The Ontario Court of Appeal in Demetriou v. AIG Insurance 2019 ONCA 855 upheld three important long standing principles:
- The onus remains on the insured to prove on a balance of probabilities that a loss occurred. This onus remains on the insured even when the insurer is alleging that the claim is fraudulent;
- A Judge on summary judgment must consider the entire record to determine whether there is a genuine issue requiring a trial; and
- If the credibility of one or more parties is squarely in issue, a trial will be required.
The $500,000.00 Ring and Summary Judgment
The Plaintiff, JD, insured a ring with AIG Insurance, appraised at over $500,000.00. He alleges that he took the ring to the Dominican Republic, wore it on a gold chain around his neck, and when walking on the beach late one night it was stolen by a man who approached him and demanded his jewelry. AIG denied the claim on the basis that the circumstances were suspicious; they were not prepared to pay the claim unless JD proved the loss.
The Plaintiff brought a summary judgment motion. AIG alleged that the claim was fraudulent. AIG requested to amend the claim to reflect such allegation, and to admit evidence on the credibility of the Plaintiff. AIG further argued that a trial was necessary to determine the issue of credibility of the claim and the Plaintiff.
Justice Gray of the Superior Court of Justice rendered a decision on January 24, 2019. Justice Gray held that the onus shifted to AIG to prove that the claim was fraudulent. He concluded that the AIG failed to prove that the claim was fraudulent, and although there were suspicious circumstances, he ordered that AIG pay the claim, and penalized AIG by awarding punitive damages for bad faith dealing and substantial indemnity costs.
Summary Judgment Overturned on Appeal
AIG appealed on the basis that Justice Gray erred in shifting the onus to the insurer and that a trial is necessary to determine the issue of credibility. The Ontario Court of Appeal agreed.
The Court of Appeal held that even when the insurer alleges fraud, the onus remains on the insured to prove that a loss occurred. Furthermore, Justice Gray ignored the suspicious circumstances and did not make a determination based on the entire record. The Court of Appeal upheld the longstanding principle that on summary judgment motions, the court must consider the entire record to determine whether there is a genuine issue requiring trial.
The Court of Appeal concluded that a trial is necessary to determine the issue of credibility of the claim and of the Plaintiff. The Order of Justice Grey was set aside, including punitive damages and costs, and AIG is allowed to amend its defence to include the allegations of fraud. The matter is now pending trial to determine whether the Plaintiff’s $500,000.00 ring was stolen while on vacation in the Dominican Republic.
Evan Argentino is the author of this blog and member of the firm’s Special Investigations practice group. If you have a question about this decision or a similar file, please contact Evan at 416-777-5208.