Insurance law – Multiple policies – Apportionment and contribution of claim – Farm policies – Business interruption coverage – Calculation of losses; Costs – Interest – Prejudgment interest – Legal and professional fees; Pleadings – Underlying action
The insured pursued a summary judgment motion for costs, enhanced pre judgment interest, and professional fees incurred in proving the claim. The defendant insurers had previously paid the amounts owed under the policy. The court declined to grant the relief sought by the insured and dismissed the action without costs.
 O.J. No. 4412
2016 ONSC 5311
Ontario Superior Court of Justice
August 22, 2016
C.U.C. MacLeod J.
The plaintiff insured is a farmer and owner of a hog farming operation. On October 16, 2011, there was a devastating fire which completely destroyed several farm buildings, equipment and livestock. The heat from the fire was so intense it was impossible to verify the number of hogs destroyed in the fire through examination of the remains.
The farm was insured under a comprehensive farm owners policy of insurance which provided coverage for loss of buildings, equipment and livestock. The policy also provided compensation for business interruption and loss of profits.
The insured reported the loss and adjustment of the claim proceeded smoothly until quantification of the business interruption claim. On October 12, 2012, the plaintiff filed an action to protect against a potential one year limitation period. The insurance policy subscription form indicated that North Waterloo Farmer’s Mutual Insurance provided 50% of the property insurance and AXA Insurance provided the remaining 50%; however, the declaration pages only contained the logo and name of North Waterloo Farmer’s Mutual Insurance Company and the insured only dealt with North Waterloo Farmer’s Mutual Insurance Company during the initial adjusting of the claim. When the plaintiff commenced his action, the only defendant was North Waterloo Farmer’s Mutual Insurance. AXA Insurance was not referenced in the Statement of Claim.
The parties eventually invoked the appraisal process to quantify the business interruption claim. The appraisers were able to reach an agreement and on September 3, 2015, the Tribunal rendered an award quantifying the loss. North Waterloo Farmer’s Mutual Insurance paid the balance of its obligation on October 1, 2015. On November 27, 2015, the plaintiff filed summary judgment materials because of AXA Insurance’s delay in paying. On January 5, 2016, AXA Insurance satisfied its obligation.
At the summary judgment application, the plaintiff conceded that the insurers had paid all they were obligated to pay under the terms of the policy of insurance; however, the plaintiff sought an order for costs, enhanced pre judgment interest, and professional fees incurred in proving the claim. The Court found that the defendant insurer had discharged all of its obligations to the insured and it would be unjust to grant the relief sought by the insured.
The pleadings did not include a claim for pre judgment interest at anything other than the rate set out in the Courts of Justice Act and the claim for enhanced pre judgment interest was dismissed. In addition, the Court declined to award pre judgment interest under the Courts of Justice Act because North Waterloo Farmer’s Mutual Insurance’s obligation to pay the remaining amount in dispute did not arise until the proof of loss was provided. Once this occurred, the appraisal process was invoked and North Waterloo Farmer’s Mutual Insurance paid promptly following completion of the appraisal process. Pre judgment interest against AXA Insurance, from the date of the appraisal until the final payment, was not awarded because AXA Insurance was not a party to the litigation.
The Court recognized that while the insured had spent a great deal of money on accounting and legal fees, the insurance policy limited payment for professional fees incurred by the insured in proving his loss to $5,000. There was no evidence to suggest that the insurer acted unreasonably and the insured conceded that the circumstances of the loss made it extremely difficult to quantify the loss of profit.
The Court found that the need to commence litigation because of the limitation period could have been avoided by a tolling agreement. In the result, the court found that it was not appropriate to award further compensation to the insured and the action was dismissed without costs.
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