Canada Insurance Lawyer & Attorney : Michael Thomas of Harper Grey Law Firm : British Columbia, Vancouver

The Manitoba Public Insurance Corporation (MPIC) sought leave to appeal from a decision of the Automobile Injury Compensation Appeal Commission. Pursuant to s. 187(2) of The Manitoba Public Insurance Corporation Act, C.C.S.M., c. P215 leave may only be granted on a question of jurisdiction or of law. 

The insured had been transporting a new propane stove to a friend. She placed it on the back seat of her vehicle and drove to her friend's place. When she arrived, he was absent. She then drove to a park, some five miles outside of town, to walk her dogs. Upon returning to the vehicle, she sat in the driver's seat. Since the stove had been making a lot of noise on the trip to the park, the insured decided to reposition it. From the front seat, and with a lit cigarette in her mouth, she turned around to move the stove. While doing so, she was suddenly enveloped by fire and thrown from her vehicle. She sustained serious burns and other bodily injuries. She sought coverage under Part 2 of the Act for these injuries.

The claim for Part 2 benefits was denied by the MPIC case manager on the basis that an investigation had revealed that the proximate cause of her injuries was smoking in the presence of propane gas and not by an automobile or the use of an automobile. The Commission overturned the internal review officer's decision, finding that the insured's injuries were caused by the use of an automobile or a load. 

In its notice of motion seeking leave to appeal, MPIC identified the issue as follows: "Did the Commission err in law in its interpretation of Sections 70(a) and 71(1) of the Act by finding that [the insured] sustained a bodily injury caused by an automobile, by the use of an automobile or by a load?" MPIC submitted that this was a question of statutory interpretation and question of law. The relevant sections of the Act are as follows:

"70(1) In this Part,

"accident" means any event in which bodily injury is caused by an automobile;

…

"bodily injury caused by an automobile" means any bodily injury caused by an automobile, by the use of an automobile, or by a load, including bodily injury caused by a trailer used with an automobile…

Application of Part 2

71(1) This Part applies to any bodily injury suffered by a victim in an accident that occurs on or after March 1, 1994."

MPIC asked the court to consider how the decisions of Lumbermens Mutual Casualty Co. v. Herbison, 2007 SCC 47, and Citadel General Assurance Co. v. Vytlingham, 2007 SCC 46, might have impacted the Commission's decision.

The insured argued that the Commission, in reaching its decision, was simply applying the established legal principles developed in McMillan v. Thompson (Rural Municipality) (1997), 115 Man.R. (2d) 2, which applied Amos v. Insurance Corp. of British Columbia, [1995] 3 S.C.R. 405.

The court held that the two recent Supreme Court of Canada cases do not deal with no-fault insurance schemes. This the court said was confirmed by the Supreme Court of Canada in Citadel General. As such, the court found that the Commission had been right to apply the test formulated in McMillan which was as follows: "Were the respondent's injuries caused by (in the sense of being related to) the use of an automobile?" As such there was no issue of law to be appealed and the application for leave to appeal was denied.

The insured, a young boy on his bicycle was injured when a vehicle driven and owned by non-Manitoba residents struck him. The Manitoba Public Insurance Corp (“MPIC”) paid the insured compensation pursuant to the amounts prescribed in the Manitoba Public Insurance Act. MPIC wanted to recover the amounts paid and the future amounts payable from the non-resident defendants without the restraints of tort principles like remoteness, foreseeablity and causation. The non-resident defendants argued that MPIC could not recover more than it could in a tort action, since the recovery was to be based on the principle of subrogation.

The Appellate Court accepted the argument of the non-resident defendants and found that since the governing provision used the term “subrogated”, the Legislature must have intended that the Insurer could acquire the rights of the injured party, but no more. The Appellate Court held that the right of MPIC to recover from the non-resident defendants was subject to the usual common law principles of remoteness, foreseeability, and causation.

The Insureds sustained structural damages to their house as a result of the shift in foundation and heaving of the floor/slab. They alleged that the upheaval of the foundation was related to work performed by the Municipality on a sewer line which damaged the weeping tiles under the house. Wawanesa denied coverage to the Insureds on the basis of an exclusion clause in the policy excluding coverage for, amongst other things, "settling, expansion, contraction, moving, bulging, buckling, cracking or the falling ceiling or wall plaster…." The policy contained additional exclusions for damages caused by water below the surface of the ground, landslide or any other earth movement. The Insureds argued that under the authority of the decision in Rivard v. General Accident Assurance Co. of Canada, 2001 MBQB 293, Wawanesa needed to prove that the loss was due to natural causes before the exclusion clauses would apply. The Court disagreed, noting that the Wawanesa exclusion clause did not refer to the cause of the damage. Instead, the Court noted that the exclusion clause contained a series of words, all of which related to structural movement resulting in structural damage. In this case, the damage to the property arose from normal wear and tear and natural causes resulting in earth movement and structural damage. As such, the exclusion clause applied to exclude the claim. The appeal was dismissed with costs.

