Dominion about 188’s Direction to Pay, at that time. Promus concedes there is also no evidence that its revised estimate was accepted or authorized by 188, at any time.

[50] In a responding email on July 12, 2018, Mr. Hawkins advised Mr. Cope, among other things, that Dominion had already advanced 188 a total of $127,464.61 towards the repair costs, in a cheque made co-payable to 188 and the Royal Bank. He instructed Mr. Cope that Promus would have to look to 188 for payment and “Travelers” would make an additional payment once the restoration work was completed. 188 was copied on Mr. Hawkins email to Mr. Cope.

[51] In cross-examination, Mr. Cope testifies that further to Mr. Hawkins’ advice, Promus attempted to contact 188 by phone and “possibly” by email, without success. There is no evidence that Promus contemporaneously advised Dominion that it disputed the advance payment (on an ACV basis) that Dominion disclosed it had made to its Insured and the loss payee under the Policy.

[52] Then, on July 18, 2018, Promus issued an invoice which, on its face, was ostensibly made out to 188, with “Travelers Insurance”, listed as an additional “ship to” addressee, in the amount of $144,035.01 (including $16,570.40 HST). Mr. Cope testifies that Promus issued the invoice to both 188 and “Travelers”. There is no evidence that Promus provided a copy of the Authorization and Direction to Pay Certificate to Dominion or Travelers, when it sent the invoice, or at any other time prior to August 29, 2018 and there is no evidence that it otherwise advised Dominion about the existence and content of the direction to pay that 188 had previously executed.

(h) 188’s Bankruptcy

[53] Mr. Cope deposes that 188 made an assignment in bankruptcy on August 1, 2018. Prior to its bankruptcy, 188 did not pay Promus for any of the restoration work to its Property. Promus has since liened the Property and it asserts that 188 directly owes it for the value of all of the restoration and repair services that it performed. Promus is also said to be actively participating in 188’s bankruptcy, but the specific nature of its participation and its expected recovery are not disclosed in the record.

(i) Promus’ Belatedly Provides the Direction to Pay Certificate to Dominion in August 2018

[54] Mr. Cope deposes that on August 28, 2018, Promus forwarded email correspondence to Mr. Hawkins attaching “an estimate and accounting” of the work that Promus had performed at the Property to date, which he deposes has a value totalling $193,992.51 (a copy of that documentation is not included in the record). In response, Mr. Hawkins sent an email to Mr. Cope on August 29, 2018 asking if Promus had a signed authorization that would permit direct payment to it. Mr. Cope responded by email the same day, indicating that Promus had obtained an authorization for the initial emergency services work and a separate Authorization and Direction to Pay Certificate for the restoration work, and he forwarded copies of both documents to Dominion. Ostensibly, that was the first time that Dominion was provided with either authorization.[^5] Mr. Hawkins replied by email correspondence the following day and advised Mr. Cope that Dominion could not pay Promus directly because of its obligations to include Royal Bank, as mortgagee, as a co-payee on any cheque for proceeds paid out under the Policy.

(j) Repairs to the Property Were Not Completed

[55] Finally, Mr. Hawkins deposes that Dominion has never been advised by 188 or Promus that repairs to the Property have been completed. There is also no evidence that the trustee in bankruptcy or the loss payee advised Dominion that repairs were completed or that either of them sought further payment under the Policy. Mr. Hawkins inspected the Property on February 8, 2019 and determined that repairs were only partially completed and the Property’s state of repair would not satisfy the Policy requirements for payment of replacement cost.

(k) Evidence of Attilio Sandre

[56] In the context of the factual matrix above, Promus claims that it is entitled to payment of $159,330.76 from Dominion because (among other reasons) it contracted with Dominion for restoration of the Property and/or Dominion owed it a duty of care to ensure it was paid for its work at 188’s property. Promus reasons that to discharge its duty, Dominion should have made the ACV advance directly to Promus, or at least made the ACV advance cheque co-payable to 188 and Promus.

[57] To support its position that Dominion breached its duty of care, the plaintiff adduced affidavit evidence from Attilio Sandre, a former Property Insurance Director, principally for Allstate Insurance Company of Canada and briefly for Royal Bank of Canada Claims. Mr. Sandre retired from the insurance industry in 2014.

[58] In a report appended to his affidavit, Mr. Sandre indicates:

1. There are three general approaches to the conduct of property damage claims made by an insured to an insurer:

a) The insurer uses its own “preferred” and “approved” contractor to estimate the loss and perform temporary repairs. If the insured agrees, the contractor will proceed with the actual repairs to the property and it will periodically seek authority from the insurer with respect to the conduct of its work. In those situations, a bond or insurance agreement is typically in place “to ensure everyone’s protection”. [The parties agree that Promus was not a preferred contractor of Dominion/Travelers];

b) The insurer uses an independent appraiser or its own in-house staff to estimate the loss, which is then provided to various contractors and the insured selects the contractor it wishes to use;

c) The insured calls in its own contractor “who works along all parties involved”. Mr. Sandre states that in the circumstances of this case, Promus was called in by the Insured to effect emergency repairs. He asserts that Promus was “reviewed and approved by” Dominion not the Insured and that the Insurer made direct payment to Promus for the emergency work. He does not expressly aver to Mr. Hawkins’ advice to 188 (which was communicated to Promus) that the Insured was free to use any contractor it chose, in order to effect repairs to its own property, nor does he acknowledge that Promus’ emergency services invoice was paid directly by Dominion only after it obtained 188’s express consent to do so, in July 2018.

[59] Mr. Sandre indicates that in his experience it is unusual for an insurer to issue a cheque directly to either party (i.e., the insured or the contractor) without an agreement in place. He says a policy of issuing cheques “co-payable” to the insured and the contractor is “an accepted property insurance industry practice” and a common method of payment when dealing with an independent contractor (as opposed to a preferred contractor), where no formal agreement or bond is in place.

[60] In cross-examination, Mr. Sandre testifies that:

1. He has never worked at Travelers or Dominion and he is not aware of their internal policies.

2. He did not review the specific policy of insurance that was applicable to 188’s loss;

3. In arriving at his opinion, he did not conduct any research or consult any literature on the subject matter to which he opines;

4. When an insured elects to pursue replacement cost under a policy, the policy typically provides that payment by the insurer is made when repairs are complete. At times, ACV is advanced by the insurer before repairs are completed and Insurers can make advanced ACV payments before repairs are completed (as was the case in this instance).

5. When an insurer makes an ACV settlement with its insured, the loss payees are insured and the mortgagee. The insurer is obligated to pay both the insured and the mortgagee pursuant to the wording of the insurance policy;

6. In this instance, even if Promus had been made an additional co-payee on the ACV advance cheque in May 2018, the mortgagee (Royal Bank) would have remained a co-payee as well, and it would have had to have agreed to endorse the cheque, in order to allow Promus to deposit it for Promus’ own benefit;

7. Pursuant to the terms of insurance policies such as the one at issue, the insurer’s obligation is to indemnify its insured for the loss. Mr. Sandre agrees that in this instance, prior to making the ACV advance, Dominion did not receive the Authorization and Direction to Pay Certificate that was executed by 188 and that there was “nothing from the Insured to the Insurer” advising that the Insured had signed the Direction to Pay Certificate before the ACV advance was made;

8. 188 was indemnified for the ACV of its loss by Dominion’s May 2018 advance payment.

[61] In the context of the factual and evidentiary matrix above, I now turn to the positions of the parties.

IV) THE PARTIES’ POSITIONS

[62] Promus submits that the defendant has failed to meet its onus to demonstrate that there is no genuine issue that requires a trial to determine if it is entitled to damages from Dominion for breach of contract, negligence, conversion, and unjust enrichment.

[63] Promus alleges that it contracted with both 188 and Dominion for the restoration of the Property. It further alleges that the circumstances surrounding the totality of the parties’ respective conduct, objectively, evidences that Dominion and Promus intended to create legal relations (in the form of a contract) between them.

[64] In support of its position, Promus alleges that: prior to 188’s claim, it had an extensive history of performing repair work for Dominion/Travelers’ insureds and in every instance, it was paid directly by Dominion/Travelers for its work. It further alleges that in respect of 188’s claim, Dominion directed Promus’ work efforts and Promus communicated primarily with Dominion as opposed to 188. Finally, Promus submits that a contract between the parties is evidenced through Dominion’s direct payment for the emergency services related to 188’s property damage loss. In all the circumstances, Promus contends that there was a valid “offer and acceptance” between itself and Dominion with respect to the completion of the restoration work in accordance with Promus’ estimate, which Dominion requested and accepted.

[65] The plaintiff posits that “in light of the previous payment form the defendants to the plaintiff in respect of the emergency work and the ongoing communication between the plaintiff and the defendants claims professional Doug Hawkins, Dominion’s direct payment of an ACV advance to 188 and the Royal Bank constituted a breach of the parties’ contract”.

[66] Promus also alleges that Dominion owed it a duty of care in tort to ensure that Promus was paid for its restoration services at the Insured’s Property, which Dominion breached by:

(a) failing to make inquiries with respect to the proper payee of the May 2018 ACV advance payment;

(b) paying the May 2018 ACV advance to the wrong party;

(c) failing to pay the May 2018 ACV advance payment to the plaintiff, despite knowing that it was “entitled” to the proceeds; and

(d) failing to include the plaintiff as a co-payee on the ACV advance payment cheque that it made payable to 188 and the Royal Bank.

[67] Promus also originally alleged that Dominion wrongfully converted the proceeds of the May 2018 ACV advance payment, which Promus asserts it “owned”, by transferring the proceeds to 188 and the Royal Bank. In its submissions, the plaintiff posited that Dominion is wrongfully withholding approximately $102,000 (the difference between the ACV advance and the total amount of Promus’ July 2018 revised repair estimate). Promus contends that it is the lawful owner of funds in that amount that are currently held by Dominion, and Dominion’s refusal to release those funds to Promus constitutes conversion. It also alleges that Dominion is unjustly enriched, to Promus’ detriment, by its failure to pay that amount to Promus. It claims Dominion received a windfall benefit because it only indemnified the Insured on an ACV basis, despite the value of the repairs performed exceeding ACV.

[68] Promus asserts that there are genuine issues with respect to each of the causes of action it asserts that require a trial to determine and as a result, the motion must be dismissed.

[69] Dominion denies all the allegations of liability asserted against it. It submits that it did not hire the plaintiff to complete repairs to the Property and any work performed by Promus arises from a contract between Promus and 188. It submits that it did not benefit from the services that the plaintiff provided because it did not own the Property. It contends that the subject matter in dispute relates to an insurance contract between Dominion and 188, to which the plaintiff is not privy, and an agreement between 188 and the plaintiff, to which Dominion was not privy. To the extent that it interacted with Promus in relation to the work it performed to the Insured’s property, Dominion submits it did so as agent of the Insured.

[70] Dominion also submits that it did not owe Promus a duty of care, it did not engage in conversion; and it was not unjustly enriched. Instead, it was obligated to conduct itself in accordance with the Policy with its Insured and it did so.

[71] Based on its positions that I will detail later below, Dominion asserts that there are no genuine issues relating to the liability allegations against it that require a trial to determine and, therefore, summary judgment is warranted.

[72] I turn now to the legal principles applicable to the determination of Dominion’s remedial request.

V) SUMMARY JUDGMENT

(a) The Legal Principles Applicable to a Motion for Summary Judgment

[73] Rule 20.01(1) of the Rules provides that:

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.

[74] Rules 20.04(2)(a) and (2.1), in part, provide:

(2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence;

Powers

(2.1) In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at trial:

1. Weighing the evidence.

2. Evaluating the credibility of the deponent.

3. Drawing any reasonable inference from the evidence.

[Emphasis added.]

[75] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 (“Hryniak”), Karakatsanis J. observes that the judicial determination of civil disputes must embrace processes other than a traditional trial, where such processes may result in more accessible, proportional, timely and affordable modes of adjudication that yield fair and just resolutions of such disputes. The following principles emerge from Hryniak:

1. The procedure used to adjudicate a civil dispute must fit the nature of the claim. If the process is disproportionate to the nature of the dispute and the interest involved then it will not achieve a fair and just result (para. 29);

2. A genuine issue requiring a trial will not exist when the judge is able to reach a fair and just determination of an action on the merits, on a motion for summary judgment. This will occur when the process (1) allows the 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 [than a trial] (para. 49);

3. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost-effective. However, a process that does not provide a judge with confidence in her conclusions can never be a proportionate method to resolve a dispute (para. 50);

4. On a summary judgment motion, the evidence need not be equivalent to that at trial, but must be such that the judge is confident that she can fairly resolve the dispute. A documentary record, particularly when supplemented by the new fact-finding tools, including ordering oral testimony [pursuant to r. 20.04(2.2) in Ontario] is often sufficient to resolve material issues fairly and justly (para. 57);

5. The standard of fairness is, therefore, not whether the procedure utilized to resolve the parties’ dispute is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute (para. 50).

6. The fact-finding powers under r. 20.04(2.1) and (2.2) are discretionary and are presumptively available to the motion judge. They “may” be exercised unless it is in the interest of justice for those powers to be exercised only at trial (para. 45);

7. In determining whether “it is in the interest of justice” that the r. 20.04(2.1) fact-finding powers only be exercised at trial, the motion judge may be required to assess the relative efficiencies of proceeding by way of summary judgment, as opposed to trial (including the cost and speed of both procedures). The determination may also involve a comparison of the evidence that will be available at trial and the evidence available on the motion, as well as the opportunity to fairly evaluate that evidence. However, even when the evidence available on the motion is limited, there may be no reason to think better evidence will be available at trial (para. 58);

8. When a judge is able to fairly and justly adjudicate a claim through the use of the new fact-finding powers it will generally not be against the interest of justice to do so. What is “fair and just” turns on the nature of the issues, the nature and strength of the evidence and the correspondingly proportional procedure, in all the circumstances (para. 59);

9. In considering whether the use of the fact-finding powers accords with the “interest of justice” a judge must consider the consequences of the motion in the context of the litigation as a whole. For instance, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact. Conversely, the resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost-efficient approach (para. 60);

10. On a motion for summary judgment the judge should first determine if there is “a genuine issue requiring trial” based only on the evidence before her, without using the new fact-finding powers. If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the fact-finding powers under r. 20.04(2.1) and (2.2). She may, at her discretion use those powers provided that their use is not against the interest of justice (para. 66); and

11. While summary judgment must be granted if there is no genuine issue requiring a trial, the decision to use either the expanded fact-finding powers or to call oral evidence is discretionary, thereby giving the judge some flexibility in deciding the appropriate course of action in the context of a particular motion (para. 68).

[76] Notwithstanding the “culture shift” away from the primacy of trial and towards a proportional adjudicative process that yields a fair and just result, there will still be cases that must go to trial. Evidence by affidavit prepared by the parties’ legal counsel can obscure the affiant’s authentic voice making the judge’s task of assessing credibility and reliability difficult. Accordingly, the motion judge must take care to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantial unfairness enters the procedure in a way that would not likely occur in a full trial, when the judge sees and hears it all: see Yusuf v. Cooley, 2014 ONSC 6501, 123 O.R. (3d) 474, at paras. 8 and 21, and Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, at para. 44.

[77] The evidentiary principles applicable to motions for summary judgment that were developed prior to the enactment of the current provisions of r. 20.04 continue to apply. The motion judge must still take a “hard look” at the evidence to determine whether the moving party has met its onus to demonstrate that there is no genuine issue requiring a trial. Each party must still put its best evidentiary foot forward and submit cogent evidence to support or oppose the relief sought. The motion judge is entitled to assume the record contains all the evidence the parties will adduce at trial. The responding party cannot reasonably rely on the position that a genuine issue requiring a trial exists because additional supportive evidence may emerge at trial: see Kolosov v. Lowe’s Companies Inc., 2016 ONSC 1661, at para. 33, aff’d 2016 ONCA 973; Aranas v. Kolodziej, 2016 ONSC 7104, at para. 34; Mazza v. Ornge Corporate Services Inc., 2015 ONSC 7785, at paras. 48–50, aff’d 2016 ONCA 753.

[78] Summary judgment motions are decided by evidence of the facts and, if appropriate, by reasonable and permissible inferences drawn from those facts (i.e. not by speculation about the facts): see Chernet v. RBC General Insurance Company, 2017 ONCA 337, at para. 12.

[79] Finally, the Court in Hryniak recognized that summary judgment motions will not be the answer in all situations and emphasized the judges must take into account the “consequences of these [summary judgment] motions in the context of the litigation as a whole”: see Hryniak, paras. 33 and 60. Further, the Court of Appeal for Ontario has confirmed that nothing in Hryniak detracts from the overriding principle that summary judgment is only appropriate where it leads to a “fair process and just adjudication”. Summary judgment remains the exception, not the rule: see Mason v. Perras Mongenais, 2018 ONCA 978, at para. 44.

(b) The Principles Applied

(i) Summary Judgment is a Fair, Just and Proportionate Procedure to Determine the Action

[80] In applying the foregoing principles and for the reasons that follow, I am satisfied that the evidentiary record available in the context of this motion adequately permits me to fairly and justly determine the plaintiff’s action.

[81] In addition, summary judgment represents the most proportionate, the most expeditious and least expensive means to fairly and justly determine the action. A trial is not required to determine any issue necessary to adjudicate the plaintiff’s claims. I will explain.

[82] First, the available evidence allows me to:

1. Make the necessary findings of fact required to determine the causes of action asserted against the defendant; and

2. To apply the relevant legal principles to the facts as found.

[83] Overall, there are very few factual disputes between the parties. The disposition of the action primarily turns on the findings of law (such as the existence of a duty of care) and mixed fact and law that arise in the operative factual matrix. A trial is not required in order for the court to make those findings. Instead, those findings can be made on this motion, with confidence.

[84] Specifically, I am mindful that there is a conflict in the evidence with respect to whether the plaintiff provided Dominion with a copy of the authorization for the emergency services work that 188 executed in January 2018, prior to Dominion directly paying a portion of Promus’ February 2018 emergency services invoice, in July 2018 (once it received express consent from the Insured to do so). As I will explain later in these reasons, the totality of the record allows me to resolve that dispute fairly and justly without the necessity of a trial.

[85] The record also discloses an issue with respect to the adequacy of the confirmatory evidence led by Promus to support Mr. Cope’s affidavit evidence that in his “over 30 years of experience in the insurance industry”, insurers (including Travelers) have always directly paid a contractor who has made repairs to an insured’s damaged property or, alternatively, have issued cheques co-payable to the insured and the contractor for the value of such services. In support of his evidence in that regard, Mr. Cope appends a modest amount of documentation as an exhibit to his affidavit, which he generally asserts is demonstrative of his proposition. As I will explain later below, the “confirmatory” evidence is not persuasive. However, that does not result in a genuine issue requiring a trial.

[86] This is a summary judgment motion in which each party must put its best evidentiary foot forward and must submit cogent evidence to support or oppose the relief sought. The court is entitled to assume that the available record contains all of the evidence that the parties will adduce at trial. Promus made a deliberate decision with respect to the extent to which it would adduce documentary evidence to confirm Mr. Cope’s evidentiary assertion referred to above. If further or better evidence on the point was available, it ought to have been adduced in the context of this motion. A responding party cannot reasonably rely on the position that a genuine issue requiring a trial exists because additional supportive evidence may emerge at trial.

[87] In the result, to the extent they raise “genuine issues”, the limited number of factual issues between the parties can be readily determined by resort to the fact-finding powers available pursuant to r. 20.04(2.1) of the Rules and in all of the circumstances, it is in the interests of justice to do so. I will explain.

[88] First, in the context of this motion, the available evidence of key witnesses is relatively straightforward and has been subjected to cross-examination. There is no reason to believe that the evidence available at trial will be better or more robust. Given the minimal nature of the factual issues arising from the evidence, determining those issues in the context of this motion is the most proportionate means by which to achieve a fair and just adjudication of the action on its merits. Second, the legal issues raised by the parties and the policy considerations inherent in the determination of those issues (including those related to whether Dominion owed a duty of care to Promus) are capable of being fairly and justly disposed of based on the record adduced by the parties. A trial is not required.

