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

The Insured was injured in several motor vehicle accidents. She received disability benefits under a disability plan (the "Plan") administered by the Association. The Plan provided the Association with a right of subrogation in respect of benefit paid thereunder. The Insured subsequently settled her civil actions with Saskatchewan General Insurance ("SGI") and the Association claimed a subrogated interest in the settlement funds. The Association was successful in an application for summary judgment finding that the Insured was required to repay disability benefits that had been provided to her in the amount of roughly $27,900.

On appeal, the Insured argued that because the lawyer who had acted for her in settling the motor vehicle accident cases had also agreed to act for the Association with respect to its subrogation rights, this created a conflict of interest which should operate to preclude the Association from acting on its rights of subrogation. The Chambers Judge found that if the Insured did have valid claims against third parties, such as her lawyer, she could pursue them in other proceedings. The Court of Appeal agreed and noted that any failure by her lawyer or any actions by SGI in relation to the subrogation issue would not negate the Association's rights under the Plan.

The second argument advanced by the Insured was that the Association had no right of subrogation because it had failed to comply with various provisions in the Saskatchewan Insurance Act (the "Act"). The Court of Appeal noted that the provisions in the Act operate with respect to "contracts of insurance" and that it was not clear whether the Plan was a contract of insurance. The coverage at issue was not provided by a third party insurer, but rather, by the Health District or the Association on its behalf. The second difficulty with this argument was that the provisions in the Act which the Insured relied on did not apply to contracts of "accident" and "sickness" insurance. Since coverage provided under the Plan was in the nature of disability insurance coverage, the Plan would, on its face, come within the meaning of accident or sickness insurance as these terms were used in the Act. Thus, even if the Plan was a contract of insurance, it would not attract the provisions that the Insured sought to rely on.

The Insured also argued that the Chambers Judge had erred with respect to the amount of money he had awarded to the Association. In particular, she argued that because she received less on settlement than she had demanded for past income loss, the amount that the Association was entitled to collect from her should have been reduced in the same proportion. The Court of Appeal rejected this argument, finding that there was no legal basis for concluding that the Association's claim should be cut back to reflect the compromise that the Insured had made in settling her lawsuit.

The insured made a number of other arguments which were not persuasive, including an argument that the Chambers Judge had erred in failing to recognize the stress that the proceedings had caused her or the loss of opportunity which they had involved.

The Court of of Appeal therefore found that there was no basis for interfering with the decision of the Chambers Judge.

On July 10, 2006, Ms. Ibrahim, a resident of Alberta, rented a motor vehicle from a rental agency in Alberta and purchased insurance from Lloyd’s Underwriters which included benefit coverage on terms prescribed by the Alberta Standard Automobile Policy S.P.F. No. 1; which notes that:

when an Insured person suffers personal injuries of an accident occurring in a no-fault jurisdiction, the Insurer agrees to pay to the Insured person the amount that would be payable under the applicable laws of no-fault jurisdiction as if the Insured person were a resident of the no-fault jurisdiction.

No-fault jurisdiction is defined to include Saskatchewan, applicable laws were defined as follows:

when an Insured person suffers personal injuries with respect to a no-fault jurisdiction, the laws in force from time to time cover the system of no-fault automobile insurance in that jurisdiction.

On the date that the Policy came into effect and the date of the accident the limit on Saskatchewan’s no-fault insurance benefits was $500,000. After the accident amendments were made which increased Saskatchewan’s no-fault insurance benefits to $5,000,000. In addition, the legislation directed the Insurer to recalculate benefits owed to insureds using the new insurance scheme.  Lloyd’s Underwriters refused to recalculate the benefits owed to Ibrahim under the new scheme. 

Ibrahim commenced this Application for a declaration of a recalculation of the benefits owed to her under the new scheme. Klebuc C.J.S. noted that the Alberta Policy defined applicable law as “the laws in force from time to time”, which in his view, specifically contemplated that any law in place in Saskatchewan, at any relevant time, applies to the Alberta Policy, and not the laws that exist on the day the Policy was issued. If Alberta intended to fix the amount of coverage as of the date of the Policy, it should have specifically stated such an intention in the legislation or insurance Policy. Lloyd’s Underwriters was required to recalculate Ibrahim’s entitlement to benefits under Saskatchewan’s new regieme which provided a maximum entitlement of $5,000,000.

