Burke Estate et al. v. Royal & Sun Alliance Insurance Co. of Canada, 2011 NBCA 98

• Judge: Drapeau, C.J.N.B., Larlee and Quigg, JJ.A.
• Court: Court of Appeal (New Brunswick)
• Case Date: June 17, 2011
• Jurisdiction: New Brunswick
• Citations: 2011 NBCA 98;(2011), 381 N.B.R.(2d) 81 (CA)

Burke Estate v. Royal & Sun (2011), 381 N.B.R.(2d) 81 (CA);

    381 R.N.-B.(2e) 81; 984 A.P.R. 81

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Sommaire et texte intégral

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2011] N.B.R.(2d) TBEd. NO.007

Renvoi temp.: [2011] N.B.R.(2d) TBEd. NO.007

Estate of Michael Burke, as Represented by Harold Vernon Hall, Administrator, and 1021256 Ontario Inc. (appellants) v. Royal & Sun Alliance Insurance Company of Canada (respondent)

(49-10-CA; 2011 NBCA 98)

Indexed As: Burke Estate et al. v. Royal & Sun Alliance Insurance Co. of Canada

Répertorié: Burke Estate et al. v. Royal & Sun Alliance Insurance Co. of Canada

New Brunswick Court of Appeal

Drapeau, C.J.N.B., Larlee and Quigg, JJ.A.

November 3, 2011.

Summary:

Résumé:

Burke was severely injured when, through no fault of his own, the Peterbilt truck he was operating collided head-on with an uninsured automobile. Underinsured motorist protection was provided by an NBEF No. 44 - Family Protection Endorsement attached to the policy Royal & Sun Alliance Insurance Co. of Canada had issued for Burke's personal pickup truck. A "named insured" was covered while occupying not only the policy's "described automobile" but also any other automobile. However, there was an exclusion from that coverage: a named insured who "owns" the other automobile was not an "insured person" for the purposes of the NBEF 44. Burke was the only officer and shareholder of 1021256 Ontario Inc., which was the sole registered owner of the Peterbilt. Burke commenced an action against Royal & Sun Alliance, seeking a declaration that he was an "insured person" for NBEF 44 purposes.

The New Brunswick Court of Queen's Bench, Trial Division, "deemed" Burke the one and only owner of the Peterbilt after lifting the corporate veil of 1021256 Ontario Inc. He would therefore not be covered under the NBEF 44. Burke's estate appealed (he had passed away). Royal & Sun Alliance requested confirmation of the judgment under appeal for reasons other than those articulated by the trial judge. It took the position that the term "owns" in the ownership exclusion included both the registered and the "true" owner of the "other" automobile and Burke was not an "insured person" because he co-owned the Peterbilt with its registered owner, 1021256 Ontario Inc.

The New Brunswick Court of Appeal allowed the appeal and declared that Burke was both an "insured person" and an "eligible claimant" for NBEF 44 purposes. The denial of Burke's eligibility was unsustainable for two reasons: (1) Royal & Sun Alliance's pleadings did not provide the required concise statement of the facts upon which objection to Burke's eligibility was taken and accepted at trial, and, as a result, he and his estate had sustained significant prejudice in the prosecution of the case for NBEF 44 coverage; and (2) in any event, Royal & Sun Alliance did not discharge its burden of proving Burke owned or co-owned the Peterbilt at the time of the accident.

