Law Times

LAW TIMES COVERING ONTARIO'S LEGAL SCENE | APRIL 8, 2019 11 www.lawtimesnews.com BY MICHAEL MCKIERNAN For Law Times A n Oakville, Ont. lawyer says insurers may want to rethink how they com- municate their denials to policy- holders after a judge awarded punitive damages against a com- pany for its handling of a case involving the loss of a $550,000 ring. Ontario Superior Court Justice Douglas Gray's Jan. 24 summary judgment ruling in Demetriou v. AIG Insurance Co. of Canada ordered the in- surer to pay out the full value of the family heirloom ring belong- ing to plaintiff James Demetriou, which he claimed was stolen from him during a trip to the Dominican Republic within weeks of its addition to his policy. But the judge also added $50,000 in punitive damages to the total to express his displea- sure with the insurer's tactics in response to Demetriou's claim for coverage. "AIG decided at a very early stage that it would not pay the claim. Notwithstanding, it con- tinued to hold out the prospect that the claim could be paid if Mr. Demetriou and members of his family continued to pro- vide material and submit to ex- aminations under oath. In fact, it had no intention of paying the claim, and it did not have the decency to say so," Gray wrote. "In my view, the conduct of the defendant can only be construed as being designed to put the plaintiff through his paces even after it had decided to deny the claim, and was with a view to setting up its case for litigation. Furthermore, the defendant has attempted to surreptitiously put forward a case of fraud, even though it had disclaimed any re- liance on fraud." Weston Pollard, a partner with Oakville firm Edwards Pollard LLP who acts for both plaintiffs and defendants in insurance disputes, was not in- volved in the case, and explains that awards of punitive damages are relatively rare. "I think it's good to see the court taking action, and exercis- ing its power to make an award in a case where the insurance company has obviously acted in a high-handed way," he says. "$50,000 is a significant enough amount that it won't just get swept under the rug, and, hope- fully, it will cause them to re- think their practices, especially in the way that they treat their insured in cases like this. "I would think that most in- surers will be sitting back and looking at their internal policies for communicating a denial to a client, especially when litigation may be required," Pollard adds. Still, Joan Takahashi, a part- ner with insurance litigation firm Gilbertson Davis LLP, isn't so convinced that AIG's behaviour meets the high test set out for punitive damages in the landmark 2002 decision in Whiten v. Pilot Insurance Co., when the Supreme Court of Canada said they should be reserved for exceptional cases involving "malicious, oppressive and high-handed" misconduct offending "the court's sense of decency." "I'm uncomfortable with the judge's decision on the facts de- scribed. Deciding early that you won't be paying out isn't oppres- sive or malicious in itself," Taka- hashi says, adding that a more sympathetic interpretation of the subsequent events is that the in- surer "sincerely wanted more in- formation to determine if its ini- tial decision to deny was correct." And she says the facts of the case appear to have been murky enough to justify the insurer's cautious approach or at least to warrant a full trial before a judge. "Much of what was said in the decision raises more questions in my mind. I'm not sure it was one that should have been made by way of summary judgment," Takahashi says. According to Gray's decision, the saga dates back to May 2015, when Demetriou's parents gave him the ring, which had once belonged to one of his grandpar- ents. After having the ring ap- praised at $550,000, he added it to one of his existing insurance policies with AIG in mid-July 2015, before departing to the Dominican Republic later that month on vacation with his wife, children and parents. Although he didn't tell his wife about the gift from his parents, Demetriou deposed in an affidavit filed with the court that it wasn't unusual for either spouse to receive "generational transfers of wealth" without in- forming the other. Following a modest ceremo- ny with his parents in the hotel lobby to memorialize the gift of the ring, Gray's decision says that Demetriou went for a night- time walk on the beach smoking a cigar, where he was held up at knifepoint by a thief who de- manded the gold chain around his neck containing the ring. After reporting the incident immediately to hotel staff, and attempting to inform local po- lice, Demetriou and his fam- ily returned home the next day, where he informed police in this country, Canada's consulate in the Dominican Republic, the department of Foreign Affairs and his insurer, AIG. By mid-August 2015, evidence filed with the court suggested AIG was leaning toward litigation Weston Pollard says that awards of punitive damages are relatively rare in insurance disputes. Case involves stolen heirloom ring Judge orders punitive damages against insurer FOCUS See Insurers, page 12 Visit gpllm.law.utoronto.ca Questions? gpllm@utoronto.ca Master the law. Canada's leading law school offers a graduate degree in four unique streams: Business Law Canadian Law in a Global Context Innovation, Law and Technology Law of Leadership Apply today. Untitled-1 1 2018-05-10 10:52 AM

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