Peace Hills General Insurance Co. v. Terrigno, (2009) 479 A.R. 151 (PC)

• Judge: O'Ferrall, P.C.J.
• Court: Provincial Court of Alberta (Canada)
• Case Date: July 11, 2007
• Citations: (2009), 479 A.R. 151 (PC);2009 ABPC 203

Peace Hills General Ins. v. Terrigno (2009), 479 A.R. 151 (PC)

MLB headnote and full text

Temp. Cite: [2009] A.R. TBEd. AU.060

Peace Hills General Insurance Company (plaintiff) v. Antoinetta Terrigno, Rocco Terrigno and Michael Terrigno (defendants)

(P0590106501; 2009 ABPC 203)

Indexed As: Peace Hills General Insurance Co. v. Terrigno

Alberta Provincial Court

O'Ferrall, P.C.J.

August 10, 2009.

Summary:

The plaintiff insurer brought an action for reimbursement, pursuant to the terms of an endorsement, from its named insureds for what it had to pay a third party for the property damage she suffered in an accident caused by the insureds' son. The insureds' son was one of two persons named in the endorsement as being persons prohibited from driving the insured vehicle. The plaintiff insurer also sought a judgment against the insureds' son for amounts it paid out to the third parties to compensate them for the personal injuries they claimed to have sustained in the accident on the basis that the son breached a statutory condition of the policy. The accident occurred when the son was driving while suspended; and the accident appeared to have occurred as a result of the son's negligence.

The Alberta Provincial Court allowed the action and awarded judgment to the plaintiff.

Agency - Topic 323

Creation of relations - Parties - What constitutes an agent - [See Insurance - Topic 4338 ].

Agency - Topic 1044

Authority of agent - Express authority - General - Scope of - [See Insurance - Topic 4338 ].

Agency - Topic 1176

Authority of agent - Implied authority - General - [See Insurance - Topic 4338 ].

Insurance - Topic 3137

Payment of insurance proceeds - Actions - Relief against forfeiture - When available - Michael drove one of his parents' (the insureds) vehicles and was involved in a motor vehicle accident - The plaintiff insurer settled with the third party by paying $1,600 for property damage and $14,400 for personal injury claims - The insurer sought a judgment against Michael for recovery of the amounts it paid out to the third parties for personal injury claims on the basis that Michael breached statutory condition 2(1)(b) of the policy by driving while disqualified - Michael asserted that if his driving was found to be a breach of the statutory condition, then given the nature of the breach, relief from forfeiture of insurance coverage ought to be granted - The Alberta Provincial Court found that Michael breached the statutory condition - Micheal's breach did not constitute imperfect compliance but rather constituted complete non-compliance with the statutory condition - Perhaps the failure of the named insured, Michael's mother, to refrain from permitting the use of the insured vehicle by a person who was a member of her household while his licence to drive was suspended might have constituted imperfect compliance when she had no reason to believe that person's licence was suspended - However, it was complete non-compliance when Michael drove the insured vehicle while his licence was suspended and while he had every reason to believe that it was suspended - The court refused to grant relief from forfeiture of the insurance coverage by reason of Michael's breach of the statutory condition - See paragraphs 53 to 57.

Insurance - Topic 3138

Payment of insurance proceeds - Actions - Relief against forfeiture - Imperfect compliance with statutory conditions - General - [See Insurance - Topic 3137 ].

Insurance - Topic 4251

Automobile insurance - Statutory conditions - Exclusions - Driving while not qualified - Michael drove one of his parents' (the insureds) vehicles and was involved in a motor vehicle accident - The plaintiff insurer settled with the third party by paying $1,600 for property damage and $14,400 for personal injury claims - The insurer sought a judgment against Michael for recovery of the amounts it paid out to the third parties for personal injury claims on the basis that Michael breached statutory condition 2(1)(b) of the policy by driving while disqualified - The accident occurred when Michael was driving while his driver's licence was suspended as a result of an unpaid fine in Ontario - The son asserted that he was unaware that his licence was suspended - The Alberta Provincial Court found that the son might not have had actual knowledge of the fine or the suspension, but there was no evidence that he was unaware of the alleged traffic violation - As a law student, he ought to have known that if he didn't contest the charge, he would be fined, and that if he didn't pay the fine, his licence would be suspended - The contract of insurance was breached by the son - His licence to drive was suspended - Whether or not he had knowledge of the suspension, the statutory condition was breached - See paragraphs 45 to 52.

Insurance - Topic 4338

Automobile insurance - Exclusions - Excluded driver endorsement - The named insureds were having difficulty obtaining insurance on reasonable terms because of their sons' (Maurizio and Michael) driving records - The plaintiff insurer suggested an endorsement as a means of lowering the insureds' premiums - The insureds were charged an acceptable (lower) premium - In return, the insurer received an undertaking that the sons would not drive their parents' vehicles - In the event of a breach of that undertaking, the insurer also received a covenant from its insureds to reimburse it any amounts paid out to satisfy property damage claims up to a maximum of $10,000 - The wife and Maurizio were present during the negotiations and Maurizio signed the insurance policy - Michael drove one of his parents' vehicles and was involved in a motor vehicle accident - The insurer settled with the third party by paying $1,600 for property damage and $14,400 for personal injury claims - The insurer brought an action for reimbursement pursuant to the terms of the endorsement - The Alberta Provincial Court granted judgment to the plaintiff - The endorsement was valid - Both insured were aware of the endorsement and what it meant - They might not have signed the endorsement, but they repeatedly ratified written reminders of its presence and of its effect by writing yearly cheques for the reduced premiums - The insureds' son, Maurizio, was the insureds' agent when he signed the endorsement - He was not only their son - The circumstances surrounding the execution of the endorsement also suggested that Maurizio was signing the property damage reimbursement endorsement on his parents' behalf - He had both actual and apparent authority to sign on their behalf - The authority was express in the case of his mother, apparent in the case of his father - The insurer's failure to have the named insureds sign the endorsement to be a case of imperfect compliance by the insurer as opposed to complete non-compliance - Even if the failure to have the named insureds sign the endorsement constituted complete non-compliance, such non-compliance did not mean that the named insureds' promise to reimburse was unenforceable - There was no ambiguity in the promise - Consideration for the promise was given - There was no doubt the promise was made - There was no doubt the named insurers knew and understood what the promise was - See paragraphs 26 to 40.