Company Law - Topic 311

Nature of corporations - Lifting the corporate veil - One person company - Burke was severely injured when, through no fault of his own, the Peterbilt truck he was operating collided head-on with an uninsured automobile - Underinsured motorist protection was provided by an NBEF No. 44 - Family Protection Endorsement attached to the policy Royal & Sun Alliance had issued for Burke's personal pickup truck - A "named insured" was covered while occupying another automobile - However, there was an exclusion from that coverage: a named insured who "owns" the other automobile was not an "insured person" for the purposes of the NBEF 44 - Burke was the only officer and shareholder of 1021256 Ontario Inc., which was the sole registered owner of the Peterbilt - Burke brought an action against Royal & Sun Alliance, seeking a declaration that he was an "insured person" for NBEF 44 purposes - The trial judge "deemed" Burke the one and only owner of the Peterbilt after lifting the corporate veil of 1021256 - Burke's estate appealed (he had died) - Royal & Sun Alliance requested confirmation of the judgment under appeal for reasons other than those articulated by the trial judge - It took the position that the term "owns" in the ownership exclusion included both the registered and the "true" owner of the "other" automobile and Burke was not an "insured person" because he co-owned the Peterbilt with its registered owner, 1021256 - The New Brunswick Court of Appeal allowed the appeal and declared that Burke was both an "insured person" and an "eligible claimant" for NBEF 44 purposes - The trial judge erred in law in resting his decision on facts that were neither pleaded nor proven, and in disposing of the case through an unrequested equitable remedy, lifting the corporate veil of 1021256 - In any event, that equitable remedy was inappropriate given the trial judge's finding that Burke used 1021256 for entirely legitimate purposes - Further, Royal & Sun Alliance did not allege, either in its pleadings or its responses to the Demands for Particulars, that Burke co-owned the Peterbilt, along with its sole registered owner, 1021256 - That failure to plead precluded reliance on co-ownership as a defence - Royal & Sun Alliance's co-ownership objection also failed for another reason - The burden was on the insurer to establish the conditions precedent to the application of an exclusion - Royal & Sun Alliance did not establish on a balance of probabilities that Burke was not an "insured person" because of the ownership exclusion - See paragraphs 48 to 68.

Insurance - Topic 3801

Automobile insurance - The contract - Particular terms - "Owner" - Who constitutes an "owner" - Burke was severely injured when, through no fault of his own, the Peterbilt truck he was operating collided head-on with an uninsured automobile - Underinsured motorist protection was provided by an NBEF No. 44 - Family Protection Endorsement attached to the policy Royal & Sun Alliance Insurance Co. of Canada had issued for his personal pickup truck - A "named insured" was covered while occupying not only the policy's "described automobile" but, as well, any other automobile - However, there was an exclusion from that coverage: a named insured who "owns" the other automobile was not an "insured person" for the purposes of the NBEF 44 - The New Brunswick Court of Appeal discussed what was meant by the term "owns" in the exclusion clause - See paragraphs 41 to 47.

Insurance - Topic 4103

Automobile insurance - Uninsured or underinsured motorist coverage - Extent of coverage - Burke was severely injured when, through no fault of his own, the Peterbilt truck he was operating collided head-on with an uninsured automobile - Underinsured motorist protection was provided by an NBEF No. 44 - Family Protection Endorsement attached to the policy Royal & Sun Alliance Insurance Co. of Canada had issued for Burke's personal pickup truck - Royal & Sun Alliance suggested that it never intended to provide underinsured motorist coverage to Burke while he was operating a commercial vehicle like the Peterbilt to earn a living - The New Brunswick Court of Appeal stated that "Royal & Sun Alliance's subjective intention, expressed post-loss and post-claim, is of no interest to the courts. Its intention stands to be ascertained by a contextual assessment of the words it chose to employ in the NBEF 44. In other words, courts look to the objective rather than the subjective intention of the insurer in construing an NBEF 44. ... The undeniable fact is that the Peterbilt meets the definition of 'automobile' in the NBEF 44. It is equally beyond dispute that NBEF 44 coverage extends to work-related automobile accidents, express provision having been made for the insurer's right to deduct workers' compensation benefits under Clause 4(b)(vii)" - See paragraph 38.

