Regina Sticks Ltd. v. Saskatchewan Government Insurance, (1993) 113 Sask.R. 40 (CA)

• Judge: Tallis, Wakeling and Lane, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: June 21, 1993
• Jurisdiction: Saskatchewan
• Citations: (1993), 113 Sask.R. 40 (CA)

Regina Sticks Ltd. v. SGI (1993), 113 Sask.R. 40 (CA);

    52 W.A.C. 40

MLB headnote and full text

Regina Sticks Ltd. (plaintiff/respondent) v. Saskatchewan Government Insurance (defendant/appellant)

(No. 1243)

Indexed As: Regina Sticks Ltd. v. Saskatchewan Government Insurance

Saskatchewan Court of Appeal

Tallis, Wakeling and Lane, JJ.A.

June 21, 1993.

Summary:

An insured's premises were destroyed by fire. While liability for the loss was even­tually admitted, the insurer disputed the quantum of the direct loss as well as the business loss.

The Saskatchewan Court of Queen's Bench determined the issues accordingly. The insurer appealed and the insured filed a notice to vary the award.

The Saskatchewan Court of Appeal deter­mined the issues accordingly.

Estoppel - Topic 1163

Estoppel in pias (by conduct) - Represen­tation, by conduct - Practice or course of conduct - Under a fire insurance policy, an insurer could treat the damaged prop­erty as destroyed and pay its value, arrange to have it repaired or rely on the insured to arrange the repairs and then pay for such repairs - However, an insurer suspected arson and declined to pay for almost three years - The insurer had custody of certain damaged equipment during that period - Later, the insurer agreed to pay for repairs - The insured submitted that the insurer was liable for full value and estopped from merely returning the equipment and paying for the repairs - The Saskatchewan Court of Appeal held that the insurer was liable for the full value of the equipment - See paragraphs 16 to 27.

Insurance - Topic 5851

Fire insurance - The loss - General - Reports - An insurer suspected arson and denied liability for more than two years - After a criminal prosecution was stayed, the insurer agreed to the liability but dis­puted the quantum of the loss - A report was prepared by a chartered accountant regarding the business interruption loss ($1,690) - However, the company did not rely upon it as an accurate indication of the loss - The court did find the report useful - Another report was prepared concerning the alleged arson ($7,008.26) - The company submitted that it was needed because the insurer could have raised arson as a defence - The company requested reimbursement for the reports - The Saskatchewan Court of Appeal held that the insurer was liable for the cost of both reports - See paragraphs 48 to 50.

Insurance - Topic 5851

Fire insurance - The loss - General - Some shareholders borrowed funds from a bank to cover start-up costs - The com­pany gave its fire insurance policy as security - The company's premises were destroyed by fire - The insurer suspected arson and refused to admit liability for more than two years - The shareholders incurred interest charges of $20,671.15 - Later, the parties could not agree on the quantum of the loss - The company sub­mitted that the interest paid on the loan by the shareholders should be included in the loss - The insurer denied liability for the interest and noted that the shareholders were not parties to the action - The Saskatchewan Court of Appeal held that the interest on the shareholders' loan did not form part of the loss - See paragraphs 46 and 67 to 74.

Insurance - Topic 5852

Fire insurance - The loss - Measure of - An insured's premises were destroyed by fire - The insurer suspected arson and refused to pay - The insurer took custody of certain damaged equipment valued in excess of $100,000 and detained it for almost three years - The cost of repairing the equipment would have been $1,070 - The insurer failed to obtain the insured's consent for the detention - Subsequently, the insurer admitted liability but only for the cost of repairs - The insured submitted that the insurer was liable for the full cost of the equipment because it failed to give notice of intent to repair and failed to commence repairs within 45 days as required by statutory condition 13 - The Saskatchewan Court of Appeal held that the insurer was liable for the value of equipment - See paragraphs 1 to 27.

