Executive Summary: Key Legal and Evidentiary Issues

• Plaintiffs asked the court to rule whether an insurance appraisal binds a broker not party to the process

• The broker, WFG, argued that the motion was procedurally improper under Rule 21.01(1)(a)

• The court agreed the issue was not plainly and obviously resolvable as a pure question of law

• Prior ruling appointing an umpire did not answer whether appraisal findings bound the broker

• The pleadings did not raise the specific legal question plaintiffs later sought to resolve

• Plaintiffs’ motion was dismissed; WFG was awarded costs

Facts of the case

The plaintiffs—4811837 Manitoba Ltd., 9120459 Canada Ltd., and 9120696 Canada Ltd.—operated the Clarion Inn Lakeside and Conference Centre and held insurance policies with several insurers: Wynward Insurance Group, The Wawanesa Mutual Insurance Company, Aviva Insurance Company of Canada, and Lloyd’s Underwriters. Their insurance broker was Western Financial Group (Network) Inc. (WFG).

Following a fire loss at the hotel, the plaintiffs initiated legal proceedings against both the insurers and the broker. They claimed that the insurers failed to pay for the full loss and that WFG had failed to arrange adequate insurance coverage.

In 2022, the court granted the insurers' motion to appoint an umpire under section 128 of the Insurance Act, which governs the appraisal process to determine the value of insured property. The plaintiffs objected to proceeding with an appraisal because it excluded WFG, even though the valuation might affect their claim against the broker. The court rejected that concern and proceeded with the appraisal, which was eventually completed.

Procedural motion under Rule 21

In 2025, the plaintiffs brought a motion under Rule 21.01(1)(a) of the Rules of Civil Procedure seeking a legal determination of whether the appraisal’s valuation is binding on WFG in the court proceedings.

WFG raised four objections:

1. It requested leave to file affidavit evidence, which the court granted.

2. It argued the issue had already been addressed in the prior 2022 decision. The court disagreed and clarified that it had not ruled on whether an appraisal was binding on non-parties.

3. It submitted that the motion did not raise a pure question of law suitable for determination under Rule 21. The court agreed.

4. It emphasized that the pleadings did not raise the question now advanced, and that the matter required a factual context.

Justice Newton analyzed each procedural requirement of Rule 21.01 and found that:

• The question was not fully settled in law;

• It was not “plain and obvious” that the plaintiffs’ legal position was correct;

• The issue was one of mixed fact and law requiring a factual record;

• The pleadings did not raise the issue at all.

Outcome

Justice Newton held that the Rule 21.01 procedure was inappropriate for deciding whether WFG was bound by the appraisal. The motion was dismissed. WFG was awarded costs, with the opportunity for parties to make written submissions if they could not agree on costs.

This decision affirms that parties must raise legal issues clearly in pleadings and that unsettled, fact-dependent questions are not suitable for early determination under Rule 21. It also reinforces that appraisals under the Insurance Act do not automatically bind third-party brokers who were not involved in the process.