Digest: Carteri v Saskatchewan Mutual Insurance Co., 2018 SKQB 150

• Date: May 11, 2018

Reported as: 2018 SKQB 150

Docket Number: QBG 424/10 JCR , QB17535

Court: Court of Queen's Bench

Date: 2018-05-11

Judges:

• Elson

Subjects:

• Insurance � Actions on Policies
• Insurance � Contract � Interpretation � Exclusion
• Statutes � Interpretation � Saskatchewan Insurance Act, Section 125, Section 126, Section 131
• Civil Procedure � Queen�s Bench Rules, Rule 7-2

Digest: The plaintiffs brought an action against the defendant insurance company claiming under their $175,000 fire insurance policy they had entered into in 2000 and against the defendants, Hoffart and Cisek, who were tenants in the plaintiffs� rental property. During the tenancy a fire had severely damaged the house and it was eventually demolished. There was evidence from the scene that suggested the explosion and fire resulted from an attempt to produce cannabis resin. The insurer admitted the policy but denied coverage on the basis of a risk exclusion it introduced to the policy in 2003. The exclusion purported to deny coverage for loss or damage to property caused by the manufacturing of illicit drugs. The plaintiffs argued that the insurer�s unilateral decision to insert the drug exclusion into the policy was unlawful under ss. 125 and 126 of The Saskatchewan Insurance Act (SIA) and it was inoperable because it was both unreasonable and unjust under s. 131 of the SIA in the circumstances of this case. In their action against the tenants, the plaintiffs sought damages on the grounds that they had violated the terms of the tenancy agreement by using the property for an unlawful purpose, resulting in the loss of the house. The insurer applied for summary judgment of the first action and the plaintiffs agreed that the matter could be decided under Queen�s Bench rule 7-2 but contested the application on its merits. The plaintiffs also pursued their own summary judgment application against the tenants. The tenants opposed the propriety of either action being decided through summary judgment. The issues were whether: 1) it was appropriate to determine the actions by summary judgment under rule 7-2; 2) the plaintiff�s property was used in a manner described in the drug exclusion; 3) the drug exclusion was properly inserted into the policy; 4) the operation of the drug exclusion was unjust or unreasonable in the circumstances; and 5) the tenants were liable to the plaintiffs for their loss.
HELD: The insurer�s application for summary judgment dismissing the plaintiffs� action was granted. The plaintiffs� application for summary judgment for damages...