National Bank of Greece (Canada) et autres v. Simcoe & Erie General Assurance Co. et autres, (1990) 115 N.R. 42 (SCC)

• Judge: La Forest, L'Heureux-Dubé, Gonthier, Cory and McLachlin, JJ.
• Court: Supreme Court (Canada)
• Case Date: October 04, 1990
• Jurisdiction: Canada (Federal)
• Citations: (1990), 115 N.R. 42 (SCC);115 NR 42;23 ACWS (3d) 74;[1990] SCJ No 95 (QL);1990 CanLII 92 (SCC);[1990] RRA 1043;[1990] 2 SCR 1029;[1990] RDI 715;[1990] ACS no 95;32 QAC 25;74 DLR (4th) 197;JE 90-1410

Nat. Bk. v. Simcoe & Erie Gen. Assur. (1990), 115 N.R. 42 (SCC)

MLB headnote and full text

[French language version follows English language version]

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

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Antonio Panzera, Giuseppe Valiante, Francesco Tatta and Andrea Barbiero (appellants) v. Simcoe & Erie General Assurance Company, General Accident Insurance and Balboa Insurance Company (respondents)

(21341)

Indexed As: National Bank of Greece (Canada) et autres v. Simcoe & Erie General Assurance Co. et autres

Supreme Court of Canada

La Forest, L'Heureux-Dubé, Gonthier, Cory and McLachlin, JJ.

October 4, 1990.

Summary:

The owners of a hypothecated (mortgaged) building in Québec made false misrepresentations to the insurer in order to obtain fire insurance coverage on their building. The policy consequently issued contained a Standard Mortgage Clause approved by the Insurance Bureau of Canada (for text see paras. 2 and 72). The building burned to the ground. The hypothecary creditors (mortgagees) claimed the insurance proceeds. The insurers rejected the claim. They thought that the policy was void ab initio because it was issued on the basis of false misrepresentations by the building's owners. The hypothecary creditors sued the insurers. The Québec Superior Court, in a judgment reported at [1985] S.C. 1263; 16 C.C.L.I. 126, allowed the action. The insurers appealed.

The Québec Court of Appeal, in a judgment reported at [1989] R.D.I. 46; [1989] R.R.A. 145; 20 Q.A.C. 226; 36 C.C.L.I. 296, allowed the appeal. The hypothecary creditors appealed.

The Supreme Court of Canada, in a three to two decision, allowed the appeal.

Insurance - Topic 1507

The contract - Nullity ab initio - Effect on hypothecary creditor (mortgagee) - A fire insurance policy was declared void ab initio because the insured falsely misrepresented the risk to the insurer - Was this nullity opposable to the insured's hypothecary creditor (mortgagee)? - The Supreme Court of Canada, in a three to two decision answered no - The majority (La Forest, Cory and McLachlin, JJ.) stated that because there was a separate contract of insurance between the hypothecary creditor and the mortgagee, the nullity induced by the insured's false misrepresentations affected only the insured - The minority (L'Heureux-Dubé and Gonthier, JJ.) stated that because the separate contract was obtained by the insured acting as mandatary of the hypothecary creditor, the insured's false misrepresentations bound the hypothecary creditor and carried with them the nullity of the separate contract.

Assurance - Cote 1507

Le contrat - Nullité ab initio - Opposabilité du créancier hypothécaire - [Voir Insurance - Topic 1507].

Insurance - Topic 1858

The contract - Interpretation - Ambiguity - Construction to produce a fair result - A Standard Mortgage Clause approved by the Insurance Bureau of Canada stated that, with respect to the mortgagee (hypothecary creditor), the policy remained in force notwithstanding any act, neglect, omission or misrepresentation attributable to the mortgagor (hypothecary debtor) including transfer of interest, vacancy, non-occupancy or hazardous occupancy - Did the Clause include the mortgagor's (hypothecary debtor's) false misrepresentation of the risk which caused the nullity ab initio of the policy? - The majority of the Supreme Court of Canada answered yes because the Clause, as understood by the average person applying for insurance, reasonably evidenced the intention to cover such false misrepresentations - The minority applied the ejusdem generis rule, stated that the Clause covered only events happening after the conclusion of the contract and answered no - See paragraphs 4 to 25 and 43 to 50 (majority) and 90 to 102 (minority).

Assurance - Cote 1858

Le contrat - Interprétation - Ambiguité - Recherche d'un résultat raisonnable - [Voir Insurance - Topic 1858].

