DATE: 19980914
DOCKET: C26645
COURT OF APPEAL FOR ONTARIO
MORDEN A.C.J.O., WEILER and MOLDAVER JJ.A.
BETWEEN: )
)
CAROLE RONA STUART ) Don H. Lapowich, Q.C.
) for the appellant
Plaintiff )
)
- and - )
) Ronald Bohm
LORNA MARY HUTCHINS, RE/MAX ) for the respondents
OMEGA REALTY (1988) LTD. and )
MARVIN ALEXANDER )
)
Defendants ) John Withrow
(Respondents) ) for Jevco Insurance Company
)
- and - )
)
AMERICAN HOME ASSURANCE )
COMPANY and JEVCO INSURANCE )
COMPANY )
)
Third Parties )
(Appellants) )
) Heard: April 7, 1998
)
MOLDAVER J.A.:
[1] American Home Assurance Company ("American") appeals from a
decision of Mr. Justice McRae granting summary judgment in favour
of Re/Max Omega Realty (1988) Ltd. and Marvin Alexander
(collectively "Re/Max") and declaring that American is obliged to
defend and indemnify Re/Max in a suit brought against it by
Carole Stuart.
[2] The appeal centres around the motions judge's decision to
grant relief from forfeiture in favour of Re/Max to preserve its
rights under a policy of insurance with American where Re/Max
breached the policy by failing to comply with the notice
requirement contained in the coverage clause.
THE FACTS
[3] On July 22, 1993, the plaintiff Carole Stuart agreed to
purchase property owned by Lorna Hutchins. Re/Max Omega Realty
(1988) Ltd. was the listing broker and Marvin Alexander, the
listing agent. The transaction closed on September 22, 1993.
[4] Contrary to her expectations, Ms. Stuart discovered that the
well on the premises was not capable of providing a safe and
sufficient supply of water for household use. Accordingly, she
sought legal advice and on December 7, 1993, her solicitor
notified Re/Max in writing of Ms. Stuart's potential claim
against it for having misrepresented the suitability of the well.
[5] As of December 7, 1993, Re/Max maintained errors and
omissions insurance with American under a policy known within the
insurance industry as a "claims-made and reported" policy. As its
name suggests, the policy provided coverage for claims made
against Re/Max and reported in writing to American during the
policy period. The policy also contained a provision extending
coverage to Re/Max in respect of potential claims against it for
any wrongful act committed during or prior to the policy period
subject to Re/Max notifying American in writing of any such
claims during the policy period.
[6] Re/Max provided its lawyer with the letter from Stuart's
solicitor prior to Christmas 1993, knowing full well that its
policy with American was scheduled to lapse on December 31, 1993.
Nonetheless, it was not until January 26, 1994 that Re/Max was
told by its lawyer to notify American of the potential claim. As
a result, the Stuart claim was first brought to American's
attention on January 28, 1994.
[7] In the meantime, Re/Max had taken no steps to renew its
policy with American, nor had it applied for the "extended
reporting period" coverage available under this policy. Instead,
it had chosen to obtain fresh coverage from Jevco Insurance
Company ("Jevco") commencing January 1, 1994 and continuing to
December 31, 1994.
[8] In response to Ms. Stuart's claim, issued April 8, 1994,
Re/Max, in third party proceedings, claimed coverage from both
American and Jevco. When both insurers declined coverage, Re/Max
moved for summary judgment, seeking a declaration that either
American or Jevco owed a duty to defend the Stuart action and
indemnify Re/Max if the Stuart claim proved successful.
JUDGMENT UNDER APPEAL
[9] On the motion for summary judgment, American took the
position that Re/Max had disentitled itself to coverage by
failing to notify American in writing of the potential claim
against it during the policy period. In these circumstances,
American submitted that relief from forfeiture was unavailable
because Re/Max's breach constituted non-compliance with a
condition precedent to coverage. Alternatively, American argued
that Re/Max had failed to meet the conditions necessary to invoke
such relief.