Insurance - Topic 4103.3

Automobile insurance - Uninsured or underinsured motorist coverage - Costs - The New Brunswick Court of Appeal allowed an appeal by Burke's estate and declared that Burke was both an "insured person" and an "eligible claimant" for purposes of an NBEF No. 44 - Family Protection Endorsement attached to the policy Royal & Sun Alliance Insurance Co. of Canada had issued for Burke's automobile - The court fixed costs at $15,000 for the trial and at $10,000 for the appeal - The proceedings had taken nearly a decade - Burke had passed away - Had Royal & Sun Alliance complied with the rules of pleading in a timely fashion, Burke's case would have been even more compelling and would have been heard and resolved before his death - Moreover, some of the arguments advanced by Royal & Sun Alliance, both in first instance and on appeal, were frivolous and detracted from the core issue it apparently wished to have adjudicated - In the result, the litigation was prolonged unnecessarily - See paragraph 71.

Insurance - Topic 4104

Automobile insurance - Uninsured or underinsured motorist coverage - Insured defined - [See Company Law - Topic 311 ].

Insurance - Topic 4118

Automobile insurance - Uninsured or underinsured motorist coverage - Exclusions - General - [See Company Law - Topic 311 ].

Insurance - Topic 4323

Automobile insurance - Exclusions - Burden of proof - [See Company Law - Topic 311 ].

Insurance - Topic 4448

Automobile insurance - Actions - Burden of proof - Exclusion of risk - [See Company Law - Topic 311 ].

Practice - Topic 1617

Pleadings - The defence - Issues to be raised must be pleaded - [See Company Law - Topic 311 ].

Droit des compagnies - Cote 311

Nature des corporations - Levée du voile corporatif - Affaire d'une seule personne - [Voir Company Law - Topic 311 ].

Assurance - Cote 3801

Assurance automobile - Le contrat - Clauses particuliེres - "Propriétaire" - Définition - En quoi consiste un "propriétaire" - [Voir Insurance - Topic 3801 ].

Assurance - Cote 4103

Assurance automobile - Garantie relative à des conducteurs non assurés ou insuffisamment assurés - Portée de la garantie - [Voir Insurance - Topic 4103 ].

Assurance - Cote 4103.3

Assurance automobile - Garantie relative à des conducteurs non assurés ou insuffisamment assurés - Dépens - [Voir Insurance - Topic 4103.3 ].

Assurance - Cote 4104

Assurance automobile - Garantie relative à des conducteurs non assurés ou insuffisamment assurés - Définition du mot assuré - [Voir Insurance - Topic 4104 ].

Assurance - Cote 4118

Assurance automobile - Garantie relative ུ des conducteurs non assurés ou insuffisamment assurés - Exclusions - Généralitiés - [Voir Insurance - Topic 4118 ].

Assurance - Cote 4323

Assurance automobile - Exclusions - Fardeau de la preuve - [Voir Insurance - Topic 4323 ].

Assurance - Cote 4448

Assurance automobile - Actions - Fardeau de la preuve - [Voir Insurance - Topic 4448 ].

Procédure - Cote 1617

Plaidoiries - Exposé de la défense - Les questions soulevées doivent être plaidées - [Voir Practice - Topic 1617 ].

Cases Noticed:

Economical Mutual Insurance Co. v. Lapalme (2010), 366 N.B.R.(2d) 199; 942 A.P.R. 199; 2010 NBCA 87, refd to. [para. 23].

Stamper v. Finnigan, Via Rail Canada Inc., Canadian National Railway Co. and New Brunswick (1986), 74 N.B.R.(2d) 271; 187 A.P.R. 271 (T.D.), revd. in part (1988), 85 N.B.R.(2d) 404; 217 A.P.R. 404 (C.A.), refd to. [para. 26].

Varson v. Town of Vegrevill, [1916] A.J. No. 96 (S.C.), refd to. [para. 43].

Rochester & Pittsburg Coal & Iron Co. v. "Garden City", The (1901), 7 Ex.C.R. 34, refd to. [para. 42].

Ballas and Minister of Education, Re, [1931] A.J. No. 7 (C.A.), refd to. [para. 42].

Rogers v. Frericton (City) (1931), 3 M.P.R. 161 (N.B.S.C.), refd to. [para. 42].

Prentice v. Brown, [1914] 17 D.L.R. 36 (Alta. C.A.), refd to. [para. 42].

