ALLSTATE INSURANCE COMPANY OF CANADA, Applicant - v. -, 2023 NBKB 212

IN THE COURT OF KING'S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF MONCTON File: MM-137-2023 Allstate Insurance Company of Canada v. Stephen Robb, 2023 NBKB 212 BETWEEN: ALLSTATE INSURANCE COMPANY OF CANADA, Applicant - and - STEPHEN ROBB, Respondent DECISION BEFORE: Madam Justice Christa Bourque AT: Moncton, New Brunswick DATE OF HEARING: October 25, 2023 DATE OF WRITTEN DECISION: December 5, 2023

APPEARANCES: Hélène L. Beaulieu, for Allstate Insurance Company of Canada Stephen Robb, on his own behalf BOURQUE, J. OVERVIEW [ 1 ] This in an application filed by Allstate Insurance Company of Canada for the appointment of an umpire in accordance with Section 107(5) of the Insurance Act , RSNB 1973, c. I-12 (the “ Act ”). The Applicant has put forth the names of three individuals as possible umpires. [ 2 ] The Respondent, Stephen Robb, opposes the application on the basis that there is no disagreement between the parties which has triggered the appraisal process under

Section 107 of the Act and alternatively, the individuals proposed by the Applicant are not acceptable. [ 3 ] This matter, which would typically be a simple process, has regrettably been fraught with animosity and distrust between the parties. It has led to their inability to agree. FACTS [ 4 ] The Applicant is an insurance company licensed to do business in New Brunswick. It insured the Respondent’s residence, located at 1997 Route 955 in Little Shemogue, New Brunswick, under a homeowner’s policy (numbered 151994599). [ 5 ] On September 24, 2022, the Respondent’s home was damaged as result of hurricane Fiona.

He filed a Proof of Loss with the Applicant on February 22, 2023. Upon review of the Proof of Loss, the Applicant indicated its disagreement with the scope of work/quantum for the repairs to the home. [ 6 ] It appears from the evidence that a large portion of the Respondent’s claim has since been resolved. The remaining issues upon which the parties cannot agree relate to whether damage was caused to the Respondent’s patio door, some windows and his roof. According to the evidence provided by the Respondent, the structural integrity of his home does not form part of the issues to be resolved with the Applicant.

This point is not disputed in the evidence. [ 7 ] The Applicant triggered the appraisal process under

Section 107 of the Act and appointed appraiser, John Valeriote. Mr. Valeriote communicated with the Respondent and requested he provide the name of his appraiser following which the appraisers could appoint an umpire. [ 8 ] On March 23, 2023, the Respondent communicated with the Applicant proposing three individuals who could act as the umpire in the appraisal process. He had not yet provided the name of his appraiser as required by

Section 107. The individuals proposed by the Respondent were 1) Troy Adams of ServiceMaster, 2) Scott Douthwright of Paul Davis Systems, and 3) Ron Cormier of First On Site. Each of these individuals work in the Moncton area. There is no evidence in the record as to whether the Applicant gave any consideration to these proposed umpires. [ 9 ] Between March 7 and May 10, 2023, the Respondent refused to provide the name of his appraiser despite several requests by the Applicant and its legal counsel. [ 10 ] On May 10, 2023, the Respondent advised his appraiser was Francis Martin of ClearClaim Adjusters.

However, the Respondent refused to permit Mr. Valeriote to speak directly with Mr. Martin insisting all communications go through him. [ 11 ] On June 21, 2023, the Applicant filed the within application. Subsequently, the Applicant proposed three possible umpires: James E. Minns, Glen T. Gibson and Donald R. Cranston K.C. The curriculum vitae of each proposed umpire were also provided to Mr. Martin. [ 12 ] The Respondent’s appraiser refused the Applicant’s proposed umpires but did not initially provide a reason why neither was acceptable to him or the Respondent.

Eventually, on August 14, 2023, he wrote to counsel for the Applicant expressing his disapproval as follows: Ms. Beaulieu, Adding Mr. Valeriote to this communication seeing as it involves him, the appraiser for the insurer; the real recipient of this correspondence. Per yours, I do not believe having refused to consider the umpires proposed by the Insurer's appraiser but rather looked to present

recommendations of my own — Mr. Valeriote made some other comments akin to what you've shared with us in communication directed to our office, all untrue, and speaking to credibility, or lack thereof. We chose to ignore all such comments as they were needlessly inflammatory and unproductive. The three candidates put forward by Mr. Valeriote, Mr. James E. Minns, Mr. Glenn T. Gibson and Mr. Donald R. Cranston, are expensive with large upfront retainers.