[10] The motions judge disagreed. Much as he was satisfied that
Re/Max had become aware of a potential claim by Stuart during the
policy period and had failed to notify American of it prior to
the expiration of the policy, he nonetheless was of the view that
relief from forfeiture was available under s. 129 of the
Insurance Act, R.S.O. 1990, c. I.8 (the "Act") and that this was
an appropriate case to grant such relief. His reasons in this
regard are set out in full below:
In my view relief from forfeiture may be
granted under a "claims made" policy in an
appropriate case and that this is such a
case. The defendants acted reasonably. They
had no ulterior motive. They always had
insurance coverage, although both insurance
companies now deny coverage. The defendants
only error was in late notification. There is
no prejudice to American Home Assurance
Company by reason of the late reporting and
to say that s. 129 of the Insurance Act does
not apply could lead to a situation where if
a claim were first received by the insured
New Years Eve and they were unable to report
it until into the new year coverage could be
denied. That is not my view of the purpose of
s. 129.
... Under all the circumstances of this case,
as I have outlined, this is a clear case that
calls for relief from forfeiture. It would be
most unfair to permit both of these third
parties to avoid liability. I agree with
Jevco that in the circumstances and on the
facts as I have found them to be there is no
liability on their part. But there will be a
declaration that American Home is required to
defend and indemnify the defendants in the
event of a successful suit.
THE ISSUES
[11] American raises two grounds of appeal, the principal one
being that the motions judge erred in concluding that relief from
forfeiture was available to preserve the rights of Re/Max under a
"claims-made and reported" policy of insurance where Re/Max
failed to comply with the notice requirements contained in the
coverage clause. The second ground relates to the motions judge's
decision to grant relief from forfeiture, assuming it was
available, and whether he erred in doing so in the particular
circumstances of this case.
RELEVANT POLICY PROVISIONS
PREAMABLE
AMERICAN HOME ASSURANCE COMPANY
A CAPITAL STOCK COMPANY FOUNDED 1853
CANADIAN HEAD OFFICE - TORONTO
(herein called the Company)
THIS IS A CLAIMS MADE POLICY - READ IT CAREFULLY1
Re/Max Ontario Atlantic Canada
REAL ESTATE SALESPERSON AND BROKERS
PROFESSIONAL LIABILITY POLICY
In consideration of the payment of the
premium, and in reliance upon the statements
in the application and Declarations attached
hereto and made a part hereof, and subject to
the limits of liability stated in Items 3 of
the Declarations and the terms and conditions
herein, the Company hereby agrees as follows:
INSURING AGREEMENTS
1. ERRORS AND OMISSIONS
To pay on behalf of the Insured all sums
which the Insured shall become legally
obligated to pay as damages resulting from
any claim or claims first made against the
Insured and reported in writing to the
Company during the Policy Period for any
Wrongful Act of the Insured or of any other
person for whose actions the insured is
legally responsible, but only if such
Wrongful Act occurs during or prior to the
Policy Period and solely in rendering or
failing to render professional services for
others for a fee as a Real Estate Salesperson
or Real Estate Broker.
DEFINITIONS
2. Policy Period means the period from the
inception date of this policy shown in Item 2
of the Declarations to the earlier of the
expiration date shown in Item 2 of the
Declarations or the effective date of
cancellation of this policy.
3. Wrongful Act means any actual or
alleged:
(a) negligent act, error or omission,
negligent statement or
misstatements;
SPECIAL PROVISIONS
3. LOSS PROVISIONS
The Insured shall, as a condition precedent
to the availability of the rights provided
under this policy, give written notice to the
Company as soon as practicable during the
Policy Period, or during the extended
reporting period (if applicable), of any
claim made against the Insured. Notice given
by or on behalf of the Insured to any
authorized representative of the Company,
with particulars sufficient to identify the
Insured, shall be deemed notice to the
Company.
4. SPECIAL REPORTING CLAUSE
If during the Policy Period or during the
extended reporting period (if the right is
exercised by the Insured in accordance with
Provision 5), the Insured shall become aware
of any occurrence which may reasonably be
expected to give rise to a claim against the
Insured for a Wrongful Act which first occurs
during or prior to the Policy Period, and
provided the Insured gives written notice to
the Company during the Policy Period or the
extended reporting period (if applicable) of
the nature of the occurrence and specifics of
the possible Wrongful Act, any claim which is
subsequently made against the Insured arising
out of such Wrongful Act shall be treated as
a claim made during the Policy Period.
