Shinkaruk Enterprises Ltd. and Mr. Klean Enterprises Ltd. v. Commonwealth Insurance Co. et al., (1990) 85 Sask.R. 54 (CA)

• Court: Court of Appeal (Saskatchewan)
• Case Date: March 07, 1989
• Jurisdiction: Saskatchewan
• Citations: (1990), 85 Sask.R. 54 (CA);1990 CanLII 7738 (SK CA);71 DLR (4th) 681;[1990] SJ No 317 (QL);85 Sask R 54

Shinkaruk Ent. v. Commonwealth Ins. (1990), 85 Sask.R. 54 (CA)

MLB headnote and full text

Shinkaruk Enterprises Ltd. and Mr. Klean Enterprises Ltd. (plaintiff/appellants) v. Commonwealth Insurance Company, Northumberland General Insurance Company, Gerling Global General Insurance Company, Scottish & York Insurance Company Limited, The Canadian Indemnity Company, Paragon Insurance Company of Canada, Assitalia-Le Assicurazioni D'Italia S.P.A. and The Non-Marine Underwriters, Members, Lloyd's, London, England (defendants/respondents)

(No. 9371)

Indexed As: Shinkaruk Enterprises Ltd. and Mr. Klean Enterprises Ltd. v. Commonwealth Insurance Co. et al.

Saskatchewan Court of Appeal

Bayda, C.J.S., Vancise, J.A. and Grotsky, J.(ad hoc)

June 28, 1990.

Summary:

A building owned by Shinkaruk Enterprises was partially destroyed by fire. The building was insured and the insurance policy listed Shinkaruk and Mr. Klean Enterprises (a tenant in the building) as the insured. The insured and insurer were unable to settle the loss arising from the fire and appraisers were appointed pursuant to statutory condition 11 and s. 108 of the Saskatchewan Insurance Act. The appraisers failed to agree and an umpire was appointed. The insured refused to accept the umpire's report and applied to the court for determination of the issue.

The Saskatchewan Court of Queen's Bench, in a decision reported in 56 Sask.R. 217, held that because the proceeding was a valuation, the court lacked jurisdiction to review or vary the umpire's award. The owner Shinkaruk appealed.

The Saskatchewan Court of Appeal allowed the appeal in part.

Insurance - Topic 3423

Payment of insurance proceeds - Appraisal or arbitration - Appraisal - When required - When performance excused - Statutory condition 11, which provided that valuation questions be determined by appraisal, was by virtue of s. 128 of the Insurance Act, required to be included in an insurance contract - The Saskatchewan Court of Appeal held that where an appraisal was held invalid and where intervening circumstances prevented a new appraisal, performance of condition 11, as a term of the contract, was excused because of impossibility - Accordingly, the insured retained a common law right to have the dispute settled in court, except possibly where the insured himself created the impossibility or where his conduct would make it unjust for him now to rely on that impossibility - See paragraphs 27 to 34.

Insurance - Topic 3430

Payment of insurance proceeds - Appraisal or arbitration - Judicial review - An umpire appointed under s. 108 and statutory condition 11 of s. 128 of the Insurance Act made findings of law and fact and based on these held that the insurer's liability was limited to the actual cash value of the partially-destroyed building at the time of the loss - The Saskatchewan Court of Appeal held that the umpire exceeded his jurisdiction by interpreting his function as that of an arbitrator - The court held that his valuation of the building was accordingly entirely invalid and of no effect - See paragraphs 22 to 26.

Insurance - Topic 3430

Payment of insurance proceeds - Appraisal or arbitration - Judicial review - The Saskatchewan Court of Appeal held that an appraisal pursuant to s. 108 and statutory condition 11 of s. 128 of the Insurance Act was a valuation, not an arbitration - The appraisal was subject to challenge on the ground that the umpire (or appraisers, as the case may be) had no power (i.e. jurisdiction) to do what was done - Fraud, collusion, bias or disqualification by reason of partiality will deprive him of that power - The same result will follow where the umpire does something which the empowering statute does not authorize him to do - The court is entitled to find all or part of an appraisal of no effect, on the foregoing grounds - See paragraphs 13 to 15, 19.

