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New Brunswick Court Reminds Insureds to Comply with Policy Terms Regarding Repairs

668339 NB Inc. v. Royal & Sun Alliance Company of Canada, 2024 NBCA 53 

Reading Time: 5 minutes (approx.) 

By: Alexandre Doucet (Articled Clerk) 

Carmelle Caissie’s home in Cap-Pelé sustained water damage, following which she altered her insurer, Royal & Sun Alliance Company of Canada (the Respondent). Per the terms of the policy, the Respondent hired First OnSite, an appraisal company, to investigate the damage and prepare a repair cost estimate. Caissie retained 668339 NB Inc. (the Appellant) for the same purpose without informing her insurer she had done so until the Appellant’s repair work was nearly complete. 

The Appellant’s repair costs came to double the amount estimated by First OnSite. To avoid litigation, the Respondent paid the Appellant what it deemed a ‘reasonable’ amount. This partial payment left a remainder of $31,920.23 owing, for which the Appellant sued the Respondent. 

The Respondent made a motion for summary judgment, which was allowed, resulting in the dismissal of the Appellant’s claim. The motion judge found no privity of contract between the Respondent and the Appellant which meant there was no obligation on the part of the Respondent to honor payment to the Appellant and therefore no genuine issue for trial. The Appellant raised three grounds of appeal: (1) that s. 4 of the Law Reform Act, R.S.N.B.  2011, c. 184 (the “Act”) applied to the Appellant; (2) that the doctrine of estoppel by convention did apply; and (3) that the motion judge relied on irrelevant and immaterial evidence to assess the Appellant’s right to action under s. 4 of the Act. 

Justice LeBlond began his analysis by addressing the first ground of appeal. He concurred with the motion judge in that the Appellant was not a member of the class referenced in s. 4(3.1) of the Act as intended to benefit from Caissie’s policy with the Respondent. It would not be reasonable to conclude that the Respondent, when negotiating their contract of insurance with Caissie, intended that the contract would benefit any renovation company that could be retained by the insured. It would, instead, seek some element of control by hiring its own renovation company prior to indemnifying any costs. There is therefore no privity of contract between the Respondent and the Appellant and as such, the first ground of appeal was dismissed. 

Regarding the second ground of appeal, Justice LeBlond referenced Ryan v. Moore, 2005 SCC 8, the leading case law on estoppel by convention. In Ryan, the court set out a 3-part test for estoppel by convention to be met: firstly, the parties’ relations must have rested on a common presupposition of fact or law; secondly, a party must have acted in reliance on this common presupposition and his actions must have resulted in a change in his legal situation; and thirdly, it must be unjust or inequitable to allow either party to retract or deviate from the common presupposition. In this case, there was no common presupposition as the Respondent never presupposed that the Appellant had a direct right of action against it. As such, the second ground of appeal was dismissed.  

As to the third ground of appeal, Justice LeBlond stated that all of the statements in the motion judge’s original decision were supported by the evidence. Affidavit evidence was presented at trial while a trial judge’s decision to admit the evidence and to decide on its weight, command deference. As such, the third ground of appeal is dismissed and, consequently, the entire appeal as well. 

Link: https://canlii.ca/t/k44b4  

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