Swiss Reinsurance Co. v. Camarin Ltd. et al.

• Jurisdiction: British Columbia
• Court: Court of Appeal (British Columbia)
• Judge: Garson, Willcock and Goepel, JJ.A.
• Citation: 2015 BCCA 466,(2015), 379 B.C.A.C. 149 (CA)
• Date: 13 November 2015

Swiss Reinsurance v. Camarin Ltd. (2015), 379 B.C.A.C. 149 (CA);

    654 W.A.C. 149

MLB headnote and full text

Temp. Cite: [2015] B.C.A.C. TBEd. NO.024

Swiss Reinsurance Company (appellant/plaintiff) v. Camarin Limited (respondent/defendant) and Aon Reed Stenhouse Inc., Aon Limited, Aon Global Risk Consultants Limited and Alexander Howden Limited (respondents/third parties)

(CA40100)

Swiss Reinsurance Company (respondent/plaintiff) v. Camarin Limited (respondent/defendant) and Aon Reed Stenhouse Inc., Aon Limited, Aon Global Risk Consultants Limited and Alexander Howden Limited (appellants/third parties)

(CA40112; 2015 BCCA 466)

Indexed As: Swiss Reinsurance Co. v. Camarin Ltd. et al.

British Columbia Court of Appeal

Garson, Willcock and Goepel, JJ.A.

November 13, 2015.

Summary:

AIG Assurance (AIG) underwrote MacMillan Bloedel Ltd.'s (MB) (now Weyerhauser Company Ltd.) commercial general liability insurance. AIG was 50% reinsured by Camarin Ltd. (Camarin). Camarin was 100% reinsured by Swiss Reinsurance Company (Swiss). Aon Reed Stenhouse (Aon) placed the reinsurance policies with Swiss for Camarin. Significantly, the reinsurance policies contained no clause requiring the reinsurer to "follow the settlements" made by the original insurer. Problems arose with roof tiles manufactured by a company (Cemwood) that had been acquired by MB in 1993. In 1999, a California court consolidated a number of class actions related to the tiles. MB and Cemwood commenced a parallel coverage action, seeking indemnity from AIG under its policies. In 2003, AIG agreed in a final settlement to pay $70 million in settlement of the class action and the coverage action. Camarin accepted its reinsuring liability for approximately $25 million. However, Swiss commenced the within action, seeking rescission of its reinsurance policies on the basis that there was material non-disclosure in each policy year. Swiss asserted that MB failed to report on information it had concerning its exposure to its insured liability when the insurance coverage was placed each year. Camarin counterclaimed for judgment on its policies and third partied Aon for negligence in placing the reinsurance policies without a "follow the settlements" clause.

The British Columbia Supreme Court, in a decision reported at [2012] B.C.T.C. Uned. 1006, dismissed Swiss' claim for rescission and held that Camarin had proven what was required to establish that Swiss was liable on each of the policies. Camarin was given "conditional judgment" on the third party claim against Aon. While the court found that Aon was negligent, judgment was entered conditionally as there was no underlying basis for the third party claim once the counterclaim against Swiss was allowed. If there was a successful appeal by Swiss on the counterclaim, the third party judgment against Aon could be entered. Swiss appealed from the dismissal of its claim for rescission and from the finding of liability under Camarin's counterclaim. Aon appealed from the conditional judgment entered against it.

The British Columbia Court of Appeal allowed the appeals, ordering a new trial. The trial judge made reversible errors of fact in dismissing Swiss' claim for rescission. On the counterclaim, the trial judge failed to articulate and apply the correct test to find Swiss liable. A new trial was the only just result available on appeal. It was neither feasible nor in the interests of justice for the court to weigh the evidence in order to make the findings of fact necessary to dispose of the rescission claim and the counterclaim. It followed that the third party claim, which rested on the facts of the rescission claim and counterclaim, also had to be retried.

Insurance - Topic 852

Insurers - Reinsurance - Effect of contract - See paragraphs 92 to 113, 121 and 122.

Insurance - Topic 855

Insurers - Reinsurance - Interpretation - See paragraphs 88 to 92.

Insurance - Topic 2458

Applicant's duty of disclosure - Materiality - Evidence and proof - See paragraphs 71 to 77.