Mr. Sylvester (the "Insured") had a life insurance contract that provided a $100,000 death benefit payable to his beneficiaries. The Insured was a member of the Outlaws Motorcycle Gang in Manitoba. He disappeared on May 29, 1998. He was never found. Pursuant to a consent order made seven years after his disappearance, the Insured was declared presumed dead as of May 29, 1998. Following the declaration, the insurance company paid out the insurance proceeds of $100,000 and returned the premiums paid from the date of the disappearance to the date of the presumption of death. The beneficiaries commenced this action in an attempt to recover the interest on the $100,000 death benefit for those seven years.

The policy of insurance was silent as to whether interest should be paid during this period. In reviewing the matter, Kennedy J. noted that the Insured was clearly associated with an outlaw gang and that he was associated with persons and activities that led him to criminal activity. His disappearance was mysterious. When his close acquaintance was shot to death by bullets to the head, it is possible that an inference could be raised that the Insured probably suffered a similar fate. There was no evidence that the Insured intended to disappear-- he had made plans for his children, started a business, which was deserted, and his financial and other possessions were left unattended. In addition, police information indicated that they believed that the Insured had been killed.

The Estate argued that well before the passage of seven years, the insurance company ought to have acted on the available evidence and paid out the insurance proceeds. Since the insurer did not do so, the insurer should now pay interest on the death benefits. Kennedy J. noted that counsel for the Estate had advised their client of the cost of applying for a death certificate and the uncertainty that may arise with that application before the expiration of seven years. The Estate, based on the advice of their lawyer, elected to wait until the expiration of seven years.

Kennedy J. could not conclude that the insurance company’s actions warranted the entitlement to interest, as the option to proceed earlier was available to the Estate and they chose to delay the application until the expiration of seven years. However, the evidence demonstrated that the insurance company did not take a particularly helpful approach to the beneficiaries. While the Estate made the decision not to proceed before the expiration of seven years, the insurance company had informal evidence, which in Kennedy J.’s view, could have supported a successful interim application for presumption of death. In the result, the application was dismissed without costs.

In March 1992, a turbine manufactured by Whirlpool Canada’s predecessor exploded, causing extensive damage to Manitoba Hydro. At the time of the explosion, Commercial Union Assurance Co. of Canada ("Commercial") provided primary liability insurance coverage for Whirlpool with a policy limit of $2,000,000. National Union Fire Insurance Co. of Pittsburgh ("National") provided umbrella liability coverage with a policy limit of $25,000,000. In November 1998, Manitoba Hydro filed a claim in the Manitoba Court of Queen’s Bench seeking damages against Whirlpool in the amount of approximately $31,000,000.

Both the Commercial and the National policy contained clauses whereby the Insurer agreed to defend any claim against the Insured where the damages sought in the claim were for a loss insured under the policies. Both National and Commercial denied a duty to defend the Manitoba Hydro action.

The Application before the Court considered which law was to be applied to the National policy.

The Court noted that in Canada "proper law" issues were resolved by considering the contract as a whole in light of all the circumstances and applying the law with which the contract had the closest and most substantial connection. The Court found that the contract had the closest and most real connection with the United States rather than any Canadian province. The Court noted that the domicile and residence of the contracting parties was in the United States, the contract was made in the United States, the premium would be paid in the United States, any losses would presumably be paid from National’s Head Office in the United States, and other aspects of the policy would be performed in the United States, including the giving of notice of occurrence audits, maintenance of underlying insurance, etc.

The Court then considered whether the proper law was the law of New York or the law of Michigan. While there were numerous factors in favour of either state, the Court found that the circumstance which tipped the scales in favour of New York was that the decision to underwrite the risk was taken there. The Court concluded that the proper law of the contract was New York.