5. EXTENDED REPORTING PERIOD
If the Company or the Insured shall cancel or
refuse to renew this policy, the Insured
shall have the right, upon payment of an
additional premium of 50% of the total annual
premium, to a period of twelve (12) months
following the effective date of such
cancellation or non-renewal (herein referred
to as the extended reporting period) in which
to give written notice to the Company of
claims first made against the Insured during
said twelve (12) month period for any
Wrongful Act committed during or prior to the
Policy Period and otherwise covered by this
policy.
The rights contained in this clause shall
terminate, however, unless written notice of
such election together with the additional
premium due is received by the Company within
thirty (30) days of the effective date of
cancellation or non-renewal. This clause and
the rights contained herein shall not apply
to any cancellation resulting from non-
payment of premium.
RELEVANT STATUTORY PROVISIONS
Section 129 of the Insurance Act, R.S.O.
1990, c. I.8 provides:
Where there has been imperfect compliance
with a statutory condition as to the proof of
loss to be given by the insured or other
matter or thing required to be done or
omitted by the Insured with respect to the
loss and a consequent forfeiture or avoidance
of the insurance in whole or in part and the
court considers it inequitable that the
insurance should be forfeited or avoided on
that ground, the court may relieve against
the forfeiture or avoidance on such terms as
it considers just.
Section 98 of the Courts of Justice Act, R.S.O. 1990,
c. C.43 provides:
A court may grant relief against penalties
and forfeitures, on such terms as to
compensation or otherwise as are considered
just.
ANALYSIS OF CENTRAL ISSUE
(i) Availability of Relief from Forfeiture Under S. 129 of
the Act
[12] In order to appreciate the central issue, it is first
necessary to understand the defining characteristics of "claims-
made and reported" contracts of insurance and the policy
considerations which led to their inception.
[13] "Claims-made and reported" policies are to be distinguished
from "occurrence" policies. Much has been written about the
defining characteristics of each2 and there is no need to
belabour the subject. A useful discussion of the origin and
distinguishing features of the two types of policies is found in
Pacific Employers Ins. Co. v. Superior Court (1990), 270 Cal.
Rptr. 779 at 783 & 784:
Occurrence policies were developed to
provide coverage for damage caused by
collision, fire, war, and other identifiable
events (Zuckerman v. National Union Fire
Insurance Company (1985) 100 N.J. 304, 495
A.2d 395, 398-399.) Because the occurrence of
these events was relatively easy to
ascertain, the insurer was able to "conduct a
prompt investigation of the incident and make
an early assessment of related injuries and
damages with the result that actuarial
considerations permitted relative certainty
in estimating loss ratios, establishing
reserves, and fixing premium rates." (Stine
v. Continental Cas. Co. (1984) 419 Mich. 89,
349 N.W. 2d 127, 131.) The automobile
liability policies in Campbell, Abrams and
Billington were classic occurrence policies
[221 Cal.App.3d 1358] where coverage attached
once the "occurrence" took place even though
the claim was not made for some time
thereafter. Notice provisions contained in
such occurrence policies were "included to
aid the insurer in investigating, settling,
and defending claims", not as a definition of
coverage. (Zuckerman v. National Union Fire
Insurance Company, supra, 495 A.2d at p.
406.) "[T]he requirement of notice in such
policies is subsidiary to the event that
invokes coverage, and the conditions related
to giving notice should be liberally and
practically construed." (Ibid.) (FN2)
All professional liability policies were
at one time "occurrence" policies. (See
Kroll, The Professional Liability Policy
"Claims Made" (1978) 13 Forum 842.)
Underwriters soon realized, however, that
"occurrence" policies were unrealistic in the
context of professional malpractice because
the injury and the negligence that caused it
were often not discoverable until years after
the delictual act or omission. In an effort
to reduce their exposure to an unpredictable
and lengthy "tail" of lawsuits filed years
after the occurrence they agreed to protect
against, underwriters shifted to the "claims-
made" policy. (Id. at p. 845) This type of
policy differed materially from an
"occurrence" policy in several aspects. Most
notably, it was transmittal of notice of the
claim to the insurer which was the event that
invoked coverage. [Emphasis added.]
