Lewis v First Canadian Title, 2015 ABQB 726

Court of Queen ’ s Bench of Alberta Citation: Lewis v First Canadian Title, 2015 ABQB 726 Date: 20151118 Docket: 1501 00039 Registry: Calgary Between: Jason Lewis and Bilynda Dayo Applicants/ Respondents by Cross Application - and - First Canadian Title Respondent/ Applicant by Cross Application _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice J.T. McCarthy _______________________________________________________ Introduction

[ 1 ] The Applicants request an order from this court that they have an insurable interest in an insurance policy or that they have a beneficial interest under the policy; or that the Applicants and the insurers have a binding contract. [ 2 ] The issues to be determined by the Court as set out by the Applicant are as follows:

i) do the applicants have an insurable interest in FCT policy; ii) are the applicants beneficiaries under the FCT policy; iii) are the applicants and/or Mr. Wilde an agent of the lender; iv) was there a contract between the applicants and FCT (the insurer). [ 3 ] The Respondent’s position in

summary is that the answer to each of the above-noted questions is “No”. Facts [ 4 ] On or about March 13, 2014, Jason Lewis and Bilynda Dayo (the “Applicants”) agreed to purchase a residential property. The purchase was to close on April 28, 2014. [ 5 ] The Applicants obtained a loan by mortgage from First National Financial GP Corporation (“First National”). First National required that title insurance be obtained protecting its interest as lender. [ 6 ] Mr.

James Wilde was the solicitor representing both the Applicants as homeowners and First National as lender. [ 7 ] The cost of a lender insurance policy is $179.00. The additional cost of obtaining a homeowner policy is $50.00. [ 8 ] On April 23, 2014, Mr. Wilde applied for and obtained a lender title insurance policy (the “Lender Insurance Policy”) for First National from the insurer Respondent, First Canadian Title (“FCT”). [ 9 ] As stated in the Respondent’s brief, the Applicants had an opportunity to purchase a homeowner’s policy to protect their interest or to instruct Mr.

Wilde to obtain such an insurance policy on their behalf. The Applicants declined this opportunity. [ 10 ] FCT provided a package to Mr. Wilde confirming the Lender Insurance Policy for the named insured First National and that no homeowner’s title insurance policy had been obtained for the Applicants.

This package contained a cover letter, a certificate of insurance with endorsements and an invoice. [ 11 ] The first paragraph of the cover letter explicitly stated at paragraph 15 of the Respondent’s brief that the Applicants were not covered by the Lender Insurance Policy: You have confirmed that you do not wish to order a Homeowner Policy. Please be advised that the homeowner will not have the benefit of any of the coverages associated with the policy including registration gap, survey, building permits, municipal compliance or fraud coverage.

We ask that you review the package and advise our office of any changes within 24 hours of receipt by email at customer.relations.rtis@firstcdn.com or call us at 1.866.804.3122. [ 12 ] The Certificate of Insurance was addressed to First National and the named insured was “First National”. [ 13 ] The invoice named the insured as First National. The invoice also identified the policy as “Title Insurance – Lender Policy First National GP Corporation” [para. 19, p 4].

On May 6, 2014, the Land Titles Office registered a Royal Bank of Canada writ on the property against the previous owners James Dixon. [ 14 ] On May 9, 2014 the Land Titles Office registered the transfer of property from Mr. Dixon to the Applicants and the First National mortgage. [ 15 ] On May 26, Mr. Wilde submitted a claim on behalf of the named insured First National to FCT. [ 16 ] On June 2, 2014 FCT responded confirming that the named insured, First National, was protected against any loss resulting from the Royal Bank writ registration.

However, since there was no actual loss at that time, and therefore no loss could be quantified, FCT would hold the claim until such time as there was a quantifiable loss. Specifically, FCT stated: I confirm that should First National Financial GP Corporation suffer a loss as a result of the prior encumbrances in favor of Royal Bank, coverage is available under the Policy.

