Non-Marine Underwriters, Lloyd's, London v. National Armoured Ltd., (1996) 19 O.T.C. 174 (GD)

• Judge: Sharpe, J.
• Court: Ontario Court of Justice General Division (Canada)
• Case Date: October 11, 1996
• Jurisdiction: Ontario
• Citations: (1996), 19 O.T.C. 174 (GD)

Lloyd's v. Nat. Armoured Ltd. (1996), 19 O.T.C. 174 (GD)

MLB headnote and full text

Michael Moss, an underwriter of Lloyd's, England, on behalf of himself and all those other Lloyd's underwriters subscribing to insurance policies numbered 009A92131, 009A92132, and 009A92133 (plaintiffs) v. National Armoured Ltd. (defendant)

(B135/94; 73803/93)

Canadian Capital Corporation, Liquor Control Board of Ontario, Korea Exchange Bank of Canada, J.D. Alexander Company Limited, W.R. Dawson Inc., John Mills Limited, J.B. Webster and Sons Limited Mike Elik Ltd., Leo A. Seydel Limited, Eric R. Sellors Holdings Limited, Brian Domelle Enterprises Limited G-Mart Ltd., McDonald's Restaurants of Canada Limited, Humber College of Applied Arts and Technology, Leon's Furniture Limited, Janda Products (Canada) Limited/New Way Sales Company, Lanzarrotta Wholesale Grocers Limited, A.G. Siberry Investments Limited, Hanley Foods Inc., Angela King Incorporated/Shell Clean Plus Versa Services Ltd., Metro Toronto Convention Centre Corporation, Duca Community Credit Union Limited, Penny Lane Food Market Ltd., Canadian Tire Corporation Ltd. and Tavco Operations Incorporated, A Division of Weston Produce Food Centre (plaintiffs) v. National Armoured Ltd., E.W. Tinmouth or M.J. Oppenheim in his quality as Attorney in Canada for the Non-Marine Underwriters, Members of Lloyd's London, England, Steven J. McCormack, Allan Wood, Marcel Gagnier, and Matthews & Associates Insurance Brokers (Fenelon Falls) Ltd., Kelly & Associates Inc., and Fraser Insurance Brokers Limited (defendants)

(B138/93; 93-CQ-36181)

Famous Players Inc. (plaintiff) v. National Armoured Ltd., E.W. Tinmouth in his Quality as Attorney in Canada for the Non-Marine Underwriters, Members of Lloyd's London, England (defendants)

(93-CQ-44301)

Indexed As: Non-Marine Underwriters, Lloyd's, London v. National Armoured Ltd.

Ontario Court of Justice

General Division

Commercial List

Sharpe, J.

November 28, 1996.

Summary:

A robbery occurred at the premises of National Armoured Ltd. (NAL) and over $8,000,000 was stolen. The robbery proceeds were not recovered. NAL was insured under three armoured car carrier policies issued by a Lloyd's syndicate. Customers of NAL whose property was stolen commenced two separate actions against Lloyd's asserting both derivative claims as well as claims as unnamed insured with direct rights of action under the policies. In a third action Lloyd's sued NAL for a declaration that it was entitled to void the policies on the grounds of misrepresentation and nondisclosure of material facts.

The Ontario Court (General Division) held that there were material misrepresentations of fact made by NAL to Lloyd's respecting NAL's claims history, company ownership, the role of a particular individual in management, "cash lapping", and "cheque kiting" which entitled Lloyd's to void the policies. The court rejected the contention that Lloyd's was precluded from voiding the policies for lack of due diligence. The court held further that the customers' claims as unsatisfied creditors, as loss payees or as unnamed assureds could not succeed because, inter alia, they were subject to the defences raised by Lloyd's.

Insurance - Topic 722

Insurers - Duties - Duty to inquire - See paragraphs 106 to 114.

Insurance - Topic 726

Insurers - Duties - Duty to investigate insurance applicant's loss record - See paragraphs 106 to 114.

Insurance - Topic 730

Insurers - Duties - Duty of good faith - See paragraphs 106 to 114.

Insurance - Topic 1006

The insurance contract - Unnamed insureds - See paragraphs 130 to 137.

Insurance - Topic 2446

Applicant's duty of disclosure - Materiality - Material matters - See paragraphs 53 to 105.

Insurance - Topic 2490

Applicant's duty of disclosure - Default in duty to disclose - Misrepresentation - What constitutes - See paragraphs 53 to 105.