[14] Bearing in mind the conceptual differences between
"occurrence" policies and "claims-made and reported" policies, I
now propose to address the central issue.
[15] In my view, the answer to the central issue lies in the
proper characterization of Re/Max's failure to provide American
with written notice of the potential Stuart claim during the
policy period. To be precise, can it be said that Re/Max's
failure in this regard constituted imperfect compliance with a
term of the policy, such that s. 129 of the Act could be invoked,
or, did it amount to non-compliance with a condition precedent to
coverage, thereby foreclosing the availability of s. 129? See
Falk Bros. Industries Ltd. v. Elance Steel Fabricating Co.
(1989), 62 D.L.R. (4th) 236 at 240-42 (S.C.C.).
[16] Unfortunately, the motions judge did not address this
question. Rather, as his reasons indicate, after making the
general observation that "relief from forfeiture may be granted
under a "claims-made" policy in an appropriate case", he moved
directly into a discussion of the circumstances surrounding
Re/Max's breach of the policy and the factors which led him to
conclude that this was an appropriate case to grant relief from
forfeiture.
[17] No issue can be taken with motions judge's assertion that
relief from forfeiture may be granted under a "claims-made"
policy in appropriate cases. Although he cited no supporting
authority, the motions judge no doubt had in mind the case of
McNish and McNish v. American Home Assurance Co. (1989), 68 O.R.
(2d) 365 (H.C.); aff'd at (1991), 5 C.C.L.I. (2d) 222 (Ont.
C.A.).
[18] At issue in McNish was whether relief from forfeiture should
be granted to preserve the rights of the McNish law firm under a
"claims-made" policy of insurance where a claim for professional
negligence, made against the law firm during the policy period,
was not reported to the insurer until some four years later, long
after the policy in question had expired.
[19] In his thorough and considered reasons for judgment in
McNish, Steele J. analyzed the terms and conditions of the
"claims-made" policy in issue and he concluded, correctly in my
view, that a claim made during the policy period was the sole
event that triggered coverage. Although the policy contained a
clause which required the insured to promptly notify its insurer
upon learning of an event that might give rise to a claim, the
notice provision did not form part of the coverage clause and
there was no express requirement in the policy that notice be
given within the policy period. In other words, transmittal of
notice of the claim to the insurer did not form an integral part
of the event triggering coverage. Accordingly, in the opinion of
Steele J., the failure on the part of the McNish firm to promptly
notify its insurer of the claim against it amounted to imperfect
compliance, such that s. 106 of the Insurance Act (now s. 129)
could properly be invoked.
[20] Much as Re/Max relies on McNish, in my view, that case is
readily distinguishable from the one at hand. Unlike McNish,
where the contract provided that coverage extended to actual and
potential claims made during the policy period, here, the
contract specified in plain language that coverage extended to
actual and potential claims both made and reported in writing to
the insurer during the policy period. In other words, whereas in
McNish, the notice provision was found to be incidental to the
event triggering coverage, here, it formed an integral part of
that event.
[21] In these circumstances, it seems to me that the position
which Re/Max finds itself in is similar to that of a motorist who
seeks coverage for an accident which occurs after his or her
motor vehicle policy has lapsed. In this situation, where the
event triggering coverage occurs after the policy has lapsed, it
can hardly be suggested that the motorist's belated notice to the
insurer should be treated as imperfect compliance. Rather, it is
a clear-cut case of no coverage.
