Edited by Amanda Kostek
Last week’s Court Rulings from the Alberta Court of King’s Bench, Court of Appeal and SCC.
Emond v. Trillium Mutual Insurance Co., 2026 SCC 3
Interpretation of Endorsements to the policy
Reddy v Saroya, 2026 ABCA 20
Penalty for improper use of AI in legal filings
JH Drilling Inc v Barsi Enterprises Ltd, 2026 ABKB 48
Reneging on a Settlement Agreement
Steinkey v First Capital Holdings (Alb) Corporation, 2026 ABKB 51
Setting aside Noting in Default
Blackstone v Chen, 2026 ABKB 69
Pre-Trial production of Surveillance
Emond v. Trillium Mutual Insurance Co., 2026 SCC 3
At issue was the determination of coverage under the “Guaranteed Rebuilding Cost Coverage” in respect of a residential home deemed a total loss as a result of a flood. The homeowners argued that the endorsement entitled them to the full cost of the rebuild as well as costs to comply with building requirements imposed by their conservation authority. The policy contained general exclusions for these additional costs, but the homeowners argued the exclusions in the policy did not apply because of the endorsement.
The majority of the Supreme Court concluded that the policy was unambiguous in excluding these costs, and the language “does not deprive the insureds of the benefit of the GRC endorsement, which is to make the cost of repairs or replacement for the house payable.” The court concluded that the endorsement “does not allow the Emonds to circumvent the compliance cost exclusion appearing elsewhere in the insurance policy”.
The majority explained that endorsements build on the foundation of the policy, and are not stand alone self contained contracts. Ambiguity will arise where the contract is unclear, or is clear, but capable of more than one interpretation. However, “two or more provisions in the same contract are not irreconcilable or ambiguous merely because they overlap.” The Court set out a 3 stage process for resolving ambiguity:
- Is there an ambiguity?
- If so, can other rules of contractual interpretation remedy the ambiguity?
- If this cannot be resolved at the second stage, then the ambiguity is resolved in favour of the Insured.
In this case, since the GRC endorsement amended the Basis of Claim Payment clause, the exclusions in the underlying policy continued to apply to the amendment created by the GRC as if the GRC was the original written provision.
It should be noted that 5 Justices endorsed the majority finding. 2 Justices issued partial dissents.
Reddy v Saroya, 2026 ABCA 20
Counsel was required to pay costs of $17,550 as a result of additional appellate steps required when counsel submitted a brief largely relying on AI that cited non-existent cases.
JH Drilling Inc v Barsi Enterprises Ltd, 2026 ABKB 48
The Plaintiff refused to sign a settlement agreement drafted by defence counsel, which resulted in the Defendants bringing an application seeking summary dismissal of the Plaintiff’s claim and a declaration that the settlement agreement was binding. Correspondence was in writing and put before the Court. On that basis, the Court concluded that the parties had reached a binding agreement, and summary dismissal was granted.
Steinkey v First Capital Holdings (Alb) Corporation, 2026 ABKB 51
The Plaintiff alleged personal injury because of a wind-tossed patio umbrella a Starbucks. Plaintiff counsel requested a defence from Starbuck’s adjuster and imposed a 45 day deadline. Having heard nothing, Plaintiff counsel followed up after the 45 day deadline again requesting a defence, and providing a deadline 21 days later. No response was received. Plaintiff counsel noted Starbucks in default and forwarded the Noting in Default to the adjuster. No response was received. Approximately 4 months later the Noting in Default was provided to the VP of the adjusting firm. The VP immediately responded asking to set aside the Noting in Default, which was declined. Counsel was retained, and an application to set aside the Noting in Default filed and served.
The Court noted competing tests for setting aside a Noting in Default, but ultimately concluded that whichever test is used, the application failed. Specifically, the Court focused on the arguable defence issue. In this case, although the standard of care of Starbucks’ employees was front and centre, the Court directed, that it was not enough that Starbucks had a policy on umbrella use, and in the absence of evidence on the use of umbrellas, and monitoring of weather, there was insufficient evidence to establish an arguable defence.
In addition, the Court acknowledged that “illness or solicitor’s inadvertence may constitute a sufficient excuse”, but the Court ultimately concluded that “adjuster did not discharge her practical burden to explain how the key emails were deleted or, in the absence of a discernible cause, offer plausible explanation(s) about what might have happened.” As a result, the Court declined to set aside the Noting in Default and indicated that Starbucks would presumably be given notice and an opportunity to provide its position at an assessment of damages.
Blackstone v Chen, 2026 ABKB 69
The Plaintiff brought an application for disclosure of surveillance arguing that privilege was waived when the Defendant listed the private investigator who took the surveillance as a Trial witness and indicated that it would be used to impeach the Plaintiff’s credibility. The Court dismissed the application on the basis that the Plaintiff “has not provided any legal authority that contradicts the principle enunciated in Juchli and Westfair Foods (and upheld in Terrigno) namely, that so long as the existence of the privileged record has been disclosed, a party may maintain privilege over the record if it is intended to be used exclusively for the purpose of impeaching a witness at trial.” The Court distinguished authority advanced by the Plaintiff on the basis that the investigator in this case was only being called to authenticate the surveillance report, and not to provide his observations.