Insurance - Topic 4623

Automobile insurance - Recovery by insurer from insured for payments to third parties - Conditions precedent - Michael drove one of his parents' (the insureds) vehicles and was involved in a motor vehicle accident - The plaintiff insurer settled with the third party by paying $1,600 for property damage and $14,400 for personal injury claims - The insurer sought a judgment against Michael for recovery of the amounts it paid out to the third parties for personal injury claims on the basis that Michael breached statutory condition 2(1)(b) of the policy by driving while disqualified - Michael asserted that even if his driving was found to be a breach of the statutory condition, the insurer was precluded from claiming reimbursement because no judgment had been obtained by the third parties against him as required by s. 635 of the Insurance Act - The Alberta Provincial Court found that Michael breached the statutory condition - The court stated that "necessary prerequisites to reimbursement of the insurer by the insured may include any one of the following: (a) a judgment against the insured by the third party claimant, (b) an admission of liability by the insured and an agreement on quantum, (c) an express delegation of authority to the insurer to settle the third party claims, (d) an acquiescence by the insured in having the insurer settle the third party claims as it sees fit, or (e) a waiver by the insured of his or her right to contest the third party claim. The evidence in this case did not support the presence of (a), (b), or (c). It did however support an acquiescence or acceptance by the insured to have the insurer handle the claims. And it also supported a finding of a waiver by the insured of his right to contest the claim. That waiver is to be found in the insured's inaction. Michael Terrigno was content to return to law school and let the insurer deal with the claim. So the defence of no judgment against the insured fails." - See paragraphs 58 to 84.

Insurance - Topic 4625

Automobile insurance - Recovery by insurer from insured for payments to third parties - Where insured in breach of statutory conditions - [See Insurance - Topic 4251 ].

Insurance - Topic 4626

Automobile insurance - Recovery by insurer from insured for payments to third parties - Where driver not named insured - [See Insurance - Topic 4338 ].

Cases Noticed:

Nichols v. Saskatchewan Government Insurance, [1984] 5 W.W.R. 349; 35 Sask.R. 11 (Q.B.), affd. (1985), 31 M.V.R. xxxvi (Sask. C.A.), refd to. [para. 44].

Co-operative Fire and Casualty Co. v. Ritchie and Ritchie, [1983] 2 S.C.R. 36; 50 N.R. 106, refd to. [para. 44].

Prentice v. Co-Operators General Insurance Co., [1986] I.L.R. 1-2022 (Ont. C.A.), refd to. [para. 48].

Ratajczak v. Hemstra, [1985] O.J. No. 1784 (Dist. Ct.), dist. [para. 49].

Elance Steel Fabricating Co. v. Falk Brother Industries Ltd. et al. (1989), 99 N.R. 228; 80 Sask.R. 22; 39 C.C.L.I. 161 (S.C.C.), refd to. [para. 54].

Quarrie v. State Farm Mutual Automobile Insurance Co. (1997), 31 O.T.C. 28; 42 C.C.L.I.(2d) 21 (Gen. Div.), refd to. [para. 54].

Clark v. Co-operators General Insurance Co. (1997), 106 O.A.C. 219; 50 C.C.L.I.(2d) 111 (Div. Ct.), refd to. [para. 54].

Pilot Insurance Co. v. Clayton, [1998] I.L.R. I-3570; 66 O.T.C. 295 (Gen. Div.), refd to. [para. 54].

McEnaney v. General Accident Assurance Co. of Canada (2005), 195 O.A.C. 57 (C.A.), leave to appeal refused (2005), 348 N.R. 192; 214 O.A.C. 400; 2005 CarswellOnt 5327 (S.C.C.), refd to. [para. 55].

Lombard Canada Ltd. v. Kostash (2006), 400 A.R. 260 (Prov. Ct.), refd to. [para. 65].

Perri v. Allstate Insurance Co. of Canada, [1984] I.L.R. 1-1804 (Ont. Co. Ct.), refd to. [para. 65].

Economical Mutual Insurance Co. v. Geldart (1984), 57 N.B.R.(2d) 130; 148 A.P.R. 130 (T.D.), refd to. [para. 70].

London Assurance Co. v. Jonassen, [1968] 1 O.R. 487 (C.A.), refd to. [para. 70].

Statutes Noticed:

Insurance Act, R.S.A. 2000, c. I-3, sect. 635 [para. 59].

Authors and Works Noticed:

Brown, Menzies, Cassels, Brock and Blackwell, Insurance Law in Canada (2002) (Looseleaf), vol. 2, p. 17-89 [para. 69].

Bundus, Randall, J., Automobile Insurance, in Brown, Menzies, Cassels, Brock and Blackwell, Insurance Law in Canada (2002) (Looseleaf), vol. 2, p. 17-89 [para. 69].

Counsel:

Dennis A. McDermott, Q.C., for the defendant;

Michael D. Aasen, for the plaintiff.

This action was heard on July 11, 2007, and May 28, 2008, by O'Ferrall, P.C.J., of the Alberta Provincial Court, who delivered the following reasons for judgment at Calgary, Alberta, on August 10, 2009.