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

The Respondent had unprotected sex with three women and contracted genital herpes and a rare complication of that condition called transverse myelitis which resulted in total paralysis from his mid abdomen down. The Respondent was not aware that any of the women that he had intercourse with had herpes. However, he did know that contracting a sexually transmitted disease was a potential risk of having intercourse. He claimed for compensation under a group insurance policy on the basis that the paralysis resulted “directly and independently of all other causes from bodily injuries occasioned solely through external, violent, and accidental means, without negligence” on his part. The policy did not contain a definition of the word “accident”.

The trial judge found in the Insured’s favor and held that the paralysis was accidental as the Insured did not expect to become a paraplegic as a result of engaging in unprotected sexual intercourse. The Court of Appeal upheld the trial judge’s decision and found that the Respondent’s condition did not arise “naturally”, but rather it was a result of an external factor or “unlooked-for mishap”.

The Supreme Court of Canada allowed the appeal and held that the loss was not covered by the policy. The Court considered the meaning of the term “accident” and held that it should be given its ordinary meaning as it would have been understood by the average person applying for insurance. In ordinary speech the term “accident” does not include ailments which flow from natural causes. The causal chain which led to the injury was the sexual transmission of herpes which led to the development of transverse myelitis. Transverse myelitis is a rare complication, but is a normal incident of herpes. To conclude that the acquisition of herpes was an “accident” despite the absence of any mishap or trauma would be contrary to the intent of the policy which was not intended to be a comprehensive health insurance policy for infectious diseases.

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

The Applicants sought a Declaration of Coverage, as mortgagees, under the Standard Mortgage Clause in a fire insurance policy. The policy was issued by the Respondent Insurer to an Insured who was not a party to the proceedings. The Insurer had denied coverage on the basis of a Tenant Exclusion Endorsement which provided that loss and damage caused directly or indirectly by vandalism or criminal or malicious acts was excluded. The fire had been deliberately set by the property's tenant. The Applicants argued that the Standard Mortgage Clause was all encompassing and should prevail over the Tenant Exclusion Endorsement. The Court agreed finding that while the Tenants Exclusion Endorsement expressly excluded coverage for loss or damage resulting from malicious or criminal acts, it was inconsistent with the Standard Mortgage Clause which protected the Applicants from any act of the occupants and expressly stated that it superseded any policy provisions in conflict with it. The Tenant Exclusion Endorsement was therefore unenforceable.

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

This appeal raised the question of whether the subrogation right of an insurer under the Standard Mortgage Clause in a home insurance policy may be exercised simply on the insurer paying the loss award to the mortgagee without the insurer establishing that it has no liability to the insured.

The Respondent Insurer had insured the home of the Appellant Insureds. The Insureds had a mortgage with the Bank of Montreal. The Insureds submitted a claim to the Insurer seeking indemnity for repairs to the house, damage to its contents, and additional living expenses following a fire. The Insurer denied their claim on two grounds:

1)         the Insureds had voided the policy by failing to notify the Insurer of a material change in the risk, namely, a change in the heating system of the premises; and

2)         the Insureds had made wilfully false statements with respect to their contents claim and their claim for alternative living expenses, thus vitiating their right to recover.

The Bank of Montreal submitted a Proof of Loss seeking payment of the mortgage under the Standard Mortgage Clause and the Insurer paid that claim. The Insurer then, relying on its right of subrogation under the Standard Mortgage Clause, claimed the sum it had paid to the Bank of Montreal from the Insureds. The motions judge granted summary judgment against the Insureds in the amount paid by the Insurer to the Bank of Montreal. The Insureds appealed seeking an Order dismissing the Insurer's Motion for Summary Judgment directing that the two Actions be tried together (the Insureds had commenced a separate proceeding against the Insurer seeking a Declaration that the policy was valid and enforceable).

The Court of Appeal held that there are two preconditions to the Insurers' entitlement to subrogation under the Standard Mortgage Clause. First, the Insurer must make payment of the loss award, or part of it, to the mortgagee. Second, the Insurer must establish a claim that it has no liability to the mortgagor insured. The Court found that this conclusion flows from the construction of the Standard Mortgage Clause and is not dependent on the specific facts of the case.

