Gillis v. Bourgard et al.*

41 O.R. (2d) 107

145 D.L.R. (3d) 570

ONTARIO

COURT OF APPEAL

BROOKE, HOULDEN AND THORSON JJ.A.

14TH MARCH 1983.

* Leave to appeal to the Supreme Court of Canada refused, June 6, 1983. S.C.C. File No. 17713.

Limitations -- Estoppel -- Limitation provision in insurance policy -- Insurer not denying liability but negotiating amount of claim -- Whether estopped from relying on contractual limitation period.

Insurance -- Fire insurance -- Contractual limitation period -- Estoppel -- Insurer not denying liability but negotiating amount of claim -- Whether estopped from relying on limitation period.

Estoppel -- Insurance -- Contractual limitation period -- Insurer not denying liability but negotiating amount of claim -- Whether estopped from relying on limitation period.

The plaintiff suffered a loss on January 3, 1978, and made a claim against his insurer. Correspondence and meetings followed in which the insurer did not dispute liability. The insurer called upon the plaintiff 's solicitor to obtain an appraisal of the property, but this was not forwarded to the insurer until January 29, 1979. The insurer then relied on a contractual one-year limitation period. The trial judge held that the insurer was estopped from relying on the limitation. On appeal to the Ontario Court of Appeal, held, allowing the appeal, the essential ingredients of promissory estoppel, namely, promise and reliance, were not present in the case. It would be unwarranted to hold that normal dealings between a claimant under an insurance policy and the insurer amounted to a promise not to rely on contract conditions.

APPEAL from a judgment of Smith J., 129 D.L.R. (3d) 342, [1981] I.L.R. para. 1-1446, in favour of the plaintiff in an action to determine liability of an insurer.

Brendan O'Brien, Q.C., and Walter K. Donaldson, for appellant.

Allan D. Houston, Q.C., and Raymond G. Colautti, for respondents.

The judgment of the court was delivered orally by

BROOKE J.A.:-- The appellant raises a number of grounds of appeal against the judgment of Mr. Justice Smith holding the appellant liable to pay damages in the sum of $21,500 to Mr. Bourgard, the solicitor.

The issue to be decided by Mr. Justice Smith had been resolved in writing by the parties and was as follows [ 129 D.L.R. (3d) 342 at pp. 343-4, [1981] I.L.R. para. 1-1446]:

Is the limitation period set forth in the third party Lumbermen's Mutual Casualty Company's policy VJ211941, which states;

"Every action or proceeding against the Insurer for the recovery of any claim under or by virtue of this contract is absolutely barred unless commenced within one year next after the loss or damage occurs"

a viable defence within the factual framework in this case?

In holding that the defendant, Lumbermens Mutual Casualty Company ("Lumbermens"), was estopped from relying on the statutory condition in question, the learned trial judge held [at p. 349]:

I am not certain of the process by which a special interest in quantifying a loss and in settling the claim will suddenly be converted to an admission, hence to a promise not to enforce the limitation period. It seems to me that more ought to be required before the Court will alter the contract and treat an interest in settlement, coupled with silence as to liability, into a new agreement from which all clauses are excluded other than those dealing with quantum.

Will protracted negotiations confined to quantum become the drop that causes the overflow? I hold, after some hesitation, that they will. In arriving at my conclusion, I cannot be oblivious of, indeed, I am impressed by, the fact that the insurer was dealing with a solicitor, an expert in limitation clauses, if not in fire loss claims. On the other hand, the adjuster was very experienced in the handling of fire loss claims.

In our respectful view, the evidence does not bear out that there were protracted negotiations. Indeed, it establishes simply that there was one meeting between Lumbermens and the solicitor, following which the insurer was pressing the solicitor to complete that which he had undertaken to do and failed to do. The learned trial judge, in our respectful view, has misunderstood and misapplied the evidence in making this finding.

We agree with the appellant's submission that entirely apart from any statutory provision, the essential ingredients of promissory estoppel, of promise and reliance are not present in this case and so this appeal must succeed.

It seems to us that what occurred here was, at best, no more than normal dealings between parties attempting to resolve an insurance claim. To hold that it could or did give rise to any admission of liability or a promise not to rely upon a condition of the contract, the limitation period, is completely unwarranted and puts in jeopardy the benefit of such dealings to litigants.

The appeal is allowed, the judgment at trial is set aside and in its place judgment will go dismissing the action as against Lumbermens with costs.

Appeal allowed.