Nuvo Electronics Inc. v. London Assurance et al., [2000] O.T.C. 459 (SupCt)

• Judge: MacFarland, J.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: November 01, 2000
• Jurisdiction: Ontario
• Citations: [2000] O.T.C. 459 (SupCt)

Nuvo Electronics v. London Assurance, [2000] O.T.C. 459 (SupCt)

MLB headnote and full text

Temp. Cite: [2000] O.T.C. TBEd. JL.032

Nuvo Electronics Inc. (plaintiffs) v. The London Assurance, Wm. H.McGee & Co. of Canada Ltd., Tom Buckley Insurance Brokers Limited, Air Canada and Emery Air Freight Corporation (defendants)

(96-CU-112728)

Indexed As: Nuvo Electronics Inc. v. London Assurance et al.

Court of Ontario

Superior Court of Justice

MacFarland, J.

June 14 and November 1, 2000.

Summary:

An air shipment from San Francisco of 15 boxes consigned to Nuvo Electronics Ltd. (Nuvo) was off-loaded in the morning in Toronto and delivered to Air Canada's cargo warehouse at the airport. The shipment was not in the assigned rack location when a check was done between midnight and 4 a.m. Nuvo sued its insurer, claiming, inter alia, the limits of its policy ($1,500,000 Cdn.). The insurer asserted that the policy was cancelled at 12:01 a.m. on the day the boxes were shipped (i.e. before shipment) and, in any event, the policy was void ab initio because Nuvo had failed to disclose its loss history at the time it applied for and/or during the currency of its policy. In the event that the insurer succeeded on the cancellation issue, Nuvo claimed against its insurance broker for misrepresenting that there was coverage in place. In the event that the policy was void ab initio, the insurer counterclaimed against Nuvo for the monies it had paid under the policy. Nuvo also claimed against Air Canada for the value of the lost shipment ($1,405,000 U.S.). Nuvo asserted that Air Canada could not rely on the limitation of liability provisions contained in the Warsaw Convention because the air waybill was deficient in terms of its particulars and the loss was occasioned as the result of the wilful misconduct of Air Canada employees. Air Canada claimed that it had turned the boxes over to Emery Worldwide. In that event, Nuvo claimed the value of its shipment from Emery.

The Ontario Superior Court, in a decision reported at 1 to 118, allowed the action against the insurer. The policy had remained in effect throughout the day of the shipment. The policy was ambiguous with respect to cancellation. The notice of cancellation was vague and imprecise and did not "bring home" to Nuvo or the broker that coverage expired at 12:01 a.m. Further, the insurer failed to comply with the requirements for cancellation under the policy. The court further held that the insurer had failed to prove material non-disclosure and the policy was not void ab initio. The court dismissed the action against the broker. The court allowed the claim against Air Canada. Air Canada was not entitled to rely on the limitation of liability provisions of the Warsaw Convention where the waybill was deficient and the shipment had been stolen by an Air Canada employee in the course of employment. The court assessed damages accordingly. The parties made submissions on prejudgment interest and costs.

The Ontario Superior Court, in a decision reported at paragraphs 119 to 173, determined the interest and costs issues. The court held that Nuvo was entitled to solicitor and costs for the time period after the date of the offer to settle for $1,900,000 ($22,110 less than the total claim against Air Canada). The court held that Nuvo was entitled to have its costs of prosecuting the action against Air Canada from Air Canada and its costs of prosecuting the action against the insurer from the insurer. Any costs incurred which were necessary for both actions were to be borne equally by Air Canada and the insurer. Nuvo was also entitled to the costs of defending the insurer's counterclaim from the insurer. The court ordered the insurer to pay the costs of the broker and Emery. The court referred to an offer to settle under which Emery had offered to agree to a dismissal of the action without costs and to Air Canada's persisting in its position vis-à-vis Emery despite knowing that it was factually untenable. The court ordered Air Canada to pay Emery costs, including solicitor and client costs from the date of the offer to settle. The court ordered Air Canada to return costs paid by Emery with respect to an abandoned motion for summary judgment. Emery had abandoned the motion because of an "invariable" procedure that Air Canada claimed to have in place respecting parcel pick up. The procedure was not "invariable". The court awarded the insurer its party and party costs of prosecuting the claim against Air Canada.