[89] In the result, I conclude that the available record is sufficient to fairly and justly determine the issue of Dominion’s liability. Therefore, I will now determine the substantive issues raised on the motion.

VI) DISPOSITION

Issue #1: Has The Defendant Demonstrated That There is No Genuine Issue Requiring A Trial To Determine Whether Dominion Is Liable To Promus In Contract?

[90] The plaintiff generally submits that a trial is required to fairly and justly determine whether, in all the circumstances, there was a contract between Promus and Dominion that requires Dominion to directly pay Promus for its restoration work to 188’s Property. If so, Dominion’s non-payment is a breach.

[91] I accept Dominion’s position that there is no issue in that regard that requires determination at trial. To explain my conclusion, I will set out additional relevant contextual background to the issue, the parties’ respective positions and the applicable legal principles to determine whether the circumstances objectively disclose the existence of a contract between Promus and Dominion. I will then set out the reasons for my conclusion that such a contract was not formed, by referring, in part, to the case-specific circumstances, including the parties’ alleged “past practice”. I will then explain my reasons for concluding that the application of the principles set out in analogous previously decided cases, support that there was no contract between Dominion and Promus.

(a) Relevant Contextual Background and the Positions of the Parties

[92] The parties do not dispute the existence of the following distinct contracts, related to 188’s loss:

1. The contract of insurance between 188 and Dominion, the terms of which require Dominion to indemnify 188 for its insured loss; and

2. The contract between 188 and Promus, pursuant to which 188 authorized Promus to complete restoration work at its Property, as set out in Promus’ February 2018 estimate.

[93] The parties differ over: the existence of a third contract made between Promus and Dominion, pursuant to which Dominion is alleged to have “hired” Promus to carry out the post-emergency services restoration work at the Property; or, alternatively, whether Dominion was an additional party to the restoration contract between 188 and Promus.

[94] The existence of a “third contract” or Dominion’s status as a party to the contract between 188 and Promus, is essential to the plaintiff’s allegation of breach of contract. That is so because Promus is not positioned to advance its own claim for indemnity, pursuant to the insurance contract between 188 and Dominion. Promus is not a party to that contract, it has no insurable interest in the Insured’s Property and there is no evidence that 188 assigned its legal entitlement to indemnity under the insurance contract to Promus. Correspondingly, the plaintiff has not advanced a position that it is entitled to direct indemnification under the Policy between 188 and Dominion.

[95] The plaintiff also does not submit that the insurance contract vests Dominion, as the insurer, with the unilateral power or discretion to determine to whom it will pay proceeds under the Policy, when it discharges its obligation to indemnify its insured for a loss. The terms of the Policy do not afford Dominion such power or discretion.

[96] Further, the parties agree that Dominion did not elect to pursue “replacement” under condition 13 of the Policy, which is set out earlier above. Had it done so, Dominion would have been relieved of making any payment to its Insured and instead would have been required to “repair/rebuild” the Property directly. Accordingly, there is no basis to conclude that a contract between Dominion and Promus was formed as a consequence of a direct obligation on Dominion to repair the Property in accordance with condition 13. Instead, pursuant to section 3 of the Enhancer Endorsement, the obligation to effect repairs to the Property, in order to satisfy the conditions for settlement on a replacement cost basis, remained solely with the insured, 188.

[97] The Insurer is not required by the terms of the Policy to enter into a contract with a contractor selected by the Insured for the purpose of effecting repairs to the Property. To the contrary, the Policy allocates the responsibility of effecting repairs to the Property, solely to the Insured. Nonetheless, Promus posits that Dominion did contract with it for repairs contemporaneously with 188.

[98] In support of its position that it made a contract with Dominion that obligates Dominion to pay it directly for its restoration services, Promus reasons:

1. Once the emergency services work was completed, Dominion requested that Promus prepare an estimate for the restoration work. Promus says this was an “invitation to treat”. Eventually, Promus delivered “an offer to Dominion to perform restoration services” in the form of its February 2018 estimate. Dominion “accepted” the estimate/offer and a contract was formed. Promus then had the Insured, 188, execute an authorization to allow it to complete the repairs and a direction to allow Promus to invoice Dominion directly and to authorize payment of the invoice, as submitted to and approved by the Insurer;

2. Promus regularly updated Dominion on the status of the restoration work and Dominion (as opposed to 188) was its primary contact during the restoration work;

3. Promus held a reasonable expectation that Dominion would pay it directly for the restoration work based on the foregoing circumstances, together with Dominion/Travelers’ past practice of paying Promus directly for its restoration work in other claims unrelated to 188’s loss. This expectation was bolstered by Dominion’s direct payment of Promus’ invoice for the initial emergency services at 188’s Property.

[99] Overall, Promus submits that it agreed to complete the restoration work on the basis that it would be paid directly by Travelers/Dominion in a manner consistent with Travelers’/Dominion’s past conduct of direct payment for Promus’ services. Promus also asserts that it was led to believe that it had a contract with Travelers/Dominion through the Insurer’s conduct and its performance in “accepting the estimates, paying for invoices and giving instructions” to Promus. A term of the contract was that Dominion would pay Promus directly when invoiced. It failed to do so. A breach is made out.

[100] Promus submits that, at the very least, there is a genuine issue requiring a trial with respect to the existence of a contract between Promus and Dominion.

[101] Dominion submits there is no genuine issue concerning its alleged liability in contract that requires a trial to determine. Instead, it is clear on the record that, objectively, a contract for the restoration work was not made between the parties. The objective circumstances do not support Mr. Cope’s subjective belief that such a contract existed.

[102] For the reasons that follow, I find that Dominion has met its onus to demonstrate that there is no genuine issue with respect to its asserted contractual liability that requires a trial to determine. The record adequately allows me to confidently make any necessary findings of fact required to dispose of the issues and to apply the law to the facts as found. In so doing, I am able to determine that a contract was not formed between Dominion and Promus for restoration services to the Insured’s Property. The only contract for such services was made between 188 and Promus.

(b) The Applicable Legal Principles

[103] In finding that a contract between Promus and Dominion was not made, I am satisfied that the record does not disclose persuasive evidence of an objective intention by them to enter into legal relations. I make that determination by applying the following legal principles, which are set out by the plaintiff in its factum:

(a) The determination of an intention to create legal relations is objective. The question is not what the parties subjectively had in mind, but whether their conduct was such that a reasonable person would conclude that they intended to be bound. In answering this question, courts are not limited to the four corners of the purported agreement but may consider the surrounding circumstances: see Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral v. Aga, 2021 SCC 22 (“Ethiopian Orthodox”, at para. 37.

(b) The conventional approach to contract formation is to construe the parties’ course of conduct according to the traditional requirements of offer and acceptance: see Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29 (“Owners, Strata”), at para. 36. An objective approach is applicable to determine whether a course of conduct constitutes acceptance of an offer: see Owners, Strata, at para. 30.

(c) In determining whether the parties’ conduct meets the conditions for contract formation, the court must examine “how each party’s conduct would appear to a reasonable person in the position of the other party”: see Ethiopian Orthodox, at para. 35.

(d) In applying the objective test, the nature of the relationship among the parties and the interests at stake may be relevant to the existence of an intention to create legal relations. The question in every case is what intentions objectively manifest in the parties’ conduct: see Ethiopian Orthodox, at para. 38.

(c) The Principles Applied

[104] The plaintiff submits that in applying the foregoing principles, it is clear that the parties’ respective conduct objectively manifests their mutual intention to contract. Promus reasons that Mr. Hawkins’ instruction to it, to finalize an estimate for the restoration work was an invitation to treat and Promus’ provision of that estimate constituted an offer to both 188 and Dominion. The estimate for the restoration work was accepted, and Promus regularly updated Dominion with respect to the status of the work and reported directly to Dominion. As a result, Promus reasons that there was binding contract between itself, 188 and Dominion with respect to the restoration work with a reasonable expectation that Dominion would pay Promus directly for its services. That expectation was bolstered by the conduct and performance of Dominion in paying cheques directly to Promus in the past, as well as, paying Promus directly for the emergency services work.

[105] I do not give effect to Promus’ position. I will explain.

[106] The determination of what the parties objectively manifested through their conduct must be made in the context of Dominion’s role as an insurer responding to a first party claim for property damage made by its own insured (188) together with the nature of the insurance contract between Dominion and 188.

(i) Contextual Considerations

[107] In my view, the circumstances in this instance, including the nature of Dominion’s interactions with Promus throughout the course of 188’s claim would not lead a reasonable person to conclude that the parties intended to contract with each other for the restoration of 188’s Property.

[108] From an objective perspective, through its principal, Mr. Cope (a contractor with over 30 years experience providing services in the context of insured property damage claims). Promus was well positioned to know, at the time that it alleges that it contracted with Dominion for repairs to 188’s Property that:

(1) Dominion was obligated to indemnify its Insured, 188, for its loss pursuant to the provisions of the Policy;

(2) Pursuant to the Policy, Dominion was not obligated to repair, or directly pay a third party for repair services effected to the Property;

(3) Dominion did not own the Property and it would not benefit from repairs to the Property. Instead, 188 would exclusively benefit from Promus’ anticipated restoration work;

(4) Dominion owed 188 a duty of good faith to facilitate its claim;

(5) As a condition to entitlement to replacement cost under the Policy, 188, not Dominion, was obligated to effect repairs to the Property;

(6) Dominion did not have authority, power or discretion to pay indemnity proceeds to anyone other than the Insured and the loss payee, without the express consent of the Insured and loss payee being communicated to it. Consistent with that proposition, Mr. Cope testifies that in each of the instances in which Dominion made direct payment to Promus in the unrelated claims that Promus identifies through the documentary evidence adduced on the motion, the Insurer’s payment was made with the respective insureds’ express authorizations and consents to the Insurer to do so.[^6]

(7) Apart from condition 13, there are no express provisions in the Policy that authorize or empower the Insurer to enter into a contract with a third party, in which the Insurer purports to authorize, on its own behalf, the third party to enter onto and effect restoration of the Insured’s property.[^7]

[109] In my view, the foregoing considerations inform, in part, the manner in which a reasonable person in the place of Promus would view the interactions between Dominion and Promus throughout 188’s claim, and objectively, from the perspective of a reasonable person, the extent to which those interactions evidenced the parties’ mutual intent to create legal relations (through a traditional offer and acceptance dynamic). However, before examining the parties’ specific interactions, I make the following findings.

[110] The Insurer’s decision to refrain from invoking condition 13 is a factor that objectively militates against the determination that Dominion and Promus entered into a contract for the repair of 188’s property. Had Dominion engaged that condition, it would have assumed direct responsibility to repair the Property and it would have been relieved of making any payment to its Insured. From an objective perspective, had Dominion intended to contract with Promus for the Property’s restoration, with a corresponding assumption of legal responsibility for payment for Promus’ services, electing to invoke condition 13 would have facilitated that result in a more reasonable and commercially efficient manner than creating a situation in which both Dominion and 188 were Promus’ contracting partners, as Promus now submits.

[111] Further, consistent with the considerations set out above, a reasonable person in Promus’ position would know that the terms of the contract it proposes (i.e., the Insurer was contractually obligated to unequivocally make direct payment to Promus, as opposed to the Insured and loss payee) would inherently conflict with the Insured’s contractual obligation to directly indemnify the Insured and/or loss payee for the loss. As a result, a reasonable person would conclude that absent the express communicated consent of the Insured and loss payee authorizing the Insurer to enter into such a contract, an Insurer would stridently avoid doing so in order to avoid creating a conflict with its obligation to indemnify the Insured.

[112] In the context of the foregoing considerations, I turn to the case specific interactions between Dominion and Promus.

(ii) Lack of Any Express Assertion or Acknowledgement By Promus or Dominion That a Contract Was Formed Between Them

[113] There is no written or other express agreement between Promus and Dominion pursuant to which Dominion agreed to retain Promus, on its own behalf, to repair 188’s Property, or at all. There is also no evidence that Promus expressly communicated its own “acceptance” of Promus’ February 2018 estimate for the repair/restoration of the Property, on its own behalf, or at all. Further, Mr. Cope on behalf of Promus acknowledges that Dominion did not, at any time, expressly represent to Promus that it would pay for the repair/restoration work nor did it represent or confirm that it was contracting with Promus for its services. Mr. Cope concedes that he simply assumed, based on “past practice”, that Dominion would pay Promus directly for the restoration work.

[114] As I will explain later below, I find Dominion’s conduct, from the objective perspective of a reasonable person in Promus’ place, does not evidence its intention to create legal relations with Promus including through the “acceptance” of the estimate as an “offer”. Rather, objectively, Dominion’s conduct is consistent with its efforts to facilitate the Insured’s claim. As set out later below, the decided cases support that from an objective perspective, Dominion acted as the Insured’s agent for the purpose of soliciting an estimate for repair work from Promus, providing the estimate to the Insured, advising the Insured of its options (including its ability to have repair work performed by Promus or any other contractor it chose, or not performed at all) and then communicating to Promus the Insured’s decision to contract with Promus, to Promus.

(iii) The Circumstances Surrounding The Emergency Services Work Do No Objectively Support a Contract Between Promus and Dominion for the Restoration Services

[115] There is no dispute that Promus was initially retained exclusively by 188 to perform emergency services, prior to Dominion’s involvement in the loss. Dominion had no role in selecting Promus as the Insured’s contractor, nor did it have the authority to object to 188’s decision in that regard. When Dominion first became involved in the loss, in January 2018, the prevailing concern was emergency remediation of the Insured’s property in order to prevent further loss. Mr. Hawkins testifies that at this stage, as an adjuster, his role was to assist the Insured, by ensuring that its damages were being property mitigated and gaining an understanding of Promus’ costing. Promus provided Dominion with a copy of its estimate for emergency services.

[116] Objectively, the foregoing aspects of the parties’ conduct do not manifest their mutual intent to enter into a contract for the provision of emergency services related to the Insured’s Property nor an “offer” and “acceptance” in that regard. Before Dominion became involved in its Insured’s claim, Promus and 188 had already entered into a written contract pursuant to which 188 authorized Promus to carry out specifically identified emergency services. There is no evidence that Dominion’s express authorization was required, or even sought, prior to that contract being made or as a pre-condition to Promus beginning the emergency services work. As the Insurer ultimately responsible for indemnifying 188 for its loss, it was objectively reasonable for Dominion to pursue an estimate from Promus to evaluate its potential indemnity obligation to the Insured without impliedly contracting with Promus to perform the services that Promus was already contractually obligated to perform on behalf of 188, and/or a contract to pay Promus directly for those services.

[117] Further, in cross-examination, Mr. Cope on behalf of Promus confirms that the emergency services authorization that Ms. Hao executed on behalf of 188, at Promus’ request, described a contractual relationship that was exclusively between 188 and Promus.[^8] Mr. Cope agrees that neither Dominion nor Travelers were signatories to the authorization document, which was executed before representatives of Dominion, Promus and 188 met at the property on January 12, 2018. Moreover, unlike the subsequent Direction to Pay Certificate related to restoration services, the authorization does not provide for, or authorize, direct payment by the Insurer to Promus for its emergency services work. Instead, the Insured agreed to “promptly endorse and remit any cheques issued co-payable between Promus Inc. and 188”. However, 188 never directed or authorized Dominion to issue a cheque co-payable to itself and Promus, for any reason or at any time.

[118] Dominion did not execute any documentation confirming or creating a contractual relationship between itself and Promus with respect to emergency services, nor did it execute any documentation agreeing to directly pay Promus for any amounts that Promus invoiced for emergency services. Pursuant to the Policy, 188 as the Insured was the only entity with authority to retain and authorize Promus to carry out emergency services to its Property. Dominion had no power or discretion under the Policy to unilaterally: select a contractor to effect emergency services or repairs to the Insured’s property; insist that the Insured obtain its approval to use a particular contractor to effect repairs or emergency services to the Property; reject a contractor selected by the Insured; insist that the Insured consult with it, before the Insured hired a contractor; or to otherwise “authorize” or refuse to “authorize” commencement of emergency services or restoration work to the Insured’s property by the contractor selected by the Insured.

[119] The Insured was responsible for effecting repairs to the Property and, as a result, it controlled the means by which the repairs were effected. Dominion as the Insurer, was not empowered by the provisions of the Policy to discharge Promus or any other contractor selected by the Insured during the course of the contractor’s work nor was Dominion empowered to prevent the Insured from discharging Promus or any other contractor that the Insured retained, during the course of the contractor’s work, if the Insured chose to do so.

[120] In short, in accordance with the contract of insurance between Dominion and 188, neither 188 nor Promus required an “authorization” or “an acceptance” of an “estimate” by Dominion before Promus was positioned to perform emergency services or restoration work to 188’s Property.

[121] In all of the circumstances set out above, a reasonable person in Promus’ position would objectively conclude that:

1. in January 2018, 188 and Promus contracted for Promus to perform emergency services at the Insured’s Property designed to mitigate 188’s losses;

2. as the entity with an interest in the property, 188 would receive a benefit from Promus’ anticipated work;

3. Dominion was not a party to the contract between 188 and Promus, which was formed before Dominion became involved in the loss;

4. Dominion’s contractual responsibility was limited to its indemnity obligations to its Insured; and

5. in the absence of a communicated direction or communicated consent from the Insured to the Insurer, indemnity for the loss was presumptively payable to the Insured/loss payee in accordance with the terms of the Policy. In turn, the Insured was responsible for paying the Contractor (Promus) for the services that the Insured contracted with it to perform.

[122] In the context of all of the foregoing, Dominion’s conduct relating to the emergency repairs did not objectively manifest its intent to contract with Promus. From Dominion’s perspective, there was no reason to do so.

(iv) Dominion’s Direct Payment of Promus’ Emergency Services Invoice Does Not Objectively Support A Contract Between Dominion and Promus with Respect to Promus’ Restoration Services

[123] In arriving at the conclusions stated above, I remain mindful that Promus relies on Dominion’s eventual direct payment (in July 2018) of its emergency services invoice (rendered at the end of February 2018) as objective evidence of a contract between Promus and Dominion for the subsequent restoration work that was performed at 188’s Property. I do not give effect to that position. I will explain.

[124] I begin by resolving the conflict in the evidence with respect to whether Dominion received a copy of the emergency services authorization executed by 188 prior to the Insured’s eventual bankruptcy. The issue informs Promus’ position that Dominion paid its emergency services invoice in July 2018, on the strength of 188’s authorization and that conduct objectively evidences its intention to enter into legal relations with Promus concerning payment for restoration services. For reasons I will set out later below, I would not give effect to the latter aspect of that position, even if I had concluded that Dominion was aware of the content of the emergency services authorization before August 29, 2018. In that sense, the evidentiary conflict does not relate to a genuine issue because its determination does not affect the disposition of the motion or the action. However, it is capable of being fairly and justly resolved on the available record, in any event.

[125] In cross-examination, Mr. Cope deposes that a copy of that authorization was provided to Mr. Hawkins during the parties’ meeting with representatives of the Insured at the Property on January 12, 2018. Conversely, Mr. Hawkins testifies that Dominion was not provided with the emergency services authorization prior to August 29, 2018.

[126] In my view, the record adequately allows me to confidently find that Dominion was not provided with the emergency services authorization until it was emailed to Mr. Hawkins by Mr. Cope on August 29, 2018 (at the same time that Promus first sent Dominion the March 21, 2018 “Customer Authorization and Direction to Pay Certificate” executed by Ms. Hao on March 21, 2018). I reach that conclusion for the following reasons:

1. There is no contemporaneous documentation evidencing that Mr. Hawkins was provided with a copy of the emergency services authorization on January 12, 2018 (or any other time before August 29, 2018).

2. Promus did not refer to the authorization in February 2018, when it sent its invoice for emergency services to 188, with a “ship to” copy to the Insurer.

