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New Brunswick Court Clarifies the Circumstances Requiring an Appraisal Umpire

Marc Girouard v. Frank Cowan Company limited, 2023 NBKB 38

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By: Alexandre Doucet (Articled Clerk)

Mason de la Butte Ltée (Insured) held an insurance policy issued by Frank Cowan Company Limited (Insurer) for which provided coverage in the event of a loss to the real and personal property of the insured for the period of March 30, 2019, to March 30, 2020. The assets were subject to a mortgage on the real and personal property of the insured.

Marc Girouard, in his capacity as creditor, sought a payout from the Insurer. At issue, broadly speaking, was the fact that an appraisal had not been completed by the Insured. The Insurer took the position that the Court could not proceed on the basis that an appraisal had not been completed by both sides, suggesting that Girouard might prejudice not only the Insurer, but also the Insured, by accepting the Insurer’s appraisal.

Section 107 of the Insurance Act, R.S.N.B. 1973 c. I-12, deals with conditions regarding appraisals. This section applies to a contract containing a condition, statutory or otherwise, providing for an appraisal to determine specified matters in the event of a disagreement between the insured and insurer. Subsection 107(2) stipulates that insured and insurer will each appoint an appraiser, both of whom will appoint an umpire. This allows for any disagreements to be ironed out between insured and insurer through a neutral 3rd party.

Justice Jean-Paul Ouellette opined that Section 107 of the Insurance Act was not wholly applicable in this case. There was never a disagreement between the Insurer and Mr. Girouard, and to require Mr. Girouard to agree to an umpire to challenge the Insurer’s own appeal, which he did not dispute, would be absurd. Considering the evidence on the record submitted by all parties, and in particular the Insurer who brought this issue before the court, there was no genuine issue requiring a trial pursuant to Rule 22.04 of the Rules of Court. Accordingly, Mr. Girouard was entitled to the amount appraised by the appraiser brought on by the Insurer ($117,418.80).

Link: 2023 NBKB 38 (CanLII) | Girouard v. Frank Cowan Company Limited | CanLII

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