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REGULATORY FRAMEWORK - Mediation

Tuesday, June 08, 2021 @ 6:13 AM  


Lexis Advance® Quicklaw®
Appeal by the insured from an order appointing a representative for the purpose of mandatory dispute resolution with the respondent insurer. In 2016, a tree fell on the appellants’ property during a windstorm and caused significant damage to their home. An issue arose over whether the respondent would cover damage to the deck, as they took the position that the deck suffered from severe rot prior to the windstorm. After assessment, repairs and discussion about the scope of coverage, the respondent’s adjuster sent a Final Proof of Loss for execution that did not include coverage of the deck repairs. The appellants did not respond. One year later, the respondent discovered the appellants commenced an action for damages for breach of contract by denying coverage and a breach of the insurer’s duty of good faith. The respondent filed a response and issued a demand for dispute resolution pursuant to s. 12(3) of the Insurance Act. The appellants declined to appoint a representative to participate in dispute resolution. The respondent obtained an order for appointment on the appellants’ behalf. The appellants appealed.

HELD: Appeal dismissed. The motion judge was substantially correct in his interpretation of the relevant statutory provisions. A “dispute” for the purpose of s. 12 of the Insurance Act and s. 3 of the Insurance Regulation was a disagreement in respect of a Statutory Condition 11 matter that the parties were unable to informally resolve, and the impasse realistically prevented settlement of the claim due to the materiality of the issue. The duty to notify the insured of the mandatory dispute resolution process was only triggered upon awareness of the existence of a dispute. Failure to provide notice did not disqualify the insurer from invoking the process assuming the preconditions were otherwise met. Here, there was nothing that precluded the appointment of a representative on behalf of the appellants for the purpose of the dispute resolution process. No notice obligation initially arose, as the respondent was not aware of the dispute regarding coverage of the deck until learning of the appellants’ civil claim. Prior thereto, the respondent reasonably believed that the appellants had accepted the final coverage provided, as no objection or response was given to the Final Proof of Loss.

Westland Insurance Co. v. Pounden, [2021] B.C.J. No. 783, British Columbia Court of Appeal, M.E. Saunders, S.D. Frankel and J. DeWitt-Van Oosten JJ.A., April 16, 2021. Digest No. TLD-June72021005