3. When Dominion paid a portion of the emergency services invoice in July 2018, it did not do so pursuant to the authorization that the Insured executed in January 2018. Instead, Mr. Hawkins expressly communicated with the Insured through Ms. Hao, on July 12, 2018, confirming that he had been advised by Mr. Cope that Promus had still not been paid for its emergency services invoice rendered to 188 in February 2018. Mr. Hawkins recommended to Ms. Hao that the invoice be paid by 188, but to resolve the issue, Dominion was willing to pay the amount directly to Promus provided 188, as insured, expressly consented to the payment. Mr. Hawkins then received express consent from Ms. Hao to make direct payment to Promus. Acting on the Insured’s express consent, as communicated in July 2018, Dominion made direct payment for the emergency services work (less HST).[^9] Mr. Hawkins testifies and I accept that direct payment was made by Dominion to Promus in the absence of Dominion’s receipt of the Insured’s January 2018 authorization. Rather, it was made with the Insured’s express consent in July 2018. I further accept his evidence that Dominion would never make a direct payment to an Insured’s contractor in the absence of the Insured’s explicit consent.

In my view, the fact that Dominion expressly required the Insured’s communicated consent in July 2018 in order to pay Promus directly, accords with Mr. Hawkins’ evidence that as of July 2018, Dominion had not received the January 2018 authorization executed by the Insured. Further, there is no evidence that Mr. Cope, on behalf of Promus, raised the authorization or otherwise advised Mr. Hawkins of its existence when he advised Dominion, in July 2018, that its emergency services invoice remained outstanding.

4. In response to Mr. Hawkins’ August 29, 2018 inquiry about whether Promus had an authorization executed by the Insured that would permit direct payment to Promus for its restoration work, Mr. Cope disclosed that Promus had obtained an authorization for the initial emergency services and subsequently, a separate authorization for the restoration work. Mr. Cope included copies of both authorizations in his August 29, 2018 email to Mr. Hawkins. Mr. Cope did not assert in his August 29, 2018 email that the emergency services authorization had previously been provided to Dominion. The parties agree that the August 29, 2018 email was the first time that the restoration authorization was provided to Dominion. In that context, I find that Promus’ August 29, 2018 advice to Dominion concerning the existence of both authorizations and its delivery of both authorizations to Dominion at that time, is consistent with and supports Mr. Hawkins’ evidence that the emergency services authorization had not been provided to Dominion prior to that date.

[127] For the reasons above, I accept Mr. Hawkins’ evidence that Dominion was not aware of the emergency services authorization at the time of the July 2018 partial direct payment to Promus for its emergency services invoice and I reject Mr. Cope’s evidence that it was provided to Dominion in January 2018.

[128] In my view, even if the emergency services authorization had been provided to Dominion prior to July 2018, it would have evidenced that Promus understood the necessity of providing copies of authorizations executed by Insureds for direct payment (by the Insurer to the Contractor) to the Insurer as a pre-condition to the Insurer being positioned to make such a payment, which for reasons set out below objectively militates against the formation of the contract Promus alleges.

[129] Promus relies, in part, on Dominion’s direct payment of the emergency services invoice as proof of a contractual relationship between Promus and Dominion, that obligated Dominion to pay Promus directly for its subsequent restoration services. Promus reasons that Dominion’s direct payment of the emergency services invoice is evidence of the parties’ “past practice”. For the following reasons, I disagree.

[130] First, the emergency services invoice had not been paid by anyone as of mid-March 2018, when Promus alleges that Dominion “accepted” its estimate for restoration work and entered into a contract directly with it in that regard. Objectively, since the emergency services invoice remained unpaid at the time that Promus submits its contract with Dominion was formed, Promus could not have relied on Dominion’s direct payment of that invoice to support a view that Dominion intended to enter into legal relations with, it concerning the performance of restoration services at the Insured’s property, or an objective view that Dominion had otherwise “accepted” the restoration estimate.

[131] Second, the face of the emergency services invoice that Promus created ostensibly indicates that its principal recipient is 188, which is the entity to whom the invoice was made. Promus only identifies Travelers as a “ship to” addressee, not as a principal debtor. The invoice remained unpaid (including by Travelers) for approximately four months after it was delivered. In July 2018, when Promus advised Dominion that it had not been paid by 188 for the emergency services work, Dominion arranged to make direct payment after obtaining the express consent of its Insured to do so. It did not purport to pay Promus directly based on the existence of a contract between Promus and Dominion.

[132] Objectively, Dominion’s direct payment of the emergency services invoice only after obtaining the express consent of its Insured, does not support the existence of a “past contract” between Promus and Dominion for emergency services, or a mutual intent between the parties to create a legal relationship in that regard. Instead, it objectively militates against the formation of such a contract and the existence of such intent. If a contract existed between the parties, or they objectively intended to enter into a contract with respect to emergency services, 188’s consent to Dominion’s direct payment of Promus’ invoice for those services would have been completely unnecessary. Instead, Dominion would have been required to make direct payment on its own behalf, in accordance with its own contract with Promus, rather than or behalf of 188 and only at 188’s direction.

[133] Similarly, from an objective perspective, the invoice that Promus created does not support the existence of a “past contract” for emergency services between Dominion and Promus. On its face, the invoice was sent to 188. While it was “shipped to” Travelers, the invoice only identifies 188 as its named recipient, which is consistent with a view by a reasonable person in Promus’ position that Promus’ emergency services contract remained solely with 188, in respect of the emergency services performed at 188’s Property.

[134] The foregoing circumstances are consistent with Mr. Hawkins’ evidence that, at times, Dominion and Travelers have directly paid service providers retained by their respective insureds (including Promus), but only with the express consent of their respective insureds.

[135] Finally, the circumstances surrounding Promus’ performance of its emergency services contract with 188 objectively discloses that in circumstances in which Dominion intends to undertake to authorize and bear direct responsibility for payment of an aspect of the emergency services work performed by a service provider/contractor otherwise retained by an insured, it does so through ordinary, unambiguous and express language that is consistent with its intent in that regard.

[136] Specifically, on January 22, 2018, Ms. Hao advised Mr. Hawkins by email that two of the commercial tenants at the Insured’s Property were experiencing sewer backups in their commercial units. Ms. Hao further advised Mr. Hawkins that she believed the backups were caused by waste flow into the Property’s drains during Promus’ emergency services work. She asked Mr. Hawkins if she should request Promus’ assistance to clean the drains at the Insured’s Property. Mr. Hawkins forwarded the entire email chain to Mr. Cope and requested that Promus assist in resolving the issues faced by 188’s tenant. Mr. Hawkins specifically advised Mr. Cope that he would authorize Promus to incur costs associated with determining the cause of the backups and the remediation of same. In my view, Mr. Hawkins’ conduct, objectively, demonstrates that in circumstances in which Dominion authorizes work to be performed by a contractor otherwise retained by an insured for which Dominion accepts responsibility to make direct payment to the contractor, it does so through clear, express and unambiguous language.

[137] By contrast, Dominion never clearly or expressly requested Promus to conduct restoration work to the Property, for its own benefit or at all, nor did Dominion clearly and expressly agree to enter into a contract with Promus for such work. Dominion never advised or represented to Promus that it would deviate from its obligation to indemnify its Insured under the terms of the Policy, in favour of contracting with Promus to unequivocally make direct payments to it for restoration work, when invoiced.

(v) The Circumstances Surrounding The Alleged March 2018 Contract Between Promus and Dominion

[138] In the context of all of the foregoing, I turn to the determination of Promus’ assertion that a reasonable person would objectively conclude that the parties made a contract in March 2018 that obligated Promus to carry out the scope of restoration work at the Insured’s Property as set out in its February 2018 estimate and correspondingly obligated Dominion to pay Promus directly for its services in accordance with the estimate. On the available record, I am able to determine that a reasonable person would objectively conclude such a contract was not formed and the parties did not hold a mutual intent to enter into the legal relations in the form of the bargain that the plaintiff alleges, or at all. There is no genuine issue requiring a trial in that regard.

[139] In reaching that conclusion, I do not give effect to the plaintiff’s submissions that, objectively viewed, Mr. Hawkins’ request that Promus prepare an estimate for the restoration work was an “invitation to treat”, in respect of a potential contract between Promus and Dominion to repair/restore the Insured’s Property.

[140] Instead, in all the circumstances, I accept that from the objective perspective of a reasonable person in Promus’ position, Dominion’s request for an estimate from the Contractor that had been previously retained by the Insured, was consistent with Dominion’s efforts to both assist the Insured with its claim under the Policy and to determine the extent of its own indemnity obligations by quantifying the loss.

[141] Mr. Cope agrees in cross-examination that part of Mr. Hawkins’ role as adjuster was to “figure out” how much the Insured was entitled to receive on an ACV and replacement cost basis. At the time that the estimate for repair work was requested, the Insured had not yet elected whether it would fully settle its indemnity claim under the Policy with the Insurer on the basis of an ACV payment without repair, or whether it would pursue settlement of its claim on the basis of replacement cost by effecting repairs. Objectively, a reasonable person in Promus’ position would anticipate and expect that in order to make an informed decision in that regard, the Insured would require specific information about the anticipated cost of the repair work and the corresponding ACV of the loss (calculated with reference to the anticipated replacement cost). That person would also reasonably expect that the Insurer would similarly require that information in order to meaningfully advise the Insured about its options under the Policy and to determine the amount of any interim ACV advance payment it may make to the Insured (in the event that the Insured pursued replacement cost) or the amount of the ACV settlement should the Insured elect not to repair the property.[^10]

[142] The circumstances surrounding the estimate support the conclusions set out above. Specifically, Ms. Hao sent an email to Mr. Hawkins on January 12, 2018, in which she inquired about the “next steps” in the loss process. Mr. Hawkins advised her in an email on January 15, 2018, among other things that he would request a “quote on repair”, and he confirmed repairs would not proceed without 188’s permission. He also requested that Ms. Hao confirm that 188 agreed with that approach. In a reply email sent the same day, Ms. Hao communicated 188’s agreement and added “and we can discuss and confirm the repair once we receive the quote for the repair”.

[143] In my view, the foregoing exchange evidences what is, from an objective perspective, otherwise patently discernible from the nature of the relationship between 188 and Dominion. Specifically, Dominion was not purporting: to obtain an estimate with respect to repairs to the Insured’s Property for its own benefit and/or for the purpose of extending “an invitation to treat” to Promus, on its own behalf; or otherwise, to directly enter into a contract with the contractor providing the estimate. Rather, Dominion requested the estimate to provide its Insured with assistance in the Insured’s claim.

[144] There is no evidence that Dominion advised Promus that it was requesting an estimate for the cost of restoration work for the purpose of contracting directly with Promus or that it expressly advised Promus that it would directly pay Promus for any restoration work for which the Insured contracted.

[145] Promus eventually provided Dominion with a detailed twelve-page estimate for restoration services to 188’s Property. Despite its length, the estimate does not contain any express terms or indication that Promus was “offering” to contract with Dominion instead of, or in addition to 188, to repair/restore the Insured’s Property or that Dominion would be contractually required to pay Promus’ invoices directly, even in the absence of the Insured’s communicated consent.

[146] Dominion did not “accept” or communicate “acceptance” of the estimate to Promus. Instead, it contemporaneously provided the estimate to its Insured and correctly advised the Insured, among other things, that it was prepared to advance funds based on 80 percent of the amount of the estimate (excluding HST). Dominion also advised 188 that 188 had the right to pursue replacement cost, by repairing the property. Dominion also advised Ms. Hao that in the event that 188 pursued replacement cost, 188 could contract with Promus or any other firm that 188 wanted to use to complete the work set out in the estimate. Dominion did not indicate that it would be a party to any repair/restoration contract that the Insured made.

[147] In response, on March 12, 2018, Ms. Hao forwarded email correspondence to Mr. Hawkins confirming that the Insured (188) would pursue replacement cost by having the Property repaired and she expressly confirmed that 188 “would like to contract with Promus to complete the work”. She questioned whether 188 was required to execute any additional paperwork. Objectively, 188’s correspondence evidences that the Insured contemporaneously understood that it would be contracting directly with Promus to effect the repairs to the Property.

[148] On March 14, 2018, Mr. Hawkins forwarded his complete email exchange with Ms. Hao, set out above, to Mr. Cope and confirmed that 188 decided to proceed with the estimated work through Promus. Mr. Hawkins did not indicate that Dominion: intended to contract directly with Promus for the restoration/repair work; agreed to pay Promus directly for the restoration/repair work; or “accepted” Promus’ restoration estimate on its own behalf. Further, through the email chain forwarded to it by Mr. Hawkins, Promus was positioned to know that: Dominion was prepared to make an immediate advance ACV payment to the Insured before completion of the repairs; Dominion had no role in selecting Promus as the contractor to perform the repair work to the Insured’s Property; and the decision to retain Promus was made solely by 188. There is no evidence that Mr. Hawkins and Mr. Cope had discussions about 188’s contract with Promus to perform the services detailed in Promus’ estimate, beyond the content of their email communications.

[149] In my view, a reasonable person in the place of Promus would not objectively view the content of Mr. Hawkins email communication to Mr. Cope on March 14, 2018, when read as a whole, as disclosing an intention by Dominion “to accept” Promus’ restoration work estimate on its own behalf or an intent to enter into legal relations directly with Promus. To the contrary, objectively Mr. Hawkins’ correspondence clearly and unequivocally evidences Dominion’s intention that Promus’ only contract for restoration of the Property would be with 188, as the entity that: would benefit from the work to be performed; had an interest in the Property to be repaired; and decided to pursue repair work, selected Promus to perform that work and expressly indicated its intention to enter into a contract with Promus to perform that work.

[150] In his email correspondence to Mr. Cope, Mr. Hawkins also requested that Promus follow up directly with 188 regarding a work plan and scheduling. Mr. Cope responded to Mr. Hawkins by email on March 14, 2018, confirming that he would do so and further indicated he would follow up with the Insured regarding “repair authorization paperwork”. In his email communication, Mr. Cope did not disclose or confirm his subjective views that: a contract had been formed directly between Dominion and Promus for the repair work; Promus expected direct payment from Dominion; or that Dominion’s authorization for repairs to the Property (as distinct from 188’s authorization) was or would be sought by Promus. Mr. Cope also failed to advise Mr. Hawkins that the repair authorization that Promus intended to obtain from 188 would include a direction to pay from the Insured that authorized Dominion/Travelers to directly pay Promus’ eventual invoice for the restoration work (less deductible and HST).

[151] Objectively, from the perspective of a reasonable person in Dominion’s position, Mr. Cope’s commitment that Promus would follow up directly with the Insured to implement the repairs and obtain its authorization for the repairs supports that the contract for repairs to the Insured’s Property was intended to be solely between 188 and Promus.

[152] Next, Promus contacted 188 and obtained a “Customer Authorization and Direction to Pay Certificate” executed by Ms. Hao, that authorized Promus: to commence the repairs set out in its February 2018 estimate. Neither Dominion nor Travelers were a party to the authorization and neither Promus nor 188 provided it to Dominion/Travelers or notified Dominion/Travelers about it, until August 29, 2018.

[153] In cross-examination, Mr. Cope confirms that Dominion was not a signatory to either the emergency services contract that Promus had with 188 nor the restoration work authorization made between 188 and Promus, which were the only two authorizations 188 executed. However, Mr. Cope testifies that, subjectively, he believed that Travelers would pay Promus’ invoice directly. He deposes that Promus obtained the restoration work authorization from 188, to ensure that it received direct payment from Travelers, rather than a cheque co-payable to the Insured and Promus. Mr. Cope further deposes that the purpose of the authorization was to ensure that Promus completed the repairs to the satisfaction of the Insured.

[154] Mr. Cope concedes that he did not have any discussions with Mr. Hawkins (or anyone else at Dominion) about the method or manner of Promus’ payment for the restoration work. However, he also observes that Mr. Hawkins never advised Promus that Dominion intended to pay its Insured directly.

[155] Mr. Cope testifies that if he had been advised by Mr. Hawkins that Dominion intended to pay 188 directly, Promus would have taken steps to protect itself, including sending a notice letter to the owner of the Property pursuant to the Construction Lien Act, requesting a deposit or payment “upfront” from the Insured and providing the Insured with interim invoices, as repair work proceeded. Mr. Cope concedes that Promus was not prevented from engaging in any of those actions in this instance. However, he explains that Promus did not do so because he (Mr. Cope) assumed Promus would be paid directly by Travelers/Dominion and he believed that Promus was working directly for Travelers. He states that subjective belief in that regard was informed by Travelers/Dominion’s past practice and its conduct during the 188 project, the particulars of which follow below.

(vi) Past Practice Does Not Objectively Support The Formation Of A Contract Between Dominion and Promus

[156] In terms of “past practice” Mr. Cope deposes that his companies have handled approximately five Travelers’ claims per year for the past 25 years. He testifies that in all his previous dealings with Travelers (prior to 188’s claim), Travelers always paid the company directly for its work or issued cheques co-payable to the insured and the contracting repair company. His experience in that regard is not limited to Travelers. Mr. Cope also deposes that based on his experience in the insurance industry for more than 30 years, payments from insurers have always been either payable directly to the contractor or co-payable to the insured and the contractor. However, Mr. Cope does not provide evidence with respect to: whether such payments were always made in circumstances in which the insured executed an authorization permitting the insurer to make a payment from the proceeds of insurance that were otherwise payable to the insured, to an entity other than the insured and the loss payee.

[157] Mr. Cope’s evidence is contrasted by Mr. Hawkins’ evidence concerning Dominion’s general and preferred practice of advancing ACV of the loss to the Insured as quickly as possible, even when the Insured is pursuing replacement cost and effecting repairs to the subject property.

[158] To confirm his evidence concerning “past practice”, Mr. Cope attaches copies of three cheques made by Travelers/Dominion payable to Promus and three cheques made by Travelers/Dominion payable to Cope Construction Limited arising from claims unrelated to 188’s loss.

[159] Of the three cheques made payable directly to Promus, at least two relate to the same claim and insured. The third cheque is not accompanied by any information identifying the insured or the type of loss/reason for payment. All three cheques payable by Dominion/Travelers directly to Promus are dated after the date in mid-March 2018 that Promus alleges that it entered into a contract with Dominion for the repair work to 188’s property.[^11] The three cheques that are payable to Cope Construction Ltd. relate to a single claim and insured and were made by Dominion/Travelers before, or contemporaneous with the date that Promus alleges it contracted with Dominion for the repair work to 188’s property.[^12]

[160] In cross-examination, Mr. Cope was unable to offer details with respect to any of the circumstances in which Travelers/Dominion made the above-referred cheques directly payable to either Promus or Cope Construction Ltd., other than that authorizations were obtained from the respective insureds, in each instance, to allow the insurer to make the direct payment to Promus/Cope Construction. Mr. Cope did not testify that any of the historical direct payments to which he deposes, were made by Travelers/Dominion in circumstances equivalent to those in this instance, where the authorization for direct payment was obtained from the insured, but the authorization was not provided or communicated to the insurer. In the absence of evidence that Travelers/Dominion made direct payments to Cope Construction Ltd./Promus in other unrelated claims in circumstances that were the same as those in this instance (i.e., no communicated consent from insured to insurer allowing insurer to make direct payment), I am unable to find that the evidence adduced by Promus concerning the parties’ asserted past practice/conduct is sufficient to support a finding that the parties’ mutual intent to create legal relations is objectively manifest by their conduct in this instance.

[161] However, the past practice evidence offered by the plaintiff does support a finding, which I make, that, objectively, Promus believed it was necessary to obtain authorizations from named insureds as a precondition to an insurer paying it directly for services performed on behalf of the insured. That finding militates against Promus’ position that a reasonable person would objectively conclude that a contract between an insurer (in this case Dominion) and a contractor (in this case Promus) is formed as a result of an insurer requesting an estimate for necessary repair work to its insured’s property, the contractor providing an estimate and ultimately, the insured deciding to pursue replacement cost and electing to have repairs performed in accordance with the estimate. Objectively, if that process resulted in a contractual relationship between the insurer and the contractor that obligated the insurer to make direct payment to the contractor in any event of the insured’s consent, an authorization from the insured for the payment would not be necessary.

[162] In addition, this is a summary judgment motion in which the parties are, respectively, obligated to put their best evidentiary foot forward. The court is entitled to determine this motion on the basis that the evidence presently before it will be the same as the evidence available at trial. In so doing, I am left to conclude that the limited number of cheques that are posited to evidence the parties’ alleged past practice of “contracting” between themselves falls well short of confirming Mr. Cope’s general conclusory affidavit evidence that in over 30 years of experience in the industry, payments from insurers (including Dominion/Travelers) have always been payable directly to the contractor or co-payable to the insured and the contractor.