[22] I see no reason why Re/Max's failure to give notice until
after the policy had lapsed should be treated differently. To do
otherwise would be to distort the plain meaning of the contract
and require the insurer to provide coverage for an event outside
the scope of the policy which it had not agreed to cover and for
which it had received no remuneration. In this respect, the
following quotation from Gulf Ins. Co. v. Dolan, Fertig and
Curtis (Fla. 1983), 433 So. 2d 512 at 515 is apposite:
Claims-made policies ... require that
notification to the insurer be within a
reasonable time. Critically, however, claims-
made policies require that notice be given
during the policy period itself. When an
insured becomes aware of any event that could
result in liability, then it must give notice
to the insurer, and that notice must be given
'within a reasonable time' or 'as soon as
practicable' -- at all times, however, during
the policy period....& Coverage depends on
the claim being made and reported to the
insurer during the policy period. Claims-made
... policies are essentially reporting
policies.... If a court were to allow an
extension of reporting time after the end of
the policy period, such is tantamount to an
extension of coverage to the insured gratis,
something for which the insurer has not
bargained. This extension of coverage, by the
court, so very different from a mere
condition of the policy, in effect rewrites
the contract between the two parties. This we
cannot and will not do. [Emphasis in the
original.]
[23] On behalf of Re/Max, it was submitted that the notice
requirement in the coverage clause should be construed in a
manner which would not foreclose the availability of s. 129. As
a matter of principle, Re/Max argued that the narrow construction
advocated by American could readily lead to the very type of
unjust and inequitable result against which s. 129 was designed
to protect.
[24] By way of illustration, counsel for Re/Max referred to the
example mentioned by the motions judge, namely, that of an
insured who first receives a claim on New Years Eve but is unable
to report the claim until the new year. American's construction
of the notice provision would result in coverage being denied to
a blameless insured, with no recourse to s. 129. According to
Re/Max, construing the notice provision in this fashion would
contravene the spirit of s. 129 and defeat its purpose. Instead,
Re/Max advocated a construction which would render its failure to
provide written notice within the policy period as being
imperfect compliance, such that s. 129 would remain available.
[25] With respect, I disagree.
[26] Dealing first with the example cited by the motions judge,
counsel for American assured the court that coverage would not be
denied in such a case because, as a matter of policy, insurers
automatically allow for a brief grace period. While counsel's
assurance in this regard is comforting, it is by no means
conclusive.
[27] Regardless of that assurance, I would have thought that in
the example cited, where circumstances beyond the control of the
insured render it physically impossible for the insured to comply
with the notice provision, general principles of contract
interpretation would come to the insured's aid, without need to
resort to s. 129. Specifically, I think it would be open to the
court to construe the notice provision as containing an implied
term that non-compliance due to physical impossibility would not
be fatal to coverage but that the insured be given a reasonable
opportunity to comply. That issue, however, is not before us and
it should be left for another day.
[28] On a more fundamental level, the position advocated by
Re/Max is one which leads inexorably to the discarding of basic
principles that have long governed the interpretation and
construction of contracts of insurance.
[29] To the extent that the wording in a contract of insurance is
found to be ambiguous, it is accepted that the ambiguity will
generally be resolved in favour of the insured. This rule,
however, has no application where the wording of the policy is
plain on its face and capable of only one meaning.3
[30] Trite though it may be, an insurer has the right to limit
coverage in a policy issued by it and when it does so, the plain
language of the limitation must be respected.
[31] In the case at hand, the coverage provision is found in
clause 4 under the heading, "Special Reporting Clause". The
wording of that clause is plain and straightforward. Coverage is
extended for potential claims, which come to the attention of the
insured during the policy period, "provided the Insured gives
written notice to the Company during the Policy Period...of the
nature of the occurrence and specifics of the possible Wrongful
Act ...."4
[32] American contracted to provide Re/Max with coverage for
potential claims made and reported during the policy period. It
did not agree to provide Re/Max with coverage for potential
claims made but not reported during the policy period and it does
not lie with the court to rewrite the policy as if it did.
[33] Much as Re/Max contends that strict construction of the
notice provision will lead to harsh and inequitable results, I do
not agree. Under the policy, Re/Max could have protected itself
by purchasing the extended reporting period endorsement.
Alternatively, it could have renewed its policy with American or
purchased another policy from a different insurer with
retroactive coverage.
[34] In short, Re/Max could have protected itself in a number of
ways. The fact that it chose not to is hardly reason to twist the
plain wording of the coverage clause and thereby create an
ambiguity where none exists.
