Law Times

PAGE 12 FOCUS January 10, 2011 • Law Times litigation of quantum disputes in cases of property loss and Insurers recognizing value of dispute-resolution option A BY JUDY VAN RHIJN For Law Times lthough there has long been a statutory pre- clusion against the damage, widespread ignorance has left the option of appoint- ing appraisers to settle the issue greatly underused. Recently, however, insurers have begun to recognize the ef- fectiveness of this dispute-res- olution process. Th e resulting upsurge means lawyers need to know how to select and direct their appraisers. According to s. 128 of the Insurance Act, when an insurer has received proof of loss relat- ing to lost or damaged property and there's a disagreement over the nature or extent of repairs, rebuilding, replacement or the amount payable, each party, as long as a request in writing for appraisal has been received, should appoint an appraiser to attempt to resolve the dispute. Th e appraisers appoint an um- pire who determines the matter if the parties can't agree. Greg Brimblecombe, a part- ner with Mollison McCormick in Kitchener, Ont., says that de- spite this requirement, litigation over quantum has continued to take place. "I don't think people knew this provision was there." Brimblecombe believes the Clients and Counsel who know Insurance, know us... So should you! appraisal route is a useful tool that's preferable to spending days and sometimes weeks hearing evidence at trial. "It's a more in- formal process, typically done in a day," he says. "It is less expensive and less cumbersome." Dave Wallace, president of Specialized Property Evaluation Control Services Ltd., calls the issue a national problem. "Each province has its own appraisal procedure under the act, but they are all very similar. It does work well. It eliminates any guesswork about what the value should be." Rob Reynolds, Ontario re- Call us or visit our website for more information. gional manager at Wallace's company, points out that Que- bec has been making good use of its appraisal process for 35 years. "Th e rest of Canada has taken notice over the last 10 years. Quantity surveying has been around for a long time, but appraisals are relatively new." Reynolds believes indepen- dent appraisers are key players in the process because they don't have a vested interest. "Look at the diff erent parties involved. Th e Gilbertson_LT_Oct19_09.indd 1 10/13/09 3:15:03 PM insurance company's desire to pay what's fair and reasonable is set off against their vested interest in controlling their money. Th e contractor has a vested interest in getting more work. A public ad- juster can be a bit like an ambu- lance chaser. Th e fi rst thing they ask is the policy limit. Th ey will try and get the amount up to that because they get a percentage of what you get. Th ey do go over- board and have a reputation for exploiting the whole process." Even the umpire can come under pressure. "Look at it from the point of view of the umpire," Reynolds notes. "Both parties have to agree. If the umpire leans towards one guy or another, may- be the one on the side that lost won't appoint that person again. Some are very fair and some just try and bring the parties closer to- gether to keep both sides happy. Everyone walks out having won some and lost some." Brimblecombe believes inde- pendent appraisal companies do assess the damages appropriately but warns that variances in re- mediation costs can arise. "For example, if you go into a fi re- damaged home, there are lots of theories on how to repair it. Two or three contractors will have gone in before for each side, each with their own theory of how to repair it. Th e job of the appraisers is to wend their way through that information and work out an appropriate value from an open- minded neutral point of view." "Typically, each side puts to- gether a brief of opinions, photos, and coverage details," he adds. "Hopefully, within a week of swapping briefs, the parties will meet, sometimes in a boardroom and sometimes they visit the damaged property, walk through it, and decide after the site visit." When the parties sit down to- CANADIAN LAW OF COMPETITIVE BIDDING AND PROCUREMENT Anne C. McNeely UNDERSTAND THE RAPIDLY EVOLVING AND UNIQUE RULES FOR PROCUREMENT PROCESSES This is a guide to the law governing the procurement of construction and other services in Canada. Rarely discussed and analyzed together, this text reviews both court (including the 2010 Supreme Court decision of Tercon Contractors) and tribunal decisions, as well as trade agreement rules on fair procurement. 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He or she asks, 'Does anyone agree with me?' A two- out-of-three decision is binding." Th ere's no standardized desig- nation of who can be an appraiser under the act, which leaves law- yers with the decision as to who would be appropriate. "Th ey must be qualifi ed in building repairs with a much better than working knowledge of the build- ing industry and estimating prac- tices," says Brimblecombe. "Th ey must be familiar with the terms and conditions of the insurance policy and be able to string some words together so as to advocate their position." Brimblecombe says the choice canadalawbook.ca For a 30-day, no-risk evaluation call: 1.800.565.6967 Canada Law Book, a Thomson Reuters business. Prices subject to change without notice, to applicable taxes and shipping & handling. LT0110 www.lawtimesnews.com will often refl ect the issues under discussion. "You should consider the kind of building and the loss itself as well as the issues, such as environment, mould or asbestos, and gear your choice of appraiser to that." LT

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