Executive Summary: Key Legal and Evidentiary Issues

• The central procedural question was whether the court should compel the plaintiffs to participate in the statutory appraisal process under s. 128 of the Insurance Act, R.S.O. 1990, c. I.8.
• Disagreement over the appropriate valuation date — with the plaintiffs insisting on a present-day valuation and the defendant rejecting that position — rendered the appraisal process impractical.
• Policy interpretation of what valuation date applies under the replacement cost coverage was identified as a legal question that must be resolved by the court before any appraisal can proceed.
• Allegations of bad faith against the defendant further placed the dispute outside the narrow scope of the statutory appraisal mechanism, which is limited to quantum only.
• Prior case management direction from Associate Justice Kamal — that the matter proceed by summary judgment — was a relevant consideration against compelling appraisal.
• Costs of $2,000 were awarded to the plaintiffs as the largely successful parties on the motion.

Facts of the case

Joseph Adelard Serge Dutremble and Jessica Smith held a homeowner's insurance policy with Heartland Farm Mutual Inc. covering their property in Brinston, Ontario. The policy provided coverage of $671,000 for dwelling/replacement cost, $536,800 for personal property, and $134,200 for additional living expenses (ALE). On August 5, 2020, the property was damaged by fire. An estimate for rebuilding was prepared in the amount of $477,289.33, inclusive of HST. In response to the claim, the defendant issued payments of $501,438.90 for the building loss, $54,910.92 for ALE, and $245,123 for personal property. Despite receiving these funds, the plaintiffs did not rebuild the structure and were living in a 900-square-foot unit above the garage at the time of the motion. They commenced this action alleging that the defendant failed to account for increased construction costs and acted in bad faith. As of April 29, 2026, the plaintiffs had filed a proposed amended Statement of Claim seeking general, aggravated, and punitive damages, as well as damages in an amount to be determined before trial.

Policy terms and contractual clauses at issue

The insurance policy at issue included dwelling/replacement cost coverage, among other heads. The broader statutory framework was also engaged: s. 148 of the Insurance Act deems certain terms to form part of every insurance contract in Ontario, including Statutory Condition 11, which gives either party the right to elect appraisal when there is a disagreement as to the value of insured property or the amount of the loss. The defendant issued a written demand for appraisal by letter dated November 21, 2024, which the plaintiffs admitted constituted proper notice under the Act. The core dispute over policy interpretation centered on what date should govern the valuation — whether indemnity is fixed at the date of loss, whether replacement cost coverage alters that, and whether post-loss market changes are relevant.

Court's reasoning and analysis

Justice Doyle considered whether the court should exercise its discretion under s. 128 of the Act to compel participation in the appraisal process. While the appraisal mechanism is generally mandatory once a proper written demand is made — as confirmed by the Court of Appeal in Desjardins General Insurance Group v. Campbell, 2022 ONCA 128 — the court noted that s. 128(5) uses the word "may," preserving judicial discretion. The court also noted that the appraisal process is limited to quantification of loss and does not address coverage disputes, bad faith allegations, or policy interpretation, as affirmed in Northbridge General Insurance Corporation v. Ashcroft Homes-Capital Hall Inc., 2021 ONSC 1684. In this case, the dispute extended well beyond quantum: the parties could not agree on the valuation date, and the plaintiffs had raised bad faith allegations. Justice Doyle held that the valuation date question is a matter of policy interpretation that must first be resolved by the court. The prior direction by Associate Justice Kamal at the August 13, 2025 triage conference — that the matter proceed to summary judgment — further supported declining to order appraisal.

Ruling and overall outcome

The court dismissed the defendant's motion and declined to compel the appraisal process under s. 128 of the Act. The plaintiffs were ordered to deliver a sworn proof of loss within 60 days. As the largely successful parties on the motion, the plaintiffs were awarded costs in the amount of $2,000.