Sagl v. Cosburn, Griffiths & Brandham Insurance Brokers Ltd. et al.,

• Jurisdiction: Ontario
• Judge: Lang, Juriansz and Epstein, JJ.A.
• Neutral Citation: 2009 ONCA 388
• Citation: 2009 ONCA 388,(2009), 249 O.A.C. 234 (CA),72 CCLI (4th) 193,[2009] OJ No 1879 (QL),[2009] ILR 1,249 OAC 234,[2009] O.J. No 1879 (QL),249 O.A.C. 234,(2009), 249 OAC 234 (CA)
• Date: 24 November 2008
• Court: Court of Appeal (Ontario)

Sagl v. Cosburn, Griffiths & Brandham Ins. (2009), 249 O.A.C. 234 (CA)

MLB headnote and full text

Temp. Cite: [2009] O.A.C. TBEd. MY.038

Bridgette Sagl (plaintiff/respondent) v. Cosburn, Griffiths & Brandham Insurance Brokers Limited, Chubb Insurance Company of Canada , Eamonn Kinsella and G.C. Carley & Co. Limited (defendants/appellant)

(C47778; 2009 ONCA 388)

Indexed As: Sagl v. Cosburn, Griffiths & Brandham Insurance Brokers Ltd. et al.

Ontario Court of Appeal

Lang, Juriansz and Epstein, JJ.A.

May 8, 2009.

Summary:

The plaintiff's home was destroyed by fire. She claimed against her insurer, Chubb Insurance. Chubb defended by denying coverage on the basis that the fire was a result of arson, in which the plaintiff had participated and that the plaintiff had made material misrepresentations to the insurer both in her initial application for coverage and in presenting her claim.

The Ontario Superior Court, in a decision reported [2007] O.T.C. Uned. I08, rejected Chubb's defences. The trial judge awarded the plaintiff damages of over $4 million, plus punitive damages of $500,000 and substantial indemnity costs. Chubb appealed, challenging the trial judge's failure to find that it had established intentional material misrepresentation in the application for coverage and in the proof of loss, his application of s. 124 of the Insurance Act to the binder of insurance in place at the time of the fire, the award of punitive damages, and the costs awards.

The Ontario Court of Appeal allowed the appeal and ordered a new trial because of errors in the trial judge's analysis of the plaintiff's proof of loss, particularly because of his failure to articulate how he resolved the credibility and reliability issues. The new trial was limited to the issue of plaintiff's loss, specifically whether she was able to prove her loss in relation to her fine arts collection, and whether the policy was void due to intentional misrepresentation in the proof of loss. The new trial would include, if appropriate, a consideration of the application of s. 129 of the Insurance Act.

Courts - Topic 583

Judges - Duties - Re reasons for decisions - [See second Insurance - Topic 5860 ].

Insurance - Topic 1103

The insurance contract - Formation of the contract - Oral agreements - [See Insurance - Topic 1116 ].

Insurance - Topic 1116

The insurance contract - Formation of the contract - Statutory requirement for all terms to be set out in policy (incl. binder or interim receipt) - The plaintiff/insured sued her insurer after her home was destroyed - The fire occurred eleven weeks after the binder of insurance was issued but before the policy was issued - The insurer denied coverage, arguing, inter alia, that the extent of coverage initially provided by the binder was subsequently reduced by agreements reached in discussions between the insured and an insurance sub-broker aimed at reducing the premiums - The insured claimed that pursuant to s. 124 of the Insurance Act, the insurer could not rely on any of these orally agreed upon modifications - The trial judge accepted the insured's argument - The insurer appealed, arguing that the trial judge erred in applying s. 124 to a binder of insurance as opposed to a policy (i.e., that the insurer was entitled to rely on oral changers made to a binder prior to the issuance of the formal policy) - The Ontario Court of Appeal rejected the insurer's argument, holding that it was clear from the language of s. 124 that it applied to binders commonly referred to as "interim receipts" (i.e., changes to a binder of insurance have to be agreed upon in writing to be enforceable) - See paragraphs 66 to 73.

