Insured Granted Leave to Appeal Decision of Arbitrator

The insured was granted leave to appeal the decision of an arbitrator where the arbitrator took a “fault-based” analysis in determining an insurer’s obligations under a policy rather than applying the principles of contractual interpretation.

Bal v. British Columbia (Ministry of Agriculture), [2013] B.C.J. No. 2345, October 25, 2013, British Columbia Supreme Court, L.A. Warren J.

The insured had obtained crop insurance for its apple orchard from the insurer. In the two years after the insurance was issued, the insured’s annual tree count greatly increased. The replanting effort was financed by the insurer. The insured did not provide an annual tree count to the insurer as required under the policy. The insured assumed the insurer was aware of the number of trees on account of their financial involvement. Due to very cold temperatures, many of the insured’s trees died. The insurer denied the insureds claim for most of the trees on the basis that only the older trees included in the reported annual tree count were covered.

At arbitration the arbitrator found the insured breached a contractual obligation to provide an annual tree count, but, since the insurer was aware there were more trees than provided on the annual tree count, he found the parties equally at fault. The arbitrator awarded damages to compensate for half of the trees that were lost due to freeze. The insured petitioned to appeal the arbitrator’s decision.

The court allowed the petition in part on the basis that the arbitrator applied a fault-based analysis rather than applying the principles of contractual interpretation. The arbitrator was required to construe the coverage grant, exclusion provisions, and consequences of failure to comply with a provision under the policy, and in doing so was required to follow the legal principles of contractual interpretation. The arbitrator was also required to apply the principles of waiver, estoppel and relief from forfeiture to the question of consequences that should flow from the petitioner’s failure to comply with a term in the policy.

This case was digested by Djuna M. Field and edited by David W. Pilley of Harper Grey LLP.

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