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Below is the latest Court version of the Shuttleworths' claims against Commercial Union ( CGNU Group ). Much of this information has been available to visitors to the CUCF web site for over a year and a half now.
The ammended statement of claim is published here to give consumers a sense of how the Shuttleworths' experience has been translated into a legal document.
In essence their claim against Commercial Union ( CGNU Group ) is for damages of $6,800,000.00 Canadian for breach of contract and punitive, aggravated and exemplary damages and that amoung other things that Commercial Union ( CGNU Group ) has completely undermined the purpose of property insurance.
Court File No. 96-CU-113885
ONTARIO COURT (GENERAL DIVISION)
BETWEEN:
BREFNI G. SHUTTLEWORTH and
MICHIKO YANO-SHUTTLEWORTH
Plaintiffs
- and -
COMMERCIAL UNION ASSURANCE COMPANY OF CANADA
Defendants
FURTHER AMENDED STATEMENT OF CLAIM
TO THE DEFENDANTS:
A LEGAL PROCEEDING HAS BEEN COMMENCED AGAINST YOU by the plaintiff. The claim made against you is set out in this statement of claim.
IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer acting for you must prepare a statement of defence in Form 18A prescribed by the Rules of Civil Procedure, serve it on the plaintiff's lawyer, and file it, with proof of service, in this court office, WITHIN TWENTY DAYS after this statement of claim is served on you, if you are served in Ontario.
If you are served in another province or territory of Canada or in the United States of America, the period for serving and filing your statement of defence is forty days. If you are served outside Canada and the United States of America, the period is sixty days.
Instead of serving and filing a statement of defence, you may serve and file a notice of intent to defend in Form 18B prescribed by the Rules of Civil Procedure. This will entitle you to ten more days within which to serve and file your statement of defence.
IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE.
IF YOU PAY THE PLAINTIFF'S CLAIM, and $500.00 costs, within the time for serving and filing your statement of defence, you may move to have this proceeding dismissed by the court. If you believe the amount claimed for costs is excessive, you may pay the plaintiff's claim and $100.00 for costs and have the costs assessed by the court.
Issued by: S. Gatti
Local Registrar DATE: November 7, 1996
Address of court office:
361 University Avenue,
Toronto
TO:
COMMERCIAL UNION ASSURANCE COMPANY OF CANADA
Commercial Union Tower, Toronto Dominion Centre
P.O. Box 441, 17th Floor, Toronto, Ontario, M5K 1L9
1. The plaintiffs claim as against the defendant:
(a) damages for breach of contract in the amount of $1,700,000.00;
(b) in the alternative to (a):
(i) a declaration that the defendant is obligated to indemnify the plaintiffs pursuant to policy no. PCP 7264120 in respect of a loss due to fire, more particularly described herein;
(ii) payment pursuant to the said policy in the sum of $1,500,000.00 pursuant to the sworn proofs of loss;
(iii) a further declaration that the defendant is obligated to indemnify the plaintiffs pursuant to policy no. PCP 7264120 in respect of a loss due to theft occurring on about September 23, 1996, as more particularly described herein;
(iv) payment pursuant to the said policy in the sum of $200,000 for loss due to theft;
(c) in any event, punitive, aggravated and exemplary damages in the amount of $5,100,000.00;
(d) prejudgment and post-judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, C. 43;
(e) indemnification with respect to any G.S.T. payable;
(f) costs of this action on a solicitor and client basis;
(g) such further and other relief as this Honourable Court may deem just.
2. The plaintiffs ("the Shuttleworths") are spouses of one another and reside in the City of Toronto in the Municipality of Metropolitan Toronto.
3. The defendant ("Commercial Union") is an insurance company and at all material times carried on business as an insurer and was at all material times the insurer of the Shuttleworths' residence located at 25 Salem Avenue, Toronto, Ontario ("the Property").
4. The Shuttleworths held comprehensive insurance coverage on the Property in order to insure themselves against catastrophic loss and to ensure that should such a risk occur that they could continue to provide for the care and comfort of their family and to live in a manner similar to their standard of living before the loss.
5. The Shuttleworths did suffer a catastrophic loss when the Property was damaged extensively by a fire. Nonetheless, while Commercial Union never denied its liability as the Shuttleworths' insurer, its dealings with the Shuttleworths subsequent to the fire have not been in the utmost good faith. Commercial Union's actions have caused the Shuttleworths to lose the Property, to lose a substantial portion of their personal property, and to incur substantial additional expenses.
6. In its dealings with the Shuttleworths, Commercial Union has completely undermined the purpose of property insurance, that being the protection of the insureds against financial loss on the occurrence of a catastrophic loss such as a fire in the home of the insureds.
