Judicial review of an umpire’s decision made pursuant to section 12 of the Insurance Act, R.S.B.C. 2012, c.1, regarding the value of stolen jewellery. The standard of review was whether the umpire’s decision was patently unreasonable. The petitioners (insureds) failed to identify a reversible error and the petition for judicial review was dismissed.

Insurance law – Homeowner’s insurance – Property insurance – Policies and insurance contracts – Proof of loss – Valuation of property – Appraisals – Actual cash value – Replacement value – Standard of review

Vandale v. Wawanesa Mutual Insurance Co., [2015] B.C.J. No. 942, 2015 BCSC 766, British Columbia Supreme Court, May 11, 2015, P. Rogers J.

The insureds had a homeowner’s policy with the insurer which provided coverage for the insureds’ jewelry. Before the policy was issued, the insureds provided an appraisal to the insurer for six items of jewelry that valued the items at approximately $79,000. The insureds’ home was broken into and the six items of jewelry were stolen. The insureds filed a proof of loss seeking indemnity pursuant to the terms of the insurance policy. The insureds did not replace the jewelry but took the position they were entitled to the replacement cost.

The insurer obtained an appraisal for the stolen jewelry that provided a fair retail value of $50,900 and an actual cash value of 50% of fair market value or $25,450. The insureds obtained an appraisal from Ms. Kneller which estimated the replacement value of the jewelry at $75,000. Ms. Kneller’s appraisal did not address the actual cash value of the jewelry.

The parties disputed the value of the jewelry and the insurer initiated the dispute resolution mechanism prescribed by section 12 of the Insurance Act, which provides for determination of the dispute by an umpire.

The umpire convened a hearing on July 4, 2014 and issued reasons for judgment on August 15, 2014. The umpire preferred the insurer’s appraisal report over Ms. Kneller’s report and found the replacement cost of the jewelry was $50,900 and its actual cash value was $25,450. The insureds were unhappy with the umpire’s decision and they brought a petition for judicial review of the umpire’s decision.

The umpire’s decision was a finding of fact and the standard of review of that decision was whether it was patently unreasonable. A patently unreasonable finding of fact is a finding that is not based on the evidence. It is a finding that is openly, clearly, evidently unreasonable: Speckling v. British Columbia (Workers’ Compensation Board), 2005 BCCA 80.

The insureds argued that the umpire erred by concluding that the insurer’s appraisal provided support for reductions in appraisal value. The Court found that the umpire’s decision on replacement cost and actual cash value were reasonable. The umpire felt that the price of the jewellery as used items would be less than the price they would fetch when new. In addition, Ms. Kneller’s appraisal did not give an opinion on actual cash value and the Court found that it cannot have been an error for the umpire to have adopted the one and only opinion that was before her on actual cash value. As a result, the insureds’ petition for judicial review was dismissed.

This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at aatkinson@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com.

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