Executive Summary: Key Legal and Evidentiary Issues

• A New Brunswick homeowner's fire-loss claim gave rise to a dispute over whether she could be compelled to submit a further proof of loss before receiving documents she said she needed from her insurer.
   
• Two competing Rules of Court procedures — a Notice of Motion under Rule 16.04(e) and a pre-trial question of law under Rule 23.01(a) — were at the center of a jurisdictional challenge on appeal.
   
• Additional Condition 10 of the policy, permitting the insurer to examine the insured under oath, was challenged as an impermissible variation of the Statutory Conditions under s. 127(1) of the Insurance Act.
   
• Whether the motion judge committed a palpable and overriding error in finding the insured had done all she reasonably could to complete her proof of loss formed a separate ground of cross-appeal.
   
• Mootness became decisive on the insurer's request for a stay of proceedings once the appeal's outcome eliminated the conditions that would have triggered it.
   
• Ultimately, the Court of Appeal set aside the motion judge's ruling on the examination-under-oath question for want of jurisdiction, while leaving undisturbed his findings on the proof of loss.
   

Facts of the case

Denise Bernard owned a home in Saint-Arthur, New Brunswick, insured under a multi-peril homeowner's policy issued by The Personal Insurance Company [sic — cited on the cover page as "The Personnal Insurance Company"]. On May 10, 2023, the home was damaged by fire. The Personal assigned adjusters and restoration contractors, and the house was barricaded for safety. On June 29, 2023, Bernard submitted a proof of loss claiming $425,000 for the house and $175,000 for contents and personal belongings, but the proof of loss lacked an inventory and both parties agreed it was deficient. The Personal's own adjuster later estimated the contents loss at $42,366.46 — roughly $130,000 below Bernard's figure. Bernard retained her own adjuster, who asked The Personal for the cause-and-origin report, interior photographs, and rebuild/repair estimates to help prepare a compliant proof of loss; The Personal refused most of these requests, providing only 360-degree interior photos, leading to an impasse. In October 2023, The Personal demanded that Bernard and her adult son submit to an examination under oath and produce banking and phone records, relying on Additional Condition 10 of the policy. Bernard refused, arguing this violated s. 127(1) of the Insurance Act. Bernard commenced an action in April 2024 seeking damages for repair or reconstruction, special damages for contents, and aggravated and punitive damages for alleged bad faith; The Personal's June 2024 defence denied ever refusing coverage and pleaded abuse of process. The Personal then brought a Notice of Motion asking that Bernard be ordered to submit a compliant proof of loss, that Bernard and her son attend an examination under oath, and that the action be stayed pending both steps. During the hearing, after the motion judge questioned whether an order could bind Bernard's non-party son, counsel for The Personal orally amended the request to ask the court to determine, as a question of law, whether the insured was required to submit to an examination under oath under Additional Condition 10.

Policy and legislative provisions at issue

Section 127 of the Insurance Act mandates that all New Brunswick fire policies include the Statutory Conditions, including Statutory Condition 6, which requires an insured to deliver a proof of loss "as soon as practicable," complete with an inventory, detailed costs and actual cash value, particulars of how the loss occurred, a statement disclaiming wilful conduct, and details of any change in title, use, or occupation. Section 127(1) further provides that "no variation or omission of or addition to any statutory condition shall be binding on the insured." Bernard argued that Additional Condition 10 of the policy — which permits the insurer to examine an insured under oath — was just such an impermissible addition. Procedurally, the case turned on Rule 16.04(e) of the Rules of Court, which allows a Notice of Application where a matter involves the "determination of rights which depend upon the interpretation of a contract... or upon the interpretation of a statute," as against Rule 23.01(a), which permits a pre-trial determination of a question of law within an existing action only where doing so "may dispose of the action, shorten the trial, or result in a substantial saving of costs," and Rule 23.02, which restricts the evidence admissible on such a motion to transcripts and narrow categories of affidavit evidence.

Reasoning and analysis

Justice Dysart, writing for the Court, held that the motion judge lacked jurisdiction to interpret the policy and the Insurance Act by way of Rule 16.04(e), because the matter had come before him by Notice of Motion within an existing action rather than by Notice of Application. Rule 16.04(e) applies only where a proceeding is properly commenced as an application; it cannot be invoked to convert a motion into one. The Court found that the proper vehicle for resolving a pre-trial question of law within an ongoing action was Rule 23.01(a), a route The Personal had pleaded but which the motion judge did not expressly apply — and which, in any event, requires that resolution of the legal question be capable of disposing of the action, shortening the trial, or substantially reducing costs. The Court noted that Bernard would remain subject to an oral examination for discovery under Rule 32.02(1) regardless of how the Additional Condition 10 question was decided, undermining any claim that the determination would meaningfully advance the litigation. The Court also observed that the affidavit evidence filed went well beyond what Rule 23.02 permits on such a motion. Relying on prior authority holding that the Rules of Court carry the force of legislation and that a superior court's inherent jurisdiction cannot override clear procedural rules, the Court concluded the motion judge had no jurisdiction to bypass Rule 23.01 and rule on the Additional Condition 10 issue as he did. On the cross-appeal, the Court held the motion judge made no error of law and no palpable and overriding error in declining to order Bernard to submit a further proof of loss, given her sworn evidence that she did not know the extent of the damage, could not access the barricaded premises, and needed further documentation from The Personal to complete her proof of loss properly. Finally, the Court found the insurer's request for a stay of proceedings moot, since the conditions triggering it — completion of the proof of loss and the examination under oath — would not occur as a result of the appeal's disposition.

Ruling and overall outcome

The Court of Appeal allowed Denise Bernard's appeal, set aside the motion judge's decision on the Additional Condition 10 examination-under-oath issue for lack of jurisdiction, and dismissed The Personal's cross-appeal in its entirety, including its challenges to the proof-of-loss ruling and the denial of a stay of proceedings. Costs of $2,500 were ordered payable to Bernard as the successful appellant. The Court expressly declined to comment on the merits of the underlying question of whether Additional Condition 10 violates s. 127(1) of the Insurance Act, leaving that issue undecided.