Chuwick v. Bevans et al. (1964), 49 W.W.R.(N.S.) 699 (Alta. S.C.), refd to. [para. 42].

Whelton v. Mercier et al. (2004), 277 N.B.R.(2d) 251; 727 A.P.R. 251; 2004 NBCA 83, refd to. [para. 42].

Morrow v. Royal Insurance Co. of Canada (1990), 42 C.C.L.I. 135, refd to. [para. 42].

Wynne v. Dalby, [1913] O.J. No. 9 (C.A.), refd to. [para. 43].

Haberl v. Richardson and Richardson, [1951] O.R 302 (C.A.), refd to. [para. 43].

Zed v. Fullerton (1944), 17 M.P.R. 417 (N.B.S.C.), refd to. [para. 43].

W.J. Blainey Ltd. v. Toronto (City), [1935] 4 D.L.R. 328 (Ont. H.C.J.), refd to. [para. 43].

Hill v. Co-operative Fire & Casualty Co., [1977] B.C.J. No. 1178 (S.C.), refd to. [para. 43].

Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 S.C.R. 252; 147 N.R. 44; 83 Man.R.(2d) 81; 36 W.A.C. 81, refd to. [para. 45].

Irving Oil Ltd. v. London & Hull Maritime Insurance Co. et al.(2000), 229 N.B.R.(2d) 378; 592 A.P.R. 378; 2000 NBCA 23, refd to. [para. 45].

Trifidus Inc. v. Samgo Innovations Inc. et al. (2011), 375 N.B.R.(2d) 141; 969 A.P.R. 141; 2011 NBCA 59, refd to. [para. 50].

Parlee v. McFarlane (1999), 210 N.B.R.(2d) 284; 536 A.P.R. 284 (C.A.), refd to. [para. 56].

Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. et al. (1996), 2 O.T.C. 146; 28 O.R.(3d) 423 (Gen. Div.), affd. [1997] O.J. No. 3754 (C.A.), appld. [para. 60].

642947 Ontario Ltd. v. Fleischer et al. (2001), 152 O.A.C. 313 (C.A.), refd to. [para. 60].

A-C-H International Inc. v. Royal Bank of Canada et al. (2005), 197 O.A.C. 227 (C.A.), refd to. [para. 61].

Stewart v. Webster (2007), 315 N.B.R.(2d) 193; 815 A.P.R. 193; 2007 NBCA 50, refd to. [para. 62].

Wildman v. Wildman (2006), 215 O.A.C. 239 (C.A.), refd to. [para. 63].

Milton v. Milton (2008), 338 N.B.R.(2d) 300; 866 A.P.R. 300; 2008 NBCA 87, refd to. [para. 63].

Dalton Cartage Co. v. Continental Insurance Co. and St. Paul Fire and Marine Insurance Co., [1982] 1 S.C.R. 164; 40 N.R. 135; 131 D.L.R.(3d) 559, refd to. [para. 66].

Canadian National Railway Co. et al. v. Royal & Sun Alliance Insurance Co. of Canada et al., [2008] 3 S.C.R. 453; 381 N.R. 332; 243 O.A.C. 340; 2008 SCC 66, refd to. [para. 66].

Optimum Insurance Co. v. Donovan (2008), 340 N.B.R.(2d) 45; 871 A.P.R. 45; 2009 NBCA 6, leave to appeal refused (2009), 398 N.R. 388 (S.C.C.), refd to. [para. 66].

C.J.G. v. L.T.G. (2011), 369 N.B.R.(2d) 202; 952 A.P.R. 202; 2011 NBCA 12, refd to. [para. 66].

Counsel:

Avocats:

Lee McKeigan-Dempsey, for the appellants;

Terrence L.S. Teed, Q.C., and Emmy M. Chiasson, for the respondent.

This appeal was heard on June 17, 2011, before Drapeau, C.J.N.B., Larlee and Quigg, JJ.A., of the New Brunswick Court of Appeal. The following judgment of the Court of Appeal was delivered in both official languages by Drapeau, C.J.N.B., on November 3, 2011.