The Contract of Insurance
7. On or about November 13, 1995, a fire occurred at the Property, destroying much of the building and contents.
[original paragraph 5 deleted]
8. At the time of the fire, a written contract for insurance coverage existed between the Shuttleworths and Commercial Union. This contract is Policy no. 7264120 ( the "Contract").
9. The Contract contained, among others, the following express terms:
a) the Shuttleworths paid Commercial Union an annual premium of $2,053;
b) Commercial Union insured the Shuttleworths against direct loss or damage caused by fire and theft (among other things);
c) Commercial Union insured the Property to a limit of $432,000 for the dwelling building, $43,200 for detached private structures, $324,000 for personal property, and $86,400 for loss of use of the Property;
d) the coverage for loss of use of the Property included additional living expenses so that if an insured peril made the dwelling unfit for occupancy, or if the insured were forced live elsewhere during repairs, any necessary increases in living expenses would be reimbursed to maintain the normal standard of living of the insured;
e) the coverage for loss of use of the Property also included the fair rental value of part of the dwelling rented to others and which was made unfit for occupancy;
f) Commercial Union provided additional coverage for the Property in the form of Guaranteed Replacement Cost insurance for the Dwelling Building ("Guaranteed Replacement Coverage") pursuant to which Commercial Union agreed that if :
I. the dwelling building on the Property was damaged by an insured peril;
II. the dwelling building was repaired or replaced on the same location with a building of the same occupancy constructed with materials of similar quality within a reasonable time;
III. the Shuttleworths chose as the basis of loss settlement the cost of repairs or replacement of the dwelling building;
the Shuttleworths were entitled to the full cost of repairs or replacement of the dwelling building, even if those costs were in excess of the stated limit of liability, that being $432,000.
10. The Contract contained, among others, the following implied terms:
(a) Commercial Union and the Shuttleworths would act with the utmost good faith;
(b) Commercial Union would pay promptly, fairly and fully a legitimate insurance claim by the Shuttleworths;
(c) Commercial Union would, in a prompt and timely fashion, pay and agree to pay the reasonable costs of repairing or replacing the building on the Property in accordance with the Guaranteed Replacement Coverage endorsement of the Contract; and
(d) Commercial Union would ensure that its agents performing work on the Property would perform work of good quality and meet the appropriate standards of care.
Breach of Contract
11. The Shuttleworths submitted an initial interim proof of loss on December 1, 1995, approximately two weeks after the fire occurred. From the start, however, Commercial Union delayed complying with its obligations pursuant to the Contract.
I. The Dwelling Building
12. The Shuttleworths chose the cost of replacement or repairs of the dwelling building as the basis of loss settlement under the Contract. They acted promptly and within a reasonable time to attempt to restore the Property to its previous condition. In this regard, the Shuttleworths incurred substantial expenses in connection with renovations and repairs to the Property. Commercial Union has refused to reimburse the Shuttleworths for these expenses.
13. Further, Commercial Union and its agents substantially interfered with the ability of the Shuttleworths to effect restoration of the Property and delayed restoration of the Property, causing the Shuttleworths to incur expenses.
14. Commercial Union agreed to pay for the costs of restoration as they were incurred but demanded that the initial budget for repairs not exceed the estimates it had received from contractors it consulted, including Alex Taylor Contracting Co. Ltd. ("A.T.C.");
15. These estimates were far below the actual cost to repair the Property and were based on a scope of work which was too narrow to effect the work required for restoration.
16. The Shuttleworths and Commercial Union disagreed about the scope of work required to restore the Property in accordance with the Contract and the Shuttleworths did not believe that A.T.C. could complete the necessary work based on its estimate.
17. Disagreements about the narrow scope and low A.T.C. estimate caused delay and the Shuttleworths, wanting the Property restored as quickly as possible, allowed Commercial Union to proceed with the restoration according to the initial scope and low estimates from A.T.C.
18. Commercial Union therefore hired A.T.C. as its agent to complete work on the Property on the basis of A.T.C.'s low estimate. Commercial Union nonetheless told the Shuttleworths that it would authorize any work necessary to restore the Property to its pre-fire condition;
19. The restoration work on the Property began in March of 1993, over three months after the fire.
20. A.T.C. could not complete the work identified in its original scope of work within its quoted price.
21. In addition, after restoration work on the Property began, A.T.C. identified a number of other repairs, in addition to those outlined in its original scope of work, that were necessary to restore the Property in accordance with the Contract.
22. A.T.C. was frustrated in its attempts to have Commercial Union approve further necessary work on the Property. Commercial Union refused to authorize any additional payments to A.T.C. for restoration of the Property. Therefore A.T.C. could not complete the work outlined in the original scope or the additional repairs identified by A.T.C.