Brian Issel farmed with his father, Arnold Issel, in the Melville area. His father purchased an air seeder in Fargo, North Dakota. To facilitate picking up the equipment, he rented a truck (the “Vehicle”) from Wheat Country Motors in Regina. Brian Issel planned on driving the Vehicle to pick up the air seeder. The owner of the Vehicle required confirmation that Brian Issel had insurance to drive the vehicle before he would rent it. Brian Issel had no vehicle insurance at that time. He was aware that his father had motor insurance (the “Policy”), and was aware that he was not covered under that Policy.   Brian Issel contacted Brent Paidel, an insurance broker at Melville Agencies. As a result of the discussion between the two, Brian Issel understood that he did not need to purchase insurance because he would be covered by the Policy. Brian Issel drove the Vehicle and was involved in an accident. 

He commenced an action against his father’s automobile insurer and Melville Agencies to recover the damages associated with the accident. At the trial, Mr. Paidel testified that he had no recollection of speaking with Arnold Issel, but believed that what he would have done in the circumstances was read from the insurance booklet issued by the Saskatchewan General Insurance Company. The advice contained in the insurance booklet says that the sibling of an Insured is covered under the policy for rental vehicles if they are driving with the consent of the Insured. Mr. Paidel agreed that in the circumstances he would not have told Arnold Issel that he was not covered under his father’s insurance Policy as he had no knowledge of the specific circumstances of the Policy. Mr. Paidel said that he receives a number of general insurance inquiries on the phone and it is not his practice to provide anything but the advice provided by the insurance booklet. 

Green Prov. Ct. J. determined that Brian Issel had no claim against his father’s automobile insurance company, but that he had a valid claim against Melville Agencies. Green Prov. Ct. J. determined that Mr. Paidel owed Brian Issel a duty of care, and that he breached that duty of care by failing to advise him that he was not covered under the Policy for rental purposes. The insurance broker was found to be responsible for the loss, despite the fact that Brian Issel was aware that he was not covered under the Policy before he spoke with the broker.

The Insured was a crane operator who contracted with the owner of a printing press to move the printing press from one building to another. The value of the printing press was in excess of the Rider for "on-the-hook" property covered by the Insured’s policy. Accordingly, the Insured contacted its broker and requested an increase in the coverage for "on-the-hook" property to ensure that the printing press would be insured in case of any damage during the move. The printing press was in fact damaged and its owner made a claim against the Insured, not only for property damage but also for loss of profits.

In order to settle the claim, the Insured contributed $35,000 in excess of the cost required to fix the printing press. It was later discovered that there were no insurers in the marketplace that would insure against "loss of profits" or consequential losses suffered by third parties. The broker was unaware that this type of insurance was not available and therefore did not disclose this fact to the Insured.

The Insured claimed that the brokerage firm failed in its duty to warn him of the "hole" in the policy and that, but for the brokerage firm’s breach of duty, the Insured would have had no exposure to loss beyond the amount for which it was insured.

After referring to Fines Flowers Ltd. et al v. General Accident Assurance Co. of Canada et al (1977), 17 O.R. (2d) 529 (Ont. C.A.), the Court concluded that the broker had breached his fiduciary duty and was negligent. The Court found that the broker had a duty to advise his clients on insurance coverage based on his knowledge of the client’s needs. The lack of coverage for business interruption was a gap or hole in the policy and the broker breached his duty when he failed to advise the Insured of this. The Insured was entitled to damages in the amount of $35,000, which it had paid toward settlement, plus legal fees expended in defending the claim by the owner of the printing press.

Mr. Mattock owned a rental property in the Town of Leask (the "House"). The House was insured, along with several other rental properties, with Saskatchewan Mutual Insurance Co. ("SMI"). The House was rented to tenants. On December 31, 2002, the tenants moved out of the House. In January of 2003, Mr. Mattock found a new tenant. The new tenant agreed to pay rent of $350 per month, agreed to paint the interior of the house, and agreed that this would constitute his rent for the days remaining in the month of January. The tenant placed utilities in his name on January 23, 2003 and gained access to house on that date and began painting the interior. On January 24, 2003, the plaintiff discovered water leaking from the kitchen and into the basement. The water in the basement was level with the kitchen floor joints. The water was pumped out and a heater was placed in the basement. However, in March of 2003, the tenant began to experience difficulty with mould and moved out of the house. Mr. Mattock presented a claim for the resulting damage to SMI. SMI denied coverage on the basis that the house was vacant within the meaning of the policy.

Mr. Mattock commenced an action against SMI for a declaration that he was entitled to insurance proceeds for the damage to his house. The parties agreed that the damage was valued at $30,000. The following terms were defined in the insurance policy:

"A dwelling or unit is ‘vacant’ when it is not being used by anyone as their usual place of residence …

‘Vacant’ refers to circumstances where, regardless of the presence of furnishings, all occupants have moved out with no intention of returning and no occupant has taken up residence."

