Insurance Law

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Dangerous “fish and chips”

This culinary specialty of British origin was the focus of a decision of the Superior Court (McKnight v. Promutuel Assurances Boréale, 2020 QCCS 71) confirmed just before Christmas 2022 by the Court of Appeal (Promutuel Assurance Boréale v. McKnight, 2022 QCCA 1735).

This decision is interesting with respect to two aspects that we have previously discussed, namely:

  1. the level of proof by presumption of fact required when the insurer invokes arson as the reason to refuse to indemnify its insured (RSS Webinar “Evidence by Presumption: Utility and Pitfalls” available online), as well as
  2. the protection afforded to the adjuster’s report and its admissibility in evidence.

The loss

The insured, owner of a mobile home that she has been gradually renovating over the years, was insured for replacement value.

At the end of June 2014, she decided to cook fish and chips by heating oil in a pot in which she first blanched her potatoes, but realized that she would not have enough fish. As such, she turns off the heat, pushes the pot of oil onto the back burner and decides to go fishing with her partner. While she was away, a fire completely destroyed the residence and its contents. The investigation revealed that one of the burners had been left in the maximum power position.

The insurer denied coverage, claiming that the insured had acted intentionally, especially since the insured had given a confused and contradictory account of her whereabouts. However, the insurer’s forensic expert had initially concluded that the cause was undetermined and could have been the result of a smoker’s article or an electrical problem in this old building. He later changed his mind and concluded that the cause was voluntary when he was informed that a neighbor living across the street had seen the insured leave the premises about ten minutes after she had noticed black smoke coming from behind the house.

The Decisions

Unfortunately for the insurer, the trial judge, in a detailed decision, meticulously analyzing the evidence submitted to her, explained why she could not attach sufficient credibility to the testimony of the neighbor across the street to allow the insurer to reverse the heavy burden of proving the insured’s voluntary act, even though the latter had given unreliable, confused and contradictory testimony in certain respects.

The Court of Appeal recalled that the burden of proof by presumption of serious, precise and concordant facts is heavy and must allow the Court to draw a “powerful inference” from the facts, allowing it to conclude that the unknown fact (the voluntary act) was established from the known facts put in evidence.

Having rejected the reliability of the neighbor’s testimony for a variety of reasons, including the imprecision of the time frame, the Court of Appeal agreed with the trial judge that the revised conclusion of the insurer’s forensic expert could no longer stand. As the insurer was unable to reverse the burden of proof, the claim was allowed and this decision was confirmed on appeal.

The adjuster’s report

At trial, the insurer objected to the introduction into evidence of its claims adjuster’s report and the information he had gathered from certain witnesses whose versions were likely to undermine the insurer’s claims regarding the circumstances of the fire. The trial judge had rejected the insurer’s objection: the report could not benefit from litigation privilege because, when it was prepared, the litigation had not yet arisen, thereby reiterating the principles set out by the Supreme Court in Blank[1].

However, the Court of Appeal disagreed with the trial judge, stating that Blank did not concern the disclosure of a claims adjuster’s report: the Court preferred to follow the judgment in Union canadienne (L’), compagnie d’assurances v. St-Pierre[2]. Accordingly, the Court of Appeal concluded that the majority of Quebec case law, with a few exceptions, holds that the reports of a claims adjuster “are automatically considered privileged, regardless of the circumstances in which they were prepared” [par. 55]. Acknowledging that this interpretation could possibly be interpreted as going beyond the teachings of the Supreme Court in Blank or Lizotte[3], the Court added: “it must be noted, however, that this interpretation seems to have been applied uniformly in Quebec since then. [par. 56].

Finally, although it disagreed with the trial judge on this issue, the Court of Appeal concluded that it had not been established that the admission into evidence of the adjuster’s report would have affected the outcome of the dispute: it therefore dismissed the appeal in its entirety and all the arguments submitted to it.

In this crispy case, the “fish and chips” did finally not favour the insured, who saw her home completely destroyed, nor the insurer, whose defence was dismissed.

[1] Blank v. Canada (Ministre de la Justice), 2006 CSC 39, [2006] 2 RCS 319.

[2] 2012 QCCA 433.

[3] Lizotte v. Aviva, Compagnie d’assurance du Canada, 2016 CSC 52, [2016] 2 RCS 521.

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Authors

Patrick Henry

Lawyer, Partner

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