An insured who sells her vehicle through an agent cannot claim for theft under her motor vehicle policy if she does not receive the proceeds of the sale.
The issue before the Court was whether the theft of the Plaintiff’s vehicle by the dealer that the Plaintiff had a consignment agreement with was excluded under her automobile policy. The Court held that the exclusion applied.
Do v. Nieswandt 2009 ABQB 43. Alberta Queen's Bench. January 22, 2009. McLeod J.
The Plaintiff consigned her vehicle and the consignment representative (“the dealer”) sold the vehicle, and absconded with the proceeds of sale. The Plaintiff made a claim under the theft provisions of her insurance policy. She was denied coverage based on the application of an exclusion clause that provided that there would be no coverage for losses resulting from “theft or secretion by any person in lawful possession of the automobile under a mortgage, conditional sale, lease or other similar written agreement.”
The Plaintiff hired a solicitor to commence an action against the insurer, but the solicitor failed to file a claim prior to the expiry of the limitation period. The Plaintiff brought an action against the solicitor in negligence. In his defence, the solicitor argued that the exclusion clause did apply to exclude indemnity between the Plaintiff and her insurer.
With respect to the issue of whether the dealer was in lawful possession of the vehicle, the Court relied upon the decision in Quantel Leasing Corp. v. Co-operators General Insurance Co. (1993), 119 N.S.R. (2d) 292 (Co. Ct.). The circumstances pertaining to the dealer’s original acquisition of the vehicle should be considered. The Court held that the dealer came into lawful possession of the vehicle upon entering into the consignment agreement with the Plaintiff. It is clear that the Plaintiff did not regain possession of the vehicle, notwithstanding that she had a lawful right to do so at the expiry of the agreement.
The Plaintiff argued that the consignment agreement was not a "similar written agreement" to a mortgage, conditional sale, or a lease, and therefore the exclusion clause did not apply. The Court held that the transfer of lawful possession away from the lawful owner or holder of the title of the property, pursuant to a financial agreement, is the common element between all three of the terms in the exclusion clause. A consignment falls within the same genus as a mortgage, conditional sale or lease.
The Court determined that the Defendant met the onus of proving that the dealer was in lawful possession of the vehicle and that the words "other similar agreement" included a consignment agreement. Therefore, the exclusion clause applied and the Plaintiff was not entitled to seek indemnity from her solicitor.
This case was originally summarized by Kim Yee and orginally edited by David Pilley.
