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

The Insured's wharf was damaged when struck by a vessel which was blown into it during high winds.  As attempts were made to move the vessel away from the wharf, a section of the wharf was torn off.  The Insured had an insurance policy which contained a "Windstorm or Hail" clause which excluded coverage for damage "directly or indirectly caused by…any of the following, whether driven by wind or due to windstorm or not:  snow-load, tidal wave, high water, overflow, flood, waterborne objects, waves, ice, land subsidence, landslip".

The Insured sought an order determining whether the damage to the wharf was excluded from insurance coverage.  The Court found that "waterborne object" for the purposes of the exclusion clause included a vessel.  As such, coverage under the policy was excluded.

This case was digested by Cameron B. Elder and edited by David W. Pilley of Harper Grey LLP.

The insureds were insured for damage to their dairy barn for the peril of a “windstorm", among other perils. On October 3, 2003, the insureds notified the insurer that their barn had been damaged by hurricane Juan. Upon receiving notice of the loss, the insurer hired an independent adjuster, who in turn hired a professional structural engineer to give his opinion on the damage to the barn and its cause. The insurer’s engineer concluded that “the structural condition of the building had not been affected by the passing of hurricane Juan”. The insureds also hired a structural engineer who found that the barn had, in fact, been damaged by hurricane Juan.

On April 6, 2004, The insureds provided the adjuster with three letters dealing with damage to the barn; one from each of the insured, Leaonard MacPhee, a carpenter, and Brian Chapman, also a carpenter. Both Mr. MacPhee and Mr. Chapman noted that they had witnessed the barn both prior to and after the hurricane and that there was no structural damage to the barn, that they noticed, prior to the hurricane. The insurer did not follow up with, or interview, any of these witnesses.

Prior to hurricane Juan, a safety survey report was conducted, indicating that the barn was in “good” repair and suitable for insurance coverage. This report was forwarded to the adjuster  by the insurer shortly after the claim was made. However, the insurer never forwarded the “post-Juan” survey report, which was conducted on June 1, 2004, to the adjuster. Further, the author of these reports, an investigator employed by the insurer, was never interviewed in connection to the claim.

On July 19, 2004, the insureds submitted their proof of loss and their claim was denied by the insurer. The insureds brought an action, which was heard before a civil jury. The jury awarded the insureds the full amount of their insurance coverage, together with punitive damages, in the amount of $55,000. The jury specifically made a finding of bad faith in relation to the coverage denial and found that the insurer’s conduct offended its sense of decency.

On appeal, the court found that on the facts of the case, the insurer’s failure to instruct its adjuster to follow up with the various witnesses, each of whom had first hand knowledge of the pre hurricane state of the barn, was tantamount to ignoring relevant evidence. The court also noted that several comments made in the adjusters report, showing disdain for the insureds’ counsel and expert, and making comments about the mounting costs to the insureds, indicated that the investigation was not undertaken in an unbiased and objective manner. Therefore, the court found that the evidence before the jury supported its finding of bad faith. A reasonable jury could have concluded that an award of punitive damages was rationally required to punish the insurer’s misconduct.

This case was digested by Natasha D. Morley and edited by David W. Pilley of Harper Grey LLP.

The Insured/Defendant O'Connor was driving a van to Canadian Tire to replace a windshield wiper blade when he collided with a vehicle driven by the Plaintiff.  The van  the Insured was driving was leased by a client of his employer.  Unbeknownst to him, the insurance on the van had been cancelled.  However, the Insured was also a named driver on a policy of automobile insurance issued to his common law spouse by the third party Wawanesa Insurance Company("Wawanesa").

Some months after the accident, the Defendant Dominion of Canada Insurance Company ("Dominion") brought a subrogated action in the name of the Plaintiff against the Insured to recover the Plaintiff's property damage and car rental paid by Dominion.  Default Judgment was entered and the Insured paid the Judgment personally.