[163] On Mr. Cope’s evidence, his companies have been involved in at least 125 claims over the past 25 years, in which Travelers was the insurer (averaging five claims per year). Based on his evidence, Promus/Cope Construction Ltd. would have been involved in approximately 25 claims in which Travelers was the insurer, during the five-year period that immediately preceded 188’s property damage loss. However, Promus only produced two cheques that were made payable directly to Promus/Cope Construction (which were related to a single claim) by Dominion, before the date that Promus alleges it made a contract with Dominion in March 2018. The totality of this evidence does not persuasively establish a “pattern of past conduct” sufficient to objectively support a mutual intent by the parties to create legal relations between them in March 2018, in respect of the repair work to 188’s Property, or at all.

(vii) Dominion’s Involvement With Promus During the Course of 188’s Claim Does Not Objectively Support A Contract Between Dominion and Promus

[164] Apart from past practice, Promus posits that Dominion’s level of involvement and control over Promus’ work during the course of Promus’ emergency services and subsequent restoration work objectively supports the existence of a contractual relationship between Promus and Dominion. Mr. Cope deposes that during the emergency services work: Promus was of the view that it was “answerable to Travelers”; Travelers “dictated instructions” to Promus and virtually all communications with respect to the emergency services work were between Promus and Travelers. To confirm his evidence in that regard, Mr. Cope appends to his affidavit copies of:

a) Email communication from Mr. Hawkins to Promus dated January 13, 2018, in which Mr. Hawkins requests that Promus re-measure the size of a damaged unit at the Insured’s Property;

b) Email correspondence from Mr. Hawkins to Mr. Cope dated January 15, 2018, in which he advises Promus that he received confirmation from the Insured that it agreed to a plan pursuant to which Promus would commence emergency services work at the Property immediately, a quote for subsequent repair work would be obtained, and the Insured would discuss the issue of repairs after it received the quote.

c) An email communication from Mr. Hawkins to Mr. Cope dated January 27, 2018, in which Mr. Hawkins forwarded email correspondence from Ms. Hao concerning sewer backup in two units at the Insured’s Property. Ms. Hao suspected the backup may have been caused by Promus’ emergency services work. Mr. Hawkins requested Promus assist in resolving the matter; and

d) An email from Mr. Hawkins to Mr. Cope dated February 5, 2018, confirming a recent onsite meeting between them at the Insured’s Property, and listing a number of open items for repair.

[165] Turning to the interactions between Promus and Dominion during Promus’ restoration work, the evidence discloses relatively minimal communication between them, after 188 contracted with Promus to effect repairs to the Property. Specifically, after Mr. Cope advised Mr. Hawkins on March 15, 2018, that he would follow up with the Insured concerning a repair schedule, it appears that Mr. Hawkins and Mr. Cope next communicated on April 16, 2018, when Mr. Hawkins requested an update on the progress of repairs from Promus. Mr. Cope provided an update the following day. Mr. Hawkins and Mr. Cope next communicated on May 15, 2018, when Mr. Hawkins forwarded Mr. Cope an email from Ms. Hao dated May 14, 2018, in which she requested an update “on the claim”. In response, Mr. Cope sent email communication to both Ms. Hao and Mr. Hawkins on May 16, 2018, outlining the work that Promus had completed to date, together with Promus’ intended timing to complete the balance of repairs set out in its February 2018 estimate.

[166] I am not persuaded that the Insurer’s interactions with Promus concerning the scope and progress of Promus’ work during the course of repairs, objectively evidences a contractual relationship between Promus and Dominion for repairs to the Insured’s Property. Instead, the nature of Dominion’s involvement is consistent with its efforts to facilitate the Insured’s claim in the overall context that the Insured, not the Insurer, was obligated to repair the Property pursuant to their contract of insurance.

(viii) The Totality of the Circumstances Disclosed By The Evidence Does Not Support A Finding of Contract Between Dominion and Promus

[167] For the foregoing reasons, I am satisfied that the defendant has met it onus to demonstrate that there is no genuine issue that requires a trial to determine the plaintiff’s cause of action asserted in contract. The record allows me to determine that the totality of the circumstances in this instance, objectively viewed from the perspective of a reasonable person, does not support findings that: Promus and Dominion contracted for the repair of 188’s property; Dominion contracted with Promus to pay it directly for its repair services; Dominion intended to create legal relations with Promus.

[168] In reaching the conclusion above, I have had regard to the cumulative effect of the totality of the circumstances relied upon by Promus.

[169] There is no evidence that the parties expressly entered into the asserted contract and Promus acknowledges it had no discussions with Dominion concerning its subjective view that a contract existed between Promus and both Dominion and 188.

[170] The evidence of Dominion’s direct payment to Promus in other unrelated claims and its direct payment of the emergency services work (made several months after the alleged contract was made) do not assist Promus in establishing the existence of a contract with Dominion. The evidence reveals that the direct payments were made in other instances at the direction and with the consent of the respective insureds, which is consistent with the insurer discharging its obligation to indemnify the insured under the policy, in a manner that the insured instructs, rather than the insurer performing a payment obligation that is independent of the contract of insurance and instead, prescribed by a contract between the insurer and the contractor retained by the insured.

[171] In this case, the Insured’s direction/authorization was not communicated to the Insurer before the ACV payment was made and, in any event, was superseded by the Insured’s subsequent consent and authorization that was communicated to the Insurer, to pay the May 2018 ACV advance to the Insured and the loss payee.

[172] Finally, the Insurer interacted with the Contractor during the course of emergency services and repair work, for the benefit of the Insured. The Insurer had no interest in the Property and did not benefit from the restoration work performed by the Contractor. The Insurer’s role, when interacting with the Contractor, is appropriately characterized as the agent of the Insured.

[173] The foregoing conclusions are generally consistent with the findings in previously decided cases, which I have considered and applied in arriving at my conclusions above and to which I now turn.

(ix) The Previously Decided Cases Do Not Support a Finding of Contract Between Dominion and Promus

[174] The decided cases consistently hold that an insurer in the position of Dominion acts as the insured’s agent, rather than on its own behalf, when it interacts with a contractor effecting repairs to the insured’s property, even in situations in which the nature of the insurer’s involvement is more extensive and substantial than Dominion’s involvement with Promus in this instance. The decided cases also consistently hold that circumstances similar to those in this instance, do not support a finding of the existence of a contract between an insurer and a contractor retained by an insured to repair its own damaged property. The authorities are canvassed below.

(ix.1) Hoelzler Construction Ltd. v. Seidler

[175] In Hoelzler Construction Ltd. v. Seidler, 2008 BCCA 77 (“Hoelzler”), a commercial building owned by the defendant insureds suffered fire damage. The plaintiff, a building contractor, succeeded at trial for payment of approximately $34,000 in outstanding invoices related to repairs to the defendants’ property for which the defendants had insurance coverage. The judgment arose in the following context.

[176] An independent adjuster, BCAC Adjusting Ltd., was retained by the defendants’ insurer to administer its property damage claim. The independent adjuster sought bids from contractors, to repair the property based on a detailed outline for the project that the adjuster prepared. The adjuster invited the defendant insureds to provide the names of additional contractors that would be invited to bid. The defendants provided two names including the plaintiff. The plaintiff was ultimately selected by the adjuster to effect repairs.

[177] During the course of repairs, the defendants terminated the plaintiff, owing to concerns over the quality of its work. Prior to the plaintiff’s termination, the independent adjuster had issued it two cheques, each in the amount of $50,000. The first cheque was endorsed by the defendants but the second was deposited by the contractor without the defendants’ endorsement and debited against the plaintiff’s outstanding account. The plaintiff sued the defendant insureds for the remaining value of its unpaid work.

[178] At trial, the defendant insureds were found to be liable to the plaintiff contractor for the outstanding amount of its invoices. The trial judge held that a contract existed solely between the contractor and property owners (and not the insurer) as implied actual authority arose from the relationship set out in the contract of insurance. The trial judge held that the defendant insureds, not the insurer, had an obligation to repair the building. The insurer’s obligation was to provide indemnity, but no more. In retaining the plaintiff, the independent adjuster could only be acting as agent for the defendant insureds, who would benefit from the repair of their property.

[179] The trial judge also held that on a literal reading of the policy of insurance, the defendant insureds were required to engage a contractor, instruct the contractor on what constituted proper replacement, pay for the work, then seek reimbursement from the insurer. The trial judge observed that in practice, it would be a rare case where the insured had either the cash flow or the expertise to proceed on that basis, and, as a result, adjusters become involved in managing such projects as the independent adjuster did in that case.

[180] The defendant insureds unsuccessfully appealed the trial result, on the grounds that they were not parties to the contract for repairs to their property because, in their submission, the independent adjuster did not act as their agent in hiring the plaintiff contractor to effect repairs and the adjuster had no authority to do so. The defendant insureds also asserted that the trial judge erred by focusing on the terms of the insurance contract, rather than exploring the “substance of the relationship between the parties”.

[181] The Court of Appeal was satisfied that a relationship of agency existed between the insurer/independent adjuster and the defendant insureds/property owners for the following five reasons:[^13]

a) There were no legal grounds for the insurer to authorize the independent adjuster to contract on its own behalf with the plaintiff to effect repairs to the insureds’ property;

b) The defendant insureds participated throughout the construction process without protest, which indicated implied authorization for the adjuster to engage a contractor on their behalf;

c) The defendant insureds as owners of the building, had ultimate control over the selection of contractors and the performance of the repairs;

d) The defendant insureds exercised control over the construction contract with the plaintiff by attending the site and monitoring the plaintiff’s work and ultimately terminating the contract with the plaintiff; and

e) The insurer and the adjuster did not have the ability to override the owner’s decision to terminate the repair contract because they could not authorize any work to the insureds’ property unless it was approved by the insureds as owners.

[182] In dismissing the appeal, the Court of Appeal also held:[^14]

As in most cases like this, the adjuster BCAC had a dual role. First, it was appointed by the insurer Federation to quantify the amount of the loss payable under the terms of the insurance policy. This fire policy obliged the insurer to indemnify its insured for losses to the extent they were insured. It obliged the insurer to pay the replacement cost of the lost or damaged property, rather than its actual cash value.

The provisions of both the indemnifying agreement and the replacement cost endorsement make it clear that the insurers’ only obligation under the policy was to indemnify the insured for its losses in effecting the replacement of the damaged property “with due diligence and dispatch”. The adjuster’s duty to the insurer was to see that it did not pay more than the policy required it to pay in accordance with its terms.

The adjuster’s second role arose from the insured’s acceptance of and reliance upon the assistance provided by the adjuster in arranging for the repairs or replacement. Here, specifications for the necessary repairs were prepared by the adjuster and sent to the owners for their approval. Those specifications were the means of quantifying the insurer’s obligation under the policy. However, the specifications were also the basis on which bids were solicited from contractors for effecting the repairs. The defendant owners acquiesced in the adjuster’s soliciting bids on their behalf from interested contractors. Indeed, the owners suggested additional contractors to whom the specifications might be sent.

As owners of the building, the defendants had ultimate control over what work was done and who did it. …

The only reasonable inference is that the defendants impliedly consented to the adjuster hiring the plaintiff as the contractor engaged to effect the specified work. The insurer could not have made this decision on the owners’ behalf without the owners’ consent. The insurer’s only duty was to pay the indemnity due under the policy. [Emphasis added.]

[183] In Hoelzler, through its independent adjuster, the insurer’s scope of involvement and interaction with the contractor repairing the insured’s property was much more extensive than Dominion’s involvement with Promus in this instance. In Hoelzler, the insurer, through its adjuster, was directly involved in formulating the process by which the plaintiff contractor was retained to perform repair services to the insureds’ property. In this instance, 188 retained and authorized Promus to perform emergency services before Dominion became involved in the claim. Subsequently, Dominion was not involved in the selection of Promus as the contractor performing restoration services at 188’s property. Rather, Dominion advised its insured of the terms of the replacement cost endorsement and 188, alone, decided to contract with Promus for repairs. Dominion was clear in communicating to Promus that the Insured wanted to proceed with repairs performed by Promus and it transparently provided Promus with its full email exchange with 188 in that regard.

[184] In addition, similar to the circumstances in Hoelzler: there were no legal grounds for Dominion to directly contract with Promus to complete repairs to the Insured’s property; 188 as the entity with an interest in the Property had ultimate control over the selection of the Contractor to perform the repairs; 188 engaged directly with the Contractor and provided authorizations for it to complete emergency services and restoration work at its Property; Promus provided a work plan and schedule to the Insured not the Insurer; and Dominion did not have the power to independently select or contract with a contractor to repair the Property, to object to its Insured’s selection of a contractor or to terminate the Contractor that its Insured selected.

[185] The foregoing context further supports my finding that any directions that the Insurer gave to Promus or updates that it solicited from Promus, during the course of Promus’ restoration work were done as an agent of its Insured, rather than pursuant to a contractual relationship between Promus and Dominion. Dominion’s only duty under its contract with 188, was to pay indemnity due to 188, which it did through the May 2018 ACV advance.

(ix.2) Brandiferri v. Wawanesa Mutual Insurance, et al.

[186] In Brandiferri v. Wawanesa Mutual Insurance, et al., 2012 ONSC 2206 (“Brandiferri”), the Brandiferris (plaintiffs) sustained a fire loss at their residence, which was insured through Wawanesa. In the course of a claim made by the Brandiferris, Wawanesa solicited estimates for the repair of the plaintiffs’ home from two contractors, one of which, Strone Construction, was selected by the plaintiffs. Ultimately, the plaintiffs were not satisfied with Strone’s work and commenced two actions, one against Strone for the deficient construction work and the other against Wawanesa claiming it was responsible for the quality of Strone’s faulty work.

[187] The trial judge expressed that Wawanesa’s status throughout the repair process would determine whether it was liable to the plaintiffs for deficiencies in the repairs carried out by Strone. He identified three ways in which Wawanesa’s status could potentially be construed:

1. Pursuant to statutory condition 13, Wawanesa elected to repair the house using Strone (a position advanced by the plaintiffs in that case, but not by Promus in this case);

2. The plaintiffs hired Strone as their contractor, with Wawanesa paying the costs under the insurance policy; and

3. A hybrid of the first two options (the plaintiffs’ alternative position, which was based largely on an allegation that Wawanesa’s failed to adequately “police” Strone’s work).[^15]

[188] The determination of Wawanesa’s status throughout the repair process was made in the following context. Similar to the present circumstances, one of the plaintiffs executed an authorization allowing Strone Construction to repair the plaintiffs’ damaged dwelling. It also executed an agreement with Strone that the cost of repairs was to be approved by the plaintiff’s adjuster, as well as an authorization and direction for Wawanesa to pay any insurance proceeds otherwise payable to the insureds, directly to Strone Construction.

[189] Wawanesa, through its independent adjuster took an extremely active role during Strone’s work. He approved changes to Strone’s scope of work as necessary, and Strone refused to perform any work without the adjuster’s prior approval. The trial judge found that the adjuster was “a frequent visitor” to the insureds’ property and often acted as a mediator between the insureds and the contractor. At trial, the insurer acknowledged that throughout the repair process it controlled all of the cheque payments, and posited that its role in that regard resulted from the insured’s written direction to make payment to Strone. The insurer conceded that it would only make a payment to the contractor when it believed that its work had been performed correctly.

[190] Ultimately, before the contractor completed its work, Wawanesa made a final payment to it, in the approximate amount of $150,000. The insurer only discovered the incomplete work after the cheque had been sent. The insurer acknowledged that it ought to have done a final inspection before a final cheque was issued to the contractor.[^16] Nonetheless, it posited that it was not responsible for any deficiencies in Strone’s construction, which it submitted was an issue between the contractor and the insured.

[191] The court determined that the insurer was liable to the insured plaintiffs to “make up” any deficiency in Strone’s performance, up to the amount of approximately $150,000, in the event that the plaintiffs were unable to make full recovery from Strone for any amount owing to it pursuant to the trial judge’s decision. That disposition resulted from the following findings by the trial judge.[^17]

[192] The insurer had built itself a middle position in which it controlled the cash flow and de facto controlled the reconstruction of the insured’s property. Its adjuster was extensively involved in the repairs on a day-to-day basis and the contractor refused to carry out work without his authorization. Nonetheless, the insurer’s conduct and “degree of control” did not equate to an election under statutory condition 13.

[193] As a result, the trial judge found that the contract for the repair work was between the insureds and the contractor and the insurer was not a party to it. Instead, Wawanesa was determined to be the plaintiff insureds’ agent for the purpose of paying the contractor. The plaintiffs withdrew their authorization to Wawanesa to make final payment to the contractor. Despite the plaintiffs’ express instructions not to pay the contractor, the insurer breached its obligation as agent to the plaintiffs, by making the final payment directly to the contractor in the approximate amount of $150,000. Had it not done so, those funds would have been available to the plaintiffs to remediate the contractor’s deficient and incomplete work.

[194] The court did not find that a contractual relationship existed between the insurer and the contractor for repairs to the insured’s property nor that the payments it made directly to the contractor resulted from such a contract. Rather, the payments were made in the insurer’s capacity as the insureds’ agent and in accordance with an authorization executed by the insured and provided to the insurer. As a result, the insurer was liable to the insured when it made a final payment to the contractor, despite the insureds’ express instructions not to do so.

[195] Consistent with the result in Brandiferri, I am satisfied on the available record, that on those occasions where Dominion/Travelers made direct payment to the Promus in respect of other unrelated claims (consistently with the express consent and authorization of its insureds), as well as for Promus’ emergency services invoice in this instance, it has done so as agent for its respective insureds and not pursuant to alleged “contracts” between itself and the plaintiff.

[196] Further, as Brandiferri illustrates, when an insurer is authorized by its insured to make direct payment to a contractor effecting repairs to the insured’s property, the authorization is subject to revocation by the insured. As a result, in this case, even if Dominion had been advised of the content of the Authorization and Direction to Pay Certificate that 188 executed in March 2018 (which it was not), it remains that subsequently in May 2018, 188 expressly consented to and authorized Dominion to make the ACV advance payment directly to it and the loss payee. Had Dominion refused, it may have been liable to its Insured, for any amount it advanced directly to Promus.

[197] I also accept Dominion’s position that Brandiferri further illustrates the dangers of an insurer prioritizing the interests of a contractor retained by the insured over the rights of its insured pursuant to the contract of insurance. As the court in Brandiferri held, the insurer’s obligation is to its insured, not to the contractor the insured has retained to effect repairs. In that case, Wawanesa exposed itself to liability to its insureds because it paid the contractor instead of performing its legal obligation to indemnify them.

[198] I accept Dominion’s position that to impose legally enforceable contractual or other obligations on an insurer to a third-party contractor not in privity to the insurance contract, would necessarily create the potential for conflicts between an insurer’s legal obligation to indemnify its insured under the insurance policy and its alleged independent contractual obligation to pay the third-party contractor directly. I find that the potential for such conflicting contractual obligations, objectively, militates against both a finding that Dominion intended to create legal relations with Promus that would require Dominion to pay Promus directly for its repair work to 188’s property, and a finding that a reasonable person in Promus’ position would objectively conclude that Dominion held such an intent.

(ix.3) Lozada v. Gold River Carpet

[199] In Lozada v. Gold River Carpet & Upholstery Cleaning, 2006 BCSC 1317 (“Lozada”), an insurer ostensibly retained a contractor to effect repairs to the roof of its insured’s residence. The insured resisted payment to the contractor for its labour and materials, and was eventually held liable for same at trial. The insured appealed the result on the basis that it did not have a contract or agreement with the contractor, whom the insured asserted was hired directly by its insurer. The insured also asserted that the contractor’s work was substandard.

[200] On appeal, the court accepted that the insurer was acting as the insured’s “authorized agent” when it retained the contractor. It also found that the evidence did not support an inference that the insurer was acting “independently and on its own” in contracting for repairs to the insured’s roof. As a result, the insured was responsible for payment to the contractor.

[201] Similarly, the circumstances of the present case support that the only contract for repair work to the Insured’s Property and payment for same was between 188 and Promus. The Insured originally contracted with Promus for emergency services to its Property and the Insured alone: had an obligation to repair the Property as a condition to entitlement to replacement cost; expressed an intent to contract with Promus for repair work; and executed an authorization accepting Promus’ repair estimate and authorizing Promus to complete the repair work. All of those circumstances support that the Insured alone contracted with Promus.

