702535 Ontario Inc. et al. v. Non-Marine Underwriters, Lloyd's London et al., (1998) 84 O.T.C. 194 (GD)

• Judge: Chadwick, J.
• Court: Ontario Court of Justice General Division (Canada)
• Case Date: November 25, 1998
• Jurisdiction: Ontario
• Citations: (1998), 84 O.T.C. 194 (GD)

702535 Ont. Inc. v. Lloyd's (1998), 84 O.T.C. 194 (GD)

MLB headnote and full text

Temp. Cite: [1998] O.T.C. TBEd. DE.055

702535 Ontario Inc. and 702536 Ontario Inc. (plaintiffs) v. Edward Tinmouth in his quality as attorney in Canada for the Non-Marine Under-Writers, members of Lloyd's London, England, (Lloyd's Open Market) and Canassurance General Insurance Company Inc. (defendants)

(Court File No. 53612/91)

Indexed As: 702535 Ontario Inc. et al. v. Non-Marine Underwriters, Lloyd's London et al.

Ontario Court of Justice

General Division

Ottawa

Chadwick, J.

November 25, 1998.

Summary:

The insured claimed against Lloyd's under its fire insurance policy and against Canassurance under a business interruption policy after a fire at its hotel. Issues included the calculation of gross earnings under the business interruption policy and entitlement to consequential damages as a result of Lloyd's failure to pay proceeds within 60 days from the proof of loss.

The Ontario Court (General Division) determined which costs could be deducted in determining gross earnings. Under the business interruption policy, gross earnings were reduced by non-continuing operating expenses. Canassurance considered interest on mortgage payments as a non-continuing operating expense. The court rejected this approach where the insurer had refused to pay the insured's fire loss claim or mortgage for two years from the date of the fire. Mortgage payments were therefore a continuing expense. The court declined to award consequential damages based on Lloyd's failure to reimburse the insurer within 60 days. There was no bad faith or malice. Proceeds were eventually paid under the policy.

Editor's note: for a related decision see 48 O.T.C. 256.

Damages - Topic 555

Limits of compensatory damages - Remoteness - Contracts - Consequential damages - See paragraphs 18 to 28.

Insurance - Topic 1806

The insurance contract - Breach by insurer - Delay in payment of proceeds - See paragraphs 18 to 28.

Insurance - Topic 6528

Multi-peril property insurance - The risks or perils - Business interruption - See paragraphs 1 to 15.

Cases Noticed:

Hadley v. Baxendale (1854), 9 Exch. 341; 156 E.R. 145, refd to. [para. 21].

Labelle v. Guardian Insurance Co. of Canada et al. (1989), 38 C.C.L.I. 274 (Ont. H.C.), dist. [para. 22].

Whitehall Development Corp. v. Reliance Insurance Co. of Philadelphia (1976), 13 O.R.(2d) 611 (H.C.), refd to. [para. 26].

Jauvin v. L'Ami Michel Automobile Canada Ltée et al. (1986), 57 O.R.(2d) 528 (H.C.), refd to. [para. 26].

Rockwood Enterprises Ltd. v. Grain Insurance and Guarantee Co. (1980), 10 Man.R.(2d) 227 (C.A.), refd to. [para. 26].

Authors and Works Noticed:

Ivamy, E.R. Hardy, General Principles of Insurance law (6th Ed. 1993), p. 1 [para. 25].

Counsel:

Paull N. Leamen, for the plaintiffs;

Eric R. Williams, for the defendants.

This matter was heard by Chadwick, J., of the Ontario Court (General Division), who released the following reasons for decision on November 25, 1998.