We do not dispute the strength of the umpire candidates, but we contend that the same candidates would be overkill for this case as it is an unremarkable case barring the need for special or extensive experience in the field these candidates may bring — we also contend that the three candidates would not necessarily speed up the appraisal process. In fact, this is a simple homeowner's claim, relating to one coverage header of the policy for insurance with no special consideration to additional or special clauses. The issues are to be argued with experts brought along by myself and Mr.

Valeriote before or at a hearing. Unless the insurer sees and presents, to me, by way of Mr. Valeriote, a complex component to this claim we cannot see, we believe Mr. Moss is perfectly suited and should be considered on his merit rather than his experience as umpire just the same as before becoming judges, members of the legal community are not asked to show experience as a judge, all the while, our justice system works well for the most part. We reiterate that Mr. Moss is a knowledgeable, professional, and ethical attorney. It is worth pointing that Mr.

Moss is teaching insurance law at the UNB School of Law and has worked in insurance litigation most of his career making him more than suitable for the case at hand. To be clear, we never eluded that the three candidates proposed were not suitable or acceptable as umpire, rather, we wished to present recommendations of our own suited to the complexity of the case while fitting a budgetary notion that insureds do not rely on other clients to finance lengthy and expensive litigation/appraisal processes. Awaiting communication from Mr. Valeriote in response. FM [ 13 ] I note that Mr.

Minns’ extensive curriculum vitae indicates he has significant experience as a mediator/arbitrator in both commercial and construction matters and has acted as an umpire in insurances disputes. Mr. Minns lives in Ontario. He is a lawyer who began practicing in 1982 and has a master’s degree in law. There is no evidence contained in the record as to whether he is available or interested in acting as an umpire in this matter. There is also no evidence as to what his services cost. [ 14 ] The same can be said regarding the second umpire proposed by the Applicant. Mr.

Gibson, who is an insurance professional, has extensive experience as an umpire having acted in such capacity approximately 300 times. He has been involved in various complex and multi-million dollar claims. Mr. Gibson lives in Ontario. There is no indication in his CV as to what his hourly rate is or what he would charge if he acted in this matter. [ 15 ] Like Mr. Minns, Mr. Cranston is an experienced lawyer who is a retired partner with the Edmonton, Alberta office of Bennett Jones and who’s CV is also very impressive.

Once again, there is no evidence contained in the record as to whether he is available or interested in acting as an umpire in this matter. There is also no evidence as to what his services cost. [ 16 ] In July of 2023, the Respondent’s appraiser eventually provided a list of three individuals whom he felt could act as the umpire. He suggested three lawyers: Charles Foster, Sarah Leahy and Andrew Moss. The curriculum vitae of Mr. Moss was provided to the Applicant for consideration however he was rejected by Mr. Valeriote for lack of experience. Mr. Valeriote asked Mr.

Martin to send along the CV of the other two proposed individuals, but he never received them. [ 17 ] On September 12, 2023, Mr. Martin communicated with Mr. Valeriote requesting that he consider Moncton lawyer, Terrence Teed, K.C., to act as the umpire. Mr. Martin stated that solicitor Teed was currently acting as an umpire in another matter he was involved with. He suggested the goal was to propose a budget friendly middle between the umpires the Applicant proposed and Mr. Moss. [ 18 ] Neither Mr. Valeriote or counsel for the Applicant ever responded to Mr.

Martin’s proposal and neither has communicated to him why solicitor Teed should not be appointed as the umpire. Instead, the decision was made to proceed with this application. ISSUES [ 19 ] The following issues are before this Court:

1) Has there been a disagreement which triggers the appraisal process provided in

Section 107 of the Act? 2) Should this Court appoint an umpire in accordance with Section 107(5)? 3) Should an award of costs be made and, if so, what amount of costs is appropriate? LAW AND ANALYSIS [20]

Section 107 of the Act provides the following appraisal process where parties to an insurance contract have arrived at an impasse: Condition re appraisal 107(1) This

section applies to a contract containing a condition, statutory or otherwise, providing for an appraisal to determine specifiedmatters in the event of a disagreement between the insured and the insurer. 107(2) The insured and the insurer shall each appoint an appraiser, and the two appraisers so appointed shall appoint an umpire. 107(3) The appraisers shall determine the matters in disagreement and, if they fail to agree, they shall submit their differences to theumpire, and the finding in writing of any two determines the matters. 107(4) Each party to the appraisal shall pay the appraiser appointed by him and shall bear equally the expense of the appraisal and theumpire. 107(5) Where, (

a) a party fails to appoint an appraiser within seven clear days after being served with written notice to do so, (

b) the appraisers fail to agree upon an umpire within fifteen days after their appointment, or (

c) an appraiser or umpire refuses to act or is incapable of acting or dies, a judge of the court sitting in the judicial district in which the appraisal is to be made may appoint an appraiser or umpire, as the casemay be, upon the application of the insured or of the insurer. [21] Likewise, Statutory Condition 11, which forms part of the insurance contract, states: Appraisal 11 In the event of disagreement as to the value of the property insured, the property saved or the amount of the loss, those questions shallbe determined by appraisal as provided under the Insurance Act before there can be any recovery under this contract whether the right torecover on the contract is disputed or not, and independently of all other questions.