The Plaintiff later retained counsel and commenced an action against the Defendant/Insured and the other Defendants for personal injuries resulting from the accident.  Wawanesa applied to be added as a third party.

There were two motions before the Court.  The first was brought by Wawanesa seeking summary dismissal of the Plaintiff's claim on the basis of res judicata.  The second motion was brought by the Plaintiff asking for a determination of whether Dominion and/or Wawanesa should respond and indemnify her with respect to her personal injury claim.

The issues before the Court were as follows:

1.  Was the Insured insured under the Wawanesa policy at the time of the accident;

2.  Was the Plaintiff entitled to claim section D coverage against Dominion; and

3.  Was the Plaintiff's action res judicata?

The Court found that the Insured was insured under the Wawanesa policy at the time of the accident.  The key finding was that the Insured had only occasionally used the van which was within the risk contemplated by the extension of coverage under Wawanesa's policy.  As a result, the Court found that the Plaintiff was not entitled to claim under section D of her policy with Dominion.  Section D provides the uninsured motorist provisions prescribed by the Insurance Act in Nova Scotia.  These provisions only apply with respect to uninsured motorists.

Finally, the Court found that the doctrine of res judicata operated as a bar to the Plaintiff's second action against the Defendant/Insured.

This case was originally summarized by Cameron B. Elder and originally edited by David Pilley.

This matter concerns two appeals which we heard together challenging the province’s addition of s. 113B of the Insurance Act, R.S.N.S., c. 231 (the “Act”) and the corresponding regulations. The legislative changes capped non-monetary damages for “minor injuries” at $2,500.00.

The appellants in the first appeal appealed a dismissal of their challenge of the minor injury legislation on the following bases:  (1) the definition of a minor injury discriminates against individuals with certain types of pain and discomfort, and is therefore contrary to s. 15(1) of the Canadian Charter of Rights and Freedoms (the “Charter”); (2) s. 113B(1)(a) of the Act discriminates on the basis of gender by disproportionately affecting women with minor injuries as a result of an automobile accident; (3) the Limitation Regulations discriminate against individuals suffering from certain forms of chronic pain, as compared to individuals who are not deemed to have minor injuries; and (4) the regulations expand beyond what the legislation intended.

The government’s position was that the legislation is constitutionally valid and reflects public policy designed to contain sky-rocketing insurance premiums.

The Court dismissed the first appeal and held that the legislation is valid and is not discriminatory as contemplated by the Charter. The regulations do not run afoul with the Act. The Court found that the Appellants were treated differently from other automobile accident victims who avoid the cap on the enumerated ground of a physical disability. The Appellants are disadvantaged by the minor injury cap because of the monetary limit and because they will be denied an independent judicial assessment and the right to seek full recovery for their injuries from a wrongdoer. However, the disadvantages do not trigger s. 15 of the Charter. The evidence fell short of establishing that the legislation perpetuates or is a result of prejudice or stereotyping sufficient to trigger s. 15 of the Charter. The legislation is sufficiently attentive to the appellants’ needs, capacity, and circumstances. The Appellants’ ability to seek recovery for wage loss, costs of future care, legal costs and/or aggravated and punitive damages remains intact.

With respect to discrimination on the basis of gender, the Court held that any disadvantages in that regard are due to pay equity issues unrelated to minor injury cap. The legislation does not trigger s. 15 of the Charter in this respect.

The regulations' expansive definition of the scope of a minor injury was consistent with the Insurance Act and the clear legislative intent to reduce rapidly rising premiums.

In the second appeal, the Appellant asserted that individuals who have purely mental injuries, such as post-traumatic stress disorder, would be discriminated against because of the wording of the legislation which could be read to mean that mental injuries would automatically be deemed to be a “minor injury”. The Court of Appeal denied her leave to appeal on the basis that her appeal was moot. The Chambers judge in the court below had found that her post-traumatic stress disorder was a physical rather than a mental injury.

This case was originally summarized by Kim Yee and originally edited by David W. Pilley.