Usually a loss such as this can only be quantified once the property has been sold under power of sale and the sale proceeds are insufficient to pay the mortgage loan, the costs of sale and the cost to have the prior encumbrance discharged. [ 17 ] First National has not pursued the insurance claim any further at this time. First National is not a party to these proceedings. [ 18 ] Mr. Wilde, solicitor the Applicants and First National at the time of the transaction, is also not a party to these proceedings.

Analysis [ 19 ] The Applicants takes the position that the policy of insurance should have been purchased in both the lender and the

purchasers’ name. If that were the case, then the purchaser’s remedy is perhaps against their lawyer for failing to comply with their instructions. They also continued to have a remedy against the vendors for failure to provide clear title to the property in question pursuant to the Purchase and Sale Agreement between the vendors and the purchasers (the Applicants). [ 20 ] In my view the circumstances of this case do not support the Applicants position.

I accept the position of the Respondent that in this case the purchasers were given an opportunity to purchase a homeowner’s policy for an additional $50.00 and specifically chose not to do so. [ 21 ] In the mortgage commitment letter which is an agreement executed by the parties, under the standard terms and condition, condition 4 reads as follows: [ 22 ] “Title Insurance: A lenders policy of Title Insurance must be obtained in a form and content satisfactory to the lender” [ 23 ] In Exhibit 1 of the examination of Victoria Margolin and Officer of FCT, the Respondent insurer, is a letter from FCT dated April 23, 2014 to Mr.

Wilde which has been previously referred to in paragraph 11 herein. I repeat it states in part as follows: Thank you for choosing FCT. We confirm receipt of your title insurance order with respect to the above transaction and enclose the Certificate of Insurance and Invoice. You have confirmed that you do not wish to order a Homeowner Policy. Please be advised that the homeowner will not have the benefit of any of the coverages associated with the policy including registration gap , survey, building permits, municipal compliance or fraud coverage.

We ask that you take a few moments to review the package and advise our office of any changes within 24 hours of receipt by email at customer.relations.rtis@firstcdn.com or call us at 1.866.804.3122. [Emphasis Added by McCarthy, J.] [ 24 ] It is clear from this letter that the Applicants had an opportunity to purchase a homeowner policy for an extra $50.00 which would have protected them in this case against an intervening writ but chose not to do so. [ 25 ] It is also important to note that Mr. Wilde provided affidavit evidence in this proceeding.

Nowhere in his affidavit does he indicate that he received instructions from the Applicants to purchase a homeowners policy. As well, one of the Applicants Ms. Dayo gave evidence by way of affidavit and nowhere in her evidence did she indicate that instructions were given to Mr.

Wilde to purchase a homeowners policy which would have given them proper protection in this case. [ 26 ] I agree with the Respondent that the Applicants made a choice not to be included in the policy of insurance in question and the consequences were clear – they chose to take the risk of an intervening creditor being in priority to the mortgage on title and this is in fact what happened. [ 27 ] They now ask the Court to interpret the Lenders Policy of Insurance to include their interest after they specifically through their lawyer chose not to do so. [ 28 ] The cases which the Applicants have submitted are not relevant to the case at bar.

The Applicants in this case are not named insureds.

Most of the cases provided by the Applicants deal with the scope of the insured interest of a named insured party and as such are inapplicable to the circumstances of this case. [ 29 ] Furthermore, no satisfactory evidence was given in my view to support the contention that there was a principal and agent relationship between the mortgage company and the Applicants. [ 30 ] The Applicants position in my view is akin to trying to place a square peg into a round hole and must fail. [ 31 ] The answers to the questions posed by the Applicants’ in paragraph [2] above are as follows:

i) No. ii) No. iii) No. iv) No. [ 32 ] In the result in claim of the Applicants fails and their Applicant is dismissed. If the parties fail to agree in costs, they may make an appointment to speak to same. Heard on the 19 th day of October, 2015. Dated at the City of Calgary, Alberta this 16 th day of November, 2015.

J.T. McCarthy J.C.Q.B.A. Appearances: Raymond S. Wong for the Applicants (Respondent’s on Cross-Application) Kerry Lynn Okita for the Respondent (Applicant on Cross-Application)