The words "their usual place of residence" were replaced with the words "occupant has taken up residence" in the relevant version of the policy.

The policy provided that SMI would not insure loss or damage caused by water while the dwelling was under construction or vacant. Krueger, J determined that on January 23, 2003, the new tenant took possession of the house owned by Mr. Mattock. The tenant did so for the purposes of painting the interior and therefore occupied the house. Therefore, the only issue was whether, the tenant / occupant resided in the house. Unfortunately, "residence" was not defined in the policy. The change in the definition of "vacant" from the policy in place prior to the loss and the one in effect at the time of the loss, removed the requirement that the house or unit be the usual place of residence. This change permits more than one place of residence and does not require primary place of residence.

The policy required that residency be established at the time of the loss. The policy stated that sleeping and eating in the property were not required in order to have taken up residence. Furnishings were not necessary. Krueger J concluded that although the tenant had not yet abandoned any other residence, he had taken up residence in the house rented by Mr. Mattock. Krueger J. noted that taking up residence, as defined in the policy, requires more than mere possession; however the policy requires less than establishing that the property is the usual place of residence. In the circumstances, Krueger J determined that the tenant was resident and that the insurance coverage was valid.

The Plaintiff Insurer, Aviva Canada Inc. ("Aviva"), sought a declaratory judgment stating that the exclusion clause in the Defendant Darlene Yaehne’s ("Darlene") insurance policy applied to the claim made against her by her son, Ricky.

Ricky rented a basement suite from the Insured. After suffering damages relating to a slip and fall at the Insured’s house, he commenced an action against her. Darlene was the named Insured in a comprehensive homeowner’s policy which contained an exclusion clause precluding coverage for claims made against her for any bodily injury sustained on her property by a person residing in her household.

The Court had no difficulty in concluding from the evidence that Ricky was residing at his mother’s house at the time of his injury. The focus of the judgment was on an examination of whether Ricky was a resident in her household. The Court observed that the common element in the cases discussing the meaning of the word "household" was the existence of the element of intimacy or community in the relationship. Accordingly, the Court found that Ricky did not reside in his mother’s household at the time that he sustained his injuries, because although he and his mother shared a number of common areas, their relationship could not be characterized as one of intimacy or community in which their daily lives were inextricably bound together. The Insured and Ricky cooked their own meals and ate separately. Ricky paid rent for an area considered to be for his exclusive privacy and use. Finally, Ricky moved into Darlene’s home to facilitate access with his son. This family connection was insufficient to create a household as Ricky and the Insured lacked intimacy and community on a daily or regular basis.

Applying the principle that exclusion clauses should be interpreted narrowly, as well as the rule of contra proferentum, the Court concluded that Ricky was not a resident in the Insured’s household at the time of his injury and the Insurer’s motion was dismissed.

Mr. Kakakaway’s parents commenced an action against Mr. Miller to recover damages resulting from the negligent and/or intentional acts of Mr. Miller relating to the March 19, 2000 death of Mr. Kakakaway. In this action it was alleged that Mr. Kakakaway and a friend had been drinking at their home on a reserve. Shortly after midnight on March 19, 2002, they grabbed their baseball bats, apparently for protection from "stray dogs" and proceeded toward a resort, where Mr. Miller and others were having a party at a cabin. Mr. Kakakaway and his cousin proceeded to damage vehicles parked outside the cabin, and then fled when they were chased by Mr. Miller and his friends on foot. Nearly 30 minutes later, Mr. Miller and his friends caught up with Mr. Kakakaway and his cousin. An altercation ensued in which Mr. Miller threw a tire iron which struck Mr. Kakakaway in the temple and killed him.

Mr. Miller made an application pursuant to his insurance contract with Grain Insurance and Guarantee Co. ("Grain Insurance") to defend him with respect to the allegations that had been made against him. Grain Insurance refused to defend him on the basis that Mr. Miller’s actions fell within the intentional act exclusion in the policy. The intentional act exclusion clause in the policy states:

This policy does not apply to bodily injury or property damage caused intentionally by or at the direction of the insured.