[35] In concluding as I have, that Re/Max cannot avail itself of
s. 129, I have not ignored the views expressed by McLachlin J. in
Falk Bros., supra, regarding the failure to meet a time
requirement and when such failure will be considered imperfect
compliance as opposed to non-compliance. In particular, I am
mindful of the fact that at p. 242, after reviewing the
authorities and relevant policy considerations, McLachlin J.
held, "that the failure to give notice of claim within the
prescribed time period constitutes imperfect compliance rather
than non-compliance ...."
[36] In coming to this conclusion, McLachlin J. accepted the
distinction identified in the case law between failure to give
notice of claim in a timely fashion and failure to institute an
action within the prescribed time period. At p. 241, she
observed:
The case law has generally treated
failure to give notice of claim in a timely
fashion as imperfect compliance whereas
failure to institute an action within the
prescribed time period has been viewed as non-
compliance, or breach of a condition
precedent. Thus, courts have generally been
willing to consider granting relief from
forfeiture where notice of claim has been
delayed: Canadian Equipment Sales & Service
Co. Ltd. v. Continental Ins. Co., supra;
Minto Construction Ltd. v. Gerling Global
Gen. Ins. Co., supra; Moxness v. Saskatchewan
Government Ins. Office, [1977] 3 W.W.R. 393,
[1977] I.L.R. &1-886 (Sask. Dist. Ct.);
Kallos v. Saskatchewan Government Ins.,
supra; North Lethbridge Garage Ltd. v.
Continental Casualty Co., [1930] 2 D.L.R.
835, [1930] 1 W.W.R. 491, 24 Alta. L.R. 390
(Alta. C.A.); see also Dashchuk Lumber Ltd.
v. Proman Projects Ltd., supra.
On the other hand, cases in which
failure to meet a time requirement has been
held to be non-compliance rather than
imperfect compliance have largely been cases
in which the time period was for the
commencement of an action rather than for the
giving of notice: D.S. Ashe Trucking Ltd. v.
Dominion Ins. Corp. (1966), 56 D.L.R. (2d)
730, 55 W.W.R. 321 (B.C.C.A.); National Juice
Co. Ltd. v. Dominion Ins. Co. (1977), 81
D.L.R. (3d) 606, 18 O.R. (2d) 10, [1978]
I.L.R. &1-935 (Ont. C.A.).
[37] Much as Falk Bros., supra, might appear to assist Re/Max,
upon closer scrutiny it does not. A review of the authorities
cited by McLachlin J. for the proposition that "failure to give
notice of claim in a timely fashion constitutes imperfect
compliance" reveals that the insurance policies in question were
all of the "occurrence" type. Unlike the case at hand, the notice
requirement in those policies did not form an integral part of
the event triggering coverage. That distinction is crucial
because, in my opinion, it has the effect of transforming
Re/Max's failure to give notice from one of imperfect compliance
to non-compliance.
Availability of Relief from Forfeiture under s. 98 of The Courts
of Justice Act
[38] Alternatively, Re/Max submitted that if s. 129 was
unavailable, the court could nonetheless invoke s. 98 of the
Courts of Justice Act to grant relief from forfeiture.
[39] In support of this submission, counsel for Re/Max relied
upon the case of Feature Foods v. Landau (1995), 23 O.R. (3d) 147
(Gen. Div.). In that case, Coo J. invoked s. 98 to grant relief
from forfeiture to an architect (Landau) who had contravened the
coverage provision of an indemnity plan under which he was
insured by failing to notify the insurer during the policy period
of a claim made against him.
[40] As the judgment indicates, the coverage provision in
question required Landau to report to the plan, during the period
of coverage, any claim made against him. While the reasons are
silent as to the nature of the indemnity plan, it can, I believe,
safely be assumed that it was the equivalent of a "claims-made
and reported" policy.
[41] In his reasons for judgment, Coo J. made reference to the
fact that s. 129 of the Act was unavailable by virtue of s. 40(4)
of the Architects Act, R.S.O. 1990, c. A.26 which provided that
the Insurance Act did not apply to the indemnity plan in issue.
Coo J. made it clear, however, that had s. 129 been available, he
would have invoked it in favour of Landau.