Insurance - Topic 5853

Fire insurance - The loss - Measure of - Replacement cost - An insured building was partially destroyed by fire - The trial judge held that the insured owner must elect whether to take the cash value of the building, as determined by an umpire, or to repair the building - The insured wished to elect to repair, but because of s. 117 of the Planning Act and relevant municipal zoning bylaws would be required to reconstruct the building entirely - The insurance policy covered "replacement cost" of the building - The Saskatchewan Court of Appeal held that the effect of the Act and bylaws was that the building was a total loss and the insured was entitled to recover the cost of replacing the entire building - See paragraphs 35 to 46.

Insurance - Topic 5856

Fire insurance - The loss - Appraisal of - [See first and second Insurance - Topic 3430].

Cases Noticed:

Maitland v. Drozda, [1983] 3 W.W.R. 193; 22 Sask.R. 1, refd to. [para. 8].

Saskatoon Real Estate & Ins. Co. v. Misra (1981), 13 Sask.R. 156, refd to. [para. 8].

Pfeil v. Simcoe & Erie General Insurance Company et al., [1986] 2 W.W.R. 710; 45 Sask.R. 241, appld. [para. 13].

Re Krofchick et al. and Provincial Insurance Co. Ltd. et al. (1978), 91 D.L.R.(3d) 744 (Ont. Div. Ct.), refd to. [para. 13].

Sport Maska Inc. v. Zittrer, [1988] 1 S.C.R. 564; 83 N.R. 322, refd to. [para. 13].

In Re Shaw Estate (No. 2), [1942] 1 W.W.R. 818 (Sask. C.A.), refd to. [para. 32].

Walbaum and Walbaum v. G & R Trucking Ltd., [1983] 2 W.W.R. 622; 22 Sask.R. 22 (C.A.), refd to. [para. 32].

Wittal v. Sask. Gov't Insurance, [1988] 5 W.W.R. 616; 67 Sask.R. 14 (C.A.), refd to. [para. 32].

Rawluk v. Rawluk, [1990] 1 S.C.R. 70; 103 N.R. 321; 38 O.A.C. 81, refd to. [para. 32].

Gendron v. Supply and Services Union of the Public Service Alliance of Canada, Local 50057 et al. (1990), 109 N.R. 321 (S.C.C.) refd to. [para. 32].

Glad Tiding Temple Missionary Society v. Wellington Fire Insurance Company (1964), 48 W.W.R.(N.S.) 385 (B.C.S.C.), refd to. [para. 44].

McCoy v. North Empire, [1918] 1 W.W.R. 468, appld. [para. 44].

McCoy v. National Benefit, [1918] 1 W.W.R. 466, varied [1918] 1 W.W.R. 473, revd. [1918] 2 W.W.R. 591; 57 S.C.R. 29, not appld. [para. 44].

Carlyle v. Elite Insurance Company, [1986] I.L.R. 8121, dist. [para. 46].

Statutes Noticed:

Insurance Act - see Saskatchewan Insurance Act. Planning and Development Act, S.S. 1983-84, c. P-13.1, sect. 117 [paras. 1, 35-36, 38-39, 41, 43].

Saskatchewan Insurance Act, R.S.S. 1978, c. S-26, sect. 108 [paras. 1, 4, 11, 13]; sect. 108(4) [para. 54]; sect. 122(1) [para. 53]; sect. 128, statutory condition 11 [paras. 1, 10-11, 13, 28, 31]; sect. 128(1) [paras. 29, 30]; sect. 286, statutory condition 15 [para. 13].

Saskatoon Bylaws, Bylaws 5198, sect. 17 [paras. 37, 40]; sect. 6772 [para. 39].

Authors and Works Noticed:

Brown and Menezes, Insurance Law in Canada (1982), p. 263 [para. 43].

Chitty on Contracts (24th Ed. 1977), para. 1414 [para. 29].

Couch on Insurance (2nd Ed. 1982), vol. 14, para. 50:5 [para. 6].

Craies on Statute Law (7th Ed. 1971), p. 121 [para. 32].

Counsel:

P. Shinkaruk, as representative for the appellants;

W. Purdy, for the respondents.

This appeal was heard before Bayda, C.J.S., Vancise, J.A., and Grotsky, J. (ad hoc), of the Saskatchewan Court of Appeal on March 7, 1989. The decision of the Court of Appeal was delivered by Bayda, C.J.S., on June 28, 1990.