Mr. Miller commenced this action against Grain Insurance for a declaration of entitlement to coverage under his policy of insurance. In assessing the application, Chicoine J. noted that the Supreme Court of Canada reviewed the general issue of the scope of an insurer’s duty to defend in the presence of an exclusion cause in the case of Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49. Grain Insurance argued that it was not obligated to defend Mr. Miller because the policy did not apply to bodily injury which was caused intentionally by the insured. Chicoine J. analyzed the Statement of Claim to determine if the factual allegations set out therein confined the Plaintiffs’ legal claim to the fact that Mr. Miller intentionally caused bodily harm to the deceased without lawful justification. Chicoine J. noted that Mr. Kakakaway and his cousin went to Mr. Miller’s cabin in the dark of night carrying two baseball bats and apparently without provocation damaged a number of vehicles. Although the Statement of Claim does not provide an explanation as to why Mr. Miller threw the tire iron at Mr. Kakakaway, it does contemplate that the Applicant may have thrown it without the intended consequence of causing serious bodily harm. Chicoine J. determined that on the basis of the pleadings, there was a possibility that Mr. Miller could be held liable for some of the damage claimed by the parents of Mr. Kakakaway from the use of excessive force to defend himself or others in his entourage. Although a plea of self-defence may result in an acquittal of criminal charges of assault causing bodily harm, it may not result in complete exoneration at a civil trial if the type or amount of force used was deemed excessive or not well measured.

Chicoine J. concluded that since the intention of Mr. Miller in throwing the tire iron was not necessarily for the purpose or with the intent of causing bodily harm to Mr. Kakakaway, the claim against Mr. Miller was not excluded by the intentional act exclusion clause contained in his policy of insurance. Chicoine J. declared that Mr. Miller was entitled to coverage under his policy of insurance, and that he was entitled to appoint legal counsel of his choosing to defend himself.

Ms. Falasca cohabited with the deceased insured from 1990 until approximately July of 2001. A child was born into the relationship. The insured was killed in an automobile accident on November 26, 2003. Ms. Falasca applied to the Saskatchewan Government Insurance Company ("SGI") for death benefits pursuant to the deceased’s policy of automobile insurance. Ms. Falasca was denied status as a surviving spouse pursuant to the policy, benefits were further denied to the child.

Ms. Falasca commenced an action against SGI for payment of surviving spouse benefits. The main issue at trial was whether Ms. Falasca qualified as a surviving spouse within the meaning of s. 2 of the Automobile Accident Insurance Act, R.S.S. 1978 (the "Act"). S. 2(1) states:

2(1) In this Act

(rr) "spouse" means:

(i) the spouse of the insured who is, at the date of the accident, residing with the insured; or

(ii) a person with whom, at the date of the accident, the insured is cohabiting and has cohabited as a spouse:

(A) continuously for a period of not less than two years; or

(B) continuously for a period of not less than one year, if they are parents of a child;

(ss) "surviving spouse" means a spouse of an insured and includes a former spouse of an insured who, at the date of the accident:

(i) had been living separate and apart from the insured for one year or less;

(ii) was receiving spousal support from the insured; or

(iii) had a court order or agreement with the insured entitling that person to spousal support from the insured.

Ms. Falasca would be entitled to benefits if she could establish that she was a former spouse of the insured for a period of in excess of a year and that she was receiving spousal support from the insured, or had a court order or agreement with the insured entitling that person to spousal support.

At trial Ms. Falasca testified that in 2001, after her relationship with the deceased ended, the deceased paid her money whenever she would phone and ask him for assistance. In addition, she commenced proceedings under the Family Maintenance Act in which she claimed, amongst other things, custody of the child and spousal support of $300 per month. Shortly after the proceedings were commenced, the deceased contacted Ms. Falasca and asked her, "Why are you doing this to me? I help you all the time and will continue to do so. Lawyers are expensive. I am having enough financial problems." Ms. Falasca testified that her response was to the effect that she guessed that there was no need for her to pursue her action since the deceased was in fact helping her. Ms. Falasca was able to establish a variety of sporadic payments to her from the deceased. Although Ms. Falasca did not pursue her petition under the Family Maintenance Act, the deceased filed papers opposing the claim for spousal support, and the claim for an equal division of family property. Based on the deceased’s opposition to the claim of spousal support, Sandomirsky J. noted that it could be assumed that the deceased was personally aware of, and intended to contest, Ms. Falasca’s claim for spousal support.

Four letters were exchanged between Ms. Falasca’s lawyer and the deceased’s lawyer with respect to the issue of spousal support. The letters clearly indicate that there was no agreement by the deceased and Ms. Falasca to pay spousal support, and that there was no money paid by the deceased to Ms. Falasca during the course of the six month correspondence that covered those letters.

Sandomirsky J. determined that an agreement requires a consensus ad idem or a meeting of the minds. The evidence did not support Ms. Falasca’s contention that the deceased had agreed to pay her spousal support. To the contrary, it appeared that the deceased disagreed and resisted entering into an agreement of a spousal support with Ms. Falasca.