There shall be no right to an appraisal until a specificdemand therefor is made in writing and until after proof of loss has been delivered. [22] While there is a lack of New Brunswick case law on the issue at hand, there are several Ontario cases that have addressed theappointment of an umpire pursuant to the appraisal provisions. The applicable provisions of the Ontario Insurance Act closely resemblethe legislation in New Brunswick. [23] Many Ontario decisions concerning the appointment of an umpire have cited paragraph 23 of Seed v.

ING Halifax Insurance(2005), (ON SCDC), 78 OR (3d) 481 as the rationale for the appraisal process: The purpose of the appraisal process under s. 128 of the Insurance Act is to provide an expeditious and easy manner for the settlement ofclaims for indemnity under insurance policies. It is intended to be a final and binding determination of the loss... Courts have affordedsubstantial deference to an appraisal under the Insurance Act and the appraisal process, which is not subject to the Statutory PowersProcedure Act, RSO 1990, c.S.22.

Unless there is proof of misconduct or that the appraisers or umpire exceeded their jurisdiction, courtshave been reluctant to interfere. [24] Justice Speyer, in Wawanesa Mutual Insurance Company v. Falahatparvar, 2023 ONSC 1355 , recently examined thenature of the appraisal process at paragraphs 15 through 17 of his decision: 15 The purpose of the appraisal process under the Insurance Act is to provide an easy, expeditious, and cost-effective means for thesettlement of claims for indemnity under insurance policies: Desjardins General Insurance Group v. Campbell, 2022 ONCA 128 at para

27. 16 The process is designed to be collaborative and not adjudicative. In Desjardins General Insurance Group v. Campbell, at para. 29,the Ontario Court of Appeal approved Perell J.'s description of the process in Northbridge General Insurance Corp. v.

Ashcroft Homes-Capital Hall Inc., 2021 ONSC 1684, at para. 29: The appraisal process is designed to be collaborative and not adjudicative, and the process, which does not require a hearing withevidence, contemplates that the appraisers and the umpire will arrive at a binding decision based on their own knowledge and expertise.The umpire is the ultimate impartial decision-maker that makes a binding determination that removes the quantification of the loss fromthe court.

As for procedure, the umpire may permit viva voce testimony under oath and may receive affidavit evidence but he or she isnot required to do so. [Footnotes omitted.] 17 In Desjardins General Insurance Group v. Campbell, at para. 36, the Ontario Court of Appeal described the approach that appraisersshould bring to the appraisal process: To fulfil the purposes of the appraisal scheme outlined above and to facilitate a collaborative process, an appraiser must attempt, in goodfaith, to reach a compromise with their fellow appraiser.

That does not preclude the appointment of one party's lawyer as their appraiseras well, but the appraisal process presupposes that each appraiser work collaboratively. While this involves advocacy in the sense thateach side may be expected to advocate their valuation to the other, their overall role within the appraisal process is more collaborativeand less adversarial. The umpire will ultimately choose one side or the other.

That places a premium on each side to be reasonable andalso to reach agreement with the other side if possible. [Emphasis added.] While the Court of Appeal was discussing the role of the appraiser in the valuation of a loss, this characterization of the appraiser'sapproach should apply equally to the selection of an umpire. The governing legislation requires the two appraisers to appoint an umpire.This necessarily requires collaboration and compromise. [25] In the matter before me, there has been little to no collaboration or compromise.

The entire dispute has been unnecessarily blownout of proportion costing both parties time and money. Most of the communication that has taken place has been filled with hostility anddistrust. As a result, the current situation is not surprising. From my perspective, selecting an umpire could have been resolved quickly ifthe parties had simply engaged respectfully with one another.

I see little chance of that happening, and the Applicant now asks the Courtto appoint the umpire. [26] The Applicant reminded the Court that it is important to consider the expertise of the proposed umpire and relies on thefollowing comments from the decision in Giammaria v. Economical Mutual Insurance Company, 2021 ONSC 963 , atparagraphs 12 through 15: 12 In Matti v.

Wawanesa Mutual Insurance Co., 2009 ABQB 451 ("Matti"), the court stated: Therefore, a properly appointed umpire, much like an expert witness at trial, should be an expert in the field at issue between the parties.The expert's expertise can come either from special training, or from sufficient experience. (at para. 8) 13 In addition, it is important that the umpire be impartial (Matti, at para. 13).

