J.I.L.M. Enterprises & Investments Ltd v. Intact Insurance, 2017 ONSC 357

This fire loss trial resulted in an award to the plaintiff for its losses under the policy, extended profits losses due to insurer delay and a punitive award to denounce the high-handed insurer behavior in delaying payment two years.

Released January 16, 2017 | Full Decision [CanLII]

The Plaintiff owned the Dorion Inn, a motel/restaurant/store and former gas bar located in a rural area between Thunder Bay and Nipigon. The business was destroyed by a fire in May 2009. The insurer initially suspected arson but arson could not be established. Intact finally made payment of $1,069,610 of the Actual Cash Value (ACV) of the property in April 2012. The Plaintiff intended to rebuild and sought the replacement cost from Intact as well as extended business interruption losses due to the insurer’s delay (the policy only provided for one year of business losses).

Justice Newton presided over the trial in this matter in June 2016. In his 30 page decision, Justice Newton held that the Plaintiff was entitled to replacement costs, lost profits and punitive damages (calculated as 10% of the actual cash value of the loss for each year it remained unpaid).

In coming to his decisions Newton J. addressed the following issues:

  1. Did Intact breach its contract of insurance with J.I.L.M.? Particularly, did Intact breach the contract by failing to pay the claim within a reasonable period of time?

To answer this question, Newton J. assessed when is was reasonable to conclude the arson investigation. He determined that very little evidence existed six months after the fire but for an anonymous tip, but by May 2010 the actual cash value payment should have been available. Failure to make any payment until almost two years later amounted to a breach of contract.

  1. If there is a breach, are damages outside the policy provisions appropriate and, if so, are the damages limited by the failure of J.I.L.M. to mitigate?

Despite receipt of a portion of funds in April 2012 the Plaintiff did nothing, it did not have drawings prepared or begin the construction process. However, the defendants also delayed payment by two years, during which time construction costs increased. The insurer was therefore responsible for two years of increased construction costs at 3% per year.

  1. If there was a breach, what is the appropriate period for awarding lost profits?

The policy provided for lost profits from one year from the date of the file; however, the earliest the Inn could have been re-built and back in operation is the end of January 2011, the delay caused by the insurer is until April 2012 when the ACV payment was made and the Plaintiff could have starting mitigating its losses by commencing construction and been back in operating by January 2014. The additional loss period which should be covered by Intact is January 2011 until January 2014, due to the insurer’s delay.

  1. If there is a breach, is the conduct of Intact so egregious as to attract punitive damages?

Justice Newton determined that the delay in payment the ACV for the Inn for two years after the arson investigation was complete amounted to a breach of the duty of good faith. He held that 10% of the ACV payment that was delayed for each year of delay would be an appropriate amount to deter and denounce the behavior.


Read the full decision on CanLII


Written by

Jan received her Bachelor of Arts (Honors) in Development Studies from Huron University College at the University of Western Ontario in 2005 and her J.D. from Western's Law School in 2009. While attending law school, Jan volunteered with the school's Community Legal Clinic and Pro-Bono Students Canada. She also participated in an international exchange program at ESADE in Barcelona where she studied both International and European Union law.

Before joining Gluckstein Personal Injury Lawyers, Jan completed her articles at a prominent personal injury firm. She was called to the bar in June 2010.

Jan's personal injury practice is dedicated to medical negligence.

When not practicing law, Jan enjoys travelling, playing soccer and volleyball.