23. Further, the actual work performed by Commercial Union's agent, A.T.C., was negligent, defective and failed to follow the original scope of work. A.T.C.'s work actually caused damage to the Property.
24. The inferior work of A.T.C. resulted in further serious delays in the restoration of the Property.
25. The Shuttleworths told Commercial Union of their serious concerns about the quality of the work performed by A.T.C. Commercial Union refused to take action to rectify the problems with A.T.C.'s work.
26. The disagreements among A.T.C., Commercial Union and the Shuttleworths continued for a number of months. In May 1996, A.T.C. stopped work on the Property.
27. A.T.C. placed a lien on the Property on July 2, 1996.
28. Commercial Union has sought to avoid the Contract and has failed to make the proper payment which is due and owing. Furthermore, Commercial Union has failed to properly take such steps to undertake and conduct such repairs as are necessary to replace the property as insured. As a result of this conduct, the Shuttleworths have been deprived of the use and enjoyment of the subject property and have suffered as a result. Despite the Shuttleworths' numerous requests and demands for Commercial Union to act in an expeditious fashion, Commercial Union has failed to do so.
II. Loss Caused by Theft
29. Contents of the home at 25 Salem Avenue, Toronto, Ontario, ("Contents") were salvaged from the fire of November 13, 1995. The Shuttleworths intended to make an insurance claim in respect of many of the Contents for fire damage.
30. Although it was clear early on that the damage to the Contents was far in excess of the limits of liability under the Contract, Commercial Union would not pay for damages or restoration of any of the Contents until the Contents were inventoried item by item and inspected by the defendant's adjuster, R.P. Insurance Adjusters Inc. ("R.P."), a division of Lindsey Morden Claim Services Limited.
31. At the direction of R.P., the Contents were taken from the Property to the warehouse of T.G.A. and Son General Contracting Inc. ("T.G.A."). T.G.A. was to make an inventory and appraisal of the Contents. Further, the Contents were stored at the warehouse of T.G.A. In the course of doing its work, at the request of and at the direction of Commercial Union and its agents, T.G.A. removed fixtures from the Property, even though those fixtures were part of the scope of work for A.T.C., and not subject to the inventory and replacement provisions of the Policy relating to personalty. In effect, through their course of conduct, Commercial Union and its agent T.G.A. wrongly converted fixtures covered by the Replacement Cost Endorsement of the Contract to personal property subject to a Contract Policy limit of $324,000.00. This course of conduct was done in the knowledge and with the intention of that it would reduce the Shuttleworths' entitlement under the Policy, and thus was a breach of Commercial Union's duty to act in the utmost of good faith.
32. The Shuttleworths began to have serious concerns about the nature and quality of the inventory performed by T.G.A.. The Shuttleworths became aware that T.G.A. had seriously undervalued Contents which it had inventoried, and that the list of Contents prepared by T.G.A. of various boxes and crates belonging to the Shuttleworths did not correspond to the actual Contents in these containers.
33. As a consequence, to ensure an accurate inventory of the Contents, an independent inventory of the contents was required.
34. In order to have this inventory prepared, the Shuttleworths moved some of the Contents from the T.G.A. warehouse into another private storage facility. The Contents were moved to this facility around January 29, 1996 and remained there until late August of 1996.
35. R.P. took an unreasonable length of time to inspect the Contents both before and after the Shuttleworths moved the contents to the second storage facility. This unreasonable delay meant that the Shuttleworths had to incur unnecessary storage costs.
36. In August of 1996, because of financial problems brought on by the lack of proper payment to the plaintiffs under the Contract, the Shuttleworths were forced to move the contents out of the second storage into two rooms of the burned out dwelling building.
37. Between September 24 and September 30 of 1996, a series of thefts took place at the Property, during which Contents were stolen.
38. The Shuttleworths were still insured by Commercial Union when this theft took place. The Shuttleworths promptly notified Commercial Union of the loss. In July, 1997, the Shuttleworths submitted a proof of loss for this theft to Commercial Union. Commercial Union has failed or refused to assess and pay the Shuttleworths' claim respecting this loss.
39. The actions of Commercial Union in refusing to make the proper payments due and owing under the Contract and the unreasonable delay of Commercial Union and its agents in preparing a proper inventory and appraisal of Contents, gave rise to the circumstances in which the thefts were likely to occur.
III. Other Losses With Respect to Contents
40. The Shuttleworths have suffered further losses due to the actions of Commercial Union's agent, T.G.A. T.G.A. did unnecessary work, unauthorized work, and incompetent work that caused damage to the Contents. Further, it was clear that damage to the Contents exceeded the Policy limits of $324,000.00. T.G.A. failed to consult with or take instruction from the Shuttleworths in respect to the priorities for restoration and replacement of Contents, and instead spent or claimed to have spent excessive amounts of time and effort on costs of adjustment (which, although such costs should have been for Commercial Union's account, were wrongly charged to the Shuttleworths), and in respect to work not done, work done improvidently, and work done incompetently.