Sandormirsky J. noted that the Act requires "an agreement with an insured entitling that person to spousal support from the insured". Such agreement, whether written or verbal, must oblige the insured to pay spousal support and create for the former spouse a reciprocal entitlement enforceable at law. No such agreement existed between Ms. Falasca and the deceased at any time, let alone at the day of the accident. The determination of Ms. Falasca’s claim does not require determination of whether she is entitled to spousal support as a matter of law. The issue to be decided is whether such an agreement was in place at the time that the deceased was killed. Sandomirsky J. concluded that the ad hoc payments of money did not establish that spousal support was being received, nor did the evidence support the finding that an agreement existed which would have obliged the insured to pay spousal support to the Plaintiff. Therefore, the Plaintiff’s claim was dismissed.

The insurer declined to pay the death benefit under a life insurance policy on the basis that the contract never took effect due to a change in the deceased’s health between the time the application was completed and the time the policy was delivered. The trial judge held that s. 142(1)(c) of the Saskatchewan Insurance Act was applicable and that there was nothing in the proviso that was inconsistent or in conflict with that subsection. As such, the contract never took effect.

The Saskatchewan Court of Appeal dismissed the appeal. The trial judge properly concluded that there was no ambiguity in the proviso in the policy. The trial judge also did not err in finding that there was no conflict between s. 142(1)(c) of the Saskatchewan Insurance Act and the proviso in the policy. The subsection dealt with changes in insurability, a subject not addressed in the proviso in the policy.

The plaintiffs commenced an action against the defendants arising out of an accident and claimed damage to property. The defendants admitted liability but quantum of damages was an issue. The plaintiffs were insured by Mennonite Mutual Fire Insurance Company of Saskatchewan (Mennonite Mutual"). The defendants were insured by Manitoba Public Insurance ("MPI").

The plaintiffs executed a Proof of Loss in favour of Mennonite Mutual which contained the following: "All rights to recovery from any other person are hereby transferred to the Insurer which is authorised to bring action in the Insured’s name to enforce such rights." Mennonite Mutual and MPI subsequently negotiated a settlement and a Release was executed by Mennonite Mutual in favour of MPI.

The defendants brought a motion to have the claim dismissed. The defendants’ position was that Mennonite Mutual had no claim against MPI because the plaintiffs had assigned their rights to Mennonite Mutual, the action had been settled, and nothing remained to be litigated. Under the terms of the policy, there were certain items for which the plaintiffs were not compensated. The plaintiffs were claiming a further sum from the defendants.

The Court held that if the clause was interpreted as merely a reminder of the insurer’s right of subrogation, the clause added nothing to the insurer’s rights. However, even if the clause amounted to an assignment in law, the assignment was not effective as there was no consideration. The plaintiffs had not contracted out of their right to full compensation for their losses. The defendants’ motion was dismissed.

In 1993, Genex Swine Group Inc. ("Genex") prepared instructions to tenderers for the construction of a swine barn. Westridge Construction Ltd. ("Westridge") delivered a tender for the construction of the swine barn in accordance with the specifications set out by Genex. Westridge later provided Genex with a list of cost-saving alternatives which included a proposal to replace the painted roof with a galvalume steel cladded roof (the "Galvalume Roof"). In 1994, Westridge entered into an agreement with Genex to construct the swine barn according to the original specifications, with the addition of the Galvalume Roof.

The construction of the swine barn was completed in October 1994. In May of 2001, Genex discovered that the roof of the swine barn was rusting, and was corroded to the point that it constituted a danger to persons and property. In 2001, Genex commenced an action against Westridge for compensation for the costs and losses associated with the premature failure of the swine barn roof, increased maintenance costs, disruption to production, including damages for loss of profits and other business interruption losses. Genex specifically claimed a breach of contract against Westridge, and negligence in proposing the addition of the Galvalume Roof to the swine barn.

Westridge was insured through a commercial general liability policy by Zurich Insurance Company and Sovereign General Insurance Company ("Zurich"), and some other insurance companies. Westridge commenced an action against Zurich for a declaration of entitlement to a defence in the action that Genex had commenced against Westridge. The trial judge determined that the true nature and substance of the claims against Westridge were that it had failed in its contractual duties. The trial judge further found that the negligence claim against Westridge was entirely derivative of the contract claim, and dismissed Westridge’s application. Westridge appealed to the Saskatchewan Court of Appeal.

The Saskatchewan Court of Appeal noted that unlike Sansalone v. Wawanesa Mutual Insurance Co., [2001] 1 S.C.R. 627 the allegations of Westridge’s negligence and breach of contract arise from different and separate sets of facts. The negligence claim is based upon the fact that Westridge held itself out to have expertise and qualifications to carry out work and to make certain recommendations with respect to the work to be done and materials to be used. Whereas the action for breach of contract is based upon the fact that the terms of the contract required Westridge to correct defects or deficiencies in its work and to reject defective material and workmanship. The Saskatchewan Court of Appeal concluded that the only overlap between the contract and tort claims were the damages. The Court of Appeal noted that the fact that the claims of negligence and breach of contract were supported by different facts conclusively demonstrated that the claims were entirely separate and that the negligence claim was not derivative of the contract claim.