(ix.4) N & H Contracting Ltd. v. Royal Insurance Co.

[202] In N & H Contracting Ltd. v. Royal Insurance Co., 1993 CanLII 1415 (BC CA), 1993 CarswellBC 5, [1993] 3 WWR 674 (C.A.) (“N & H Contracting”), an insurer appealed against a judgment, in which the trial judge determined that it had formed a contract with the contractor effecting repairs to its insured’s residence which had been damaged by fire. The insurer was directly involved in the process of selecting a contractor to effect repairs. The insured refused to agree to the contractor being retained on a fixed price basis and the insurer eventually agreed to allow a “costs plus” contract with the plaintiff, N & H Contracting. During the course of repairs, the insured, the insurer and the contractor expressly agreed that the insurer would advance a cheque for partial payment for the contractor’s services, made co-payable to the insured and the contractor, once the value of the contractor’s work reached $50,000 and the insured submitted a corresponding executed interim proof of loss to the insurer. Ultimately, those conditions were met and interim payment was then made on that basis. Subsequently, the insured homeowner refused to provide an additional authorization and other documentation requested by the insurer, that would allow it to directly pay the contractor’s final invoice, which was rendered when all its work was completed. As a result, the contractor’s final invoice was not paid by either the insured or the insurer.

[203] The contractor commenced an action against the insurer and the insured homeowner. The trial judge found that a contractual relationship existed between the contractor and the insurer and the contractor and the insured, respectively. The court granted judgment for the full amount of repairs against the homeowner and judgment against the insurer for two-thirds of that amount, with the difference representing items of repair that were not covered by the policy. The insurer appealed.

[204] In allowing the appeal, the British Columbia Court of Appeal held that the trial judge erred in concluding that there was a contractual arrangement between the contractor and the insurer. The court held that the insurance policy obligated the insurer to indemnify the insured homeowner for repair costs. The court determined that the arrangements for the method of interim partial payment to the contractor through a co-payable cheque, fell short of establishing that there was a contractual agreement pursuant to which the insurer became directly liable for the contractor’s account. It further determined that the insurer’s initial payment through a co-payable cheque was made in accordance with the agreement of all parties and did not establish any further obligation or relationship between the insurer and the contractor. Finally, the appellate court found that there was no reason for the insurer to enter into a contractual relationship with the contractor, of the kind found by the trial judge.

[205] I accept the defendant’s submission that similar to the result in N & H Contractors, Dominion’s eventual direct payment of Promus’ emergency services invoice, with the express consent of the Insured, does not evidence a contractual relationship between Dominion and the plaintiff. There was no reason for Dominion to enter into the type of contract that Promus asserts.

(ix.5) TGA General Contracting v. Cirillo

[206] Finally, in TGA General Contracting and Restoration Inc. v. Cirillo, 2009 CarswellOnt 57158 (S.C.) (“TGA”), the contractor brought an action against homeowners for the value of unpaid restoration work it performed at their residence, following a fire loss. The homeowners then brought an action against their insurer, Wawanesa, for monies that were said to be owed to the contractor, TGA. The actions were tried together.

[207] In TGA, the insurer was originally authorized by the insureds to make all cheques co-payable to the insureds and the contractor. Eventually, the insureds withdrew their consent to the “co-payable arrangement” and the insurer’s final lump sum payment for building coverage under the relevant insurance policy was made to the insureds only. Contextually, the contractor had communicated with the insurer and kept it informed about its progress, throughout the restoration project. While there was a dispute with respect to whom the insurer ought to have made the final cheque payable, the court held: “The Cirillos were the insureds of Wawanesa and Wawanesa should issue the cheque directly to the Cirillos. Ultimately, Wawanesa did.”[^18]

[208] The trial judge concluded that there was no collateral contract between the contractor and the insurer relating to restoration of the insured’s property or for direct payment by the insurer to the contractor on behalf of the insured homeowners. The court reasoned that the insureds’ obligation to pay the contractor for repairs to their residence was not contingent or dependant upon the insureds receiving money from the insurer.

[209] The court also found that by making its final payment to its insureds, the insurer had satisfied its indemnity obligations under the policy and it had settled the insureds’ building coverage claim. As a result, the court determined that the insureds and the contractor were both precluded from seeking further payment from Wawanesa. The contractor was not entitled to any payment from the insurer and the insurer was not obligated to pay the contractor’s account because there was no contract between them. There was also no agreement between the insureds and the insurer, requiring the insurer to pay the contractor’s outstanding account, in relation to repair and reconstruction of the insured’s residence.[^19]

[210] The circumstances in TGA are relatively similar to those in this instance, except for one important distinction. In TGA, the insurer was aware that its insureds had authorized it to make initial payments co-payable to the insureds and the contractor. In the present circumstances, when Dominion made the May 2018 ACV advance, it had not been made aware of the content, or existence, of the direction to pay certificate that Promus obtained from the Insured. However, even if it had been aware of that certificate, it remains that the Insured effectively withdrew its consent for direct payment to Promus when it expressly consented to, and authorized payment of the ACV advance by Dominion, on a co-payable basis to 188 and Royal Bank in May 2018.

[211] Consistent with its obligations under the Policy, Dominion indemnified its Insured up to the ACV value of its claim in May 2018. The evidence also establishes that the Property has not been repaired to an extent that would compel replacement cost settlement under the terms of the Policy. As a result, the Insured, 188, was fully indemnified for the loss in May 2018 in accordance with the amount set out in Promus’ original repair estimate that 188 accepted. Although Promus delivered a revised estimate in July 2018, it was not accepted by 188.

[212] In all of the circumstances, including the lack of communicated authorization by 188 to Dominion to make payments under the Policy to Promus, Dominion was required to pay indemnity under the Policy to 188 and the loss payee. Ultimately, that is what Dominion did. In the absence of 188 satisfying the conditions for entitlement to replacement cost, Dominion appears to have satisfied its indemnity obligation under the Policy.

[213] In the result, all of the decided cases to which the court was referred support Dominion’s position that it did not enter into a contract with Promus to effect repairs to the Insured’s Property. The plaintiff did not refer the court to any decided cases in which an insurer was ultimately found to have entered into a contractual relationship with a contractor effecting repairs to its insured’s property, in the absence of the insurer electing to pursue direct repair pursuant to statutory condition 13.

[214] As I explained earlier above, consistent with the legal principles in the cases referred to above, there is no genuine issue requiring a trial to determine that the only contract to which Dominion was a party, was its insurance contract with 188. The only contract for repairs to the Property to which Promus was a party, was with 188.

[215] At its highest, Dominion acted as 188’s agent when it interacted with Promus during 188’s insurance claim. Unlike the respective circumstances in Hoelzler, Brandiferri and N & H Contracting, in which the insurers were involved to some extent, in selecting the contractor that repaired the insureds’ premises, in this instance 188 sought out and retained Promus on its own. Dominion was involved in some communications with Promus during the course of its repair work, principally to obtain progress updates. That conduct does not objectively evidence a contractual relationship between Dominion and Promus. Indeed, Brandiferri illustrates that even circumstances in which an insurer is found to have exercised a high degree of control by supervising and overseeing the daily operation of a restoration project, will not be enough to deem the insurer to be a party to the repair contract between the Insured and the Contractor.

[216] Finally, Brandiferri illustrates the potential for conflicting contractual obligations that may arise if an insurer’s interactions with its insured’s contractor resulted in a contract between the insurer and the contractor for direct payment for the contractor’s services. The materialization of that risk is heightened in circumstances where the insured and contractor dispute the adequacy of the contractor’s repair work. In those circumstances, if the insured instructed the insurer to withhold payment from the contractor or to make payment directly to the insured, and the insurer complied, the insurer would prima facie be in breach of its contract with the contractor. If the insurer refused to comply, it would be in breach of its contract of utmost good faith with its insured. Objectively, it would be commercially unsound for Dominion to have formed an intent to enter into a contract with a contractor that was already retained by its Insured, in circumstances where to do so would be of no benefit to Dominion and would potentially place it in a conflict with the contractual obligations it already owed to its Insured.

[217] For all of the reasons set out above, I find that there was no contract between Promus and Dominion that required Dominion to make direct payment to Promus for its restoration work at 188’s Property, or at all.

[218] I now turn to the plaintiff’s tortious theory of liability in negligence.

Issue #2: Has the Defendant Demonstrated That There Is No Genuine Issue Requiring a Trial to Determine Dominion’s Asserted Liability to Promus in Negligence?

[219] For the following reasons, I am satisfied that Dominion has met its onus to demonstrate that there is no genuine issue requiring a trial with respect to the cause of action the plaintiff asserts against it in negligence. Without displacing Dominion’s onus in that regard, I will begin by reviewing the basis for Promus’ asserted position, in the context of the action.

(a) Position of the Parties

[220] Promus submits that Dominion owed it a duty of care in the circumstances, to ensure that it was paid for the restoration repair work that it performed with respect to 188’s property. It reasons that there is a genuine issue requiring a trial to determine whether that duty exists and, if so, whether Dominion breached its duty of care by, among other things, failing to make insurance proceeds co-payable to Promus and the Insured.

[221] Promus does not submit that a general duty of care exists in every instance, between an insurer and an independent contractor retained by its insured. Rather, it posits that the scope of the asserted duty of care can be limited, so that it will be operable in certain circumstances and not in others. It contends that the duty arises in this case because of the parties’ dealings with one another and Dominion’s knowledge that Promus was performing restoration work at its Insured’s Property.

[222] Promus further asserts that Dominion’s failure to include it as a co-payee on the ACV advance cheque (or notifying it of same) fell below the applicable standard of care. It reasons that Dominion would not have suffered an additional burden or cost by making the ACV advance cheque co-payable, or by notifying Promus of its intended ACV advance to the Insured. Correspondingly, the consequences of its failure to do so adversely affected Promus who remained unpaid for the work it performed.

[223] The plaintiff offers Mr. Sandre’s evidence, which was detailed earlier above, to support its position with respect to breach of the applicable standard of care. Mr. Sandre generally deposes that the practice of an insurer making cheques co-payable to an insured and an independent contractor performing repairs on the insured’s property is “an accepted” industry practice and a common method of payment when dealing with an independent contractor, where there are no formal agreements or a bond in place.

[224] Finally, Promus contends that “but for” Dominion’s breach of the applicable standard of care, Promus would not have suffered the economic loss that it did, as a result of 188’s failure to pay it directly. Alternatively, had Dominion advised it of its intention to make an ACV advance to its Insured, Promus would have “taken immediate steps to recover payment from 188”. As a result of Dominion’s unreasonable conduct, Promus suffered economic loss.

[225] In the context of its negligence theory set out above and the evidence it relies on in support of it, Promus submits that there are genuine issues that require a trial to determine its asserted cause of action. First, Promus categorizes its proposed cause of action as a “novel negligence claim” that likely cannot be decided on the materials before the court. Second, Mr. Sandre’s proposed opinion evidence with respect to the applicable standard of care is not contradicted by other expert evidence, in the context of the motion. Based on Mr. Sandre’s evidence, there is, at the very least, a genuine issue requiring a trial with respect to the applicable standard of care and the corresponding allegation of Dominion’s breach.

[226] Dominion sees things differently. It submits that this is a motion for summary judgment. As a result, if the record is adequate to allow the court to justly and fairly decide the issues in the action, the court must do so. In this instance, the plaintiff alleges it suffered pure economic loss as a result of the defendant’s negligence. However, the relevant circumstances do not disclose a sufficiently close and direct relationship of proximity between Promus and Dominion necessary to recognize the duty of care that Promus alleges, particularly because of the nature of the relationship between the parties and their respective relationships with 188.

[227] Dominion posits that there are two distinct contracts in this instance. The first is a contract of insurance between Dominion and 188, pursuant to which Dominion owes its Insured a duty of utmost good faith. Promus is not a party to that contract. The second contract is one between the Insured and Promus for repairs to the Insured’s property. Dominion is not a party to that contract. The decided cases (which are reviewed above) consistently find that an insurer’s sole obligation in the circumstances disclosed by the evidence, is to provide indemnity to its insured under the terms of the policy. The fact that a contractor such as Cope/Promus may derive an indirect benefit from the insurer indemnifying its insured under the policy (which may provide the insured with a potential funding source for the repair work it contracts for) does not create sufficient proximity to find a duty of care on the part of the insurer to “ensure that the contractor is paid by the insured or for work that benefits the insured”.

[228] On the issue of breach of the applicable standard of care (if a duty is owed), Dominion takes issue with Mr. Sandre’s qualifications to offer opinion evidence with respect to the standard that applies to the conduct of Travelers/Dominion’s business. Dominion submits that Mr. Sandre has not worked in the insurance industry for almost a decade. He spent his entire career at a single insurance company, Allstate, apart from seven months at RBC. He admits that he has no working knowledge of Dominion’s policies, practices or internal processes or those of any of Dominion’s related companies. He denied conducting any independent research with respect to the issue of co-payable cheques. He also denied consulting or publishing any literature on the subject. He had not even reviewed the specific policy that is the subject of this action.

[229] Further, Mr. Sandre admitted during cross-examination that Dominion’s obligation was to indemnify its insured and he agreed that 188 gave no authorization or direction to Dominion prior to the issuance of the ACV advance cheque, to make payment co-payable to Promus. He also confirms his understanding that 188 did not notify Dominion that the ACV advance cheque ought to be made payable or co-payable to Promus.

[230] Finally, on the issue of the standard of care itself, Dominion observes that Mr. Sandre does not purport to opine with respect to “the” industry standard but rather suggests that a co-payable cheque is “an” accepted industry practice. He does not opine that it is a mandatory one, nor does he testify that it is a standard required, or even recommended, by any authoritative body, code of conduct, legislation, regulation or body that trains insurance adjusters.

[231] In the context of the parties’ positions, I turn to the legal principles applicable to the negligence cause of action asserted by the plaintiff.

(b) Applicable Legal Principles

[232] The elements of a cause of action in negligence, which are not in dispute, are succinctly set out in 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35, 450 D.L.R. (4th) 181 (“Maple Leaf Foods”), at para. 18:

1. The existence of a duty owed by the defendant to the plaintiff to take reasonable care in the circumstances;

2. The defendant’s conduct breached the applicable standard of care;

3. The plaintiff sustained compensable loss or damage;

4. The damages were caused, in fact and in law, by the defendant’s breach.

[233] In my view, the plaintiff’s proposed cause of action in negligence fails at the duty of care stage.

[234] The plaintiff’s claim is for pure economic loss, in the form of non-payment for restoration/repair services it performed to the Insured’s Property in accordance with a contract that it made with the Insured. Pure economic loss is economic loss that is unconnected to a physical or mental injury to the plaintiff’s person or to physical damage to property: see Martel Building Ltd. v. Canada, 2000 SCC 60, [2000] 2 S.C.R. 860, at para. 34. The Supreme Court of Canada has recognized that pure economic loss may be recoverable in certain circumstances, but there is no general right in tort, protecting against the negligent infliction of pure economic loss. As a result, the common law has been slow to accord protection to purely economic interests: see Maple Leaf Foods, at para. 19.

[235] In Canadian National Railway Co. v. Norsk Pacific Steamship Co., 1992 CanLII 105 (SCC), [1992] 1 S.C.R. 102, 91 D.L.R. (4th) 289, at p. 1049, the Supreme Court of Canada applied a classificatory scheme that identifies four categories of pure economic loss that can arise between private parties.[^20] In Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63 (“Livent”), at para. 30, the Court narrowed the categories of pure economic loss incurred between private parties to the following three: 1) negligent misrepresentation or performance of a service; 2) negligent supply of shoddy goods or structures; and 3) relational economic loss, and see Maple Leaf Foods, at para. 21.

[236] The categories above are analytical tools that describe how a loss occurred. The fact that a claim arises from a particular kind of pure economic loss does not signify that the loss is recoverable. Instead, the requirements for imposing a duty of care must still be satisfied: see Maple Leaf Foods, at para. 22. In other words, a duty of care cannot be established simply by showing that a claim fits within a category of pure economic loss. It is still necessary to determine whether the plaintiff’s alleged loss represents an injury to a right that can form the subject of recovery in tort law, and whether it possesses the requisite factors to support a finding of “proximity”, necessary to recognize a duty of care under that category. The manner in which the pure economic loss is said to have occurred, or how the loss has been catalogued within the categories of pure economic loss does not signify that the defendant, whose negligence caused that loss, owes the plaintiff a duty of care. The relevant “category” for the purpose of supporting the existence of a duty of care remains “proximity of relationship”, as set out below: see Maple Leaf Foods, at para. 23.

[237] Whether a duty of care exists, in the particular circumstances of a case is a question of law that attracts a two-stage analytical approach that derives from the principles set out in Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), as adapted and applied in several decisions of the Supreme Court of Canada, including Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537 (“Cooper”).

[238] Foreseeability of harm alone is not sufficient to establish a prima facie duty of care: see Cooper, at para. 22. Instead, the first stage of the Anns/Cooper test asks whether there is a relationship of proximity between the plaintiff and the alleged tortfeasor in which the failure to take reasonable care might reasonably cause loss or harm to the plaintiff: see R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45, at para. 39.

[239] Under the first stage of the Anns/Cooper test, the analysis begins by determining whether the asserted duty of care falls within a category of cases that have been previously judicially recognized as establishing a prima facie duty of care. If a relationship falls within a previous established category or is analogous to one, then the requisite “close and direct” relationship is shown. Provided a risk of reasonably foreseeable injury can be shown, or has already been shown through an analogous precedent, the first stage of the Anns/Cooper framework is complete and a duty of care may be identified: see Cooper, at para. 36, and Livent, at para. 26.

[240] In determining whether proximity can be established on the basis of an existing or analogous category, “a court should be attentive to the particular factors which justified recognizing that prior category, in order to determine whether the relationship at issue is, in fact, truly the same as, or analogous to, that which was previously recognized”: see Livent, at para. 28; and Maple Leaf Foods, at para. 65. To ground an analogous duty, the case authorities relied upon by the plaintiff must be shown to arise from an analogous relationship and in analogous circumstances. As between parties to a relationship, some acts or omissions might amount to a breach of duty while other acts or omissions within the same relationship will not. Proximity may inhere only for particular purposes or particular conduct, the scope of which is dependant upon the nature of the relationship at issue or the type of economic loss alleged: see Maple Leaf Foods, at para. 65.

[241] If the court determines that proximity cannot be based on an established or analogous category of proximate relationship, then the court must determine whether a new duty of care should be recognized in the circumstances by considering the principles of foreseeability of harm and proximity of relationship. If the inquiry is answered in the negative, the asserted negligence claim fails because it does not disclose a prima facie duty of care. When it engages this aspect of the Anns/Cooper test, the court must undertake a full proximity analysis. To determine whether a “close and direct” relationship exists that is sufficient to ground a prima facie duty of care, the court must examine all relevant “factors arising from the relationship between the plaintiff and the defendant”. While these factors are diverse and depend on the circumstances of each case, they generally include “expectations, representations, reliance and the property or other interests involved”, as well as any statutory obligations on the parties: see Livent, at para. 29.

[242] In conducting a full proximity analysis at the first stage of the Anns/Cooper test, the court must also examine whether there are policy considerations specific to the parties and their relationship, that determinatively favour not recognizing tort liability. For example, a relevant consideration may be whether the plaintiff had an opportunity to protect itself by contract, from the risk of economic loss and declined to do so. The plaintiff’s ability to foresee and provide for the particular damage in question is a key factor in the proximity analysis: see Design Services Ltd. v. Canada, 2008 SCC 22, [2008] 1 S.C.R. 737, at paras. 53-54.

[243] As set out earlier above, the plaintiff advances a claim for pure economic loss against Dominion. In its factum and submissions, the plaintiff does not specifically frame its duty of care analysis (and specifically its proximity analysis) in a manner that is wholly consistent with its pure economic loss claim. The plaintiff did not argue proximity with reference to any of the established categories of pure economic loss.

