O'Byrne v. Farmers' Mutual Insurance Co., 2014 ONCA 543

JudgeEpstein, Pepall and van Rensburg, JJ.A.
CourtCourt of Appeal (Ontario)
Case DateMarch 19, 2014
JurisdictionOntario
Citations2014 ONCA 543;(2014), 323 O.A.C. 323 (CA)

O'Byrne v. Farmers Mutual (2014), 323 O.A.C. 323 (CA)

MLB headnote and full text

Temp. Cite: [2014] O.A.C. TBEd. JL.026

Blake O'Byrne and Colleen O'Byrne (plaintiffs/respondents) v. Farmers' Mutual Insurance Company (Lindsay) (defendant/appellant)

(C56611; 2014 ONCA 543)

Indexed As: O'Byrne v. Farmers' Mutual Insurance Co.

Ontario Court of Appeal

Epstein, Pepall and van Rensburg, JJ.A.

July 11, 2014.

Summary:

A building owned by the plaintiffs was damaged by oil that leaked from the furnace. The defendant insurance company had insured the building pursuant to an "all-risks" insurance policy, but denied coverage for the damage. The plaintiffs sued.

The Ontario Superior Court, in a decision reported at [2012] O.T.C. Uned. 468, found in favour of the plaintiffs and awarded them damages of $66,737. The defendant appealed.

The Ontario Court of Appeal dismissed the appeal.

Courts - Topic 560

Judges - Powers - Authority to act ex mero motu (on own motion) - [See second Insurance - Topic 3105 ].

Insurance - Topic 424

Agents - Authority of agent - Implied or apparent authority to bind insurer - [See first Insurance - Topic 3105 ].

Insurance - Topic 1856

The insurance contract - Interpretation of contract - Exclusions - [See Insurance - Topic 6610.2 ].

Insurance - Topic 3105

Payment of insurance proceeds - Actions - Conditions precedent - Filing proof of loss - The plaintiffs' building was damaged by a furnace oil leak - The defendant insurance company, through an independent adjuster, denied coverage for the loss based on a pollution exclusion in the plaintiffs' "all-risks" policy - The plaintiffs did not complete a proof of loss form because the adjuster sent them a letter which stated that they did not have to - The plaintiffs sued the insurer - The trial judge allowed the action and found that the insurer had waived the proof of loss requirement by (1) the adjuster's letter to the plaintiffs; and (2) its failure to raise the issue until it amended its statement of defence more than three years after delivering the first statement of defence - The insurer appealed these findings - The Ontario Court of Appeal dismissed the appeal - The adjuster's letter was a written communication on behalf of and binding on the insurer - The letter, the failure to provide a proof of loss form to the plaintiffs, and the insurer's failure to plead the absence of a proof of loss until several years into the action, would also have been relevant to the question of relief from forfeiture pursuant to s. 129 of the Insurance Act - See paragraphs 18 to 20, 26 and 27.

Insurance - Topic 3105

Payment of insurance proceeds - Actions - Conditions precedent - Filing proof of loss - The plaintiffs' building was damaged by a furnace oil leak - The defendant insurance company, through an independent adjuster, denied coverage for the loss based on a pollution exclusion in the plaintiffs' "all-risks" policy - The plaintiffs did not complete a proof of loss form because the adjuster sent them a letter which stated that they did not have to - The plaintiffs sued the insurer - The trial judge allowed the action and found that the insurer had waived the proof of loss requirement - The insurer appealed, arguing that the trial judge erred by (1) finding waiver in the absence of a specific pleading of waiver by the plaintiffs; and (2) amending the statement of claim nunc pro tunc and of his own volition - The Ontario Court of Appeal dismissed the appeal - The trial judge did not err in granting the plaintiffs leave to amend their pleading in the absence of any evidence of prejudice to the insurer - Waiver was a live issue at trial and was addressed by both sides - Granting leave to amend the pleadings was warranted, and to not consider it because plaintiffs' counsel did not specifically request it would amount to a triumph of form over substance - See paragraphs 21 to 25.

Insurance - Topic 3137

Payment of insurance proceeds - Actions - Relief against forfeiture - When available - [See first Insurance - Topic 3105 ].

Insurance - Topic 3139

Payment of insurance proceeds - Actions - Relief against forfeiture - Imperfect compliance with statutory conditions - Claims - Notice and proof of loss - [See first Insurance - Topic 3105 ].

Insurance - Topic 6607

Multi-peril property insurance - Exclusions - Mechanical breakdown - The plaintiffs' building was damaged by a furnace oil leak - The leak occurred as a result of a tenant's actions in bypassing the thermostat so that the furnace would stay in constant operation while she was away - The defendant insurance company denied coverage on the grounds that the loss was subject to a mechanical breakdown exclusion in the plaintiffs' "all-risks" policy - The plaintiffs sued the insurer - The trial judge granted judgment to the plaintiffs, finding that the exclusion did not apply to the unexpected actions of a tenant - Rather, the exclusion pertained to "the risk that a mechanical system is poorly designed, manufactured with a defect, not properly maintained or simply fails over time" - The Ontario Court of Appeal dismissed the insurer's appeal - The insurer erred in seeking to characterize the oil spill damage as a multi-causal loss - The failure of a mechanical element of the furnace was not another cause of the oil damage, but something that happened only after the tenant interfered with the proper operation of the furnace - The oil damage was the result of external interference, not a defect in the furnace - See paragraphs 33 to 40.

