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THE INSURANCE CONTRACT - Fraudulent or intentional misrepresentation - Silence or non-disclosure

Wednesday, November 11, 2020 @ 6:06 AM  

Lexis Advance® Quicklaw®
Appeal by BCAA Insurance from a finding of liability under a homeowners’ insurance policy with the plaintiffs. In March 2016, the defendant issued the policy to the plaintiffs. In December 2016, the plaintiffs’ home and contents were destroyed in a fire. BCAA resisted the claim on the basis the policy was void due to misrepresentations when coverage was placed, and due to a material change in the risk related to occupancy. The alleged misrepresentations related to omissions concerning the previous insurer lapsing its policy with the plaintiff due to claims frequency, and the extent of those claims. The prior claims included fire loss and theft at another property, and damage to the roof of the property at issue. The only loss disclosed by the plaintiffs related to the theft. The trial judge found that the omissions at issue were not fraudulently made and did not void the policy. BCAA appealed.

HELD: Appeal allowed. The existence of the previous claims was material to the contract. The trial judge committed a palpable error by characterizing the failure to list the previous claims as omissions rather than misrepresentations, requiring BCAA to prove fraudulent intent. The error was overriding given the finding that BCAA never received an addendum disclosing the prior claims. In so doing, the trial judge reached a result that was plainly wrong. The error was complicated by misapplication of the rule in Browne v. Dunn to give less weight to BCAA’s submissions in support of its position the addendum was fabricated. The appropriate remedy was to set aside the trial judge’s order and remit the matter for a new trial.

Nagy v. BCAA Insurance Corp., [2020] B.C.J. No. 1563, British Columbia Court of Appeal, M.E. Saunders, E.A. Bennett and J.C. Grauer JJ.A., October 7, 2020. Digest No. TLD-November92020006