The Saskatchewan Court of Appeal determined that the two claims arose from separate facts, that Genex was entitled at law to pursue the claims in contract and tort concurrently, and that Westridge was entitled to a defence from Zurich. Zurich was ordered to pay their proportionate share of the cost to defend Westridge in the Genex action.

On November 19, 1999, Mrs. Anderson completed and submitted an application form to Sun Life for $100,000 of life insurance. She provided Sun Life with a medical report from her doctor indicating that she was healthy given her age of 80 years and had several medical problems that were identified in the application. Sun Life approved Mrs. Anderson’s application and issued the policy for the base amount of $100,000. Sun Life sent the policy documents to Mrs. Anderson’s broker, Mr. Hornung. Mr. Hornung received the documents on December 13, 1999 and forwarded them to Mrs. Anderson. Mrs. Anderson executed the documents on December 16, 1999 and returned them to Mr. Hornung on December 18, 1999. On December 15, 1999, Mr. Hornung received $15,000 from Mrs. Anderson as a premium for the life insurance policy. Sun Life received the cheque and the documents executed by Mrs. Anderson on December 31, 1999.

On December 5, 1999, Mrs. Anderson attended at the Red Deer Regional Hospital complaining of lower abdominal and back pain, and a hardening of her stomach. On December 5, 1999, Mrs. Anderson underwent an ultrasound that confirmed the presence of a large mass arising from her pelvis which was diagnosed as cystadenocarcinoma of an ovary. On December 29, 1999, Mrs. Anderson’s doctors concluded she had inoperable ovarian cancer. Mrs. Anderson received intermittent hospital treatment following that diagnosis until she died on December 11, 2000.

Mrs. Anderson’s estate commenced an action against Sun Life for payment of the benefits under the life insurance policy. Sun Life argued that the life insurance policy was void pursuant to section 142(1) of the Saskatchewan Insurance Act. Section 142(1) states that a contract does not take effect unless:

(a)   the policy is delivered to an insured, his assign or to a beneficiary;

(b)   payment of the first premium is made to the insurer or its authorized agent; and

(c)   no change has taken place in the insurability of the life to be insured between the time the application was completed and the time the policy was delivered.

Counsel for Mrs. Anderson’s estate argued that a clause contained in the life insurance policy was inconsistent with section 142 of the Act and as such, Mrs. Anderson’s estate was entitled to the benefits. The material part of the disputed clause in the insurance contract read:

Sun Life will not incur any liability pursuant to this application unless and until (a) it has approved the issue of a policy, (b) it has received the first premium, in full, and (c) the answers and statements made on this Application are complete and true as of the date the first premium is paid in full.

The trial judge determined that there was no direct conflict between section 142 of the Act and the clause, and that the clause in the contract was not ambiguous. The action commenced by Ms. Anderson’s estate was dismissed.

The Plaintiff was involved in a minor automobile accident on November 22, 1994. She had previously been injured in a MVA March 1993 and had settled that claim for $6,500. The Plaintiff was 21 years old and had a Grade 12 education. On two separate occasions, the Plaintiff called the adjuster for SGI and attempted to settle her 1994 MVA claim. On both occasions, the adjuster had suggested that settlement was premature. The Plaintiff suffered another motor vehicle accident in June 1995. Ultimately, the Plaintiff met with the adjuster and agreed to settle the 1994 MVA claim for $4,500. The Plaintiff signed a Release relieving SGI of further liability. The Plaintiff received and spent the money. About six months later, the Plaintiff sued SGI seeking to set aside the settlement on the ground that it was an unconscionable transaction. At trial, the judge found that the adjuster had effectively, if unintentionally, misled the Plaintiff to believe that it was necessary to settle the 1994 claim in order to obtain benefits in relation to the 1995 claim and set aside the settlement.

The Court of Appeal reviewed the principles which govern the issue of unconscionability as set out in Dolter v. Media House Productions Inc. (2002), 227 Sask.R. 153:

1. Significant inequality in bargaining position exists between the parties based on factors such as the relative knowledge and education of the parties, the financial needs of the weaker party, or other circumstances;
2. The stronger party has used its position of power in an unconscionable manner to achieve a material advantage over the weaker party; and
3. The bargain arrived at has given the one party a grossly unfair advantage over the other, or is otherwise sufficiently divergent from community standards of commercial morality to warrant it being set aside.

