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Insurance - Umpire Appraisals [s.128] (4). Mann-Bentley v. North Kent Mutual Insurance Co.
In Mann-Bentley v. North Kent Mutual Insurance Co. (Div Court, 2024) the Divisional Court dismisses a JR by the insured against an Insurance Act (IA) s.128 umpire appraisal award, here regarding a fire claim.
Here the court considered the JR approach where few or no 'reasons for decision' are provided, here by the s.128 umpire:[14] In Laporte (Div. Ct.), at para. 28, D. Edwards J. cited the Supreme Court’s guidance on how to approach on appeal where no reasons are required or given:There will nonetheless be situations in which no reasons have been provided and neither the record nor the larger context sheds light on the basis for the decision. In such a case, the reviewing court must still examine the decision in light of the relevant constraints on the decision maker in order to determine whether the decision is reasonable. But it is perhaps inevitable that without reasons, the analysis will then focus on the outcome rather than on the decision maker’s reasoning process. This does not mean that reasonableness review is less robust in such circumstances, only that it takes a different shape: Vavilov, at para. 138. [15] Accordingly, appraisal awards should generally be afforded significant deference.
THE APPRAISAL AWARD
[16] The umpire’s award is very short. He clearly preferred the insurer’s appraiser’s opinion on the size of the cottage but did not provide any reasons stating why.
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PRELIMINARY EVIDENTIARY ISSUE
[20] Where an umpire does not give reasons, it is appropriate to re-create the record of what was before the umpire, as the parties did here. The applicant, however, argued that the Court should ignore appraiser Valeriote’s 10 April 2024 affidavit. Alternately, she argues that we should ignore paragraphs 6-13, 15-22, and 25-31 of that affidavit. She gives two bases for this submission: 1) it was late filed, and 2) it contains evidence that is not properly before the Court, namely, information Mr. Valeriote received from others, but which Mr. Valeriote does not say he believes is true. Further, that evidence is not on non-controversial matters and violates r. 39.01(5).
[21] We accept the 10 April Affidavit as it contains necessary information such as emails and Mr. Valeriote’s memory, which clarifies evidence arising out of the affidavits filed before 10 April, and to understand what transpired at the appraisal hearing. The applicant does not argue that this information in it is not true nor did she seek an adjournment to consider and respond to it. To exclude that affidavit in its entirety would allow form to triumph over substance.
[22] We accept the applicant’s position, however, that those portions of the 10 April affidavit which are on information and belief are improper as those portions of the affidavit do not deal with non-controversial matters. We have ignored them. Even had we excluded the affidavit in its entirety, the outcome of this application would have remained the same. . Mann-Bentley v. North Kent Mutual Insurance Co.
In Mann-Bentley v. North Kent Mutual Insurance Co. (Div Court, 2024) the Divisional Court noted a limited JR jurisdiction for Insurance Act s.128 umpire appraisal cases.
Here the court reviews the JR SOR and the JR jurisdiction bearing on such cases, where there is higher deference due to the decider's (or tribunal's) expertise:JURISDICTION
[11] The court has jurisdiction to hear this application for judicial review pursuant to ss. 2(1) and 6(1) of the JRPA. This Court has ruled, however, that its jurisdiction to review an appraisal award is narrow, limiting intervention only to when there has been misconduct, or where the appraiser or umpire has exceeded his or her jurisdiction: Sellors v. State Farm Fire and Casualty Co., 2023 ONSC 645 (Div. Ct.), at para. 21; Seed v. ING Halifax Insurance (2005), 2005 CanLII 41991 (ON SCDC), 78 O.R. (3d) 481 (Div. Ct.), at para. 23. Although an umpire is not required to give reasons, the failure to do so may also be grounds for intervention: Intact Insurance Co. v. Laporte (c.o.b. Warrior Gear), 2023 ONSC 1828 (Div. Ct.), at paras. 78-79, Leiper J. dissenting, at paras. 133-135, rev’d on other grounds 2024 ONCA 454.
STANDARD OF REVIEW
[12] The applicant and the respondent agree that the appropriate standard of review on this application is reasonableness: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653. Under Vavilov, the court must only determine whether the decision bears the “hallmarks of reasonableness – justification, transparency and intelligibility – and whether it is justified in the relevant factual and legal constraints that bear on the decision.” Unreasonable decisions are those that contain at least one of two fundamental flaws: 1) a failure of rationality internal to the reasoning process; and/or 2) is in some respect untenable in light of relevant factual and legal constraints: Vavilov, at paras. 99-101.
