Smith v. Co-Operative Fire and Casualty Co., (1977) 5 A.R. 116 (DC)

• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: January 17, 1977
• Citations: (1977), 5 A.R. 116 (DC)

Smith v. Co-op Fire (1977), 5 A.R. 116 (DC)

MLB headnote and full text

Smith v. Co-Operative Fire and Casualty Company

Indexed As: Smith v. Co-Operative Fire and Casualty Co.

Alberta District Court

Judicial District of Edmonton

Belzil, D.C.J.

January 7, 1977.

Summary:

This case arose out of the plaintiff's claim against an insurer for the proceeds under a fire insurance policy on a mobile home. The insured applied to an agent of the insurer for a fire insurance policy on a mobile home, which was 10 years old. The insured answered questions concerning the mobile home put by the agent, who filled in the answers on the application form. The insured informed the agent that the mobile home was oil heated, but the agent recorded that the furnace was heated by hot air and natural gas. The agent issued an insurance policy, although he had no authority from the insurer to insure a mobile home 10 years old. The mobile home burned on the first night of coverage and the insurer denied liability on the ground that the insured made a material misrepresentation in the application for insurance. The insured brought an action against the insurer for the proceeds under the policy.

The Alberta District Court allowed the action and held that the insurer was liable. The District Court held that the agent knew the true facts about the heating system as related by the insured and the agent's knowledge was imputed to the insurer, who was estopped from asserting that it was misled by the false statement in the application - see paragraphs 16 to 20.

The District Court held that the agent had apparent authority to issue the policy and the insurer could not rely on the actual limitation of his authority to deny liablility under the policy - see paragraph 15.

Insurance - Topic 406

Agents - Knowledge of agent imputed to principal - The insured in applying for fire insurance answered questions concerning the property put by the agent, who filled in the answers on the application form - The agent recorded a different heating system from the one stated by the insured - The insured signed the application without noting the error - The insurer denied liability after a fire, because of the misrepresentation in the application - The Alberta District Court held the insurer liable - The District Court held that the agent knew the true facts as related by the insured and the agent's knowledge was imputed to the insurer, who was estopped from asserting that it was misled by the false statement in the application - See paragraphs 16 to 20.

Insurance - Topic 424

Agents - Authority of agent - Apparent authority to bind insurer - The agent of an insurer issued a fire insurance policy on a mobile home to the insured, when the agent actually had no authority to issue a policy on a mobile home of its age - The Alberta District Court held that the agent had apparent authority to issue the policy and the insurer could not rely on the actual limitation of his authority to deny liability under the policy - See paragraph 15.

Insurance - Topic 2483

Applicant's duty of disclosure - De-fault in duty to disclose - Requirement that misrepresentation induced insurer to insure - The Alberta District Court stated that a misrepresentation of a material fact in an application for insurance only makes the insurance policy voidable by the insurer if the misrepresentation induced the insurer to conclude the policy of insurance - See paragraphs 17 and 22.

Insurance - Topic 2488

Applicant's duty of disclosure - De-fault in duty to disclose - What constitutes prior refusal by an insurer to insure - When the insured moved from an apartment to a mobile home, she asked a secretary of her usual in surer if it would insure the mobile home - The secretary told her that the insurer would not insure mobile homes - The insured approached the agent of another insurer and obtained insurance, informing the agent of her inability to obtain insurance from the other insurer - The agent recorded in the application that the insured had not been refused coverage by any other insurer - The mobile home was destroyed by fire and the in surer denied liability on the ground, inter alia, that the insured had been refused coverage by another insurer contrary to the statement in the application - The Alberta District Court held that the insured had not been refused coverage by the other insurer, since she had not formally applied for insurance - See paragraph 21.

Insurance - Topic 2542

Applicant's duty of disclosure - Completing the application - Effect of signing of - The insured in applying for fire insurance answered questions concerning the property put by the agent, who filled in the answers on the application form - The agent recorded a different heating system from the one stated by the insured - The insured signed the application without noting the error - The insurer denied liability after a fire, because of the misrepresentation in the application - The Alberta District Court stated that, where the insured signed the application, the onus of proof was on her to establish that, despite formal appearances, she did not in fact give the answers written down and attributed to her - The District Court held that the insured met the burden of proof - See paragraphs 24 to 25.

Insurance - Topic 5588

Fire insurance - The risk - Material misdescriptions - Property description - The Alberta District Court held that a misrepresentation of the method of heating a mobile home was material to the risk - See paragraph 16.

Cases Noticed:

Blanchette v. C.I.S. Ltd., [1973] 5 W.W.R. 547 (S.C.C.), [paras. 15, 23].

Chenier et al. v. Madill et al., [1974] I.L.R. 793, appld. [para. 21].

Newsholme Brothers, [1929] 2 K.B. 356, dist. [para. 23].

Bawden, [1892] 2 Q.B. 534, dist. [para. 23].

Stone v. Reliance Mutual, [1972] 1 L.L.R. 469, dist. [para. 23].

Authors and Works Noticed:

MacGillivray and Parkington on Insurance Law (6th Ed.), pp. 260 [para. 17]; 286 [para. 16]; 394 [para. 19]; 402 [para. 24].

Counsel:

D.G. McKenzie, for the plaintiff;

H.O. Moffet, for the defendant.

This case was heard at Edmonton, Alberta, before BELZIL, D.C.J., of the Alberta District Court, Judicial District of Edmonton.

On January 17, 1977, BELZIL, D.C.J., delivered the following judgment: