



COURT OF APPEAL FOR ONTARIO

CITATION: Demetriou v. AIG Insurance Company of Canada, 2019
    ONCA 855

DATE: 20191029

DOCKET: C66624

Feldman, Fairburn and Jamal JJ.A.

BETWEEN

James
    Demetriou

Plaintiff

(Respondent)

and

AIG Insurance Company of Canada

Defendant

(Appellant)

Alan DSilva and Alexandra Urbanski,
    for the appellant

Brian Brock and Stephen Libin, for the respondent

Heard and released orally: October 22, 2019

On appeal from the
    judgment of Justice Gray of the Superior Court of Justice, dated January 24,
    2019.

REASONS FOR DECISION

[1]

The respondent insured a ring appraised at over $500,000, took that ring
    to a resort in the Dominican Republic, wore it on a gold chain around his neck
    on a late night walk on the beach, where he claimed it was stolen from him by a
    man who approached him and demanded his jewellery. The insurer denied the claim
    on the basis that the circumstances were suspicious and the insurer was not
    prepared to pay unless the respondent proved the loss. The respondent had lost
    another very valuable ring and recovered from another insurer the year before.

[2]

On summary judgment, the motion judge ordered the insurer to pay the
    claim. He also awarded punitive damages against the insurer for bad faith
    dealing and substantial indemnity costs.

[3]

The main issue on the appeal is whether the motion judge erred in law in
    two ways: 1) by failing to allow the insurer to amend its pleadings to rely on
    provisions of the policy that exclude coverage for deliberate acts or fraud,
    and 2) having disallowed the amendment, by granting summary judgment on the
    claim without giving any consideration to the many suspicious circumstances
    raised on the record, on the basis that they were not relevant without a plea
    of fraud.

[4]

The appellant submits that had the motion judge considered the entire
    record he would have concluded that the credibility of the insured was in issue
    and that a trial was required.

[5]

We agree with the submission of the appellant. In paragraph 48 of the
    reasons, the motion judge stated: The suspicious circumstances raised in the
    affidavit material would certainly be relevant to whether or not the claim is
    fraudulent, if fraud were being relied on. Although those suspicious
    circumstances may have been relevant to a plea of fraud, had one been made or
    allowed, they were also directly relevant to whether the respondent could prove
    his loss.

[6]

The motion judge reversed the burden of proof by ignoring those
    suspicious circumstances in relation to whether the respondent had proven his
    claim. In
Shakur v. Pilot Insurance Co.
(1990), 74 O.R. (2d) 673 (C.A.)
, a similar case where the
    insurer did not accept that the insured had proved that her jewellery was
    stolen, this court stated at p. 681:

It is fundamental insurance law that the burden of
    proof rests on the insured to establish a right to recover under the terms of
    the policy. In this case, the burden rested on the respondent and remained on
    the respondent to prove on the balance of probabilities that a theft of her
    jewellery had occurred. That the appellant, in denying the allegation of theft,
    impliedly alleged that the respondent was fraudulent in putting forward the
    claim in no way shifted the basic burden of proof resting on the respondent.

[7]

The motion judge in this case found that
Shakur
did not apply
    and was distinguishable because in this case the insurer had disclaimed
    reliance on fraud. He erred in so doing. While the appellant did not invoke the
    policy exclusions relating to fraud, the appellant was clearly challenging the
    respondents version of events.
Shakur
is binding and applies to this
    case. The primary issue was not whether the insurer had established fraud, but
    whether the insured had proved on a balance of probabilities that theft of the
    ring had occurred within the meaning of the policy:
Shakur,
at pp. 681-682.

[8]

In fact, the factum of the insurer asked for the amendment to plead
    fraud if it is deemed necessary to have done so to have the evidence regarding
    the plaintiffs credibility admitted. Rule 26.01 provides that the court shall
    grant leave to amend a pleading at any stage of an action, unless there is
    prejudice that cannot be compensated by costs or an adjournment. In our view,
    there was no such prejudice in this case. The motion judge thus erred by
    denying the amendment and then excluding from his consideration the evidence
    that raised the credibility issues and concerns regarding the insureds claim.

[9]

In our view, the motion judge was required to take a hard look at the
    entire record on the summary judgment motion in order to determine whether
    there was a genuine issue requiring a trial or whether he could decide the case
    on summary judgment. Because he did not do so, it is up to this court to do so
    on the record. In our view, it is clear that the credibility of the claim and
    of the claimant was squarely in issue and requires a trial.

[10]

We also allow the amendment of the respondents pleading, if desired.

[11]

The order is set aside including the punitive damages and costs. The
    costs of the motion shall be left to the trial judge to determine.

[12]

Costs of the appeal to the appellant in the agreed amount of $25,000,
    inclusive of disbursements and HST.

K. Feldman J.A.

Fairburn J.A.

M. Jamal J.A."