Ms. Conrod owned a house and Assiniboine Credit Union ("Assiniboine") held the first mortgage. The house was insured by Aviva Insurance ("Aviva"). On January 19, 2001, at the request of Ms. Conrad, but without the knowledge of Assiniboine, Aviva added a vacancy permit to their insurance coverage. The vacancy permit was renewed from time to time but never with the knowledge of Assiniboine. Assiniboine stopped receiving mortgage payments in the summer of 2002 and took possession of the property. Upon taking possession of the property, Assiniboine discovered that electricity to the property had been disconnected for non-payment resulting in the property being unheated during the winter of 2001-2002. As a result of the lack of heat, water in the plumbing system froze causing approximately $30,000 of damage. Assiniboine requested payment from Aviva through the standard mortgage clause in the contract of insurance.

Darichuk J. determined that Aviva was obligated to indemnify Assiniboine for the loss. He found that Aviva had been in breach of the terms of the policy when it failed to inform Assiniboine that a vacancy permit had been added to the property. Had Assiniboine been advised of the vacancy permit, it could have taken steps to protect its investment by arranging to make the property ready for winter.

On appeal, Aviva focused on the fact that the insurance policy provided no coverage for the type of loss incurred. It argued that Royal Bank of Canada v. Red River Valley Mutual Insurance Company (1986), 42 Man.R. (2d) 124, stood for the proposition that an Insurer cannot be liable for a loss pursuant to the terms of a standard mortgage clause if a loss is excluded by a term in the underlying policy. Assiniboine maintained that the decision in Royal Bank was not applicable, and argued that there would have been coverage under the terms of the underlying policy, but for the actions of the owner of the property. Because the actions of the owner of the property, in vacating the building, caused the damage, Assiniboine was entitled to rely upon the standard mortgage clause for indemnity.

The Ontario Court of Appeal examined the wording of the the first paragraph of the standard mortgage clause, namely the fact that the clause "is and shall be in force notwithstanding any act, neglect, omission or misrepresentation attributable to the mortgagor, owner or occupant of the property insured". The Court noted that the water damage exclusion in the underlying policy did not exclude recovery by Assiniboine, because the damage was in an area of the building that would have been heated had the building not been vacated. In effect, this was a loss covered by the policy except for an act, neglect or omission attributable to the owner. Monnin J.A., for the court, determined that Aviva was liable to Assiniboine for the damages caused to the property under the terms of the standard mortgage clause.

In concurring reasons, Kroft J.A. noted that although the ultimate decision of the Court was the same as the Queen’s Bench decision, the ruling by the Court of Appeal was that Aviva was liable to indemnify Assiniboine for its loss under the actual terms of the policy. Kroft J.A. stressed that this judgment was not intended to resolve for Insurers or their customers any questions concerning the form and nature of notice that should be used between them.

An employee of the Defendant University of Waterloo, during the course of his employment, was involved in a motor vehicle accident in the province of Manitoba. A five year old child was severely injured. MPIC paid compensation for the child in the sum of $776,441.97 and reserved a further $4,306,070.18 for compensation under Part II of the Manitoba Public Insurance Corporation Act, R.S.M. 1987, c. P215, C.C.S.M. c. P215 (the "Act").

Under section 77 of the Act, where a person is entitled to compensation, MPIC "is subrogated to the person’s rights and is entitled to recover the amount of compensation". MPIC argued that this section was a statutory recovery provision entitling MPIC to recover from the Defendants the amount of compensation it had paid or had reserved for payment to the extent the Defendants were responsible for the accident. The University of Waterloo took the position that MPIC could not recover more than it would be entitled to in a tort action and that the right of subrogation was subject to the common law tort principles of remoteness, foreseeability and causation.

The Court noted that section 77 (1) of the Act used the word "subrogated" but no definition of the term was provided in the Act. Therefore, the common law meaning of the term was to apply. The Court reviewed various definitions and noted that the common law right of subrogation was derivative in that the insurer could be in no better position as against the third party than the insured would be if the insured commenced an action against that third party. The Court noted that an injured party, had he brought a tort action, would not be entitled to simply put forward a schedule of compensation which the Defendant would be required to pay without addressing the issues of remoteness, foreseeability and causation. Any recovery would be subject to those principles.

In the result, the Court held that MPIC’s right of subrogation, as set forth in section 77(1) of the Act, was subject to the common law tort principles of remoteness, foreseeability and causation such that the amounts sought by MPIC from the University of Waterloo must be proven and justified according to those principles.

The insurer paid the plaintiff/landlord (the "Landlord") under an insurance policy for fire damage to the premises (the "Premises") leased by the defendant/tenant (the "Tenant"). The Defendant Kresz was the sole director, officer and shareholder of the Tenant. The insurer commenced a subrogated claim against the Tenant. The Defendants brought a motion for summary judgment to dismiss the claim on the basis that the insurer had no right to bring the subrogated claim. The motions judge dismissed the motion, and the defendants appealed. The Court of Appeal dismissed the appeal.