Insurance - Topic 3010

Payment of insurance proceeds - Loss payable clauses - See paragraphs 126 to 129.

Insurance - Topic 3162

Payment of insurance proceeds - Actions - By judgment creditor against debtor's insurer - When available - See paragraphs 124, 125.

Insurance - Topic 3306

Payment of insurance proceeds - Actions - Defences - Failure to disclose - See paragraphs 53 to 105.

Insurance - Topic 3307

Payment of insurance proceeds - Actions - Defences - Misrepresentation in application - See paragraphs 53 to 105.

Cases Noticed:

Anglo-African Merchants Ltd. v. Bayley, [1969] 2 All E.R. 421, refd to. [para. 74].

Rozanes v. Bowen (1928), 32 Ll. L.R. 98, refd to. [para. 74].

Edinburgh Assurance Co. v. Burns (R.L.) Corp. (1980), 479 F.Supp 138, revd. in part, 669 F.2d 1259, refd to. [para. 74].

Carter v. Boehm (1766), 3 Burr. 1905; 97 E.R. 1162, refd to. [para. 75].

Bode v. Chubb Insurance Co. of Canada (1991), 3 O.R.(3d) 752 (Gen. Div.), refd to. [para. 75].

Ontario Metal Products Co. v. Mutual Life Insurance Co., [1925] A.C. 344 (P.C.), refd to. [para. 76].

Vrbancic v. London Life Insurance Co. (1995), 83 O.A.C. 321; 25 O.R.(3d) 710 (C.A.), refd to. [para. 76].

Moscarelli v. Aetna Life Insurance Co. of Canada (1995), 24 O.R.(3d) 383 (Gen. Div.), affd. (1995) 87 O.A.C. 314 (Div. Ct.), refd to. [para. 80].

R. v. K.G.B., [1993] 1 S.C.R. 740; 148 N.R. 241; 61 O.A.C. 1, refd to. [para. 81].

Bernardi et al. v. Guardian Royal Exchange Assurance Co., [1979] I.L.R. 385 (Ont. C.A.), refd to. [para. 82].

Hanes v. Wawanesa Mutual Insurance Co., [1963] S.C.R. 154, refd to. [para. 82].

Coronation Insurance Co. et al. v. Taku Air Transport Ltd. et al., [1991] 3 S.C.R. 622; 131 N.R. 241; 6 B.C.A.C. 161; 13 W.A.C. 161, not appld. [para. 107].

Dimario v. Royal Insurance Canada (1987), 26 O.A.C. 370; 29 C.C.L.I. 67 (Div. Ct.), refd to. [para. 118].

R. v. Canadian Dredge & Dock Co. et al., [1985] 1 S.C.R. 662; 59 N.R. 241; 9 O.A.C. 321, refd to. [para. 122].

Oger v. Chiefscope Inc. et al. (1996), 2 O.T.C. 209; 29 O.R.(3d) 215 (Gen. Div.), refd to. [para. 125].

Liverpool & London & Globe Insurance Co. v. Agricultural Savings & Loan Co. (1901), 3 O.L.R. 127 (C.A.), revd. (1902), 23 S.C.R. 94, refd to. [para. 127].

Coleman v. Northern Assurance Co., [1950] 3 D.L.R. 556 (Ont. H.C.), refd to. [para. 127].

National Bank of Greece (Canada) et autres v. Simcoe & Erie General Assurance Co. et autres, [1990] 2 S.C.R. 1029; 115 N.R. 42; 32 Q.A.C. 250, not appld. [para. 128].

Vandepitte v. Preferred Accident Insurance Co. of New York, [1933] A.C. 70, refd to. [para. 131].

Statutes Noticed:

Insurance Act, R.S.O. 1990, c. I-8, sect. 132(1) [para. 124].

Authors and Works Noticed:

MacGillivray and Parkington, Insurance Law (8th Ed.), para. 1375 [para. 74].

Counsel: (73803/93)

Ian H. Fraser and Marcia C. Green, for the plaintiffs;

No one appeared for the defendant.

Counsel: (93-CQ-36181)

Hugh G. Brown and Pamela Large-Moran, for the plaintiffs;

Ian H. Fraser and Marcia C. Green, for the defendant, Lloyd's.

Counsel: (93-CQ-44301)

Richard H. Krempulec, Q.C., for the plaintiff;

Ian H. Fraser and Marcia C. Green, for the defendant, Lloyd's.

This case was heard from September 16 to October 11, 1996, before Sharpe, J., of the Ontario Court (General Division), who released the following judgment on November 28, 1996.