High Noon Holdings Ltd. v. Commonwealth Insurance Co. et al., (1986) 70 A.R. 136 (QB)

• Judge: Shannon, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: April 25, 1986
• Citations: (1986), 70 A.R. 136 (QB)

High Noon v. Commonwealth Ins. Co. (1986), 70 A.R. 136 (QB)

MLB headnote and full text

High Noon Holdings Ltd. v. Commonwealth Insurance Company, Reandex Managers Limited and Marsh and McLennan, Limited

(Action No. 8301-34378)

Indexed As: High Noon Holdings Ltd. v. Commonwealth Insurance Co. et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Shannon, J.

April 25, 1986.

Summary:

The insured operated a business out of a leased airport hangar. The hangar and its contents were destroyed by fire. The insurer denied liability under a fire insurance policy on the grounds of non-compliance with conditions precedent to obtaining insurance and misrepresentation as to the age of the hangar and the financial condition of the insured. The insured brought an action against its broker, the insurer and the insurer's managing agent to enforce its claim under the policy.

The Alberta Court of Queen's Bench allowed the action. The court held that the conditions precedent were waived by the insurer and there was no misrepresentation.

Insurance - Topic 1115

The contract - Formation of contract - Conditions precedent - Waiver of - An insurance contract was made subject to the insured hangar being "a modern hangar" and the insured being in "reasonably good financial shape" - The conditions were so vague and imprecise as to be virtually meaningless - The policy was issued without incorporating or referring to the two conditions - The premium was paid and accepted - The Alberta Court of Queen's Bench held that the insurer, by its conduct, had waived compliance with the conditions precedent - See paragraphs 12 to 31.

Insurance - Topic 2490

Applicant's duty of disclosure - Default in duty - Misrepresentation - What constitutes - An insurer submitted that the insured misrepresented the age of the insured property (an airport hangar) in response to the insurer's question as to whether the hangar was a "modern hangar" - The Alberta Court of Queen's Bench held that there was no misrepresentation, where the response that the building was in excellent condition was accurate and the insurer waived the provision of more details - See paragraphs 32 to 34.

Insurance - Topic 5752

Fire insurance - Insurable interests - Ownership of property insured - A fire insurance policy insured an airport hangar and its contents - The majority of the contents were owned by a third party (disclosed to the insurer) and held by the insured as bailee - The insurance contract included the third party as a loss payee - The Alberta Court of Queen's Bench held that the insured had an insurable interest in the property held as bailee - See paragraphs 38 to 40.

Insurance - Topic 5854

Fire insurance - The loss - Actual cash value - What constitutes - The insurer insured the "actual cash value" of the insured's leasehold interest in an airport hangar and its contents - The Alberta Court of Queen's Bench held that actual cash value was not necessarily the replacement value or market value, but the value of the property to the insured at the time of the loss - The court held that the actual cash value to the insured was based on a capitalized value of revenues expected to accrue over the life of the building - The court set out the figures to be used by the parties to arrive at this value - See paragraphs 43 to 61.

Interest - Topic 5304

As damages - Interest on payment of money or debt withheld - Amount due under insurance contract - The Alberta Court of Queen's Bench held that an amount due under a contract of insurance (and not as damages) was a payment improperly withheld notwithstanding the amount was in dispute and not ascertained on the due date - The court awarded the insured interest on the sum withheld, commencing 60 days following submission of the proofs of loss - See paragraphs 62 to 71.

Cases Noticed:

Cole v. Merchants Fire Insurance Co. (1921), 51 O.L.R. 340, refd to. [para. 41].

Hepburn v. A. Tomlinson (Hauliers) Ltd., [1966] A.C. 451 (H.L.), refd to. [para. 42].

Canadian National Fire Insurance Company v. Colonsay Hotel Company, [1923] S.C.R. 688, refd to. [para. 45].

Ziola v. Cooperative Fire and Casualty Company, [1976] 6 W.W.R. 159, refd to. [para. 46].

McMurray Mobile Home Park Limited v. Halifax Insurance Company (1979), 17 A.R. 40, refd to. [para. 63].

Granpac v. American Home Insurance Company (1982), 33 A.R. 212, appld. [para. 64].

Eyben v. K.R. Ranches 1970 Limited (1982), 38 A.R. 336, refd to. [para. 66].

Kenting Drilling Limited v. General Accident Assurance Co. of Canada, [1979] 5 W.W.R. 68, refd to. [para. 66].

Evergreen Irrigation v. Belgium Farms Limited (1976), 3 A.R. 248, refd to. [para. 67].

Sheehy v. Edmonton World Hockey Enterprises Limited (1979), 22 A.R. 1, refd to. [para. 67].

Statutes Noticed:

Judicature Act, R.S.A. 1980, c. J-1, sect. 15 [para. 63].

Judgment Interest Act, S.A. 1984, c. J-0.5, sect. 4(2).

Authors and Works Noticed:

McGillivray and Parkington on Insurance Law (7th Ed. 1981), p. 795 [para. 14].

Chitty on Contracts (25th Ed. 1983), p. 3707 [para. 33].

Counsel:

D.I. Brenner, for the plaintiff;

W.E. Code, Q.C., and J. Dewar, for the defendants, Commonwealth and Reandex;

R. White and A. Gray, for the defendant, Marsh & McLennan.

This action was heard before Shannon, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following judgment on April 25, 1986.