The insureds purchased a policy of insurance for their trailer through their insurance broker, AA Munro Insurance, . In the spring of 2009 the river where their trailer was parked flooded and destroyed their trailer. When they attempted to claim against their policy for the full replacement value of the trailer, they discovered that their policy only entitled them to the depreciated value of the trailer.

The insureds claimed that when they spoke to AA Munro Insurance they were clear in their desire for replacement value insurance. The court found that there was more than one way for the broker to insure the trailer. The more expensive option would have been through a so-called trailer policy, which would have provided for full replacement value. The less expensive option was to use a standard automobile policy which provides for a depreciated amount only, in the event of theft or damage. The broker insured the trailer under the latter.

Before agreeing to the coverage the insureds received a fax from the broker quoting the premium on the policy. The fax read, in part, "$30,000 value Replacement Cost." The insureds concluded from this that they had replacement value insurance. The broker claimed that it needed to know the replacement cost to know how much insurance to arrange, but that this did not mean that the coverage would be for replacement value.

The court found that most people reading those words would conclude that they had replacement value insurance, It held, citing the Supreme Court of Canada's decisions in Fine's Flowers Ltd. v. General Accident Assurance Co, (1977), 17 O.R. (2d) 529, and Fletcher v. Manitoba Public Insurance Co, [1990] 3. S.C.R. 191, that it is the duty of an insurance broker to explain the coverage being offered, and in particular match it up with the customer's needs. In this case the broker did not fully explain to the insureds the limitations of the policy they would be getting. In doing so, the broker was in breach of its duty of care.

The insureds were awarded the difference between the replacement value of their trailer ($33,900.00) and the amount their insurance company actually paid them for the trailer ($28,465.00), amounting to $5,435.00.

This case was originally summarized by Natasha D. Morley and originally edited by David W. Pilley.

On October 5, 2003, Clements was driving a truck owned by the Baltzers when he collided with a vehicle driven by the Clarks. The Clarks brought an action against the Baltzers, Clements and Royal & Sun Alliance, the Section "D" insurer of the Clark vehicle.

By consent, the parties sought a preliminary determination of the issue of whether Clements was operating the vehicle in question with the consent, express or implied, of the Baltzers. Clements was a friend of the Baltzers and also a mechanic. Over the years he had done maintenance on their truck. He did not have a vehicle of his own and on several previous occasions, with the Baltzers' consent, he had used the truck. Several weeks after the accident the Baltzers produced a document, dated October 4, 2003, which purported to set limits on Clements' use and operation of the truck. The document was signed by Mr. Baltzer and Clements.

The trial judge found as a fact that Clements had used the truck with the consent of the Baltzers. She did not accept that the document was executed prior to the accident on October 5, 2003. She then went on to consider s. 248(3) of the Motor Vehicle Act, R.S.N.S. 1989 and found that the principle of the Baltzers' vicarious liability was rebutted, as Clements was not driving in the course of employment with the Baltzers or acting under their instructions. She therefore concluded that the uninsured motorist provisions in the Clarks policy was engaged and Royal & Sun Alliance was responsible for responding to the claims by Clark and his passengers.

On appeal Royal & Sun Alliance argued that the trial judge had erred by failing to consider s. 144 of the Insurance Act to determine that the Baltzers' insurer was responsible to pay any damages occasionsed by Clements's use of the vehicle. The Court of Appeal agreed. It noted that the judge had correctly found that Clements was driving the vehicle with the consent of the Baltzers. According to s. 114 of the Insurance Act, and the jurisprudence, it would therefore be the Baltzers' insurance which would be called upon to respond to any claims. The judge incorrectly applied s. 248 of the Motor Vehicle Act, which deals with tortuous liability for accidents, not insurance coverage. The appeal was allowed and the order requiring Royal & Sun Alliance to respond to the claim was reversed.

This case was originally summarized by Natasha D. Morley and originally edited by David W. Pilley.