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

The Insureds held a policy of insurance on a home they rented to tenants. They were covered for fire and loss of rental income. The Insureds' property was severely damaged by a fire on or about October 10, 2006. The Insureds' tenants had moved out of the property on August 5, 2006 and the Insureds had not replaced them. When the tenants moved out of the property, they only returned the keys to the front door. The Insureds did not change the back door locks nor advise the Insurer that the previous tenant had failed to return the back door keys. The Insurer denied coverage on the basis of an exclusion clause which provided that the Insurer would not insure direct or indirect loss or damage "occurring after your dwelling has, to your knowledge, been vacant, even if partially or fully furnished, for more than thirty consecutive days". The Insurer also denied coverage on the basis that the Insureds had breached statutory condition no. 4 of the Insurance Act, R.S.O. 1990, C1.8, which requires an Insured to advise an Insurer of any change material to the risk within the control and knowledge of the Insureds. The Insureds disagreed with the decision of the Insurer to deny coverage and commenced this action.

The Court found that the damage caused by the fire occurred after the rental property had, to the Insureds' knowledge, been vacant for more than thirty consecutive days. Further, the Court found that the Insureds should have advised the Insurer when the last tenants moved out and that they had not returned all of the keys.

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

The Plaintiff Insured appealed the dismissal of his action against the Defendant Insurer. The Insured held a long term disability policy with the Insurer. The Insured subsequently became disabled as a result of meningitis. He applied for long term disability benefits but his application was rejected by the Insurer who took the position that the Insured had materially misrepresented his medical history on the initial questionnaire.

The trial judge found that the policy was void ab initio because the Insured had not disclosed material facts. In particular, the Insured had not disclosed the identity of his attending physician or his consultation with that physician four or five months prior to the date of the insurance application regarding lumbar pain. The trial judge found that had the Insured not misrepresented his medical history, the coverage offered would have been subject to full exclusions for back and hip related ailments. The Insured's appeal, which was on the basis that the trial judge had committed errors of facts, was dismissed.

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

Feaver was struck by a car driven by Briggs after leaving a party held at the third party's restaurant. The Defendant, Unifund Assurance Company, joined the restaurant alleging they were liable to the deceased in that they allowed him to consume alcohol, and become intoxicated to the extent that he was unable to ensure his own safety.

The Feavers attended a staff party at the restaurant where, in her affidavit, Mrs. Feaver said her husband consumed approximately six beers during the evening, and was feeling good but was not drunk. Blood samples taken from Mr. Feaver suggested he had consumed closer to 18 to 20 bottles of beer during the evening.

The restaurant owner's affidavit also stated that Mr. Feaver appeared fine and did not display any visible signs of intoxication when he left. Mr. Feaver left in the company of his wife and another couple, who were responsible for him. The restaurant owners knew the group were going to walk to a nearby restaurant along a sidewalk, and that they were going to be driven home by a group called Operation Red Nose after leaving the second restaurant.

The judge held that Unifund could argue the third party restaurant owners should have known Mr. Feaver had consumed up to 18 beers despite the assertion of Feaver's wife that he had four to five and lacked signs of intoxication. However, even if Feaver was visibly intoxicated, the third party owners knew he was in the hands of three other people, including his wife, that he was going to be walking along a sidewalk adjacent to their establishment, and that he was to be driven home at the end of the evening. On the strength of that evidence the judge felt that there was no foreseeable risk to Mr. Feaver when the third party owners allowed the group to walk to the other restaurant, and as a result the claim against the third party would be dismissed at trial. The judge granted the summary judgment against the Defendant Unifund Insurance under Rule 22.

This case was originally summarized by Neil J. MacDonald and originally edited by David W. Pilley.

The Plaintiff's boat was insured by the Defendant insurance company. As a result of a collision, the boat was destroyed. The Plaintiff claimed $38,439 plus pre-judgment interest pursuant to the policy. The Defendant Insurer denied coverage on the grounds the driver of the boat was impaired, and in the alternative that the accident was caused by an illegal or an intentional act of the driver.

This motion was brought as a result of the Plaintiff wishing the Defendant to produce a knowledgeable person pursuant to the Manitoba Rules of Court. While the Plaintiff did not designate a specific person for the Defendant to produce, he suggested that the insurance adjuster retained by the Defendant to investigate the claim could be the local knowledgeable representative . The Defendant Insurer argued that there was no suitable local representative and that it wished to bring a knowledgeable representative from Coast Underwriters Limited in Vancouver.

