Canada: Waiting For The Umpire To Make The Call Under BC's Insurance Act

Whether in baseball or a court of law, all eyes turn to the officials as they make their decision. As the expression goes: the waiting is the hardest part. A new Court decision has denied a claimant's attempt to terminate her dispute resolution hearings with multiple insurers in a three-year dispute over the value of water damage in her strata unit. While the Court denied her attempt, insurers should consider whether the dispute resolution process is proceeding in a timely and cost effective way.

In King v. Aviva Insurance Company of Canada, 2022 BCSC 973, the BC Supreme Court held that the Insured could not opt out of the mandatory dispute resolution process ("DRP") which she had commenced pursuant to section 12 of BC's Insurance Act, RSBC 2012, c 1 (the "Act"). The DRP intends to provide a simple, cost-effective method to resolve disputes at an early stage.

The Mutual Fire Insurance Company of British Columbia had provided Ms. King with a homeowner's policy for the strata unit she owned on Beach Avenue in Vancouver ("Homeowner policy"). Square One Insurance Services Inc. had brokered this policy to her. Her strata also held an insurance policy (the "Strata Policy") with Aviva Insurance Company of Canada, Allianz Global Corporate & Specialty, Temple Insurance Company and Lloyd's Underwriters (collectively, the "Strata Insurers").

In April 2019, water leaked into her unit causing significant damage. She subsequently submitted claims under both polices. Square One and the Strata Insurers each retained their own adjusters.

Disagreements between the Strata Insurers and their adjuster, and Square One and its adjuster, as to the cause of the water loss and responsibility for repairs arose. Ms. King, who had been living amongst the damages, subsequently invoked section 12 of the Act. She triggered two DRPs on November 24, 2020 (one for each policy).

Following the DRPs being triggered, Square One and the Strata Insurers agreed to cooperate with each other in the Act's appraisal process. To do so, they entered into a so-called cooperation agreement. Per the insurers, this was to avoid duplication and potential inconsistencies in the appraisal process.

The appraisal Umpire noted in correspondence to the agreement's parties that he would render his decision with a single scope of loss, despite there being two DRPs. He also confirmed that any final decision pursuant to the Act would be the product of three votes - one on behalf of the insurers, one by the Umpire and one by counsel representing Ms. King.

Ms. King subsequently terminated her relationship with her lawyer. Despite this, on April 6, 2021, she filed a Notice of Civil Claim in the British Columbia Supreme Court (the "Court Action"). Ms. King then applied to the Court to terminate the DRPs and to transfer all issues to the Court Action. She argued that the number and variety of issues raised since her water loss could not be addressed through the DRPs. She noted that the insurers' disputes as between themselves had delayed her DRPs significantly despite the cooperation agreement. As well, she speculated that this agreement was actually an attempt by the insurers to reduce the scope and cost of repairs (rather than being used to avoid duplication and inconsistencies). This was to her disadvantage. Finally, the DRPs required submissions of counsel on behalf of Ms. King which she no longer had.

The Court denied Ms. King's application to terminate the DRPs. Once a party invokes the dispute resolution process, according to Skolrood J., issues within the jurisdiction of the Act are required to be resolved within this process. The Court was not convinced the various issues raised were sufficiently beyond the jurisdiction of the adjudicator. As Ms. King had invoked this process herself, further, it was mandatory for her to await its conclusion.

Nor was the cooperation agreement being used for the reasons Ms. King had suggested. This agreement, according to Skolrood J., also eliminates the need for Ms. King to deal with apportionment as between the insurers.

Lastly, Skolrood J. held that Ms. King's claims could still be determined by the Court. While the Act was mandatory, she could seek judicial review of the decision which was yet to be rendered. Her Court Action was also extant.

The Court sympathized with the delay experienced by Ms. King. Accordingly, the Court was critical of the DRP and questioned whether it was providing a simple, cost-effective method for dispute resolution at an early stage. When a party triggers the Act's process, however, that party must proceed with it unless the issues raised are beyond an Umpire's jurisdiction. Because the Act's process had been triggered by Ms. King, and because there were issues within the Umpire's jurisdiction, the Court declined to intervene.

Takeaway

Although a cooperation agreement may demonstrate an insurer's commitment to a timely and cost effective DRP, insurers should do all they can to avoid delay and costs. In the worst-case scenario, a Court may find that the insurer has fallen short of the duty it owes to its insured.

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