[244] In my view, in the context of the plaintiff’s position that Dominion owed it a duty of care to ensure that it was paid for the performance of its repair services to the non-party Insured’s Property, the only potentially applicable pure economic loss category is “negligent performance of a service”. In that regard it appears that the plaintiff reasons that through the nature of the parties’ relationship, as established, in part, by past dealings, Dominion undertook, in this instance, to ensure that the plaintiff was paid for its services and the plaintiff, reasonably relying on that undertaking, was induced to detrimentally change its position by refraining from seeking a deposit from the Insured, interim billing the Insured, engaging the procedures available to it under the Construction Lien Act, or immediately addressing interim payment with the Insured after the May 2018 ACV advance payment was made.

[245] Although a duty of care cannot be established by showing a claim falls within a category of pure economic loss, the categorization of the claim influences the “controlling considerations” that apply to the court’s full proximity analysis. Specifically, in cases of negligent performance of a service, two factors are determinative of whether proximity is established: the defendant’s undertaking, and the plaintiff’s reliance: see Livent, at para. 30 and Maple Leaf Foods, at para. 32.

[246] As the Court instructs in Livent, at para. 30, “where the defendant undertakes to provide a service in circumstances that invites the plaintiff’s reasonable reliance, the defendant becomes obligated to take reasonable care”. In turn, the plaintiff has a right to rely on the defendant’s undertaking to do so. These corollary rights and obligations create a relationship of proximity.

[247] In other words, the proximate relationship is formed when the defendant undertakes responsibility, which invites reasonable and detrimental reliance by the plaintiff upon the defendant for that purpose: see Maple Leaf Foods, at para. 32. When a defendant undertakes to “do something”, it assumes the task of doing so reasonably, thereby manifesting an intention to induce the plaintiff’s reliance upon the defendant’s exercise of reasonable care in carrying out the task. Where the plaintiff then, reasonably relying on the undertaking, is induced to alter its position and forego a more beneficial course of action that was available at the time of the inducement, and is detrimentally effected as a result, it is a wrong to the plaintiff. Having deliberately solicited the plaintiff’s reliance as a reasonable response, the defendant cannot justly disclaim responsibility for any economic loss that the plaintiff can show was caused by such reliance: see Maple Leaf Foods, at paras. 33-34.

[248] However, “reliance-based entitlement” is not limitless. Any reliance on the part of the plaintiff which falls outside of the scope of the defendant’s undertaking and responsibility (the purpose for which the service was undertaken) necessarily falls outside the scope of the proximate relationship and therefore, outside of the defendant’s duty of care: see Livent, at para. 31 and Maple Leaf Foods, at para. 35. Reliance that exceeds the purpose of the defendant’s undertaking is not reasonable and therefore not foreseeable.

[249] Apart from proximity, the existence of a duty of care must also be premised on foreseeability of harm. The foreseeability aspect of duty of care inquiry objectively focuses on whether someone in the defendant’s position ought to have reasonably foreseen the harm complained of, rather than whether the specific defendant did so, in fact. Courts must remain vigilant in order to ensure that the “foreseeability” analysis is not clouded by the fact that harm actually occurred. Rather, the analysis is properly focussed on whether foreseeability was present prior to the incident occurring, without the benefit of hindsight. Foreseeability requires a higher threshold than “mere possibility” of harm. It also requires that the general harm complained of, and not its manner of incidence, be reasonably foreseeable. The determinative question is whether the plaintiff has offered facts to persuade the court that “the risk of the type of damage that occurred was reasonably foreseeable to the class of plaintiff that was damaged” (emphasis in original): see Rankin (Rankin’s Garage & Sales) v. J.J., 2018 SCC 19, [2018] 1 S.C.R. 587, at para. 24.

[250] If the court is satisfied that the plaintiff has established a prima facie duty of care, it must proceed to the second stage of the Anns/Cooper inquiry, which is focused on determining whether there are residual policy considerations which ought to negative or limit the scope of the duty, the class of persons to whom it is owed, or the damages to which a breach may give rise. The onus is on the defendant to establish that such policy considerations are operable.

[251] Residual policy considerations are not concerned with the relationship between the parties, which is already considered at stage one of the test, but with the effect of recognizing the duty of care on other legal obligations, the legal system and society more generally: see Cooper, at para. 37. The residual policy inquiry at stage two of the Anns/Cooper test is a normative one, that asks whether it would be better, for reasons relating to legal or doctrinal order, or reasons arising from other societal concerns, not to recognize a duty of care in a given case: see Livent, at para. 40.

[252] Ultimately, if a prima facie duty of care is found at the first stage of the Anns/Cooper test and there are no residual policy concerns negating the creation of that duty at the second stage, then a new category of duty is recognized.

(c) The Principles Applied

[253] Promus submits that the duty of care that it alleges it was owed by Dominion (to ensure that Promus was paid for its repair services to the Insured’s Property) is novel. It concedes that the duty is not analogous to a duty that has been previously recognized in any decided cases. The defendant does not dispute that submission.

[254] I accept the parties’ submissions that proximity in this case cannot be found on the basis that the relationship at issue falls within, or is analogous to, a previously recognized category of proximity. As a result, a full proximity analysis must be undertaken.

[255] In evaluating proximity in what the plaintiff submits is a novel situation, it is appropriate to examine the expectations, representations, reliance, and property or other interests involved to assess the “closeness” of the relationship between the parties, when determining if it is just and fair, having regard to that relationship, to impose a duty of care on the defendant: see Cooper, at para. 30.

[256] Promus submits that there is evidence of a close and direct relationship between Dominion and itself that justifies the imposition of a duty of care, in the circumstances of this case. Specifically: the parties communicated with one another during both the emergency services work and restoration work performed by Promus; Dominion provided some instructions to Promus during its emergency services work; Promus updated Dominion and 188 during the course of its restoration work; and Dominion paid Promus directly in other unrelated claims, as well as, for the emergency services work in this instance. Promus acknowledges that in the other instances where direct payment was made by Dominion, Promus secured authorizations from Dominion’s insureds, allowing direct payment by Dominion to Promus. Further, the evidence establishes that shortly before 188’s bankruptcy, 188 expressly communicated its consent to Dominion to allow it to pay Promus directly for its emergency services.

[257] In evaluating whether the requisite relationship of proximity necessary to ground a duty of care existed between Dominion and Promus, it is helpful to review the nature of the parties’ relationships, not only with each other but their respective relationships with the Insured, 188, with whom each had an independent contract. I will begin with the latter.

[258] Dominion, as insurer, was party to a contract of insurance with 188 that among other things required it to indemnify 188 for loss or damage to the Insured’s Property arising from a peril covered by the policy, unless the Insurer availed itself of a condition in the Policy allowing it to directly repair or replace the Property. In that case the Insurer would be relieved from making any payment under the Policy. The parties agree that the Insurer did not elect to do so, in this instance.

[259] The evidence of both Mr. Hawkins and the plaintiff’s proposed expert, Mr. Sandre, establishes that absent the Insured’s consent and authorization to do otherwise (including paying a contractor directly), the Insurer must pay proceeds of indemnity under the Policy to its insured.

[260] The Policy prescribes that the Insurer will settle the Insured’s claim on the basis of ACV unless the Insured elects to pursue replacement cost pursuant to a specific policy endorsement. If so, the Policy requires the Insured (not the Insurer) to repair the Property as a pre-requisite to the additional payment of the difference between ACV and replacement cost. The Insured remains entitled to indemnity from the Insurer for the ACV of the loss in any event of whether repairs are effected. If repairs are not completed (even if partially undertaken) by the Insured, the basis of settlement of the Insurer’s obligation to indemnify the Insured remains the ACV of the loss.

[261] The provisions of the contract of insurance between the Insured and the Insurer do not authorize or empower the Insurer to unilaterally direct or pay the proceeds of indemnity to which the Insured is entitled, to anyone other than the Insured (excepting the mortgagee of the property, who is designated as a loss payee in accordance with the Policy), whether directly or by making proceeds “co-payable” to the Insured and a stranger to the insurance contract.

[262] The insurance contract does not require the Insured to use any proceeds payable to it pursuant to the Policy, for the purpose of paying a third party with whom it has contracted to effect repairs to the Property. Also, the Policy does not prescribe any obligation on the Insurer to ensure that third party service providers retained directly by the Insured are paid for their services from the indemnity proceeds that the Insured is entitled to under the Policy, or at all. The Policy does not provide the Insurer with the authority, power or discretion to insist or direct that the Insured use the proceeds of indemnity payable to it, in any particular manner, at all.

[263] The contract of insurance between Dominion and 188 is also one of utmost good faith that requires Dominion to facilitate its Insured’s claim.

[264] The decided cases that the defendant has provided, illustrate that there are circumstances in which insurers who respond to first party property damage claims made by their insureds, may become involved in their respective insured’s efforts to repair property damage arising from a covered peril.[^21] In prior cases, that type of involvement has included: facilitating the insured’s selection of a contractor to effect repairs, defining the scope of the loss, overseeing and monitoring a contractor’s repair efforts at the insured’s property; communications with the insured’s chosen contractor; mediating disputes between insureds and their chosen contractor; and, with the express authorization and consent of the insured, controlling payments during the restoration/repair project. In each of the decided cases that the defendant provided, the insurer has been found to have been acting on behalf of the insured, as its agent, when it has engaged in any of the foregoing conduct. The cases also recognize that the insurer’s only obligation, even when it has engaged in aspects of the foregoing conduct, remains its obligation to indemnify its insured under the policy.

[265] The case law provided by the defendant also recognizes that when an insured executes an authorization to permit the insurer to make direct payment to the independent contractor retained by the insured (and the authorization is communicated to the insurer), the insurer acts as the insured’s agent for the purpose of paying the contractor. If the insured withdraws its authorization or instructs the insurer to make a payment in a manner inconsistent with the terms of the authorization and the insurer, nonetheless, makes direct payment to the contractor, the insurer may be liable to the insured for the amount paid: see Brandiferri, at paras. 90-91.

[266] I now turn to the relationship between 188 and Promus. Without the involvement of Dominion, 188 contracted directly with Promus for emergency services to its property in order to mitigate its losses resulting from the burst pipe and flood. Subsequently, after it was advised by Dominion that it could retain any contractor it wanted to effect repairs (if it chose to do so), 188 expressed its intent to contract with Promus for restoration work in accordance with an estimate that Promus had prepared. Then, 188 entered into a contract with Promus pursuant to which it authorized Promus to carry out the restoration work in the estimate. 188’s conduct in that regard is consistent with its obligation under the Policy to effect repairs to its own Property, if it sought settlement of its claim on a replacement cost basis.

[267] 188’s obligation to pay Promus for its services under their contract was not expressly made contingent on 188 receiving or, being entitled to receive, indemnity under the Policy. Nonetheless, at Promus’ request, 188 executed a Direction to Pay Certificate that authorized Promus to send its invoice to Travelers/Dominion and authorized Travelers/Dominion to pay Promus directly in accordance with the invoice to the extent it was “approved” by Travelers. A copy of the Direction to Pay Certificate was not sent to Dominion nor was Dominion advised of its existence or its terms by either Promus or 188, until late August 2018.

[268] When conducting a full proximity analysis, the “nature of the relationship between Dominion and Promus” ought to be evaluated in the foregoing context. To the extent Dominion and Promus were linked, it was through their respective independent contracts with 188. To the extent that they interacted during their performance of their respective contractual obligations arising from their independent contracts with 188, Dominion was acting as 188’s agent. Promus is not a party to the contract of insurance between 188 and Dominion, and it has no right of indemnity under the associated policy of insurance. Dominion is not a party to the contract for repairs between 188 and Promus and it was not a signatory to the Direction to Pay Certificate, nor was it advised of its existence before the happening of the events which Promus asserts resulted in its economic loss (i.e. the ACV advance made by Dominion to its Insured and the loss payee and 188’s subsequent bankruptcy).

[269] Although Mr. Cope testifies that he expected that Promus would be paid directly by Dominion, he concedes that he had no discussions with Dominion concerning that expectation. He also had no discussions with Dominion about payment at all, prior to July 2018. Dominion did not expressly warrant or undertake that it would make any direct payment or “co-payment” to Promus for any aspect of the repair/restoration work, let alone, that it would make such a payment in the absence of express communicated consent and authorization from its Insured.

[270] In the context of the foregoing circumstances, I accept that the defendant has met its onus to demonstrate that a trial is not required to determine the issue of whether the defendant owed the plaintiff a duty of care to Promus, in tort. On the record, I am able to find with confidence that it did not. In the circumstances, neither a duty of care whereby an insurer must act reasonably to ensure that an independent contractor retained by an insured, is paid for repair work to an insured’s property, nor a duty whereby an insurer is obligated to take reasonable care “to protect” a contractor retained by its insured, from economic loss arising from the insured’s non-payment for its services, are supported by the existence of a proximate relationship between the insurer and the contractor, that would render it just and fair to impose such a duty on the insurer defendant.

[271] I am mindful that there are several factors in this case that the plaintiff submits are capable of supporting a proximity finding and, as a result, a trial is required to determine the issue. Those factors include: the direct interactions between the Insurer and the Contractor with respect to the scope of the Contractor’s work, the Insurer’s monitoring of the progress of the Contractor’s work, the Insurer’s periodic direction to the Contractor (particularly during the course of the Contractor’s emergency services work), the Insurer’s direct payment of other claims, and the Insurer’s direct payment of the emergency services invoice.

[272] In addition, Mr. Cope testifies to his subjective belief that: the Insurer had accepted Promus’ estimate for the repair work to the Insured’s property; Promus had a contract with Dominion requiring Dominion to make direct payment to it; Promus was working for Dominion; and Promus would be paid directly by the Insurer. In that sense, Promus effectively submits that its “expectation” was that the Insurer would ensure that it was paid for the work it performed at the Insured’s Property, primarily by directly paying its invoices, or alternatively, by issuing a cheque co-payable to the Insured and Promus.

[273] As a result of its expectation and reliance on Dominion’s past (and contemporaneous) practice of making direct payments to it, Promus effectively submits that it was induced to alter the course of conduct that it would have otherwise taken to secure payment for its work had it believed it was contracting with 188 alone.[^22]

[274] Promus further reasons that the risk of the type of damage (economic loss arising from unpaid services) to the class of plaintiff that was damaged (contractor performing services at insured’s property) was a reasonably foreseeable consequence of the Insurer paying indemnity proceeds directly to its own Insured and the loss payee identified in the policy, instead of paying them to the contractor.

[275] Despite the plaintiff’s submissions, I find that an examination and accounting of the nature of the parties’ relationship conclusively militates against a finding of the proximity that the plaintiff asserts.

[276] Above, I have reviewed the nature of the parties’ respective relationships with 188. While there is no direct contract between Dominion and Promus, their interactions with respect to the Insured’s loss were driven by their respective contractual relationships with 188. The contractual matrix created the following obligations:

1. Dominion was required to indemnify its insured, 188. It did not have the authority or power to make payments of proceeds under the policy to anyone other than its Insured and the identified loss payee absent express communicated consent from the Insured. Dominion also owed 188 a duty of utmost good faith. Promus was not a party to the contract of insurance and was not entitled to indemnity under its terms.

2. The Insured had an obligation to repair the property as a pre-requisite to replacement cost.

3. The Insured was not required by the terms of the Policy, to use any proceeds of indemnity payable to it for any particular purpose, including paying its own contractor for the services the contractor performed.

4. The Insured contracted with Promus to effect repairs. Pursuant to that contract, Promus was obligated to repair the Insured’s property and the Insured was required to pay the Contractor. The repairs were solely for the benefit of 188. There is no evidence that the Insured’s obligation to pay Promus for its repair services was contingent on the Insured receiving any proceeds of indemnity under the policy of insurance.

5. Dominion did not contract with Promus for repairs to the Insured’s property, or at all.

6. To discharge its obligations to the Insured, Dominion interacted with Promus, from time to time during the course of emergency services and repair work. When it did so, it acted in the capacity of agent for the Insured and not on its own behalf.

7. On other occasions when Dominion has made direct payment to Promus in the context of unrelated claims and with respect to the emergency services work Promus performed in this instance, it did so: based on the nature of its relationship with its own insured(s); for the sole benefit of, and as agent for, its own insured(s); and on the specific instructions to do so, that it received from its own insured(s), all of whom consented and authorized such payments. Dominion did not make any direct payments based on, or as a result of, the nature of its relationship with the third party contractors that were retained by its insureds.

[277] In this instance, the Insurer did not receive express communicated consent or instructions from its Insured to pay Promus directly for its repair work at the Insured’s Property. The Direction to Pay Certificate was not provided to Dominion by either 188 or Promus. Instead, Dominion received instructions and consent from 188 to make an advanced payment of the calculated ACV of the loss to 188 and the mortgagee, who were prima facie entitled to be indemnified under the policy. The consequences of that dynamic inform the viability of the duty of care that Promus advocates, as it carries with it a real and palpable risk that in discharging the proposed duty of care, an insurer will be compelled to breach its contract with its own insured. I will elaborate on that point further when addressing stage one policy considerations that operate to negative the proposed duty.

[278] To the extent that the proposed duty of care is grounded in a “negligent performance of a service” (i.e. that the insurer was negligent in its duty to confer a benefit on the contractor by ensuring that the contractor was paid for its services), I would conclude that the determinative factors of the “defendant’s undertaking” and the “plaintiff’s reliance” do not justify a finding that it is “fair and just” to recognize a duty of care owed by the Insurer to the Contractor. I will explain.

[279] First, the defendant did not make any undertaking to Promus with respect to Promus’ performance of its obligation to repair/restore the Insured’s Property, or the Insured’s independent obligation to pay Promus for that work, both of which flowed from the contract between 188 and Promus. The Insurer clearly communicated to Promus, on behalf of its Insured, that 188 sought to retain Promus to carry out the repair work and provided Promus with a copy of 188’s correspondence confirming same. Dominion did not advise Promus that: it would assume responsibility for direct payment for the repair work; that it accepted Promus’ estimate; that it was contracting with Promus; or that it was guaranteeing 188’s payment of Promus’ eventual invoice, or otherwise acting as a surety for such payment.

[280] To the extent that the Insurer undertook to “do something” in the context of the totality of the circumstances, its undertaking was made to its own Insured, through the terms of the policy of insurance and primarily consisted of indemnifying the insured on an ACV basis, and paying the Insured on a replacement cost basis if the Insured “replaced” the Property. As a consequence of the good faith nature of the insurance contract and the relationship between the Insurer and Insured, the Insurer also undertook to assist the insured, qua agent, in aspects of the Insured’s efforts to repair the property. It is that undertaking that resulted in the Insurer’s involvement with Promus in the course of 188’s claim, rather than an undertaking made by Dominion directly to Promus.

[281] Further, absent the Insured’s express communicated consent, the Insurer’s obligation to directly indemnify the Insured remains absolute. The evidence of both Mr. Hawkins and Promus’ proposed expert, Mr. Sandre, establish that an insurer is required to receive the insured’s consent before it can make payment directly to the insured’s contractor. The decided cases referred to earlier, illustrate that the insurer also requires the insured’s consent before it can make indemnity proceeds otherwise payable to the insured, co-payable to the insured and a contractor. In that context, the Insurer’s undertaking to its Insured includes refraining from paying proceeds of indemnity in a manner that is inconsistent with the terms of the policy, without the Insured’s consent to do so.

[282] Based on the relationship between the Insured and the Insurer, the Insurer does not have the discretion, authority or power to compel the Insured to use the proceeds paid to it pursuant to the policy for any particular purpose, including paying the insured’s own contractor. Instead, the Insurer is simply required to indemnify the Insured. Thereafter, the Insured may dispose of the proceeds it receives in a manner of its own volition, without interference from the Insurer. While the proceeds received by the Insured could provide it with the means to pay the contractor that it retained, whether the Insured uses the proceeds for that purpose is a decision that rests solely with the Insured.