The lease did not contain an explicit provision passing the risk of fire damage caused by the tenant’s negligence to the landlord. Accordingly, the insurer was not barred from bringing the subrogated claim under the terms of the lease.

The motions judge erred in concluding that the insurer was entitled to subrogate in the name of the Landlord based only on the insurable interest of the Landlord in the building. The Landlord was not a named insured under the policy and the policy did not identify anyone as an unnamed insured. The issue of whether the Landlord was an unnamed insured was matter for trial.

Kresz was a named insured under the policy, but only in respect of a different property. The motions judge correctly concluded that the waiver of subrogation clause must be read in connection with the declaration page of the policy. As such, the waiver of subrogation with respect to the Premises did not apply to Kresz.

In the result, the appeal was dismissed, with no costs awarded to either party because the issue of subrogation remained a live issue.

The insured was in the business of providing audio-sound equipment to various venues. The insured’s audio-sound equipment was damaged while in transit to such a venue during a motor vehicle rollover. The defendant insurer, Canadian Northern Shield Insurance Company ("CNS"), refused to indemnify the insured for the loss.

The insured had sought insurance coverage for its audio-sound equipment on and off premises and while "in transit", and for replacement cost coverage. The Court found that the agent Wagner did not advise the insured’s insurance agents that the CNS policy would not include "in transit" coverage or replacement cost coverage.

The Court found that the language of the policy with respect to whether the policy included "in transit" coverage was ambiguous and confusing. As such, the Court concluded that the ambiguity should be interpreted in favour of the insured, and that the CNS policy included "in transit" coverage.

The Court concluded that on the basis of common law, the insured and its agent were entitled to rely on the insurer and its agent to provide the insurance coverage for which the insured had applied, unless the insurer advised, in writing, of the material differences between the application for insurance and the policy. In failing to do so, the insurer and its agent breached the duty of care owed to the insured.

The Court held that the insured’s insurance agents were also personally liable in failing to adequately read the policy and advise the insured of the lesser coverage.

The Court held that CNS, as principal, was vicariously liable for the negligence and breach of contractual obligations of its agents to the plaintiff’s agents, and hence to the plaintiff.

The Court held that the insured was not contributorily negligent in failing to read the policy of insurance as it was entitled to rely upon the expertise and advice of its agents and to assume that it would receive the coverage for which it had applied.

The insured manufactured a turbine for Manitoba Hydro which exploded and caused extensive damage. Manitoba Hydro commenced an action in Manitoba against the insured. The insured and its primary insurer brought applications in the Manitoba court seeking a declaration that the umbrella insurer, National Union Fire Assurance Company ("National"), had a duty to defend. National, an American insurance company, brought the subject application challenging the jurisdiction of the Manitoba court to decide the issue.

The Court found that Manitoba had jurisdiction simpliciter as there was a real and substantial connection to Manitoba. The Court noted that it was artificial for National to argue that it did not operate in Canada when the claim in this case was made with respect to a Canadian insured for a Canadian loss that would be adjusted in Canada and, if covered, paid in Canadian dollars. The Court also noted that under s. 22(2)(i) of the Insurance Act, C.C.S.M., c. 140, an insurer is deemed to be carrying on business in Manitoba if it adjusts any losses in Manitoba.

The Court also found that Manitoba was the forum conveniens. The Court assumed for the sake of argument that there was a difference between the Canadian and American law on the issue of the duty to defend, and that that difference motivated National’s motion.

The proper law of the contract was the law with which the contract had the closest and most substantial connection. The policy insured the parent company as well as a number of subsidiaries all over the world. The Court held that the contract was between National and the parent corporation which negotiated the policy. Thus while the policy would cover risks in Canada and a number of other foreign countries, it would be reasonable to assume that the parties expected the policy would be interpreted uniformly under one system of law and that that law would be American. Even if the named insureds could each be considered to have entered into separate contracts with National, it would be reasonable to assume that they expected American law to apply.

The Court found that the proper law was either Michigan or New York. The Court was provided with no evidence as to whether the law of the two states was different on the issue. Also, the Court was provided with no evidence as to why the Michigan court (where the competing application was brought) would be in a better position than Manitoba to apply the law of New York. National failed to show that there was another forum that was clearly better suited to apply the applicable law. The Court dismissed National’s application and held that Manitoba was forum conveniens.