Insurance - Topic 6610.2

Multi-peril property insurance - Exclusions - Contamination or pollution - The plaintiffs' building was damaged by a furnace oil leak - The leak occurred as a result of a tenant's actions in bypassing the thermostat so that the furnace would stay in constant operation while she was away - The defendant insurance company denied coverage on the grounds that the loss was subject to a pollution exclusion in the plaintiffs' "all-risks" policy - The plaintiffs sued the insurer - The trial judge granted judgment to the plaintiffs, finding that the exclusion did not apply - The Ontario Court of Appeal dismissed the insurer's appeal - The pollution exclusion stated that it did not apply "if the discharge ... of pollutants is the direct result of a peril not otherwise excluded under this policy" - The court stated that "On a plain reading of the pollution exclusion, there must be another operative exclusion before the pollution exclusion applies. The only other exclusion relied upon by the [insurer] is the exclusion for 'mechanical breakdown or derangement'. Indeed, during oral argument, [insurer's] counsel acknowledged that the pollution exclusion would apply in the circumstances of this case only if the mechanical exclusion also applies. As I have already noted, I do not agree that the mechanical exclusion applies in these circumstances. On this basis alone, I would dismiss this ground of appeal." - See paragraphs 47 to 53.

Insurance - Topic 6641

Multi-peril property insurance - Interpretation - General - [See Insurance - Topic 6610.2 ].

Practice - Topic 1335

Pleadings - The issues - Issues to be raised must be pleaded (incl. time for) - [See second Insurance - Topic 3105 ].

Practice - Topic 2106

Pleadings - Amendment of pleadings - Power of the court to amend - [See second Insurance - Topic 3105 ].

Practice - Topic 2142

Pleadings - Amendment of pleadings - Considerations governing granting of leave - [See second Insurance - Topic 3105 ].

Waiver - Topic 1002

Contracts - Acts constituting waiver - [See first Insurance - Topic 3105 ].

Cases Noticed:

Kalkinis et al. v. Allstate Insurance Co. of Canada (1998), 117 O.A.C. 193; 41 O.R.(3d) 528 (C.A.), refd to. [para. 21].

Caneast Foods Ltd. v. Lombard General Insurance Co. of Canada et al. (2008), 238 O.A.C. 64; 91 O.R.(3d) 438; 2008 ONCA 368, refd to. [para. 31].

Derksen et al. v. 539938 Ontario Ltd. et al., [2001] 3 S.C.R. 398; 277 N.R. 82; 153 O.A.C. 310; 2001 SCC 72, refd to. [para. 34].

Zurich Insurance Co. v. 686234 Ontario Ltd. (2002), 166 O.A.C. 233; 62 O.R.(3d) 447 (C.A.), dist. [para. 45].

Corbould v. BCAA Insurance Corp., [2010] B.C.T.C. Uned. 1536; 13 B.C.L.R.(5th) 168; 2010 BCSC 1536, refd to. [para. 52].

Counsel:

Martin P. Forget and E. Reynolds, for the appellant;

Robert N. Kostyniuk, Q.C., and G. Pribytkova, for the respondents.

This appeal was heard on March 19, 2014, before Epstein, Pepall and van Rensburg, JJ.A., of the Ontario Court of Appeal. The following judgment was delivered for the court by van Rensburg, J.A., on July 11, 2014.

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7 practice notes
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    ...v. Aviva Insurance Co. of Canada, 2011 BCCA 391, 23 B.C.L.R. (5th 272). [176] O'Byrne v. Farmers’ Mutual Insurance Company (Lindsay), 2014 ONCA 543 at paras. 35-36. [177] Weston Ornamental Iron Works Ltd. v. Continental Insurance Co., [1981] O.J. No. 78 (C.A.). [178] Zurich Insurance Co. v.......
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    ...Zurich Insurance Co. v. 686234 Ontario Ltd. (2002), 62 O.R. (3d) 447 (C.A.), O'Byrne v. Farmers' Mutual Insurance Company (Lindsay), 2014 ONCA 543 Sicotte v. 2399153 Ontario Ltd., 2021 ONCA 912 Keywords: Contracts, Interpretation, Real Property, Mortgages, Guarantees, Priority Agreements, P......
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    ...any weight. Instead she "relied upon her own view of what the case was worth." O'Byrne v Farmers' Mutual Insurance Company (Lindsay), 2014 ONCA 543 [Epstein, Pepall and van Rensburg JJ.A.] Counsel: M. P. Forget and E. Reynolds, for the appellant R. N. Kostyniuk, Q.C. and G. Pribytkova, for ......
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3 cases
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    • Ontario Superior Court of Justice of Ontario (Canada)
    • 30 March 2020
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    ...2004 ABQB 781, 370 A.R. 294. [20] 2012 ONSC 468, 10 C.C.L.I. (5th) 103. [21] O’Byrne v Farmers’ Mutual Insurance Company, 2014 ONCA 543. [22] [2011] ONCA 321, 105 O.R. (3d) 241. [23] See Miracle, at para. 22. [24] 2001 SCC 49, [2001] 2 S.C.R. 699, at paras. 29–35. [25] ......
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    ...any weight. Instead she "relied upon her own view of what the case was worth." O'Byrne v Farmers' Mutual Insurance Company (Lindsay), 2014 ONCA 543 [Epstein, Pepall and van Rensburg JJ.A.] Counsel: M. P. Forget and E. Reynolds, for the appellant R. N. Kostyniuk, Q.C. and G. Pribytkova, for ......
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