41. Because of the foregoing, a dispute arose about payments to T.G.A.
42. T.G.A. then seized and placed a lien on the Contents in T.G.A.'s possession. On August 8, 1996, T.G.A. issued a Notice of Intention to Sell Personal Property of the Shuttleworths at a public auction on September 7, 1996. The auction never took place, however, T.G.A. still has Contents in its possession.
43. The Shuttleworths told Commercial Union about the actions of T.G.A., however, Commercial Union refused to take action to resolve the problems with its agent. As a result of the actions of T.G.A., the Shuttleworths have been deprived of the use and enjoyment of the Contents and have been unable to prepare a complete inventory of the Contents. Further, the Contents have been damaged and discarded by T.G.A. Commercial Union is responsible in law for this conduct by T.G.A.
IV. Additional Living Expenses
44. Commercial Union has also refused to pay to the Shuttleworths a reasonable amount for their additional living expenses, which include accommodation expenses, loss of rental income, Contents storage and incidental expenses.
45. The delay in repair to the dwelling building caused by Commercial Union and its agents caused the Shuttleworths to incur many of these additional living expenses including, among others, additional accommodation expenses , loss of rental income and storage costs.
V. Loss of Equity in the Property
46. On October 16, 1996, Commercial Union told the Shuttleworths that it refused to renew their insurance policy because of the condition of the Property.
47. The Shuttleworths were unable to purchase insurance coverage elsewhere both because of their insurance claims and because the Property was vacant and in a dangerous and unrepaired condition, and posed a safety hazard to persons entering onto the Property.
48. As of November 13, 1996, the Shuttleworths were without insurance for the Property and thus entirely at risk for any damage caused to the Property or to persons entering onto the Property.
49. Further financial hardship was caused to the Shuttleworths by the delay in payments pursuant to the Contract for additional living expenses and the Contents.
50. The value of the Property was also substantially decreased when A.T.C. placed a lien on the Property.
51. As a result of these events, the Shuttleworths were forced to sell the Property for a nominal sum in August, 1997, thus losing all their equity in the Property.
V. Breach of Contract
52. Commercial Union's adjuster, R.P. took charge of and directed the restoration of the Property. R.P. directed that A.T.C. prepare a scope of the repairs necessary to restore the Property, authorized payments to A.T.C., retained T.G.A. to perform an inventory and clean the Contents and authorized payments to T.G.A.
53. Commercial Union has made improper payment to third parties, including A.T.C. and T.G.A., representing such payment to be made on behalf of the Shuttleworths. These payments should not reduce Commercial Union's liability to the Shuttleworths in respect to the Shuttleworths' claims herein.
54. Commercial Union is responsible in law for the improper actions of its agents pursuant to the Contract.
55. Commercial Union, in failing to pay either the repair or replacement value as the loss settlement for the dwelling building, in refusing to pay the full additional living expenses of the Shuttleworths, in refusing to pay the full value of the Contents, in delaying payment, and in making improper payments to third parties has deprived the Shuttleworths of the benefit of the Contract.
Damages Sustained by the Plaintiffs
56. As a result of the breach of the Contract by Commercial Union, the Shuttleworths have lost the Property and now can now longer effect its repair. Thus, the Shuttleworths have suffered, among others, the following damages:
a) costs of additional living expenses
b) loss of rental income
c) loss of value, use and enjoyment of the Contents
d) money expended to purchase replacement Contents
e) loss of value of and equity in the Property
f) the costs to repair and replace the Property
g) loss of enjoyment of use of the Property
h) inability to purchase home insurance on a commercially reasonable level
57. In the alternative, if it is found that there has been no breach of the Contract by Commercial Union, the Shuttleworths are entitled to indemnification under the Contract and are entitled to $1,700,000.00 pursuant to their sworn proofs of loss.
58. In any event, the Shuttleworths plead that as a result of Commercial Union's actions in refusing to pay and refusing to deal with the damages caused by the said fire and by refusing to hire proper contractors to repair the Shuttleworths' premises, Commercial Union has acted in a high handed and arrogant manner, in bad faith and not in the utmost of good faith and is therefore liable for punitive damages.
59. The Shuttleworths propose that this action be tried at the City of Toronto.
DATED: November 7, 1996
Eberts Symes Street & Corbett
Barristers and Solicitors
8 Price Street
Toronto, Ontario
M5W 1Z4
David L. Corbett
Tel (416) 920-3030
Fax (416) 920-3033
Solicitors for the Plaintiffs
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