Aeronautics - Topic 5126

Airlines - Carriage of goods - Liability - Statutory limitations - Warsaw Convention -See paragraphs 82 to 110.

Courts - Topic 101

Stare decisis - Authority of judicial decisions - English, American and foreign authorities - General - See paragraphs 93 to 95.

Courts - Topic 103

Stare decisis - Authority of judicial decisions - English, American and foreign authorities - American decisions - See paragraphs 93 to 95.

Evidence - Topic 1595

Hearsay rule - Hearsay rule exceptions and exclusions - Business records - Particular records - Waybills - See paragraphs 8 to 28.

Insurance - Topic 1425

The insurance contract - Termination by insurer - Notice of cancellation - See paragraphs 29 to 57.

Insurance - Topic 2483

Applicant's duty of disclosure - Default in duty to disclose - Requirement that misrepresentation induced insurer to insure - See paragraphs 58 to 76.

Interest - Topic 5490

Interest as damages (prejudgment interest) - Particular claims - Insurance - See paragraphs 125 to 131.

Practice - Topic 7063

Costs - Party and party costs - Counsel fees - Special or additional counsel - See paragraph 147.

Practice - Topic 7155

Costs - Party and party costs - Liability for party and party costs - Bullock order or Sanderson order - Where success divided - See paragraphs 150 to 155.

Practice - Topic 7168

Costs - Party and party costs - Liability for party and party costs - Between defendants - See paragraphs 144 to 146 and 149 to 155 and 162 to 172.

Practice - Topic 7241

Costs - Party and party costs - Offers to settle - General - What constitutes - See paragraphs 132 to 143.

Practice - Topic 7364

Costs - Costs of interlocutory proceedings - Costs of motions or applications - See paragraphs 160 and 161.

Cases Noticed:

Pan Atlantic Insurance Co. et al. v. Pine Top Insurance Co., [1995] 1 A.C. 501; 171 N.R. 81 (H.L.), not folld. [para. 71].

Brinks's Ltd. v. South African Airways (1996), 93 F.3d 1022 (C.A., 2nd Cir.), refd to. [para. 93].

Corocraft Ltd. et al. v. Pan American Airways Inc., [1969] 1 Q.B. 616, refd to. [para. 94].

Swiss Bank Corp. et al. v. Air Canada (1987) 83 N.R. 224; 44 D.L.R.(4th) 680 (F.C.A.), dist. [para. 98].

Continental Insurance Co. v. Dalton Cartage Co. et al., [1982] 1 S.C.R. 164; 40 N.R. 135, refd to. [para. 101].

Republic National Bank of New York v. Easter Airlines Inc., 20 Avi 17920 (U.S.C.A., 2nd Cir.), refd to. [para. 106].

Whiten v. Pilot Insurance Co. et al. (1999) 117 O.A.C. 201; 42 O.R.(3d) 642 (C.A.), refd to. [para. 115].

Walker Estate et al. v. York Finch General Hospital et al. (1999), 118 O.A.C. 217; 169 D.L.R.(4th) 689 (C.A.), dist. [para. 136].

Data General (Canada) Ltd. et al. v. Molnar Systems Group Inc. et al. (1991), 52 O.A.C. 212; 6 O.R.(3d) 409 (C.A.), refd to. [para. 138].

Authors and Works Noticed:

Sopinka, John, Lederman, Sidney N., and Bryant, Alan W., The Law of Evidence in Canada (2nd Ed. 1998), generally [para. 21].

Counsel:

R.B. Lawson and D. Cheifetz, for the plaintiff;

Gerald Chouest and Alexandra Kindbom, for Air Canada;

Rui M. Fernandes and Gordon Hearn, for The London Assurance and Wm. H. McGee & Co. of Canada Ltd.;

Deborah Berlach, for Tom Buckley Insurance Brokers Limited;

Patricia M. Conway, for Emery Air Freight Corporation.

MacFarland, J., of the Ontario Superior Court heard this action on April 3-6, 10-14, 17, 25-28, May 1-5, 8-11 and 15-18, 2000, and filed the following decisions on June 14 and November 1, 2000.

Please note: The following judgment has not been edited.