Insurance - Topic 5852

Fire insurance - The loss - Measure of - Business interruption loss - An insured's premises were destroyed by fire - The parties could not agree upon the quantum of the business interruption loss - The business manufactured chopsticks - It was in the start-up phase and had no sales record - The down-time was determined to be four months and 23 days - A report for the insurer by a chartered accountant quantified the business interruption loss at $11,000 - A report prepared for the insured quantified the loss as $36,443 - The Saskatchewan Court of Appeal assessed the loss at $25,000 - The court of appeal used the format employed in the accountants' reports and inserted the fig­ures which the best evidence supported - See paragraphs 28 to 43.

Insurance - Topic 5852

Fire insurance - The loss - Measure of - An insured's premises were destroyed by fire - The insurer suspected arson and refused to pay - The insurer took custody of certain damaged equipment valued in excess of $100,000 and detained it for almost three years - The cost of the repairs would have been $1,070 - The insured claimed the three year retention meant that the insurer accepted the aban­donment of the equipment by the insured to the insurer in return for payment for its full value - The insured also submitted that it should not be charged depreciation because the equipment was virtually new - The Saskatchewan Court of Appeal awarded the insured the value of the equipment less 10% for depreciation - See paragraph 51.

Interest - Topic 5490

As damages (prejudgment interest) - In­surance - An insured's premises were destroyed by fire - The insurer suspected arson and denied liability for more than two years - The business interruption loss was quantified by the court - The court awarded prejudgment interest from the date of the fire - However, the Insurance Act stated that payment was not due until 60 days after the filing of the proof of loss - The insurer submitted that because there was no agreement on the quantum of the business interruption loss, prejudgment interest should not have been awarded as the quantum of the loss was unknown until determined by the court - The Saskatchewan Court of Appeal declined to award prejudgment interest - See para­graphs 44 and 45.

Practice - Topic 7535

Costs - Solicitor and client costs - Dis­bursements - Reports - [See first Insur­ance - Topic 5851 ].

Cases Noticed:

Meduk v. Soja, [1958] S.C.R. 167, consd. [para. 19].

N & H Contracting Ltd. v. Royal Insur­ance Co. et al. (1993), 22 B.C.A.C. 10; 38 W.A.C. 10; 74 B.C.L.R.(2d) 373 (C.A.), consd. [para. 20].

Rosenblood Estate v. Law Society of Upper Canada, [1989] I.L.R. 1-2416; 37 C.C.L.I. 142 (Ont. S.C.), refd to. [para. 24].

Houweling Nurseries Ltd. v. Fisons West­ern Corp. (1988), 49 D.L.R.(4th) 205 (B.C.C.A.), consd. [para. 40].

Seip v. South Saskatchewan Hospital Centre (1992), 97 Sask.R. 39 (C.A.), consd. [para. 60].

Engel v. Salyn et al., [1993] 2 W.W.R. 373; 147 N.R. 321; 105 Sask.R. 81 (S.C.C.), consd. [para. 61].

Taylor v. Ankenman and Jaegli Enterprises Ltd., [1981] 2 S.C.R. 2; 40 N.R. 4, refd to. [para. 62].

Harrand v. Saskatchewan Government Insurance Office (1979), 7 Sask.R. 188 (C.A.), refd to. [para. 72].

Statutes Noticed:

Saskatchewan Insurance Act, R.S.S. 1978, c. S-26, stat. conds. 10, 13 [para. 7].

Authors and Works Noticed:

Spencer, Bower and Turner, Estoppel by Representation (3rd Ed.), p. 243 [paras. 19, 21].

Counsel:

G.W.G. Semenchuck, Q.C., for the appel­lant;

F.C. Zinkhan, for the respondent.

This appeal was heard on December 18, 1992, by Tallis, Wakeling and Lane, JJ.A., of the Saskatchewan Court of Appeal.

The decision of the Court of Appeal was given on June 21, 1993, when the following judgments were delivered:

Wakeling, J.A. - see paragraphs 1 to 58;

Tallis, J.A., dissenting in part - see para­graphs 59 to 66;

Lane, J.A., dissenting in part - see para­graphs 67 to 74.