The NB Court of King’s Bench has refused to grant summary judgment in an insurance dispute over a building damaged by fire, finding that there were genuine issues requiring a trial.
The plaintiff sued five insurers – Sovereign General Insurance Company, Economical Mutual Insurance Company, Northbridge General Insurance Corporation, Arch Insurance Company and Intact Insurance Company. Each of these insurers underwrote a 20 per cent share of a subscription policy providing commercial property insurance coverage for a building in Minto, New Brunswick. A few weeks after the policy was issued, a fire damaged the building.
The claimant argued that its loss was covered and sought damages for the actual cash value of the building, the cost of removing debris from the site, interest paid to its lender from the date of loss, and fees and disbursements.
The insurers, on the other hand, refused to pay the claim, arguing that the claimant had made material misrepresentations and omissions when applying for cover. The parties each moved for summary judgment against the other, arguing that there was no genuine issue of material fact requiring a trial.
However, the NB Court of King’s Bench ultimately found that there were genuine issues of material fact requiring a trial. As a result, the court dismissed both applications.
The court found that the Eastland Group of Companies owned the Minto property. When Eastland went bankrupt, the property was mortgaged in favour of a private lender. The plaintiff company, through its president Earl Daniels, negotiated with the private lender to purchase the property.
The plaintiff claimed that the loss was covered as a named peril under the policy issued by the defendant insurers.
The defendants argued that the plaintiff had made several material misrepresentations and omissions which negated the coverage, including the representation that the plaintiff was the owner of the property at the time the policy was issued, which was allegedly not the case. The defendants also alleged that the plaintiff made misrepresentations regarding the occupancy and valuation of the property. The defendants argued that had the insured provided the correct information, they would not have underwritten the risk or would have charged a higher premium.
After reviewing the evidence, the court was satisfied that there were genuine issues requiring a trial. For example, the court was concerned that if the occupancy was material, why was the insurer not seeking details, particularly given that it knew or should have known that the property would not be occupied for at least several weeks after the policy was issued.
The defendants also argued that the plaintiff did not have an “insurable interest” in the property because he did not become the legal owner of the property until some three weeks after the policy was issued. However, the court asked, “Does not being the legal owner automatically mean that there is no insurable interest?”
Ultimately, the court was satisfied that neither party had met its burden of proof and neither had demonstrated that there were no genuine issues of material fact requiring a trial of the case. The court found that numerous questions remained unanswered and that the evidence of several missing witnesses would be required at trial.
The court stated that it could not fairly and justly decide the parties’ dispute on the basis of the record before it. Accordingly, the court denied the motions for summary judgment.