Insurance - Topic 2444

Applicant's duty of disclosure - Materiality - Matters not material - The plaintiff/insured sued her insurer after her home was destroyed - The fire occurred eleven weeks after the binder of insurance was issued - The insurer denied coverage alleging, inter alia, that the insured made material misrepresentations to the insurer in her initial application for coverage by failing to disclose that she was not the sole owner of the property, that there were several mortgages on the property that were in default, and that rather than being wealthy, she was in dire financial distress - The trial judge rejected the insurer's arguments on the basis that the insurer failed to establish that these matters were material, especially since there were no questions regarding these matters in the minimal application form required of the insured - The insurer appealed - The Ontario Court of Appeal rejected this ground of appeal - The court stated that where the insurer failed to establish why, if it considered these matters material, that it did not ask the insured questions about them, it was open to the trial judge to draw the inference that the undisclosed matters upon which the insurer now sought to rely to void the coverage were not material to its decision to assume a sizable risk (i.e., the insurer failed to establish that the information allegedly intentionally misrepresented or withheld by the insured was material to its assumption of the risk) - See paragraphs 51 to 65.

Insurance - Topic 2446

Applicant's duty of disclosure - Materiality - Material matters - [See Insurance - Topic 2444 ].

Insurance - Topic 5531

Fire insurance - The contract - General - [See Insurance - Topic 1116 ].

Insurance - Topic 5586

Fire insurance - The risks or perils - Material misdescriptions and changes - General - [See Insurance - Topic 2444 ].

Insurance - Topic 5860

Fire insurance - The loss - Evidence - The Ontario Court of Appeal stated that "in order to recover for a loss, the onus is on the insured to establish, on a balance of probabilities, that the loss occurred and the amount of the loss. The onus does not shift to the insurer merely because the insurer raises the defence of fraud" - See paragraph 75.

Insurance - Topic 5860

Fire insurance - The loss - Evidence - The plaintiff/insured sued her insurer after her home was destroyed - The insurer denied coverage alleging, inter alia, that the insured either did not prove her claim or she overstated it - The trial judge rejected the insurer's argument - The insurer appealed, arguing that the trial judge was mistakenly of the view that some degree of overstatement, even if fraudulent, would not serve to vitiate the policy, as long as the actual loss exceeded the coverage - The insurer also argued that the trial judge's reasons were deficient because they did not indicate how the trial judge resolved the serious challenges to the insured's credibility in this case where credibility was the foundation of her proof of loss - The Ontario Court of Appeal allowed the appeal holding that the trial judge fell into error in failing to articulate how he reconciled the obvious problems with the insured's credibility and reliability (i.e., the reasons were inadequate) - The court also noted that fraud in connection with any part of the claim would void the entire policy, and the fact that the insured may have been under insured had no relevance - The court opined that the trial judge also erred in holding that the insurer had to call expert evidence that the insured overvalued her loss and in appearing to be of the view that the value of art could not be inflated as it was in the eye of the beholder - See paragraphs 74 to 111.

Cases Noticed:

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, refd to. [para. 51].

Mutual Life Insurance Co. v. Ontario Metal Products Co., [1925] 1 D.L.R. 583 (P.C.), refd to. [para. 51].

Gauvremont v. Prudential Insurance Co. of America, [1941] S.C.R. 139, refd to. [para. 51].

General Structures Inc. and Booth v. Fidelity and Casualty Co. of New York, [1977] 2 S.C.R. 1098; 12 N.R. 571 refd to. [para. 51].

Taylor v. London Assurance Corp., [1935] S.C.R. 422, refd to. [para. 51].

Gregory v. Jolley et al. (2001), 147 O.A.C. 336; 54 O.R.(3d) 481 (C.A.), refd to. [para. 52].

Stuart (W.H.) Mutuals Ltd. v. London Guarantee Insurance Co. (2004), 193 O.A.C. 201; 16 C.C.L.I.(4th) 192 (C.A.), leave to appeal refused [2005] 1 S.C.R. xvii; 343 N.R. 196; 207 O.A.C. 399, refd to. [para. 52].

Non-Marine Underwriters, Lloyd's, London v. National Armoured Ltd. (1996), 19 O.T.C. 174; 142 D.L.R.(4th) 506 (Gen. Div.), affd. [2000] I.L.R. 1-3751; 120 O.A.C. 340 (C.A.), refd to. [para. 52].

Great Northern Insurance Co. v. Whitney (1918), 57 S.C.R. 543, refd to. [para. 59].

Fordorchuk v. Car & General Insurance Corp., [1931] 3 D.L.R. 387 (Alta. S.C.), refd to. [para. 59].

Newsholme Brothers v. Road Transport and General Insurance Co., [1929] 2 K.B. 356 (C.A.), refd to. [para. 59].

Hamzeh v. Safeco Insurance Co. (1988), 85 A.R. 344; 32 C.C.L.I. 83 (Q.B.), refd to. [para. 59].

Shakur v. Pilot Insurance Co. (1990), 41 O.A.C. 51; 74 O.R.(2d) 673 (C.A.), refd to. [para. 75].

