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BROKERS - Liability - Negligence, obtaining adequate coverage

Tuesday, April 28, 2020 @ 9:03 AM  

Lexis Advance® Quicklaw®
Appeal by the plaintiff from the trial judge’s dismissal of a claim for negligence and breach of contract. The appellant’s commercial property was destroyed by fire. The appellant’s insurer refused to cover the cost of rebuilding the property because it was underinsured. The appellant sued the respondents, its insurance brokers and one of the licensed insurance brokers, alleging that they failed to secure adequate reconstruction cost insurance for the building and were liable for their ensuing losses. The trial judge found as a fact that Kan, the appellant’s principal, was a sophisticated client who was in a good position to assess whether his insurance coverage was sufficient. The trial judge concluded that the respondents discharged their duty to the appellant by advising Kan that the appellant should obtain adequate coverage, that the respondents did not have the expertise to provide an accurate estimate of the appellant’s reconstruction costs, and that the appellant should obtain expert advice.

HELD: Appeal dismissed. The trial judge’s conclusion that the respondents met their obligations in tort or contract was fully supported by the evidence and the law. The trial judge did not err in her conclusion that the respondents provided information and advice about which forms of coverage the appellant required in order to meet its needs and the limits of that coverage. Both the appellant’s and respondents’ experts agreed that insurance brokers were not qualified to give replacement cost advice to their clients and that it was a best practice to advise clients about the need to obtain expert advice. The trial judge applied licensed broker’s evidence, which she accepted, to the agreed standard of care as articulated by the experts for both parties. There was no error in her articulation of the duty of care or her conclusion that it was met in this case. The respondents were not liable in contract based on their promise to strive to provide insurance products that were suitable, affordable and adequate. This was very different from a guarantee that they would be adequate. The trial judge’s approach to liability and damages was sound. The reasons for judgment gave no indication that she engaged in backward reasoning but decided the case based on the evidence and argument. Given her finding that there was no liability and therefore the appellant was not entitled to damages, she had no obligation to assess reconstruction damages. There was no basis to suggest that how the trial judge dealt with damages gave rise to an appearance of bias. Nor was there any evidence that she decided there was no liability to avoid having to deal with damages.

2049390 Ontario Inc. v. Leung, [2020] O.J. No. 935, Ontario Court of Appeal, D.H. Doherty, D.M. Brown and J.A. Thorburn JJ.A., March 3, 2020. Digest No. TLD-April272020003