This case involved a motion by the Defendant Insurer for a declaration of a non-suit.  The Plaintiff Insureds were a mother and her children whose home was insured by the Insurer.  After a break-in, the Insured and her children began to have health problems including skin irritations, breathing problems, and other symptoms.  The Insurer arranged for a cleaning of the home and advised the family to return home because it was safe.  The Insureds continued to have health problems and the Insurer arranged additional cleaning.  Ultimately, the Insureds moved from their home.

The Insureds brought a claim against the Insurer for breach of contract for the Insurer's failure to compensate them for items contaminated following the break-in.  The Insureds also advanced claims of equitable fraud, negligent misrepresentation, and negligence by the Insurer and its adjuster.

The Court dismissed the Insureds' claims for breach of contract and negligence on the basis that the Insureds had failed to present any evidence of the standard of care required of an insurer or its adjuster with respect to assessing a claim for chemical contamination of a home.  The Court did not dismiss the claim with respect to negligent misrepresentation and equitable fraud as there was evidence that the Insurer's adjuster advised the Insureds that their home was safe to inhabit after the initial cleaning.  There was evidence that, at that time, the cleaning had not eradicated the problems with the home.

This case was originally summarized by Cameron B. Elder and edited by David W. Pilley.

A motor vehicle accident occurred when the Defendant's motor vehicle slid on an unexpected patch of ice on a bridge. The Court found that the Defendant driver had breached a statutory and common law duty to allow the Plaintiff half of the road free and clear. This gave rise to a prima facie case of negligence casting upon the Defendant driver the "onus of explanation". In reviewing the circumstances, the Court noted that the weather on the day of the accident was clear with good visibility. The Defendant was driving a mechanically sound vehicle equipped with all terrain radial tires that had good tread. The Defendant was driving 15 - 20 km/hr below the posted speed limit and had no forewarning of the slippery condition. The Court concluded that the Defendant was driving with the degree of care and caution that a reasonably competent driver would exercise under similar circumstance and had, therefore, met the standard of care required of him. The Court held that the collision was an unfortunate accident for which no one was legally liable.

The Court went on to assess damages on a provisional basis. The Court found that the Plaintiff suffered the following injuries as a result of the accident:

(a) an injury to his right chest area that went on to heal uneventfully;

(b) an injury to his lower back which continued to cause pain/discomfort;

(c) a small chip fracture to his left hand that went on to heal uneventfully;

(d) a contusion to his right ankle that went on to heal uneventfully; and

(e) a fracture to his right wrist which resulted in an obvious deformity of that wrist and which continued to cause pain/discomfort.

Based upon the threshold requirements set out in Section 113B of the Insurance Act, RSNS 1989, c.231, the Court concluded that the Plaintiff had not suffered a permanent "serious" disfigurement. The Court also concluded that while the Plaintiff had suffered a permanent impairment of important bodily functions caused by continuing injuries that were physical in nature, such impairments were not "serious" as defined by the legislation. On this basis, general damages would have been limited to $2,500.

This case was originally summarized by Jonathan D. Meadows and originally edited by David W. Pilley.

The Respondent and his common law wife purchased life insurance policies from the Appellant Insurer, Federated Life Insurance, after they were approached by the Appellant insurance agent, Bellafontaine, from whom they had previously purchased life insurance policies with a different insurer. The wife had a history of blood pressure problems and one year after purchasing the policy she suffered a heart attack and died. The Insurer denied the Respondent’s demand for the life insurance benefit, claiming that the Respondent and the deceased had both misrepresented or failed to disclose material facts regarding the deceased’s heart condition when they applied for coverage. The Respondent sued the Insurer and the Agent for the benefit. The Insurer cross-claimed against the Agent. The Insurer was ordered to pay the full amount of the policy to the Respondent but was also successful in its claim against the agent for the same amount. The Respondent’s claim against the agent was dismissed because he recovered the full amount of his claim from the Insurer.