Britton v. Royal Insurance Co. (1866), 4 F. & F. 905 (Nisi Prius), refd to. [para. 76].

Alavie v. Chubb Insurance Co. of Canada (2005), 195 O.A.C. 7 (C.A.), refd to. [para. 76].

Dimario v. Royal Insurance Canada (1987), 26 O.A.C. 370 (Div. Ct.), refd to. [para. 76].

Swan Hills Emporium & Lumber Co. and Wenger v. Royal General Insurance Co. of Canada (1977), 2 A.R. 63; 2 Alta. L.R.(2d) 1 (C.A.), refd to. [para. 80].

Maple Leaf Milling Co. v. Colonial Assurance Co. (1917), 36 D.L.R. 202 (Man. C.A.), refd to. [para. 80].

von Bismark v. Sagl, [2000] O.T.C. 603 (Sup. Ct.), revd. in part (2002), 158 O.A.C. 326 (C.A.), refd to. [para. 84, footnote 5].

National Justice Compania Naviera SA v. Prudential Assurance Co. (Ship Ikarian Reefer), [1993] 2 Lloyd's Rep. 69 (Q.B.), affd. [1995] 1 Lloyd's Rep. 455 (C.A.), refd to. [para. 85].

R. v. R.E.M. (2008), 380 N.R. 47; 260 B.C.A.C. 40; 439 W.A.C. 40; 235 C.C.C.(3d) 290 (S.C.C.), refd to. [para. 91].

R. v. Sheppard (C.), [2002] 1 S.C.R. 869; 284 N.R. 342; 211 Nfld. & P.E.I.R. 50; 633 A.P.R. 50, refd to. [para. 95].

R. v. H.S.B. (2008), 380 N.R. 130; 260 B.C.A.C. 122; 439 W.A.C. 122; 235 C.C.C.(3d) 312 (S.C.C.), refd to. [para. 95].

F.H. v. McDougall (2008), 380 N.R. 82; 260 B.C.A.C. 74; 439 W.A.C. 74; 297 D.L.R.(4th) 193 (S.C.C.), refd to. [para. 94].

R. v. Walker (B.G.) (2008), 375 N.R. 228; 310 Sask.R. 305; 423 W.A.C. 305 (S.C.C.), refd to. [para. 95, footnote 6].

R. v. Dinardo (J.) (2008), 374 N.R. 198; 231 C.C.C.(3d) 177 (S.C.C.), refd to. [para. 98].

R. v. Braich (A.) et al., [2002] 1 S.C.R. 903; 285 N.R. 162; 164 B.C.A.C. 1; 268 W.A.C. 1, refd to. [para. 98].

Canadian Broadcasting Corp. Pension Plan (Trustee of) v. BF Realty Holdings Ltd. - see MacDonald et al. v. BF Realty Holdings Ltd. et al.

MacDonald et al. v. BF Realty Holdings Ltd. et al. (2002), 160 O.A.C. 72; 214 D.L.R.(4th) 121 (C.A.), refd to. [para. 98].

Waxman et al. v. Waxman et al. (2004), 186 O.A.C. 201 (C.A.), refd to. [para. 98].

R. v. Mohan, [1994] 2 S.C.R. 9; 166 N.R. 245; 71 O.A.C. 241, refd to. [para. 104].

R. v. Parrott (W.), [2001] 1 S.C.R. 178; 265 N.R. 304; 198 Nfld. & P.E.I.R. 260; 595 A.P.R. 260, refd to. [para. 104].

Chung v. British Columbia Insurance Co. et al., [1996] B.C.T.C. Uned. 463; 36 C.C.L.I.(2d) 158 (S.C.), refd to. [para. 115].

Statutes Noticed:

Insurance Act, R.S.O. 1990, c. I-8, sect. 1, sect. 124(1), sect. 124(2), sect. 124(4), sect. 124(5), sect. 124(6), sect. 129 [para. 50].

Authors and Works Noticed:

Brown, Craig, and Menezes, Julio, Insurance Law in Canada (2002 Looseleaf), generally [para. 60]; p. 9-16 [para. 76].

Osborne, Coulter A., Civil Justice Reform Project: Summary of Findings and Recommendations (2007), p. 71 [para. 106].

Counsel:

Peter H. Griffin and Jamie J.W. Spotswood, for the appellant;

Barry A. Percival, Q.C., for the respondent.

This appeal was heard on November 24, 2008, by Lang, Juriansz and Epstein, JJ.A., of the Ontario Court of Appeal. The following decision of the court was delivered on May 8, 2009, by Epstein, J.A.