In this case, the Court of Appeal noted that the Plaintiff was relatively experienced in these matters, having settled a previous claim the year prior. The Plaintiff herself had suggested settlement twice and the settlement amount agreed at was set objectively using a SGI formula. The adjuster had specifically asked the Plaintiff if she wanted to discuss the proposed settlement with her parent or anyone else and the Plaintiff declined. Taking all of these factors into account, the Court of Appeal was of the view that the trial judge erred in concluding that SGI misused its position of power in an unconscionable manner to achieve the material advantage.

In the result, the judgment below was set aside and the action was dismissed.

The insured father, Larry Hewson, carried on a cattle operation. The insured son, Dayton Hewson, worked with his father throughout his lifetime. He was paid no wages, though every year he was given a heifer and when the animals were sold, the son retained the money. The father did not declare wages to the son on his income tax returns. The son was also attending high school on a full-time basis.

The son was injured while hauling hay and was paralyzed from the waist down. The son brought an action against the father for injuries suffered in the accident, and the appellant insurer brought this action for a declaratory judgment stating that the son was an "insured" within the definition in the policy, and that an exclusion clause in the policy applied to the claim such as to relieve the insurer of any liability to indemnify the father. Also the insurer applied for a declaration that it was under no duty to defend the claim brought against the father.

The contract of insurance was a farm policy providing farm liability coverage. The exclusion at issue reads as follows:

You are not insured for claims made or actions brought against you for:

…

(3) bodily injury to you or to any person residing in your household other than an employee;

At trial, the judge held that the word "you" referred to the insured against whom a claim was made, i.e. the father. He declined to interpret the clause as precluding liability for claims made by one insured against another insured. He also found ambiguity in the exclusion clause, and refused to interpret the words "an employee" as applying only to residents of the Hewson household and not to insureds. Due to the perceived uncertainty and ambiguity in the wording of the policy and the exclusion clause, he determined that the employee exception applied to both insureds and residents in the household.

The Court of Appeal applied the general principles of interpretation of insurance contracts, including contra proferentem, and the principle that coverage provisions should be construed broadly and exclusion clauses narrowly. The Court of Appeal agreed that the difficulty in interpreting the exclusion clause is that the word "you" as used therein is inherently ambiguous. The court found that while the interpretation of "you" as relied upon by the trial judge was reasonable, there were also two other possible interpretations of the term "you", including "any insured" and the possibility that the term "you" could have different meanings in different parts of the policy. Because there were multiple possibilities respecting the interpretation, and each interpretation raised possible contradictions within the policy, the Court of Appeal held that it could not be said that the coverage was clearly excluded or that the exclusion clause was unambiguous.

With respect to the interpretation of the word "employee", the Court of Appeal held that it was a factual issue, and on the facts, the definition applied by the trial judge was a reasonable one.

Fitzpatrick was in the business of collecting and selling urine from pregnant mares, commonly known as PMU farming. Fitzpatrick was insured under a commercial general liability policy with a livestock floater, and farm earnings floater attached. A significant number of the pregnant mares owned and insured by Fitzpatrick aborted their fetuses. Fitzpatrick was unable to sell urine from the non-pregnant mares. Subsequent investigation revealed that faulty electrical grounds in Fitzpatrick’s barn caused the mares to receive low voltage shocks, which caused the mares to abort their fetuses. Fitzpatrick was advised by his insurance company, Red River Valley Mutual Insurance Co. ("Red River"), that his policy did not cover any losses for the aborted fetuses and the consequential loss of revenue from his inability to sell urine from the non-pregnant mares. The livestock floater in Fitzpatrick’s policy insured against perils to livestock for "death or destruction" resulting from or made necessary by artificial electricity.

Fitzpatrick commenced an action against Red River for recovery of his losses arising from his inability to sell urine from the non-pregnant mares. Red River submitted that an equine fetus is not the subject of insurance in the policy, and that to recover under the policy, the insured must show a direct loss or damage resulting in death or destruction to the mare itself. Using a human analogy, Red River argued that the livestock floater was analogous to a life insurance policy as opposed to a disability policy. Fitzpatrick’s counsel submitted that coverage under the policy extended to any horse related to the Plaintiff’s PMU operation, which would include both colts and unborn foals; and that the rendering of the PMU mares useless for their intended purpose, even temporarily, constituted their "destruction" within the terms of the policy. Ball J. noted that the insured peril was for death or damage, not for death alone. In order to give full meaning to the word damage, Ball J. determined that the policy must cover more than the mere death of the insured livestock. Ball J. ruled that the loss of the unborn foals, and Fitzpatrick’s subsequent inability to sell the mare’s urine, was an insurable loss under the policy.