The Defendant maintained that it had no offices in Manitoba and it conducted no business in Manitoba. The Defendant's managing general agent was Coast Underwriters Limited in Vancouver, who issued the policy in question from its Vancouver office. It also submitted that the policy was brought to Coast Underwriters by the Winnipeg office of Marsh Canada, an insurance broker.

The Insurer was licensed under the Manitoba Insurance Act, and section 22(2) outlines who will be deemed an insurer carrying on business within the province. The Court held that the Defendant met several of the criteria for carrying on business in the province contained within s. 22 of the Insurance Act. The judge went on to say that it would be inconsistent with the intent of the Insurance Act to allow the Defendant to sell insurance in Manitoba and then to behave as a disconnected stranger when an insured seeks indemnity.

The judge held that the term "residence" was a flexible term to be interpreted in the context of a case, and that in conjunction with the Manitoba Insurance Act he was persuaded that the Defendant resided in the province of Manitoba for the purposes of the Rules of Court. Accordingly, no conduct money needed to be paid.

This case was originally summarized by Neil J. MacDonald 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.

Sakinofsky, a lawyer, was sued for professional negligence after an action commenced by one of his clients was dismissed for delay. Sakinofsky took the position that his former law clerk, Rosso, was responsible for the loss because Rosso failed to meet the necessary deadlines to keep the action active.   Sakinofsky commenced third party proceedings against Rosso on this basis. Rosso commenced a fourth party claim against LawPro claiming contribution and indemnity for any liability found against him in the claim commenced by Sakinofsky. LawPro brought a motion seeking an order striking Rosso's fourth party claim on the basis that it disclosed no cause of action against it.

The Court held that there was no genuine issue for trial arising from either Rosso's claim for contribution and indemnity from LawPro under Sakinofsky's policy of insurance or from his allegations of misrepresentation.  Rosso conceded he was not a named insured under the policy issued to Sakinofsky and that he never understood LawPro would be liable to him directly as there was no contractual relationship between them. The policy specifically excluded coverage for law clerks. Any right of coverage for the errors of Sakinofsky's staff belonged to Sakinofsky who was the sole insured under the policy. Rosso did not establish that he relied on representations by either Sakinofsky or LawPro to the effect that he would be covered under the policy.

The Court held that there was no genuine issue with respect to Rosso's direct claim of negligence against LawPro as LawPro did not owe Rosso a duty of care. The Court noted that an insurer is not obliged to minimize the liability of a party adverse in interest or to protect his interest, relying upon Overload Tractor Services Ltd. v. British Columbia (Insurance Corp. of British Columbia, [1988] B.C.J. No. 94 (BCSC). In this case, LawPro owed Rosso no duty of care and, consequently was not obligated to take into account his interest.

In the result, LawPro was granted summary judgment dismissing Rosso's claim against it.

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

The Saskatchewan Mutual Insurance Co. ("SMI") provided Homegrown Advertising Inc. ("Homegrown") with a commercial general liability policy. Homegrown was retained to assist in marketing a company in Illinois and was sued in an Illinois class action for sending unwanted faxes. Homegrown settled the action for $5 million but it was agreed the judgment would only be satisfied to the extent of available insurance proceeds. Homegrown took steps to register the judgment against SMI in both Illinois and Saskatchewan. SMI commenced an action against Homegrown seeking a declaration that it had no duty to defend Homegrown in the Illinois class action as Homegrown did not have coverage for the claim. Homegrown took the position that the Saskatchewan courts did not have jurisdiction.

The Court held that Saskatchewan was the more appropriate forum in which the action should be tried. Factors supporting this determination included the fact that the action involved the interpretation of a contract made in Saskatchewan between Saskatchewan parties, and that the interpretation would be conducted under Sasakatchewan law. The Illinois Court had been alerted to SMI's application in Saskatchewan and, therefore, it was likely that the Illinois Court would await the Saskatchewan Court's decision before proceeding. In the result, the Court dismissed Homegrown's application and found that the Saskatchewan courts had jurisdiction to hear SMI's action.

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