[283] Similarly, the Insurer’s direct payments to Promus in other unrelated claims, as well as, for the emergency work performed by Promus to 188’s property were not made pursuant to an undertaking made by Dominion to Promus. Rather, consistent with Mr. Cope’s evidence, all of the other “direct payments” made by Dominion to Promus were made with the prior authorization and consent of Dominion’s respective insureds. In those circumstances, the other direct payments do not evidence an undertaking by the Insurer to the Contractor retained by the Insured, to ensure payment for the services the Contractor performs to repair the Insured’s property. Rather, the circumstances of those payments evidence that the Insurer undertakes to the Insured that it will only deviate from its obligation to indemnify the Insured directly under the Policy, with the express consent or authorization of the Insured. The nature of that undertaking is consistent with Mr. Hawkins’ evidence that to the extent that Dominion deviates from its preferred practice of making an ACV advance payment to its insureds, it does so only with the explicit consent of its insureds. Therefore, the Insurer’s direct payments to its respective insureds’ contractors derive from the Insurer’s undertaking and obligation to its insureds rather than as a result of an independent duty of care owed to the contractor to ensure that it is paid for its services provided solely to, and solely for the benefit of the insured.

[284] Therefore, in all the circumstances, I find that Dominion did not deliberately solicit Promus’ reliance as a “reasonable response” to Dominion’s undertaking to its own insured to perform its obligations arising from the contract of insurance. Any reliance that Promus placed on the belief that the Insurer would “ensure that it was paid for its services performed in accordance with a contract with the Insured, to repair the Insured’s Property”, fell outside the scope of the Insurer’s undertaking of responsibility and cannot create sufficient proximity to ground the duty that Promus asserts. Promus’ asserted reliance exceeds the purpose of the Dominion’s undertaking (to perform its obligations prescribed by the contract of insurance and the instructions given to it by its own insured). Promus’ stated reliance is, therefore, not reasonable and consequently not foreseeable.

[285] In the result, I am satisfied that properly construed, Dominion’s undertaking stems from its obligations to 188 and any undertaking that was made by Dominion was made to 188 for the purpose of furthering and protecting 188’s interests. Dominion did not make any undertaking to Promus.

[286] However, even if it were found that Dominion, through making direct payments with the consent of its insureds in unrelated claims, effectively assumed the general responsibility to take reasonable care, to ensure that Promus was paid for its services in future unrelated claims, it remains that the circumstances that would give effect that undertaking were not present in this case. Specifically, 188’s consent to allow Dominion to make direct payment to Promus for repair work that was manifest by the Direction to Pay Certificate was not communicated to Promus. Instead, 188 eventually instructed Dominion, to indemnify it for the ACV of the loss in an advance payment, by making such payment co-payable to 188 and the loss payee. That manner of payment was consistent with Dominion’s obligation pursuant to the Policy. Therefore, in the circumstances of this case, Dominion’s undertaking remained to indemnify 188 in accordance with the Policy. Under the Policy, Dominion did not have the ability to make the ACV advance payment either co-payable to Promus, or directly to Promus because it did not receive 188’s consent to do so.

[287] In the foregoing circumstances, in as much as Mr. Cope testifies to a subjective belief that Promus expected that Dominion would ensure that Promus was paid for the repair work it performed pursuant to its contract with 188 and that Promus relied on Dominion’s past practice when it determined that it would not pursue options that were available to it, as between itself and 188, to protect it from the type of loss at issue (economic loss arising from the insured’s non-payment for its services), such reliance was not reasonable. Promus took no steps to provide Dominion with the direction to pay certificate, nor did it engage in any discussions with Dominion to confirm that its own expectations with respect to payment would be honoured or facilitated by Dominion, or to confirm that Dominion had, in fact, undertaken to protect Promus from any economic loss that it may potentially suffer in the event that 188 breached its contract, through non-payment for Promus’ services.

[288] Further, a determination that Promus’ reliance on any asserted undertaking said to arise from Dominion’s other direct payments in unrelated claims was reasonable, would require the circumstances surrounding the other payments to be present in this case. They are not.

[289] In the result, the determinative factors of the nature and extent of “the defendant’s undertaking” and the plaintiff’s asserted “reasonable reliance” do not support a finding that there was a proximate relationship between the parties sufficient to support the existence of the duty of care that the plaintiff asserts. There is no issue in that respect that requires a trial to determine.

[290] Additionally, in conducting a full proximity analysis at the first stage of the Anns/Cooper test, I find there are policy considerations specific to the parties that would render it unjust and unfair to impose a legal duty on the defendant insurer to “ensure that Promus was paid” for the services Promus performed pursuant to its contract with 188. I will explain.

[291] First, the plaintiff submits that it was foreseeable that it would suffer economic loss in the event that 188 breached its contract for the repair work, by failing to make payment to Promus. Promus relies on the asserted foreseeable nature of that consequence to support its proposed duty of care. However, the plaintiff’s ability to foresee and provide for the particular damage at issue is as a key factor in the proximity analysis. In the circumstances of this case, the plaintiff had the opportunity to protect itself by contract from the foreseeable risk of the very economic loss of which it now complains, and it declined to do so. This is a relevant consideration in assessing proximity: see Design Services Ltd., at para. 54.

[292] To protect itself from what it characterizes as the foreseeable risk of non-payment by 188, Promus could have sought specific protective terms in its contract with 188, including: obtaining a complete assignment of 188’s indemnity rights and entitlement under the Policy; requiring a sizeable deposit from 188; contracting for an interim invoicing schedule that required 188 to make payment in accordance with specified benchmarks in the progress of the construction or the value of Promus’ services “performed to date” (i.e., for example, interim billing each time the value of Promus’ performed but unpaid services reached a specified dollar amount); or other additional security for payment from 188. It did not do so. Instead, it chose to rely only on the Direction to Pay Certificate (that was not expressed to be irrevocable), which it did not provide to, or discuss with, Dominion despite ongoing opportunities to do so.

[293] Promus’ failure to provide for adequate security for payment from 188, through the terms of its contract with it, is an overriding policy reason justifying that tort liability not be recognized against Dominion on the basis that it “failed to ensure that Promus was paid” for the services it performed pursuant to its contract with 188, to which Dominion was a stranger. That is particularly so, when, as I will set out below, the recognition of the duty of care alleged by Promus, would create a palpable risk of conflict with Dominion’s obligation to indemnify its own Insured (188) in accordance with their contract of insurance.

[294] In my view, tort law is not the legal vehicle through which the obligations that Promus seeks to impose on Dominion should be addressed. Rather, the imposition of such obligations (if at all) should be a matter of contract. Promus’ proposed duty of care effectively seeks to extend Dominion’s legal status from an entity obligated to indemnify its insured to one of a surety or guarantor of 188’s performance of its payment obligation to Promus, that arises from a repair contract to which Dominion is not a party and derives no benefit. In my view, the creation of that type of obligations is best addressed through contract.

[295] If a contractor seeks to obligate an insurer to make direct or co-payment to it for its services pursuant to a contract with the insured, even when the insured’s express consent is not communicated to the insurer, it ought to attempt to do so through an express contract with the insurer. In any event of whether the insurer is willing to enter into such a contract, the contractor is also positioned to seek adequate protection against the foreseeable risk of non-payment by the insured through the express terms of its agreement with the insured. If the contractor is unable to secure such terms, it can then evaluate whether it will undertake the risk of performing the work without its desired level of security for payment, or whether it will decline to contract at all. All of this can be done before the contractor enters into the repair contract with the insured, and therefore, before the foreseeable risk of economic loss arising from non-payment by the insured materializes or is otherwise engaged.

[296] In effect, Promus is attempting to substitute its proposed tort claim against Dominion for its inability to pursue 188 in an action for breach of contract owing to 188’s bankruptcy. In my view, its proposed duty of care invites an unjustified intrusion of tort law into a contextual matrix that is properly controlled by contract. The contextual circumstances disclosed by the evidence and set out above, do not result in a gap created by the law of contract that the law of tort must fill, in a fair and just manner, by imposing a duty of care on Dominion to protect Promus from the consequences of the bargain Promus freely made with 188 for repair work, on terms that were exclusively dictated by Promus (and which in hindsight proved inadequate to guard against the risk of non-payment that the plaintiff asserts was a foreseeable one). The plaintiff had the means to address the risk of non-payment by 188 through the terms of their contract and it failed to do so. Therefore, it is neither fair nor just to impose a legal duty on Dominion to confer a positive benefit to Promus to “ensure that it is paid”, in order to relieve Promus from the consequences of its failure to address, in contract, the identified foreseeable risk of economic loss when it had the opportunity to do so.

[297] The recognition of the proposed duty of care would also conflict with Dominion’s contractual duties to its Insured. The obligation in tort that Promus seeks to enforce against Dominion only arises because of the existence of the contract of insurance between Dominion and 188. Dominion’s interaction with Promus with respect to 188’s claim was solely in relation to performing its own obligation to 188 under the contract of insurance and predominantly with Dominion acting as 188’s agent.

[298] At all times, Dominion was fundamentally obligated to act in accordance with the terms of the contract of insurance and the instructions of its Insured. Dominion did not have the authority or discretion to pay proceeds under the Policy to any entities other than the Insured and loss payee, without the communicated consent/authorization of the Insured and loss payee to do so. However, the proposed duty of care would obligate the insurer to make co-payable cheques or direct payment to the contractor, even in the absence of the insured’s consent, which conflicts with the insurer’s obligation to indemnify its insured directly, under the policy.

[299] In my view, tort law cannot be relied upon as a mechanism to effectively re-write or negative the terms of the defendant’s contract with its own Insured. Nor can it be fair or just to recognize a duty of care that compels an insurer to act in a manner that is inconsistent with its contractual and good faith obligations owed to is own insured, in favour of protecting a stranger to the insurance contract from foreseeable pure economic loss, that the stranger is capable of protecting itself from. The fair and just application of the principles of tort law should not result in circumstances in which an insurer is potentially compelled to breach its indemnity obligations to its own insured. The conflict in an insurer’s duties that would inherently result from the recognition of the plaintiff’s proposed duty of care in circumstances similar to those in this instance, is, by itself, a basis to reject its recognition.

[300] As a result of all of the foregoing, I find that a trial is not required to determine whether the duty of care proposed by the plaintiff ought to be recognized. The record allows me to find, with confidence, that the duty should not be recognized. It fails at the first stage of the Anns/Cooper test. There are also strong policy considerations engaged at step one of the Anns/Cooper test that determinatively militate against recognition of the proposed duty. It is, therefore, unnecessary to proceed to a stage two consideration of residual policy concerns.

[301] For the reasons set out above, I find the proposed duty of care should not be recognized. In the absence of a duty of care, the negligence claim fails. As a result of my conclusion that the proposed duty of care ought not to be recognized, I will not engage in an analysis of whether the Insurer’s conduct breached the applicable standard of care. Instead, I will now determine whether there is a genuine issue that requires a trial to dispose of the plaintiff’s asserted cause of action in conversion as pled, and the alternative theory of conversion advanced in the plaintiff’s submissions, which was not properly pled.

Issue #3: Has The Defendant Demonstrated That There is No Genuine Issue That Requires a Trial to Determine Whether Dominion is Liable in Conversion?

[302] For the following reasons, I do not give effect to the plaintiff’s position that there is a genuine issue requiring a trial to determine whether Dominion engaged in the tort of conversion as plead, by making the May 2018 ACV advance payment to the Insured and the loss payee. I am satisfied that the moving party has met its onus to demonstrate that there is no genuine issue requiring a trial in that regard. I will explain.

[303] A person is liable in conversion if that person wrongfully interferes with the goods of another in a manner that is inconsistent with the rights of the true owner (emphasis added): see Prim8 Group Inc. v. Tisi, 2016 ONSC 5662, [2016] O.J. No. 4727, at para. 36.

[304] In its pleadings, Promus submits that it was the true owner of the insurance proceeds (i.e., the amount of the May 2018 ACV advance made to the Insured and loss payee) because that quantum represented an “accounts receivable” to which Promus was entitled. It posits that by excluding it from payment of those proceeds, Dominion interfered with “the goods” of Promus (i.e., a portion of funds generally held by Dominion that was advanced to 188) in a manner that was inconsistent with Promus’ right to receive those proceeds.

[305] Dominion correctly submits that a trial is not required to determine any genuine issue related to that asserted cause of action. On the record before me, I am able to determine that this aspect of the claim fails, for the following reasons.

[306] Promus was not the “owner” of the proceeds of indemnity that Dominion advanced, on an ACV basis, to the Insured and loss payee in May 2018. The insurance policy evidences a contract of indemnity between the Insurer and Insured and the Insurer and the loss payee, respectively. The Insured and the loss payee were the only entities that were potentially entitled to indemnity under the Policy. There is no evidence that either of them assigned their respective legal rights and entitlement to indemnification to Promus.

[307] Promus was clearly not a party entitled to indemnity under the Policy. Its interests were not insured pursuant to the Policy, and it did not have an insurable interest in the subject Property. While the Policy obligated the Insured to effect repairs to the Property in order to become entitled to settlement of its claim with the Insurer on a replacement cost basis, the policy did not require the Insured to specifically use any proceeds paid to it pursuant to the Policy for that purpose. Similarly, the Policy did not require the Insured to enter into a contract with a third party to effect repairs to the Property (let alone with a specific contractor), nor did it require the Insured to use proceeds payable under the Policy to satisfy any debt obligations it may have incurred in repairing the Property.

[308] In short, the manner in which the Insured and loss payee disposed of the policy proceeds once received, was not a matter for which the Insured and Insurer contracted. The fact that, the Insured could use the proceeds to meet its own contractual obligation to pay its Contractor if it chose to do so, does not vest the Contractor with an ownership interest in the potential proceeds of indemnity otherwise payable to the Insured.

[309] More fundamentally, the Insured itself does and did not have an “ownership interest” in any portion of the general funds held by the Insurer. Instead, once its entitlement to indemnity is established, the Insured is a creditor of the Insurer, and it is entitled to payment from the Insurer in an amount required to indemnify it for the loss. In that sense, the Insured is owed the unpaid amount of the proceeds of indemnity, but it does not own a specific portion of monies held by the Insurer. In that context, there is no merit to the proposition that an unsecured creditor of the Insured can successfully claim an “in rem” ownership interest in a portion of general funds held by the Insurer, founded solely in the debtor/creditor relationship between the Insured and Insurer, when the Insured itself cannot.

[310] Further, the asserted acquisition of ownership rights by the Contractor to unpaid potential proceeds of indemnity owed by the Insurer to the Insured is inconsistent with Promus’ solicitation of a direction to pay certificate from 188, which would be unnecessary if Promus was the “true owner” of the funds.

[311] Counsel referred the court to any decided cases in which a contractor that is a stranger to an insurance policy was found to be the “true owner” of the unpaid proceeds of indemnity and therefore, entitled to direct payment of same by the insurer.

[312] I am mindful that Promus pleads that it had a direct ownership interest in the proceeds of indemnity under the Policy because it had an “accounts receivable” for the value of its services performed in respect of the Insured’s Property. However, to the extent that Promus held “an accounts receivable” it arose from its own contract with 188, not from the contract of insurance. The receivable was owed by 188, not Dominion. The existence of an “accounts receivable” from 188 does not create an ownership interest in funds held by Dominion.

[313] In reaching the foregoing conclusion, I am mindful that 188 executed the Direction to Pay Certificate, which addresses the manner in which Dominion could make payment of the Policy proceeds. However, the Direction to Pay Certificate does not assist Promus in its conversion claim for the following reasons. The certificate does not purport to be an assignment to Promus of 188’s right or entitlement to indemnity under the Policy. The direction to pay was not irrevocably made by 188. 188 subsequently instructed and authorized Dominion to make the ACV advance payment in accordance with the terms of the Policy. Those circumstances, as a whole, do not displace the entitlement of the Insured and the loss payee to payment of the indemnity proceeds under the policy for ACV, nor their entitlement to payment by the insurer of the difference between ACV and replacement cost once the Insured completed repairs to the Property (which did not occur in this instance).

[314] In advancing its theory of conversion, Promus appears to conflate the terms of payment it subjectively expected with both the “ownership” of the indemnity proceeds that had not yet been paid under the Policy, as well as, Dominion’s legal liability to pay the proceeds to it. Dominion’s obligation was to indemnify its Insured for the loss. It did so by providing direct payment to the Insured and loss payee. The Insured’s obligation through its contract with Promus was to pay Promus. It did not do so. To the extent that Promus has a claim in that regard it would have been against 188 in contract. Owing to the bankruptcy, Promus’ claim now lies in the bankruptcy, not against Dominion in conversion.

[315] Before leaving this area, I will address the plaintiff’s oral submissions with respect to conversion, which differ from the allegations it made in the amended statement of claim and the content of its factum.

[316] In its amended statement of claim, the plaintiff alleges (at para. 16) that “the plaintiff wrongfully converted the “Insurance Proceeds” [identified at paragraph 9 of that pleading as the $127,464.61 ACV advance paid directly to 188 and Royal Bank of Canada in May 2018] which was the property of the plaintiff by transferring same to the wrong parties.” Similarly, at para. 83 of its factum, the plaintiff submits that it was the true owner of the “Insurance Proceeds” [again identified as the $127,464.61 ACV advance] and that by excluding Promus from payment of the “Insurance Proceeds”, Dominion interfered with the goods of Promus in a manner that was inconsistent with Promus’ right to receive the proceeds. The merits of those allegations and submissions have been determined above.

[317] In its oral submissions, Promus’ conversion theory evolved into something new. Specifically, the proceeds of the May 2018 ACV advance no longer appears to be the main subject of the conversion cause of action asserted against Dominion. Instead, Promus now posits that Dominion’s conversion relates to an amount of $101,995.79 representing the difference in the value of work set out in Promus’ revised estimate dated July 11, 2018 (which was not accepted by 188) in the amount of $230,420.39 (inclusive of $26,508.48 in HST) and the ACV payment that was made in the amount of $127,464.61.

[318] Promus now argues that in accordance with the Direction to Pay Certificate that was executed by 188 in March 2018, Promus is the “lawful owner” of funds in the amount of $101,995.79 that Dominion currently possesses and has yet to pay. Promus submits that that amount continues to be wrongfully held by Dominion and Dominion is engaging in ongoing conversion by refusing to release the funds to Promus.

[319] The quantum claimed under the plaintiff’s new conversion theory creates additional issues. First, there appears to be a minor arithmetic issue. The difference between the plaintiff’s July 2018 revised estimate and the ACV advance is $102,955.78. In oral submissions, the plaintiff referred to a difference of approximately $101,000. This discrepancy might be accounted for by the fact that the insured’s deductible was $2,500.

[320] Second, there is no evidence that Promus fully completed the scope of work in its July 2018 revised estimate. In his affidavit, Mr. Cope deposes that on August 28, 2018, he forwarded email correspondence to Mr. Hawkins attaching an estimate and “accounting for work” completed to date, which totaled $193,992.51. A copy of that correspondence is not in evidence. While Mr. Cope identifies a true copy of “August 28, 2018 email correspondence” between Mr. Hawkins and himself and appends it to his affidavit (as Exhibit Q) that exhibit is one page and sets out an exchange between them in which Promus confirms that it obtained authorization and a direction to pay certificate for its restoration work. Assuming, without deciding, that the “accounting” reflects the amount to which Mr. Cope deposes and that such work was performed, it remains that it is below the value of the July 2018 revised estimate that grounds the quantum of the relief claimed for conversion under the plaintiff’s new theory. Also, during oral submissions, plaintiff’s counsel rhetorically justified Promus’ “failure to complete the repair project” at the Insured’s Property on the basis that Dominion would not pay it for its work. Finally, Mr. Hawkins’ evidence establishes that as of February 2019, repairs to the Property were incomplete and would not justify payment of replacement cost under the policy. There is no evidence that further repairs were completed after that time. As a result, the “replacement cost” value disclosed by the revised estimate ought not to be used as a measure of the proceeds the Insured (188) was entitled to receive under the Policy.

[321] Third, even if it was operable, the Direction to Pay Certificate only allows the Insurer to pay invoices received and “approved” by the insurer, not internal accounts of Promus. There is no evidence that Promus ever issued an invoice in accordance with the July 2018 revised estimate or the August 2018 “accounting” to which Mr. Cope deposes. Rather, the only invoice for repair work that was issued by Promus is dated July 18, 2018 and totals $144,035.01 (comprised of $127,464.61 in a principal amount and $16,570.40 in HST). The principal amount of that invoice is consistent with the quantum of the ACV advance payment that Dominion has already made to 188, representing 80 percent of Promus’ original estimate.