The Insurer and the Agent both appealed on the basis that the trial judge had erred in not finding that the Respondent and the deceased had misrepresented, or in the alternative failed to disclose, medical information that was material to the risk. The policies were issued after the Agent had a brief telephone conversation with each the Respondent and the deceased, following which he filled out the deceased’s health questionnaire, forged her signature, and submitted it to the Insurer. The Court of Appeal held that the trial judge had correctly found that the Insurer and the Agent had failed to establish that the deceased had not disclosed her health problems given that she could not testify, the health questionnaire was an admitted forgery, and the Agent lacked credibility and did not testify. The Insurer carried the burden of proving that the deceased had not complied with her duty to disclose and on the evidence available the Insurer was not able to discharge that burden. With regard to the Respondent’s duty to disclose material facts about the deceased’s health, the Court held that the trial judge had correctly interpreted the nature of the respondent’s duty to disclose, namely, that the scope of the duty was limited as a result of the “vague” and “general” nature of the questions asked by the agent and the context in which the questions were asked. The Agent had asked the Respondent whether the deceased’s health had changed since they made the application for their previous coverage seven years earlier. The Respondent replied that “as far as he knew”, it had not. Given the context, this did not amount to a breach of the Respondent’s duty to disclose and the Court dismissed this ground of appeal.

The Court also dismissed all other grounds of appeal raised by the Appellants including the Insurer’s argument that the deceased had no contract with it because she did not sign the application for insurance. The Court held that the forging of her signature was relevant only to the disclosure issue and that the policy had been properly issued based upon an offer and acceptance between the Insurer and the deceased.

This case was originally summarized by Emily M. Williamson and originally edited by David W. Pilley.

The respondents SREIT (Park West Centre) Ltd. (“SREIT”) owned and managed a commercial property in Halifax and contracted with D. & J. Excavating (“D. & J.”) to provide snow and ice removal services.  D. & J. was required to maintain liability insurance and did so with the appellant ING Insurance Co. (“ING”).  SREIT was identified as an additional insured under that policy.

The underlying action was started when a pedestrian sued for injuries sustained after he slipped on ice and fell outside SREIT’s premises.  ING was prepared to provide a complete defence to SREIT until the pedestrian amended his statement of claim to include an allegation that SREIT was negligent in failing to properly maintain the rain gutters and manage the roof water runoff near the sidewalk thereby causing or contributing to the ice buildup on which he fell.  ING refused to defend SREIT against the rain gutter allegations.  SREIT brought an application for a declaration obliging ING to assume and pay for the entire defence in the underlying action.  The application was allowed and ING was ordered to assume a complete defence of SREIT’s interests in the action.

On appeal, the Court held that whether the amended claim triggered a duty by ING to defend the entire claim must be determined based on the facts as pleaded and the insurance coverage provided, after taking into account any exclusions from that coverage found in the policy.  The Court noted that the duty to defend, unlike the duty to indemnify, is triggered not by actual acts or omissions of an insured, but rather by allegations against the insured.  The mere possibility that a claim within the policy may succeed is enough.  An insurer cannot resist a duty to provide a defence simply by raising other possible scenarios in which there would be no coverage.

The Court held that the chambers judge was correct in ordering ING to mount a complete defence on behalf of SREIT and noted his three principal reasons for that decision.  First, the substance and true nature of the claim was that the premises were not reasonably safe because of an icy sidewalk which had not been salted, a pleading which could give rise to liability within the policy coverage, regardless of whether the icy conditions were caused or exacerbated by  a leaky gutter.  Second, and in the alternative, if the amended statement of claim contained allegations that fell both within and outside the coverage, then the claims were so intertwined as to permit no rational or practical basis for bifurcating the respondents' defence.  Third, any apparent or actual conflict of interest would not, in the circumstances of this case, trump ING's duty to defend.

In the result, the appeal was dismissed.

This case was originally summarized by Emily M. Williamson and originally edited by David Pilley.