Québec Nominate Contracts - Topic 3616

Mandate - Obligations of mandator toward third persons - Fault by mandatary - General - A fire insurance policy was declared void ab initio because the insured falsely misrepresented the risk to the insurer - Was this nullity opposable to the insured's hypothecary creditor (mortgagee)? - The Supreme Court of Canada, in a three to two decision, answered no - The majority (La Forest, Cory and McLachlin, JJ.) stated that because there was a separate contract of insurance between the hypothecary creditor and the mortgagee, the nullity induced by the insured's false misrepresentations affected only the insured - The minority (L'Heureux-Dubé and Gonthier, JJ.) stated that because the separate contract was obtained by the insured acting as mandatary of the hypothecary creditor, the insured's false misrepresentations bound the hypothecary creditor and carried with them the nullity of the separate contract.

Québec Contrats Nommés - Cote 3616

Mandat - Obligations du mandant envers les tiers - Faute du mandataire - Généralités - [Voir Québec Nominate Contracts - Topic 3616].

Cases Noticed:

Caisse populaire des Deux rives v. Société mutuelle d'assurance contre l'incendie de la Vallée du Richelieu (1990), 115 N.R. 1 refd to. [para. 2].

London and Midland General Insurance Co. v. Bonser, [1973] S.C.R. 10, refd to. [para. 4].

Hastings v. Westchester Fire Insurance Co. (1878), 73 N.Y. 141, consd. [paras. 5, 78].

Imperial Building & Loan Ass'n v. Aetna Ins. Co. (1932), 166 S.E. 841 (W. Va.), refd to. [paras. 5, 79].

Syndicate Ins. Co. v. Bohn (1894), 65 F. 165, consd. [paras. 7, 78].

Lirette v. Madill et al., [1987] R.J.Q. 993; 8 Q.A.C. 81, dist. [paras. 9, 59].

Thames and Mersey Marine Insurance Co. v. Hamilton, Fraser & Co. (1887), 12 App. Cas. 484, refd to. [para. 11].

Renault v. Bell Asbestos Mines Ltd., [1980] C.A. 370, consd. [paras. 11, 93].

Scott v. Wawanesa Mutual Insurance Co., [1989] 1 S.C.R. 1445; 94 N.R. 261, refd to. [para. 18].

Hanover Fire Ins. Co. v. National Exchange Bank (1896), 34 S.W. 333 (Tex. Civ. App.), consd. [paras. 29, 79].

Omnium Securities Co. v. Canada Fire and Mutual Insurance Co. (1882), 1 O.R. 494, consd. [paras. 31, 82].

Liverpool and London and Globe Insurance Co. v. Agricultural Savings and Loan Co. (1903), 33 S.C.R. 94, consd. [paras. 32, 83].

Chenier v. Madill (1973), 2 O.R.(2d) 361 (H.C.), consd. [paras. 39, 84].

Consolidated Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488, refd to. [para. 46].

Caisse populaire des Deux rives v. Vallée du Richelieu (La), compagnie mutuelle d'assurance de dommages, [1988] R.J.Q. 2355; 18 Q.A.C. 44, refd to. [para. 59].

Reed v. Firemen's Insurance Co. of Newark (1911), 35 L.R.A.(N.S.) 343 (N.J.), refd to. [para. 78].

Federal Land Bank of Columbia v. Atlas Assur. Co. (1924), 125 S.E. 631 (N.C.), refd to. [para. 78].

Collins v. Michigan Commercial Underwriters (1928), 6 Tenn.App. 528, refd to. [para. 78].

Fayetteville Building & Loan Ass'n v. Mutual Fire Ins. Co. of West Virginia (1928), 141 S.E. 634 (W. Va.), refd to. [para. 78].

National Union Fire Ins. Co. v. Short (1929), 32 F.2d 631 (6th Cir.), refd to. [para. 78].

Stockton v. Atlantic Fire Ins. Co. (1934), 175 S.E. 695 (N.C.), refd to. [para. 78].

National Fire Ins. Co. of Hartford, Conn. v. Dallas Joint Stock Land Bank of Dallas (1935), 50 P.2d 326 (Okla.), refd to. [para. 78].

Western Assur. Co. v. Hughes (1937), 66 P.2d 1056 (S.C. of Okla.), refd to. [para. 78].

Great American Insurance Co. of New York v. Southwestern Finance Co. (1956), 297 P.2d 403 (Okla.), refd to. [para. 78].

