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AUTOMOBILE INSURANCE - Compulsory government schemes - Rights and duties of insured

Thursday, November 14, 2019 @ 3:58 AM  

Lexis Advance® Quicklaw®
Appeal by the defendant insurer from the trial judge’s decision that it was responsible to provide insurance coverage to its insured, D’s estate. D was killed in 2006 as he, L and the respondent drove their motorcycles. D collided with C when D drove on the wrong side of the road. In 2008, C commenced an action against D’s estate, L, and the respondent for damages. During his examination for discovery in 2009, L advised for the first time that D and the respondent were drinking beer shortly before the accident. Two weeks later, the appellant advised the parties that it was taking an off-coverage position because D violated the terms of his policy by consuming alcohol before the accident. The trial judge held that the appellant waived its right to rely on D’s policy breach because the appellant took its off-coverage position too late. The trial judge imputed knowledge of the breach to the appellant on the basis that the evidence was available to it, had it obtained the coroner’s report. Having decided to defend, the appellant waived its right to rely on the breach of policy to deny coverage.

HELD: Appeal allowed. The trial judge erred in finding that the appellant waived its right to deny coverage. The appellant knew it was a breach of D’s policy to consume any alcohol before driving. Knowledge of a policy breach could not be imputed, as the appellant did not have all the material facts from which to determine there was a policy breach. It did not have information that D was drinking and thereby breached the terms of the policy. There was no evidence to support the respondent’s assertion that the appellant knew of the policy breach but chose not to take possession of the information. There was no written waiver of the breach on the part of appellant, as required by s. 131(1) of the Insurance Act, to demonstrate a clear intention to waive the policy breach. The appellant was not estopped from asserting a breach of the policy since it had no knowledge of the breach until 2009. There was no evidence of detrimental reliance because two weeks after discovering the evidence of alcohol consumption, the appellant took an off-coverage position.

Bradfield v. Royal Sun Alliance Insurance Co. of Canada, [2019] O.J. No. 5047, Ontario Court of Appeal, D.H. Doherty, A.L. Harvison Young and J.A. Thorburn JJ.A., October 7, 2019. Digest No. TLD-November112019007