This concern of perceived bias generally falls along thelines of a perceived apprehension of bias against insurers or a perceived apprehension of bias against insureds, as a class. 14 I would add that past experience of a candidate as an umpire would also be a good indicator of the candidate's suitability both from aperspective of impartiality and skill.

This is because the appointment of an umpire is generally chosen by the respective appraisers of theinsured and insurer and experience as an umpire would be a valuable asset. 15 The parties agree that the skill that would be most suitable in selecting the ideal candidate is experience in the valuation of theproposed repairs. Impartiality is also identified as a key consideration.

Indeed, when one looks at the respective critiques offered by theappraisers and their clients, many of the candidates are attacked by reason of having a reasonable apprehension of bias. [27] However, in order for the process to be cost effective, the umpire’s level of expertise must be considered in light of other factorssuch as the level of complexity of the issues, the amounts in dispute and the cost of the umpire. While I am bound to consider theexpertise of the proposed umpires as one factor, I can appreciate the Respondent’s reluctance in agreeing to the names advanced by theApplicant.

While he does not take issue with their qualifications and their experience, he has a valid concern as to what it will cost him.Recall that Section 107(4) requires the parties to “bear equally the expense of the appraiser and the umpire”. [28] The jurisprudence requires that the appraisal process must not only be cost-effective and efficient, but also fair. This applicationforms part of the appraisal process, and I must respect these principles.

In my view, it is unfair to the Respondent for the Court to selectone of the three individuals proposed by the Applicant, particularly when we are unaware of the associated costs.

While counsel for theApplicant proposed that the appointed umpire could potentially meet with the parties virtually, thus avoiding travel expenses, we stilllack information regarding the total cost of the process. [29] The Respondent also argues that the proposed umpires are highly overqualified, and their level of expertise is not necessarybecause the issues at hand are uncomplicated. [30] The evidence presented suggests that the disagreement between the parties concerns the responsibility for payment of repairs towindows, a patio door, and sections of the roof.

I do not consider this a complex construction issue that requires a high level of expertise.Certainly, experience acting as an umpire along with a good understanding of property insurance claims would be valuable assets. Thus,

it is not necessary that the umpire have experience in handling complex or multi-million dollar disputes. [31] It does concern me that the Applicant paid no attention to the Respondent’s proposal regarding Mr. Teed, who, according to Mr.Martin, has acted as an umpire in the appraisal process. Instead of considering that option, the Applicant chose to pursue this application.During the hearing of this matter, the Applicant’s counsel did not address why Mr. Teed would not be a satisfactory choice. [32] Unfortunately, I was not provided with any evidence regarding Mr.

Teed’s experience, whether he is available or interested inacting as the umpire in this matter or what his services would cost. [33] Unfortunately, the content of the record is lacking. There is simply no evidence to satisfy me that the appointment one of theApplicant’s three proposed umpires will ensure that the appraisal process is an “efficient and cost effective measure to effectivelyresolve the dispute” (see: Vincent v. The Economical Insurance Group, 2021 ONSC 7169 par. 10).

It is on that basis that I dismiss theapplication. [34] Although I am not prepared to grant the Applicant’s request, I do feel it necessary to make an order which will move the matterforward and provide the parties with some assistance given the strenuous nature of their relationship. This Court has the inherentjurisdiction to make procedural orders necessary to give effect to the statutory scheme set out at

Section 107 of the Act in order to obtaina just result (see: Northbridge General Insurance Corp. v. Ashcroft Homes-Capital Hall Inc., 2021 ONSC 1684 ) paragraph31 and Campbell v. Desjardins, 2020 ONSC 6630 , paragraph 74 upheld Desjardins General Insurance Group v.

Campbell,2022 ONCA 128 . [35] I therefore order the parties to do the following: a) 15 days from the date of this order, the appraisers will provide each other with the names of two proposed umpires along with theircurriculum vitae, their hourly rate to act as umpire, whether they require a retainer and the amount of such retainer, whether they willcharge any additional expenses including travel costs, and whether they are available and willing to act as umpire;

b) upon receipt of the above information, the appraisers will have 15 days within which to accept or reject the other party’s candidatewith reasons;

c) in the event that in 30 days of this order the appraisers are still unable to agree and appoint an umpire, they will return to Court, andeach propose the name of one candidate for the judge to select. [36] This is a matter in which it is appropriate to require the parties to bear their own costs. It is the parties (and not counsel)respective inability to cooperate and lack of collegiality which has led to the necessity to come to court on such a simple issue. DATED at Moncton, New Brunswick, this 5th day of December 2023. ________________________________________Christa BourqueJustice of the Court of King’s BenchNew Brunswick, Trial Division