A New Brunswick fire claim tested how far an insurer could push for a sworn examination - and exposed a costly procedural misstep.
The homeowner's house in Saint-Arthur, New Brunswick, was damaged by fire on May 10, 2023. She held a multi-peril homeowner's policy with The Personal Insurance Company covering fire loss among other perils. The insurer sent adjusters and restoration contractors, and the house was barricaded for safety. On June 29, 2023, the homeowner submitted a proof of loss claiming $425,000 to replace the house and $175,000 for its contents. She acknowledged the proof of loss was deficient, lacking a required inventory, a point never in dispute.
The insurer's own adjuster valued the contents claim at $42,366.46, about $130,000 below the homeowner's figure. The homeowner's adjuster then asked the insurer for its cause and origin report, interior photographs, and any rebuild estimates, saying these were needed for a compliant proof of loss. The insurer refused most of the request, providing only 360-degree interior photos. The impasse left the homeowner's counsel warning she would have to sue to obtain the documents.
In October 2023, counsel for The Personal demanded that the homeowner and her adult son submit to an examination under oath and produce banking and phone records, relying on Additional Condition 10 of the policy. The homeowner refused, arguing the condition was an impermissible addition to the statutory conditions under section 127(1) of the Insurance Act, which bars any variation or addition to those conditions from binding the insured. In April 2024, she sued The Personal for damages under the policy, plus aggravated and punitive damages over alleged bad faith. The insurer's defence maintained it had never denied the claim and blamed the impasse on the deficient proof of loss and the refusal to be examined.
The Personal then moved for an order compelling a compliant proof of loss, compelling the examination under oath, and staying the action until both were completed. The motion judge declined to order a further proof of loss, finding the homeowner reasonably needed the insurer's documents and had done everything reasonably expected of her. He also found Additional Condition 10 did not violate the Insurance Act and was enforceable, and he denied the stay.
The Court of Appeal of New Brunswick set aside the ruling on the examination under oath - not on the merits, but because the motion judge had no authority to decide it. The insurer had raised the issue by Notice of Motion within an existing lawsuit, rather than the Notice of Application the Rules of Court require for a pre-trial ruling interpreting a policy or statute. Writing for the court, Justice Dysart found "the question was not properly before the motion judge." Whether Additional Condition 10 actually complies with the Insurance Act remains undecided.
The Court of Appeal upheld the ruling on the proof of loss, finding no error of law and no palpable and overriding error in the finding that the homeowner needed the insurer's records to complete it. The stay request was found moot, since neither step would occur at this stage regardless. The appeal was allowed, the cross-appeal dismissed, and costs of $2,500 awarded to the homeowner. The underlying action for damages remains before the Court of King's Bench.