[13] The standard of review for Insurance Act appraisal awards must be viewed in the context of the appraisal mechanism under that Act. An appraisal is not adjudicative or quasi judicial process. It is a process based on discussion between those with knowledge and expertise. It is intended to be collaborative, not adversarial. Where the appraisers cannot agree on the value of the property lost, the umpire decides using a process of his or her design: Northbridge General Insurance Corp. v. Ashcroft Homes-Capital Hall Inc., 2021 ONSC 1684 (Div. Ct.), at para. 29. Since an appraisal under s. 128 is not an arbitration, it does not require a hearing, evidence, or reasons: Campbell v. Desjardins General Insurance Group, 2022 ONCA 128, 467 D.L.R. (4th) 480, at para. 47.
[14] In Laporte (Div. Ct.), at para. 28, D. Edwards J. cited the Supreme Court’s guidance on how to approach on appeal where no reasons are required or given:There will nonetheless be situations in which no reasons have been provided and neither the record nor the larger context sheds light on the basis for the decision. In such a case, the reviewing court must still examine the decision in light of the relevant constraints on the decision maker in order to determine whether the decision is reasonable. But it is perhaps inevitable that without reasons, the analysis will then focus on the outcome rather than on the decision maker’s reasoning process. This does not mean that reasonableness review is less robust in such circumstances, only that it takes a different shape: Vavilov, at para. 138. [15] Accordingly, appraisal awards should generally be afforded significant deference. . Mann-Bentley v. North Kent Mutual Insurance Co. [illustration]
In Mann-Bentley v. North Kent Mutual Insurance Co. (Div Court, 2024) the Divisional Court dismisses a JR by the insured against an Insurance Act (IA) s.128 umpire appraisal award, here regarding a fire claim.
Here the court illustrates some typical IA s.128 procedures:[1] This is an application for judicial review pursuant to s. 2(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1 (“JRPA”) of an appraisal award made under s. 128 of the Insurance Act, R.S.O. 1990, c. I.8 (the “Act”), with respect to the value of the damage to the applicant’s cottage property following a fire.
[2] The applicant seeks an order in the nature of certiorari quashing or setting aside the appraisal award and remitting the matter for a fresh appraisal before a new umpire. The respondent requests that the application be dismissed.
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[3] In 2019, the applicant, Patricia Mann-Bentley, purchased a cottage at 6195 London Road, Lambton Shores, Ontario and insured it through their insurance agent, Marianne Hope, with the respondent, North Kent Mutual Insurance Company, under a property policy, Policy No. 56646P01.
[4] The cottage was completely destroyed by fire on January 20, 2022, which was ultimately ruled to be criminal arson by someone other than the applicant and her husband. The respondent retained Paul Davis of Chatham-Kent to provide it with a “total loss repair estimate” for the cottage. Paul Davis produced two estimates dated February 7, 2022 and May 20, 2022.
[5] The applicant and her husband, Barry Bentley, sued the respondent in 2022 for damages in breach of contract. On January 27, 2023, the respondent invoked the appraisal process in s. 128 of the Act to determine the value of the cottage fire loss.
[6] Under s. 128 of the Insurance Act’s arbitration process, each party retains an appraiser who provides an assessment of the value of the loss. The two appraisers select an umpire to decide the value of the loss. In this case, the respondent appointed John Valeriote, a veteran insurance appraiser as its appraiser, and the applicant, Thomas Hanrahan, a veteran insurance lawyer. The appraisers appointed James Minns as umpire.
[7] The appraisers agreed that the replacement cost of the cottage was $256.26 per sq. ft. They differed, however, on the size of the cottage. For the respondent, Mr. Valeriote argued that the cottage was 1,140 sq ft., based on the two estimates prepared by Mr. Scott of Paul Davis after the fire. Mr. Scott went to the property and measured what remained of the building. For the applicant, Mr. Hanrahan submitted that the cottage was 1,341 sq ft., based on an iClarify valuation report that had been prepared in 2019 at the request of the insurance broker, Ms. Hope, when the applicant purchased the home. After it received the iClarify report, the insurer issued the policy.
[8] Umpire Minns found that the Replacement Cost of the cottage at $285,785.27 based on the agreed replacement cost price per square foot and, implicitly, a total cottage size of 1,140 sq ft.
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