Court File and Parties

Date: 2023-06-16 Superior Court of Justice - Ontario

Re: DAVID DISANTE and TERESA MCLEOD, Applicants And: MELOCHE MONNEX FINANCIAL SERVICES INC. (c.o.b. as TD INSURANCE MELOCHE MONNEX) and SECURITY NATIONAL INSURANCE COMPANY (c.o.b. as TD INSURANCE MELOCHE MONNEX), Respondents

Before: Regional Senior Justice Calum MacLeod

Counsel: Andrew Ferguson, for the Applicants Dean Melamed, for the Respondents

Heard: May 25, 2023

Endorsement

[1] This is an application under s. 128(5) of the Insurance Act. The Applicants suffered property damage as the result of a collision between a ride-on lawn mover and their home.

[2] The parties disagree as to what damage was caused by that collision and the extent of the insured loss. Both parties have appointed appraisers but they have been unable to agree on the name of a suitable umpire. This engages the jurisdiction of the court under s. 128(5)(b) of the Act and it falls to the court to appoint an umpire.

[3] The importance of the binding and non appealable appraisal process is outlined in Sellers v. State Farm 2023 ONSC 645 (Divisional Court) at paragraphs 19 and 21.

[4] There is very little jurisprudence to guide the court in the exercise of its discretion but the case of Giammara v. Economical Mutual 2021 ONSC 963 (SCJ), cited by counsel, is very helpful. In that case, the court adopted an Alberta decision to the effect that a properly appointed umpire should be an expert in the issue to be resolved. [2] Obviously, as well, the umpire must be impartial. There is also a useful description of the process in Aviva v. Cunningham 2022 ONSC 6331 and the cases cited therein.

[5] The parties differ not on the test as such, but on the question of level of expertise required on the one hand and on the question of bias or perceived bias on the other.

[6] TD proposes Glenn Gibson, who was an adjuster and senior officer with Adjusters Canada, and subsequently with Crawford & Company. Mr. Gibson has significant experience as an adjuster, as an umpire and in management roles. The Applicants’ major issue with Mr. Gibson is his long association with Crawford & Company – the very firm of adjusters used by the Respondent in this case. The alternative umpires proposed by the Respondents are Thomas Hanrahan, Don Cranston or James Minns. These are all lawyers who were formally experienced insurance defence counsel located in Toronto or in one case, Alberta.

[7] The Applicants put forward two local candidates, Brian Parnega or Robert Bates. Mr Parnega is a well-known mediator and former insurance litigator with much experience acting as a neutral. Mr. Bates holds both a law degree and a Professional Engineer designation (P.Eng.). He has significant experience as a referee and arbitrator which are roles similar to the role as umpire in this case.

[8] The Respondents object to certain evidence tendered by the Applicants as either being served out of time or as inadmissible hearsay. It is accurate that affidavits based on information and belief have less of a role in an application than on a motion because Rule 39.01(5) contains somewhat different requirements for affidavits for applications than Rule 39.01(4), which applies to motions. But in any event, hearsay evidence, even if admissible, may carry little weight on either a motion or an application. Information and belief is not nearly as persuasive as direct proof. In this case, however, nothing actually turns on this point.

[9] I do not accept that the submission that Mr. Gibson’s long history as an adjuster with Crawford & Company raises a reasonable apprehension of bias. I note that he has been appointed by parties or the court on several occasions (See the unreported decision of Braid J. appointing Mr. Gibson and contained in the materials). In fact, none of the evidence persuades me that any of the proposed umpires are unsuitable or subject to any disqualifying bias.

[10] While disqualifying bias would require me to reject a particular proposed umpire, the fact that Mr. Gibson is not disqualified cannot be the end of the analysis. The court is not compelled to accept the proposed umpire simply because he is qualified and suitable.

[11] I am required to select one of the proposed umpires because that is the statutory mandate of the Court under the Act. I consider that subject matter expertise in property damage claims and construction costs would be useful but it does not follow that alone is the deciding factor. An umpire must have sufficient expertise to quickly grasp the issues and understand the documents. They need not be qualified to do the work themselves and other expertise is also important. I consider that adjudication and dispute resolution expertise is also important. Experience in arbitration and dispute management would be helpful. Experience as an umpire would be beneficial. Ideally, the umpire should be a person in whom the parties themselves have confidence. In that regard, while no judicial decision should be arbitrary, a choice must be made between the proposed neutrals. All of them seem appropriate for different reasons.

[12] As Mr. Melamed argues, it is not for the parties themselves to name the umpire. It is the appraisers who are to attempt to agree on an umpire. It is TD’s evidence that the proposed umpires on its side were supported by their appraisers and are not individuals hand picked by counsel.

[13] On the other hand, even if the neutrals proposed by the Applicants were selected by counsel, I am unimpressed with the failure of TD to give serious consideration to those proposed simply because they are not known to their Toronto counsel. Even the most cursory of research would have revealed that Rick Wieler (who was originally on the list) is one of the most respected mediators in Ottawa if not in Canada. Mr. Parnega has a stellar reputation as a neutral and even if I ignore the evidence in the supplementary affidavit that he has actually served as an umpire in property insurance disputes, he is entirely qualified. So too is Mr. Bates who brings both legal and scientific expertise to the table.

[14] There is no doubt that Mr. Gibson is the most experienced of the proposed umpires for the reasons described by Braid J. but in this case, given the hypersensitivity of the Applicants to the notion on a “hired gun” and the fact of his long experience with Crawford & Company, I am of the view that one of the other candidates is preferable. Not because he would be disqualified but simply to be fair. The process mandated by the Act must be fair and expeditious.

[15] As I have decided not to appoint the Respondent’s first choice and thus to yield to the strong objections of the Applicants, in order to be balanced and fair, I have selected an alternative from the Respondent’s list.

[16] Thomas Hanrahan is on the list. He is a highly experienced litigator with extensive experience in property loss claims. He has experience acting as a neutral and the Court has confidence that he will discharge his duties as an umpire in this case fairly and competently in the summary and expeditious manner set out in the Act.

[17] As a decision must be made, it is my decision that Mr. Hanrahan be appointed.

Costs

[18] It is unfortunate that the parties had to file and to respond to significant material in this case. The Applicant’s failed to prove that the person proposed by the Respondent was a biased hired gun. The Respondent failed to show that the umpires proposed by the Applicant were unsuitable.

[19] The court has made a decision because the parties could not, but this was made into a much larger dispute than it needed to be.

[20] I am not inclined to award costs and I decline to do so.

Justice C. MacLeod Date: June 16, 2023

Footnotes

[1] This decision has been subject to minor editing since being pronounced in court

[2] The Alberta statute contains a similar provision.