Practice - Topic 8800

Appeals - General principles - Duty of appellate court regarding findings of fact by a trial judge - See paragraphs 59 to 70.

Practice - Topic 9224

Appeals - New trials - Grounds - General - See paragraphs 71 to 83 and 123 to 131.

Practice - Topic 9256

Appeals - Judgments by appeal court - Remittal to lower court - When appropriate - See paragraphs 71 to 83 and 123 to 131.

Cases Noticed:

Fletcher v. Manitoba Public Insurance Co., [1990] 3 S.C.R. 191; 116 N.R. 1; 71 Man.R.(2d) 81; 44 O.A.C. 81, refd to. [para. 59].

Stein Estate v. Ship Kathy K, [1976] 2 S.C.R. 802; 6 N.R. 359, refd to. [para. 60].

Housen v. Nikolaisen et al. (2002), 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 61].

Minister of National Revenue v. Schwartz, [1996] 1 S.C.R. 254; 193 N.R. 241, refd to. [para. 62].

Waxman et al. v. Waxman et al. (2004), 186 O.A.C. 201; 44 B.L.R.(3d) 165 (C.A.), refd to. [para. 62].

McLeay et al. v. Kelowna (City) et al., [2003] B.C.A.C. Uned. 7; 2003 BCCA 34, refd to. [para. 65].

Hollis v. Dow Corning Corp. et al., [1995] 4 S.C.R. 634; 190 N.R. 241; 67 B.C.A.C. 1; 111 W.A.C. 1, refd to. [para. 66].

McGarry v. Co-operators Life Insurance Co. (2011), 304 B.C.A.C. 238; 513 W.A.C. 238; 2011 BCCA 214, refd to. [para. 67].

Morin v. Chan (1999), 131 B.C.A.C. 49; 214 W.A.C. 49; 1999 BCCA 636, refd to. [para. 69].

Hill v. Mercantile and General Reinsurance Co. plc, [1996] 1 W.L.R. 1239 (H.L.), refd to. [para. 89].

Insurance Co. of Africa v. Scor (U.K.) Reinsurance Co., [1985] 1 Lloyd's Rep. 312 (C.A.), refd to. [para. 91].

Commercial Union Assurance Co. v. NRG Victory Reinsurance Ltd., [1988] 2 All E.R. 434 (C.A.), refd to. [para. 98].

London County Commercial Reinsurance Office Ltd., Re, [1922] 2 Ch. 67, refd to. [para. 98].

Omega Proteins v. Aspen Insurance UK Ltd., [2010] EWHC 2280 (Comm), refd to. [para. 98].

Astrazeneca Insurance Company Ltd. v. XL Insurance (Bermuda) Ltd. et al., [2013] EWHC 349 (Comm), refd to. [para. 98].

Enterprise Oil v. Strand Insurance Company Ltd., [2006] EWHC 58 (Comm), refd to. [para. 98].

Toomey v. Eagle Star Insurance Co., [1994] 1 Lloyd's Rep. 516, refd to. [para. 106].

Royal Insurance Australia Ltd. v. Government Insurance Office of New South Wales, [1994] 1 V.R. 123, refd to. [para. 109].

New Zealand Local Government Insurance Corp. Ltd. v. R+V Versicherung AG, [2013] NZHC 690, refd to. [para. 109].

Lombard General Insurance Co. of Canada v. Cominco Ltd. et al. (2007), 240 B.C.A.C. 218; 398 W.A.C. 218; 2007 BCCA 249, affd. (2009), 384 N.R. 351; 266 B.C.A.C. 32; 449 W.A.C. 32; 2009 SCC 11, refd to. [para. 112].

Counsel:

G. Cowper, Q.C., S. Martin and S.M.Y. Hsia, for the appellant;

R. Anderson, Q.C., and S.A. Dawson, for the respondents in Docket CA40100 and the appellants in Docket CA40112, Aon Reed Stenhouse Inc., Aon Limited, Aon Global Risk Consultants Limited and Alexander Howden Limited;

I.G. Nathanson, Q.C., J. Patterson and R. Promislow, for the respondent Camarin Limited.

These appeals were heard at Vancouver, B.C., on June 22-25, 2015, by Garson, Willcock and Goepel, JJ.A., of the British Columbia Court of Appeal. On November 13, 2015, the court delivered the following reasons for judgment.