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Monday Morning QB for June 4, 2018

Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.

Edited by Amanda Kostek & Christie Dewar

Funk v Wawanesa Mutual Insurance Company, 2018 ABCA 200
SEF 44 | Physical Contact

Kowalchuk v White, 2018 ABQB 421
Summary Judgment | Car Manufacturer

1142730 Alberta Ltd v Smok’in Guns Transport Ltd, 2018 ABQB 417
Fraud | Double Costs

Judgment Highlights


Funk v Wawanesa Mutual Insurance Company, 2018 ABCA 200

This was a claim on the SEF 44. The Insured swerved right to avoid a head on collision and rolled his vehicle. The issue was whether he could claim under his SEF 44, because the policy required physical contact between two vehicles.

The Alberta Court of Appeal concluded that there was no ambiguity in the policy, and confirmed that the Plaintiff could not rely on section 545 of the Insurance Act because that section did not apply to automobile insurance on the date of the accident. Although subsequent amendments to the Insurance Act extended the scope of the section, those amendments could not me applied retroactively. The Court of Appeal ultimately concluded that the Chambers Judge was wrong in concluding the endorsement was unreasonable and against Public Policy:

[23] The chambers judge concluded, however, that the Endorsement was unreasonable and contrary to public policy. As noted, the reasoning was that “. . . the insured who avoids physical contact has no coverage under the endorsement, but the insured who takes no evasive action and physically contacts the unidentified vehicle has coverage”. This merely describes the scope of the coverage. Coverage is only extended under the SEF No. 44 Endorsement if damage is caused by an unidentified vehicle, the driver of that vehicle was negligent, and there is physical contact between the two vehicles.

[24] It was, in any event, unreasonable to characterize the wording of the SEF No. 44 Endorsement as “requiring the respondent to commit a tort”. The Endorsement provides for insurance coverage if certain defined risks emerge, and excludes coverage if those risks do not emerge. The Endorsement does not require the respondent to do anything, much less commit a tort. If an unidentified motorist had negligently made contact with his vehicle, the respondent would have been entitled to indemnity for his damages, but the respondent was not entitled to indemnity for damages for any uncovered risks.

Similarly, Relief from Forfeiture was also not available:

[26] “Relief from forfeiture” is also not engaged on these facts. Suffering a loss from a risk that is not covered by the policy is not a “failure to perform a covenant” justifying relief from forfeiture: Kozel v Personal Insurance Co., 2014 ONCA 130 (CanLII) at paras. 33-4, 119 OR (3d) 55; Styles v Alberta Investment Management Corp., 2017 ABCA 1 (CanLII) at paras. 69-71, 44 Alta LR (6th) 214. For example, if the owner purchases house insurance that covers damage to the house, but not damage caused by flooding, the owner is not entitled to indemnification if damage is in fact caused by flooding. The owner has not breached any covenant in the policy, because there is no covenant that he will not permit any damage by flooding. He has simply suffered a loss that was not insured against. In this appeal the respondent purchased insurance that was triggered by physical contact with another vehicle. When damage resulted from a different kind of accident, he simply had no coverage, but he was never in breach of the policy. Coverage could not be extended to the respondent through “relief from forfeiture” under the Judicature Act.

[27] Further, there is very little room for finding that a provision of an automobile insurance policy issued in Alberta is “unjust or unreasonable” or contrary to public policy. The terms of automobile insurance policies are highly regulated. The rates charged for basic or additional coverage are controlled by the Automobile Insurance Rate Board under s. 602 of the Insurance Act. Mandatory statutory conditions are prescribed by s. 556. Section 551(1) prevents the use of any form of policy or endorsement not approved by the Superintendent of Insurance. Section 551(3) enables the Superintendent to reject any provision in a policy that is “wholly or partly inappropriate to the requirements of a contract”. The Superintendent has approved the form of the SEF No. 44 Endorsement and published it as required by s. 551(1): (1999), 95 Alberta Gazette, Part 1, No. 8, p. 855. Given that the Superintendent has approved the requirement in the SEF No. 44 Endorsement that there be physical contact between the insured vehicle and the unidentified vehicle, and corroborating evidence, there is little if any room for holding those provisions to be unreasonable or unenforceable.

The Majority decided that coverage was not available on the following basis:

[30] The approach of stepping around the terms of an insurance policy on the basis of “unjust or unreasonable” terms, “public policy”, or “relief from forfeiture” runs the risk of throwing any semblance of certainty out the window. While these concepts are recognized in law, they must be applied with caution with respect to standard form, statutorily mandated insurance policies. There is the danger that the wording of insurance policies would become meaningless. Insurance policies would come down to providing the kind of coverage that some future court found to be “fair”, even though the insured never contracted for that coverage, and the insurer never priced the risk accordingly. As it was put in Progressive Homes at para. 23: “Courts should avoid interpretations that would give rise to an unrealistic result or that would not have been in the contemplation of the parties at the time the policy was concluded.” Given that the definition specifically requires “physical contact” it could not have been in the reasonable contemplation of either party that physical contact was not required.

It should be noted that the decision was not unanimous.


Kowalchuk v White, 2018 ABQB 421

This was a claim against a car manufacturer for defective lights. The Plaintiff’s 2008 Hyundai Accent was rear-ended on October 4, 2010, when she stopped for a crosswalk. Her brake lights were not working at the time of the accident. The vehicle was purchased two years before. Following the accident it was inspected, and it was determined that a stop lamp switch was defective. On April 1, 2013, Hyundai issued a recall for certain stop lamp switches. Hyundai brought an application for Summary Judgment on the basis that the brake lights did not cause or contribute to the accident. The Court noted that the brake lights may have made a difference, but that has to be proven. In this case, the at fault driver had followed the Plaintiff for several blocks, and knew the lights were not working:

[10] … The at-fault driver had known for several blocks that the Plaintiff’s brake lights were not working. Instead of extra caution, she followed too close – to the point where ‘another couple of feet’ would have made the difference between a safe stop and this accident. Ms. White was also not fully attentive to the vehicle in front. She was looking at the pedestrian about to cross in front of Ms. Kowalchuk’s vehicle.

Summary Judgment was granted on the following basis:

[15] Even if we apply robust common sense to these facts, I cannot say that the accident would not have happened but for negligence on the part of the Hyundai Defendants. It is equally well explained by Ms. White following too close and being momentary inattentive.

[16] I am not permitted to presume that the evidence would be any different at a trial. The Plaintiff and the Cross-Claimant have not demonstrated that they will be able to prove their case on a balance of probabilities. This makes the Hyundai Defendants’ defence (dare it be said), unassailable on the evidence presently before the Court.


1142730 Alberta Ltd v Smok’in Guns Transport Ltd, 2018 ABQB 417

Tis was an application for double costs based on allegations of fraud. However, the claim was dismissed based on the Limitations Act prior to a Trial to determine if there was fraud. On this basis double costs was not granted.