Executive Summary: Key Legal and Evidentiary Issues

• The enforceability of an Umpire's valuation under section 128 of the Insurance Act was central to the dispute.

• Plaintiff’s standing as a lessee and named insured was challenged but upheld based on the insurance contract and statutory provisions.

• Chubb raised several procedural and substantive defences late, including limitation periods and settlement by a third party.

• The appraisal process was deemed binding, and Chubb’s failure to seek judicial review prevented re-litigation of the valuation.

• Lack of pleading and evidence on newly raised issues undermined Chubb’s arguments at the motion hearing.

• Court emphasized the role of appraisal as a valuation tool, not a determination of liability or entitlement.

Background and facts

2327209 Ontario Inc., operating as The Gardener Landscape & Maintenance, is a landscaping business in Ontario. The company leased four trucks from NewRoads Automotive Group and purchased extended warranties for each vehicle. The trucks were insured under a policy issued by Chubb Insurance Company of Canada. In June 2020, all four trucks were vandalized, prompting the insured to seek indemnification for the loss.

Chubb engaged appraisers who assessed the loss for three of the trucks and issued corresponding payments to NewRoads, the lessor. NewRoads, in turn, issued partial payments to the plaintiff but deducted amounts representing the remainder of the lease contracts. Dissatisfied with the valuations, the plaintiff obtained its own appraisals, which were higher. Chubb declined to pay the difference.

The plaintiff initiated legal proceedings in September 2021. In response, Chubb insisted the dispute should be resolved under section 128 of the Insurance Act, which allows for an appraisal process. Both parties agreed to proceed with the statutory appraisal. An Umpire was appointed, who issued a binding report in February 2024, assessing the loss at higher amounts than Chubb had paid. The plaintiff demanded payment of the difference, totaling $23,767.66. Chubb refused, arguing that the Umpire’s decision was not binding and raising various new legal and procedural objections.

Issues and legal arguments

The motion before the court sought enforcement of the Umpire's decision. The key legal issues included the enforceability of the Umpire’s valuation under section 128 of the Insurance Act, whether the plaintiff had standing as a lessee to challenge the insurer’s valuation, the impact of the one-year limitation period under the Insurance Act, and whether previous payments to NewRoads constituted a binding settlement.

Chubb argued that only the owner, NewRoads, had standing, and that the plaintiff was not entitled to dispute the value. It also claimed that the plaintiff’s motion was procedurally defective and that the claim was out of time. Additionally, it argued that its payments to NewRoads resolved the dispute.

Decision and reasoning

The Ontario Superior Court of Justice ruled in favour of the plaintiff. The court held that the Umpire’s decision was binding and enforceable, and that Chubb’s failure to seek judicial review of the Umpire’s valuation barred it from contesting the result.

The court rejected Chubb’s standing argument, finding that Gardener was the named insured under the policy and had an insurable interest. The court emphasized that the Insurance Act and related regulations expressly allow the named insured to invoke and rely on the appraisal process.

On the limitation period, the court found Chubb’s argument invalid because the defence had not been pleaded. Citing case law, the court held that limitation defences must be raised explicitly in pleadings, and Chubb’s late attempt to introduce the issue caused clear prejudice to the plaintiff.

Regarding the alleged settlement with NewRoads, the court concluded there was no evidence that NewRoads had authority to settle on behalf of Gardener, nor had Chubb pleaded this position.

Finally, the court held that the motion was not procedurally defective. Rule 37 and section 128 of the Insurance Act were sufficient to ground the motion, particularly because there were no material facts in dispute and the legal issues had been clearly defined in the parties’ requisition to schedule the motion.

The court ordered Chubb to pay the amount awarded by the Umpire. Cost submissions were invited if the parties could not resolve costs on their own.