[322] Apart from the issues above, through the reasons that follow, I will explain my conclusions that this version of the plaintiff’s conversion cause of action is not properly plead, and, in any event, it does not require a trial to determine. The record is adequate to determine it is without merit.

[323] Rule 25.06(1) of the Rules mandates that every pleading shall contain a concise statement of the material facts on which the party relies for its claim or defence. There is good reason for that requirement. Pleadings define the nature and scope of the disputed issues between the parties that require the court’s adjudication. Pleadings also provide notice to the opposite party of the specific case it must meet and/or answer in the litigation, together with the nature and extent of the remedies sought against it (if any). In this case, the amended statement of claim fails to meet either objective as it relates to the plaintiff’s newly advanced theory of conversion.

[324] The amended statement of claim asserts that the defendant committed conversion by transferring the ACV advance payment to the wrong parties. The newest version of the plaintiff’s conversion theory is predicated on the Insured’s entitlement to replacement cost. The amended statement of claim does not allege that the Insured met the conditions under the Policy for payment of replacement cost or that the Insured was otherwise entitled to payment under the Policy on a replacement cost basis. The amended statement of claim does not contain any allegations that Dominion is engaging in a continuous ongoing act of conversion by withholding funds that Promus truly owns.

[325] An action must be decided within the bounds of the pleadings and the parties to an action are entitled to have their litigated dispute determined on the basis of the issues joined in the pleadings. A defendant is entitled to know, in advance, the case it has to meet and to be afforded a fair opportunity to meet that case. At trial, a finding of liability against a defendant on a basis of liability that was not pleaded against it cannot stand. To find otherwise would deprive the defendant of the opportunity to address the issue through evidence: see Rodaro v. Royal Bank of Canada (2002), 2002 CanLII 41834 (ON CA), 59 O.R. (3d) 74 (C.A.), at paras. 60-63; Place Concorde East Limited Partnership v. Shelter Corporation of Canada (2006), 2006 CanLII 16346 (ON CA), 270 D.L.R. (4th) 181 (Ont. C.A.), at para. 60; Kalkinis (Litigation Guardian of) v. Allstate Insurance Co. of Canada (1998), 1998 CanLII 6879 (ON CA), 41 O.R. (3d) 528 (C.A.), at pp. 533-34; and Vanek v. Great Atlantic and Pacific Co. of Canada (1999), 1999 CanLII 2863 (ON CA), 48 O.R. (3d) 228 (C.A.), at paras. 70-71.

[326] The evidence adduced in the context of the defendants’ summary judgment motion was developed through affidavits, and cross-examinations, before the plaintiff’s most recent theory of conversion made its debut in plaintiff’s counsel’s oral submissions and of critical import, after all of the evidence for use on the motion was developed and filed. In that context, it is clear that the defendant did not canvass the plaintiff’s new theory of conversion through affidavit evidence or through cross-examination of the plaintiff’s witnesses, because the foundational facts of the theory were not pleaded in the amended statement of claim.

[327] By advancing a new theory of conversion in oral submissions on the motion, the plaintiff has deprived the defendant of the opportunity to know the case it had to meet and the opportunity to fairly respond to that case through evidence in the context of this motion. In my view, the defendant would be significantly prejudiced if the assertion of the plaintiff’s new theory of conversion against it could anchor a finding that a genuine issue requiring a trial exists relating to that basis of liability. Absent an amendment to the statement of claim, which was not requested, a finding of liability against the defendant on that basis at trial could not stand.

[328] In the result, the amended statement of claim, as pleaded, does not support the conversion cause of action theory that the plaintiff asserts in oral submissions. The plaintiff did not seek leave to further amend its statement of claim to plead sufficient material facts in support of its new theory. Therefore, in my view, no question of fact, law or mixed fact and law related exclusively to the new theory of conversion ought to inform the determination of whether the defendant has met its onus in the context of its summary judgment motion.

[329] To the extent that I have erred in determining that the plaintiff’s revised version of its conversion theory is not properly pleaded, I would not give effect to it for the following reasons. First, there is no genuine issue that requires a trial to determine whether the plaintiff is the “lawful owner” of a portion of general funds held by Dominion in the amounts that it asserts. It is not. At its highest, Promus is an unsecured creditor in 188’s bankruptcy. Prior to 188’s bankruptcy, Promus was an unsecured creditor of 188.

[330] Similarly, assuming without deciding, that 188 met the conditions for settlement of its claim with Dominion on a replacement cost basis, any additional amounts owing by Dominion under the Policy would be owed to 188’s trustee in bankruptcy and Royal Bank of Canada as the loss payee. Any amounts that were owing by Dominion to 188 prior to its bankruptcy were owed to 188 as an unsecured creditor (and not owned by 188). There is no evidence that 188 had any in rem rights in respect of a specific fund held by Dominion prior to its bankruptcy. There is no evidence that 188 assigned its right or entitlement to be indemnified by Dominion under the terms of the Policy to Promus. There is nothing that arises in the circumstances of this case that vests Promus with in rem ownership rights to a specified fund or monies that Promus appears to reason is still payable to 188, under the terms of the Policy.

[331] The nature of the respective relationships between 188 and Promus and Dominion and 188 are simple “debtor/creditor”, from which in rem rights to a specific fund do not derive. In the context of this action, Promus’ status of an unsecured creditor of 188, a now bankrupt “potential” unsecured creditor of Dominion, does not vest ownership rights in Promus in any monies held by Dominion.

[332] I am also not persuaded that the Direction to Pay Certificate vests Promus with ownership rights in any further monies that may have been owing to 188 after the ACV advance, for the following reasons. First, 188 did not have an ownership interest in monies held by Dominion at any time. The payment of proceeds under the Policy engaged 188’s in personam rights and did not create in rem rights in any monies held by Dominion. Second, 188’s entitlement to payment under the Policy was not transferred or assigned to Promus through the language used in the Direction to Pay Certificate. The Direction to Pay Certificate addresses the manner in which the Insurer was to discharge its obligation to make payment to its Insured. The entitlement to indemnity by the Insurer remained with 188 as Insured, and was eventually transmitted to its trustee in bankruptcy. Third, the Direction to Pay Certificate simply authorizes payment of an invoice “as submitted to and approved by Travelers Canada”. Apart from its interim July 2018 invoice for the principal amount that Dominion had previously advanced paid to the Insured in May 2018, Promus has not rendered nor has Dominion “approved” of any other invoices, including for any additional work ostensibly founding the amount communicated by Mr. Cope to Mr. Hawkins in August 2018. In the absence of complying with the Direction to Pay Certificate that it drafted, Promus is not well positioned to argue that its terms vested it with an ownership interest in monies currently held by Dominion.

[333] Had 188 not gone bankrupt and it otherwise met the conditions to receive replacement cost under the Policy and all repairs in accordance with Promus’ revised estimate were actually performed, the Insured would have been entitled to a further payment of the difference between the replacement cost of repairs less both HST and the amount of the ACV payment it already received. In those circumstances, Promus still would not have had a legal entitlement to receive direct payment from Dominion. The direction to pay certificate that 188 executed does not assist Promus in that regard because it does not purport to assign the Insured’s legal entitlement to indemnity under the policy to Promus.

[334] As a result, with the bankruptcy, 188’s legal entitlement to indemnity and payment of any further amounts owing under the Policy was transmitted to the trustee in bankruptcy. That does not mean that the trustee in bankruptcy “owns” money currently held by Dominion. Rather it means that it is for the trustee in bankruptcy and/or the loss payee mortgagee to determine whether they wish to pursue Dominion for payment of any further proceeds that allegedly may be payable under the Policy. There is no evidence that Promus has obtained an assignment of the trustee in bankruptcy or the loss payee’s rights in that regard.

[335] For the purpose of this action, I am satisfied that the conditions for the settlement of 188’s property damage claim on the basis of replacement cost as prescribed by s. 3 of the Enhancer Endorsement were not met. Pursuant to that endorsement, 188 was required to effect replacement. Mr. Hawkins’ largely uncontradicted and unchallenged evidence (on the point) establishes that in February 2019, he determined that repairs to the property had only been partially completed and that the level of repair would not warrant settlement of 188’s claim on a replacement cost basis.

[336] It is for all of the foregoing reasons that I am satisfied that there is no genuine issue requiring a trial concerning the plaintiff’s pleaded cause of action in conversion and its revised theory with respect to same. I will now determine whether there is a genuine issue requiring a trial with respect to the plaintiff’s asserted cause of action in unjust enrichment.

Issue #4: Has The Defendant Demonstrated That There Is No Genuine Issue That Requires A Trial To Determine Promus’ Asserted Cause Of Action Against Dominion In “Unjust Enrichment”?

[337] For the following reasons, I accept that the moving party has met its onus to demonstrate that there is no issue that requires a trial to determine the plaintiff’s position that Dominion is liable to it in unjust enrichment. The record adequately allows me to find, with confidence, that it is not.

[338] I am mindful that Dominion submits the unjust enrichment cause of action has not been properly plead. I disagree for the reasons that follow.

[339] In its factum, the plaintiff combines its positions with respect to conversion and unjust enrichment under a single issue framed as “Is there a genuine issue requiring a trial regarding the Dominion’s liability for conversion/unjust enrichment?” While the issue, as stated suggests that the plaintiff may have conflated the tortious cause of action in conversion with the equitable concept of unjust enrichment, the analysis the plaintiff undertakes in its factum addresses those distinct bases of liability as separate concepts. Although, the plaintiff expressly pleads a cause of action in conversion its amended statement of claim (in respect of the Insurer’s ACV advance payment), it does not expressly plead a basis of recovery premised on unjust enrichment. Prior to determining whether the plaintiff’s submitted cause of action in unjust enrichment can fairly and justly be determined in the context of this motion, it is necessary to determine whether the material facts pled in the statement of claim support the asserted cause of action. If not, the cause of action is not properly before the court.

[340] In its factum, Promus submits that Dominion has been unjustly enriched through a windfall benefit of paying the ACV of a portion of the restoration work with a balance of $101,955.78 being unpaid. Promus asserts that it suffered a corresponding deprivation because it performed a substantial amount of work without being paid. As a result, Promus contends that justice and fairness requires Dominion to restore the benefit to Promus.

[341] Considering the allegations in the amended statement of claim as a whole, I accept that the material facts that the plaintiff relies upon to support its unjust enrichment claim have been adequately pleaded, specifically that: Dominion has paid ACV to its Insured and loss payee for a portion of the value of the Insured’s loss but not the full amount of $230,420.39 inclusive of HST, representing replacement costs (although the amended statement of claim erroneously alleges that in March 2018 the Insurer hired Promus to complete repair work to the Insured’s Property for that amount); and Promus has not been paid for any of its repair work to the Insured’s Property.

[342] Although the material facts that the plaintiff relies upon have been adequately pled in the statement of claim, the cause of action fails. That determination can be made on the available record. A trial is not required. I will explain below.

[343] Pursuant to the principled approach to unjust enrichment, a plaintiff will succeed if it can prove that: a) the defendant was enriched; b) the plaintiff suffered a corresponding deprivation; and c) the defendant’s enrichment and the plaintiff’s deprivation occurred in the absence of a juristic reason: see Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303 (“Moore”), at para. 37. The principled approach is flexible and allows the court to identify circumstances where justice and fairness require one party to restore a benefit to another. Recovery is not restricted to cases that fit within the categories under which the retention of a conferred benefit has traditionally been considered unjust: see Moore, at para. 38.

[344] In this instance, Dominion derived no “benefit” for which Promus suffered a “corresponding” deprivation. Dominion had no contract with Promus or 188 to effect repairs to 188’s Property. Dominion had no legal interest in the Property and did not “benefit” from the restoration services Promus performed. Pursuant to its contract of insurance with 188, Dominion was not required to repair the Property. Instead, 188 was obligated to repair the Property as a condition of entitlement to payment from Dominion on a replacement cost basis.

[345] The evidence establishes that as of February 2019, the repairs to the Property were not complete and its state of repair would not justify payment on a replacement cost basis. As a result, Dominion’s obligation remained to indemnify its insured on an ACV basis for its loss, which it did through its May 2018 ACV advance payment to 188 and loss payee.

[346] Without deciding that there is a viable legal or equitable claim against Dominion for further indemnity under the Policy, such a claim, if it does exist, rests with 188’s trustee in bankruptcy and the loss payee, not Promus. When 188 became a bankrupt on August 1, 2018, its entitlement to indemnity under the policy vested with its trustee in bankruptcy and remained with the loss payee, Royal Bank. There is no evidence that payments from Dominion of any additional amounts under the Policy, including on an ACV basis, have been sought or requested by either of them.

[347] The Insurer receives no more of a benefit or enrichment in this instance than it would have had 188 not become a bankrupt, but had terminated its relationship with Promus before repairs were completed and before replacement cost became payable to 188 pursuant to the Policy. In those circumstances, Dominion would not be required to indemnify 188 on a replacement cost basis, and there may have been a difference between the amount that was payable under the Policy to 188 and the amount 188 owed Promus. If so, 188 would have been responsible to fund payment for Promus’ work above the ACV of the loss through alternative means, or risk legal action against it by Promus. But, none of this would have been a benefit to Dominion because its only obligation would have remained indemnifying the Insured in accordance with the terms of the Policy.

[348] In the present circumstances, it is 188 that benefited and was enriched by Promus’ work. Promus alleged detriment is tied to its lack of payment for the work that it performed in conferring a benefit to 188, not Dominion. To the extent that there is a claim that further monies should be paid pursuant to the Policy, it is a claim that must be advanced by the trustee in bankruptcy and/or the loss payee.

[349] Further, there is a juristic reason for Promus’ identified “enrichment/corresponding deprivation” analysis. The reason derives from the terms of the contract of insurance between 188 and Dominion and the fact that Promus does not have a legal entitlement to payment of indemnity under its terms. Here, the contractual requirements for payment of insurance proceeds on a replacement cost basis were not met. Therefore, Dominion was obligated to settle the insured’s claim on an ACV basis, and it has done so, in accordance with the estimate 188 accepted. Any further disputes over indemnity are matters that are respectively between: the trustee in bankruptcy and Dominion, in the context of the bankruptcy proceedings; and Dominion and the loss payee.

[350] In reaching the foregoing conclusions, I am mindful that the plaintiff argues that Dominion’s Insured has not been fully indemnified for its loss as measured against the July 2018 revised estimate. That position does not create an issue requiring a trial, for these reasons. First, there is no evidence that the revised estimate was accepted by 188 at any time. Second, the issue of whether the Insured has been fully indemnified is between the Insurer and Insured and loss payee. The Insured’s interest was transmitted to the trustee in bankruptcy. It is now for the trustee and/or the loss payee, not Promus, to advance the issue of incomplete indemnification.

[351] As a result of the foregoing, I am satisfied that there is no genuine issue requiring a trial to determine whether Promus is entitled to recover against Dominion on the basis of unjust enrichment. The record is adequate to allow me to find, with confidence, that it is not.

VII) JUDGMENT

[352] For all of the reasons set out above, I am satisfied that the moving party has met its onus to demonstrate there is no genuine issue requiring a trial to determine the bases of liability asserted against it both in the plaintiff’s pleadings and its submissions on this motion.

[353] As a result, Dominion’s summary judgment motion is allowed and the action against Dominion is dismissed. A judgment will go accordingly.

VIII) COSTS

[354] Dominion was successful in both its motion and the action overall. As a result, it is presumptively entitled to its costs of both. The parties may make written submissions regarding entitlement to, and quantum of, costs of both the motion and the action in accordance with the following directions:

1. Dominion may deliver a costs outline and written submissions of no more than 10 pages, double spaced 12-point font, addressing the costs of the motion and the action, together with copies of any rule 49 offers within 30 days of the date of these reasons.

2. Promus may deliver a costs outline and written submissions of no more than 10 page, double spaced 12-point font, addressing the costs of the motion and the action, together with copies of any rule 49 offers within 30 days of the date of service of Dominion’s costs submissions.

3. Dominion may deliver reply submissions of no more than four pages, double spaced 12-point font, within 20 days of the date of service of Promus’ costs submissions.

Original signed by Justice Gregory J. Verbeem

Gregory J. Verbeem

Justice

Released: December 13, 2022

[^1]: The action against the defendant Travelers Insurance Company of Canada has been discontinued.

[^2]: For the purpose of this motion and action, there is no dispute that Dominion was 188’s insurer at the time of the loss. At that time Dominion was one of three Canadian licensed insurers known as “Travelers Canada”. The former defendant Travelers Insurance Company of Canada is a legal entity separate from Dominion. It is also one of the Canadian licenced insurers known as Travelers Canada.

[^3]: Section 5 of the Policy’s broad form coverage, insures 188 against all risks of direct physical loss of, or damage to the Property insured, which includes the commercial plaza premises located at 1690 Huron Church Road, Windsor, Ontario (as identified in the Policy’s declaration page). Section 6B(b) of the broad form coverage prescribes that the Policy does not insure against loss or damage caused directly or indirectly, in whole or in part by “flood”. However, section 6B of the form exempts the application of the exclusion to loss or damage caused directly by rupture of pipes or breakage of apparatus, among other things.

[^4]: The parties agree that Ms. Hao had authority to bind 188 in its dealings with both Dominion and Promus.

[^5]: Although Mr. Cope deposes he provided the emergency services authorization to Mr. Hawkins during their site meeting in early January 2018, Mr. Hawkins does not agree.

[^6]: Notably, the Authorization and Direction to Pay executed by 188 at Promus’ request in March 2018 was not communicated to Dominion until late August 2018.

[^7]: In my view, even if such a contract was possible outside the parameters of condition 13, it would require the insured’s consent, since the insurer would otherwise lack authority to permit a “stranger” to the insurance contract to enter onto and alter the insured’s property. In this instance, there is no evidence that 188 consented to Dominion entering into such a contract with Promus or that such consent was communicated to either Promus or Dominion.

[^8]: The authorization form for emergency services executed by 188 on January 8, 2018, in part provides “this work authorization shall constitute a contractual agreement between the insured [188] and Promus Inc.”

[^9]: Mr. Hawkins testifies that Royal Bank’s consent was not required for this payment because it related to emergency services designed to mitigate the Insured’s losses.

[^10]: Mr. Hawkins testifies that in the ordinary course, when an insured elects to pursue replacement cost, Travelers/Dominion pays the ACV amount of the loss upfront to the insured and the loss payee once the value of the anticipated repairs is established. This allows the insured to deal directly with its contractor with respect to the repairs and payment for same. This has been the standard practice at Dominion since it was “taken over by Travelers.” There are times when insureds authorize Dominion to pay the insurance contractor directly, but Travelers/Dominion will never issue a cheque directly to a contractor in the absence of the insured’s explicit permission to do so. The plaintiff’s proposed expert Mr. Sandre confirms that pursuant to the wording of first party property insurance policies, payment under the policy is made to the insured and loss payee. An insurer is obligated to indemnify the insured directly but could pay the insured’s contractor directly if the insured provided its consent. Despite the policy wording typically requiring an insured to effect repairs before an insurer is obligated to pay the insured under the policy, there are times when an insurer may advance ACV to the insured while repairs are ongoing but not completed.

[^11]: The cheques directly payable to Promus were made July 19, 2018, July 24, 2018, and November 16, 2018, respectively.

[^12]: Two of the cheques were made on November 9, 2017, and one was made on March 23, 2018.

[^13]: See Hoelzler, at paras. 21-24.

[^14]: See Hoelzler, paras. 12 and 16-22.

[^15]: Brandiferri, at paras. 63-64.

[^16]: Brandiferri, at paras. 80-86.

[^17]: Brandiferri, at paras. 87-91.

[^18]: TGA, at para. 155.

[^19]: TGA, at paras. 57, 65, 155 and 162.

[^20]: Those categories include negligent misrepresentation, negligent performance of a service, negligent supply of shoddy goods or structures and relational economic loss. The Court also recognized a fifth category “the independent liability of statutory public authorities”, which is not purely between private parties.

[^21]: These authorities have been identified and digested earlier in these reasons, in the determination of the plaintiff’s position that it had a contract with the defendant for payment for repairs.

[^22]: In the absence of its asserted reliance on the insurer’s past practice and its own expectations, Promus posits that it would have sought a deposit from the Insured, interim billed the Insured and availed itself of procedures under the Construction Lien Act.