Northwestern National Insurance Co. v. Mildenberger (1962), 359 S.W.2d 380 (Mo. Ct. App.), refd to. [para. 78].

Equality Savings and Loan Association v. Missouri Property Insurance Placement Facility (1976), 537 S.W.2d 440 (Mo. Ct. App.), refd to. [para. 78].

Meade v. North County Co-Operative Insurance Co. (1985), 487 N.Y.S.2d 983 (Sup. Ct.), refd to. [para. 78].

Graham v. Fireman's Insurance Co. (1881), 87 N.Y. 69, refd to. [para. 79].

Young Men's Lyceum of Tarrytown v. National Ben Franklin Fire Ins. Co. of Pittsburg (1917), 163 N.Y.S. 226 (Sup. Ct., App. Div.), refd to. [para. 79].

Canadian Imperial Bank of Commerce v. Dominion of Canada General Insurance Co. (1987), 29 C.C.L.I. 313, consd. [para. 85].

Duchesneau v. Great American Insurance Co., [1955] Qué. Q.B. 120, refd to. [para. 99].

Amin v. Cie d'assurance American Home, [1989] R.R.A. 151, refd to. [para. 99].

Veilleux v. Victoria Insurance Co., [1989] R.J.Q. 1075; 22 Q.A.C. 206, refd to. [para. 99].

Statutes Noticed:

Civil Code of Lower Canada/Code civil du Bas-Canada, art. 1024, art. 1727, art. 2485, art. 2486, art. 2487, art. 2499, art. 2510, art. 2511, art. 2512, art. 2513, art. 2514, art. 2515, art. 2566, art. 2572, art. 2573.

Authors and Works Noticed:

American Jurisprudence (2nd Ed. 1982), vol. 43 [para. 19].

Bouzat, Pierre, De la clause par laquelle une partie dans une convention s'engage à ne pas en demander la nullité (1934), 54 Rev. crit. lég. et jur. 350 [para. 104].

Bergeron, Jean-Guy, L'opposabilité des exceptions à différents intéressés dans un contrat d'assurance (1987), 47 R. du B. 933 [paras. 14, 35, 37, 48].

Concise Oxford Dictionary (7th Ed. 1982), "include", [para. 13].

Côté, Pierre-André, Interprétation des lois (1982) [paras. 11, 93, French version].

Côté, Pierre-André, The Interpretation of Legislation in Canada (1984) [paras. 11, 93, English version].

Couch, George J., Encyclopédia of Insurance Law (2nd Ed. 1982), vol. 10A [paras. 5, 27, 35].

Domenget, M., Du mandat, de la commission et de la gestion d'affaires, t. 1, 1862 [para. 70].

Driedger, Elmer A., Construction of Statutes (2nd Ed. 1983) [para. 11].

Dwyer, James R. and Barney, Corey S., Analysis of Standard Mortgage Clause and Selected Provisions of the New York Standard Fire Policy (1984), 19 Forum 639 [para. 28].

Encyclopédie juridique Dalloz: Repertoire de droit civil (2e éd.), t. 5, Mandat par René Rodière [para. 70].

Faribault, Bernard, Du papillon à la chrysalide ou l'étrange métamorphose de l'assurance de responsabilité (1987), 55 Assurances 300 [para. 98].

Petit Robert 1 (1987), "notamment" [para. 13].

Picard, Maurice et Besson, André, Traité général des assurances terrestres en droit français (1940), t. 2 [para. 75].

Simard Jr., François-Xavier, La faute intentionnelle de l'assuré et la clause de garantie hypothécaire (1987), 21 R.J.T. 335 [para. 40].

Stroud's Judicial Dictionary (5th Ed. 1986), vol. 3, "include", "including" [para. 13].

Counsel:

Jacques Fournier, for the appellants;

Emile Colas, Q.C., for the respondents.

Solicitors of Record:

Mondor, Fournier & Ass., Montréal, Québec, for the appellants;

Colas & Ass., Montréal, Québec, for the respondents.

This appeal was heard on March 20, 1990 by, La Forest, L'Heureux-Dubé, Gonthier, Cory and McLachlin, JJ., of the Supreme Court of Canada.

The judgment of the Supreme Court of Canada was delivered in both official languages, on October 4, 1990, and the following opinions were filed:

La Forest, Cory and McLachlin, JJ. - see paragraphs 1 to 51;

L'Heureux-Dubé and Gonthier, JJ., dissenting - see paragraphs 52 to 105.