The decision of an arbitrator or umpire assessing the value of a loss in an insurance contract may be binding on the courts

15. April 2010 0

An action by the insured for payment under a hail insurance policy asking that the amount of loss as determined by the Umpire be set aside and a new amount inserted was dismissed as the court found that a statutory condition of the Saskatchewan Insurance Act was binding on the insured.

deBalinhard v. Butler Byers Hail Insurance Ltd., [2010] S.J. No. 57, February 10, 2010, Saskatchewan Provincial Court (Civil Division), R. Green, Prov. Ct J.

Mr. deBalinhard had an insurance policy with Butler Buyers Hail Insurance Ltd (“Butler Buyers”). Three quarter sections of his land were rented out to another farmer. In July 2007 the canola crops grown on the rented land were damaged by hail.  A representative appointed by the defendant attended the property in September 2007 but failed to reach an agreement on the percentage of loss suffered. The defendant valued the loss at 45% for each of the three quarters of land, while the plaintiff felt the loss was 55% on each quarter.

By virtue of Section 286(1) of the Saskatchewan Insurance Act, Statutory Conditions 8 and 15 were deemed part of the hail insurance contract in this case.  Conditions 8 and 15 set out a series of steps designed to reach a valuation on hail damage where there is a disagreement as to the percentage of loss suffered.

Since an agreement could not be reached between the plaintiff’s and the defendant’s representatives, an umpire was appointed  who determined that the value of the loss was 10% on each quarter of land.

The plaintiff was not satisfied with the award and submitted that Statutory Condition 15 was not binding on him on the basis of biased interest or lack of impartiality on the part of the umpire, that he did not comply with Statutory Condition 15(i) because he did not deliver notice in writing requiring appraisal within three days of the disagreement, and that he did not comply with Statutory Condition 15(iii) as he was not prepared to accommodate the plaintiff’s representative in estimating the percentage of damage.

The plaintiff also submitted that the umpire was without jurisdiction to make a final valuation because he did not comply with Statutory Condition 8 in that he did not meet within 30 days of the plaintiff’s notice of loss.  The plaintiff had the onus of proving all elements of the claim on the balance of probabilities.  The judge found that the plaintiff’s lack of recall about dates and who attended to his land was not sufficient on the balance of probabilities to find that the defendant violated Statutory Condition 8.  The judge found that it was as likely as not that the notice requiring an appraisal be delivered in three days pursuant to Statutory Condition 15 was met and held on the balance of probabilities that the defendant did not violate Statutory Condition 15(i).

With respect to the claim that the defendant violated Statutory Condition 15(iii) as the defendant’s representative was not prepared to accommodate the plaintiff’s representative the judge found that very likely was not the case.  The judge was also not satisfied that the plaintiff at any time during the process raised any concerns about the three issues considered above.

In addition, the plaintiff deBalinhard agreed in writing that he would cover an equal share of the umpire’s expenses and by inference that he would be bound by the umpire process set out in that document.  The process included a condition that the umpire’s award was final.

As to whether the decision under Statutory Condition 15 was binding on the plaintiff with respect to bias, interest or lack of impartiality, the judge found that the method employed by the umpire did not show any evidence of bias to the parties and that the umpire did a careful job of appraising the percentage of hail loss on the quarter sections.

The judge was not satisfied the valuation should be set aside and found that the umpire’s award was binding on the plaintiff.

This case was originally summarized by Neil J. MacDonald and originally edited by David W. Pilley.

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