[42] Having determined that s. 129 was unavailable, Coo J. then
turned to s. 98 of the Courts of Justice Act and after reviewing
the facts of the case, he determined that Landau should be
granted relief from forfeiture.
[43] While I have serious reservations about the correctness of
Coo J.'s conclusion that s. 98 could be invoked in circumstances
where s. 129 was unavailable on account of an overriding
statutory provision, for reasons which will become apparent, it
is unnecessary to finally decide that issue. Suffice it to say
that if s. 98 was available, I am confident that its reach could
not extend beyond that of s. 129 to relieve against forfeiture in
the case of a breach amounting to non-compliance with a condition
precedent to coverage.5
[44] Not unlike the case at hand, I am respectfully of the view
that in his analysis, Coo J. failed to address the critical
question, namely, whether Landau's breach constituted imperfect
compliance with a term of the plan or non-compliance with a
condition precedent to coverage. Instead, Coo J. focussed on the
circumstances of the breach and the mitigating factors which led
him to conclude that relief from forfeiture should be granted.
[45] From the reasons in Feature Foods, it would appear that the
notice requirement formed an integral part of the event
triggering coverage. That being so, in my opinion, the breach
amounted to non-compliance with a condition precedent to coverage
for which relief from forfeiture was unavailable. To the extent
that the judgment might be construed as holding otherwise, I am
respectfully of the view that it was wrongly decided and it
should not be followed.
[46] In sum, I am satisfied that the motions judge erred in
concluding that relief from forfeiture was available in the
circumstances of this case.
SECOND ISSUE
[47] In view of my conclusion on the central issue, it is
unnecessary to determine the second issue raised by American.
Suffice it to say that had I come to a different conclusion on
the central issue, I would have been loathe to interfere with the
result arrived at by the motions judge in the exercise of his
discretion.
CONCLUSION
[48] In my opinion, relief from forfeiture was not available in
the circumstances of this case and the judgment under review
cannot stand. I would set aside the judgment and in its place,
grant an order dismissing the motion for summary judgment.
[49] I would grant American its costs of the appeal and the
motion.
Released: September 14, 1998.
_______________________________
1 Emphasis added throughout.
2 See generally: Gordon Hilliker, Liability Insurance Law
in Canada, 2d ed. (Toronto: Butterworths), 1996 at pp. 153-8; N.
Leigh-Jones ed., McGillivray on Insurance Law, 9th ed. (London:
Sweet & Maxwell), 1997 at p. 152; L.R. Russ and T.F. Segalla,
Couch on Insurance, 3d ed. (U.S.A.: Westgroup, 1997 at paragraphs
102:20 to 102:21, pp. 102-43 to 102-51). See also Slater v.
Lawyers' Mut. Ins. Co. (1991), 278 Cal. Rptr. 479.
3 See Consolidated-Bathurst Export v. Mutual Boiler Ins.
(1979), 112 D.L.R. (3d) 49 (S.C.C.) at 57; Indemnity Ins. Co. v.
Excel Cleaning Service, [1954] 2 D.L.R. 721 (S.C.C.) at 730 and
Cornish v. Accident Ins. Co. (1889), 23 Q.B. 453 (C.A.) at 456.
4 Unlike clause 4 which speaks to potential claims of
which the insured becomes aware during the policy period, clause
1 is silent on the matter of awareness in respect of actual
claims made during the policy period. Since this appeal concerns
only clause 4, it is unnecessary to finally decide whether strict
construction of the notice provision in clause 1 would be
warranted in the case of a claim made during the policy period
which, through no fault of the insured, does not come to the
insured's attention until after the expiration of the policy
period.
5 In Saskatchewan River Bungalows Ltd. v. Maritime Life
Assurance Co., [1994] 2 S.C.R. 490 at 505 (S.C.C.), Major J., for
the court, found it unnecessary to determine whether s. 10 of the
Judicature Act, R.S.A. 1980, c. J-1 (the equivalent of s. 98 of
the Courts of Justice Act) applied to contracts regulated by the
Insurance Act, R.S.A. 1980, c. I-5. He did, however, note that
the Insurance Act did not codify the whole law of insurance and
he therefore rejected the argument that the "field" of equitable
relief was occupied by the Insurance Act. |