The insured was a family logging company. In 1987 it purchased an SGI "Commercial Pak" policy from a SGI agent with a yearly premium of about $1,000. Throughout the next 10 year period the insured increased its coverage, always through the agent, until the policy covered 10 pieces of equipment with an annual premium of about $50,000.

The original policy was for a one-year term, with automatic yearly renewals. Revisions were made by telephone call from the company principal to the agent when the insured acquired or disposed of equipment. The policy was revised in 1994 to add a "delimber" with a built-in fire suppression system. The agent told the principal he was covered and they discussed only that the premium would change. The agent sent a memo to the insurer requesting coverage, and SGI issued a Revision responding to the request and adding a new Warrantee that had recently been developed by the insurer to deal with logging equipment with fire suppression systems. The new Warrantee added a condition to the policy requiring biannual inspections of the system. The agent forwarded the new policy and the Revision to the insured by mail but did not draw his attention to the Warrantee. In addition to the Revision the insured also received renewal documents for 1995 and 1996 that included the Warrantee. The principal said he did not read them. The delimber, worth about $100,000, was destroyed by fire in May 1996. It had never been inspected in accordance with the Warrantee.

The trial judge found that the agent did not explain the Warrantee to the insured, and that therefore the oral agreement between the agent and the insured remained in place regardless of the mailed Revisions and renewals. The Appeal court disagreed, holding that the oral contract was simply a temporary contract, as is the practice in the industry to hold over until a formal policy is in place. However, on an analysis of the case law the Court held that each yearly renewal of the policy did not extend the original policy such that it could be characterized as "continuous" in law, rather each renewal created a new contract with new terms that were offered and accepted. Because the Warrantee in the 1996 contract required "biannual" inspections, the inspection could be delayed until June 1996, and therefore there was no breach of the warrantee when the loss occurred in May, regardless of the insured’s failure to inspect in previous years.

The Insured held a CGL policy with the Defendant Insurer. Part of the Insured’s business was to take ownership of second hand farm equipment through trade-ins, refurbish the equipment and then re-sell it. The Insured suffered losses arising out of three instances of defective workmanship to reconditioned farm equipment. After the claims were denied by the Insurer, the Insured sought recovery against the Insurer and the Brokers on the basis of representations to the effect that it had coverage for defective workmanship such as would be applicable to cover the losses.

The Court held that the losses were clearly excluded from the policy as it did not apply to property damage to the "named insured’s product" which included any goods or products manufactured, sold, handled, distributed or disposed of by the Insured. The losses were also excluded since the repairs were akin to compensatory damages that the Insured was required to pay by reason of the assumption of liability in a contract or agreement.

The Court also held that the Brokers were not the agents, actual or ostensible, of the Insurer since their authority did not extend to a position of being able to conclude the coverage without the consent of the Insurer. The acceptance of premiums was their sole authority. In any event, the Court held that the Brokers did not misrepresent to the Insured that the losses which occurred would be covered under the policy.

The Insured’s action against all of the Defendants was therefore dismissed.

Westridge contracted with Genex Swine Group Inc. ("Genex") to construct a hog barn. Prior to construction, Westridge provided Genex with a list of modifications that it represented would achieve cost savings. One of these modifications was the use of Galvalume steel cladding as a roofing material. The roof to the hog barn failed, and Genex commenced an action against Westridge alleging both breach of contract and negligence.

The court agreed that careful examination of the Statement of Claim was required to determine the true nature of the claim being advanced against Westridge. Based on the decision of the Supreme Court of Canada in Non-Marine Underwriters, Lloyd’s of London v. Scalera, [2000] 1 S.C.R. 551, the court held that this examination entailed a three-step process:

1. A court should determine which of the plaintiff’s legal allegations are properly pleaded. In doing so, the courts are not bound by the legal labels chosen by the plaintiff;
2. Having determined what claims are properly pleaded, the court should determine if any claims are entirely derivative in nature; and
3. The court must decide whether any of the properly pleaded, non-derivative claims could potentially trigger the insurer’s duty to defend.

In this case, the court found that the essence of the claim by Genex was that the roof of the barn had failed prematurely and that the reason for this failure was that the Galvalume recommended and supplied by Westridge was unsuitable for use in the swine barn. No allegation was advanced against Westridge for property damage other than damage to the hog barn itself. The court found that the true nature of the claim by Genex was a breach of contract by Westridge. The court held that, insofar as the claim relied on alleged negligence, such a claim was entirely derivative of the contract claim and was not sufficiently disparate to render the two claims unrelated. The contract claim did not fall within coverage and would not trigger a duty to defend.

In the result, Westridge’s application was dismissed with costs.