Bryan Scott Young - v. -, 2015 SKPC 56

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2015 SKPC 056 Date: April 30, 2015 File: 106/13 Location: Moose Jaw _____________________________________________________________________________ Between: Bryan Scott Young - and - Saskatchewan Government Insurance (SGI) Mr. Ken Cornea For the Plaintiff Mr. Don Harmon For the Defendant _____________________________________________________________________________ JUDGMENT D.

KOVATCH , J _____________________________________________________________________________ BACKGROUND [ 1 ] The plaintiff had a vehicle registered in his name and was properly licenced to drive a vehicle. He believed he had insurance under The Automobile Accident Insurance Act , RSS 1978, c 35. He was involved in a motor vehicle accident and made a claim for the value of the vehicle. SGI denied coverage on the basis that the defendant did not have an insurable interest in the vehicle. The sole issue

in this action is whether the plaintiff had an insurable interest. THE EVIDENCE [ 2 ] There is no dispute regarding any of the evidence in this matter. Colby Erickson testified that his name used to be Colby Nagel. He had a legal change of name between the institution of this action and the trial. (I will refer to him as Mr. Nagel throughout this judgment.) He testified that he purchased a 2006 Pontiac G6 automobile from Murray GM. He was the person legally liable and responsible for the monthly payments to finance that purchase.

The vehicle was registered in his name. [ 3 ] In May 2011, his driver’s licence was suspended. He allowed the plates to expire. [ 4 ] Mr. Dwayne Sanderson testified for SGI. He said that when a licenced driver is suspended from driving, SGI will not allow that driver to licence a vehicle in his name. (I will return to Mr. Sanderson’s evidence in due course.) [ 5 ] Mr. Nagel testified that he did not know that he could not register a vehicle in his name, and no one had told him that. [ 6 ] Mr. Nagel testified that in August 2012, he was living with the plaintiff, Bryan Young, and with Drew Myrol. Mr.

Nagel said he was working out of town, and wanted to let his two roommates use this vehicle. He said he did not want Mr. Young to have any issues if he was pulled over. [ 7 ] On August 28, 2012, Mr. Nagel and Mr. Myrol went to Cherry Insurance in Saskatoon. At that time, Mr. Nagel utilized and completed the transfer of ownership form attached to his Saskatchewan Certificate of Registration. A copy of that form was entered in evidence. It clearly indicates that on August 28, 2012, Mr. Nagel transferred this vehicle to Mr. Myrol for a purchase price of $500.00. Everyone was in agreement that Mr.

Myrol did not pay $500.00 for the vehicle. There also can be no doubt that even if he had paid $500.00, that sum did not in any way reflect the true market value of the vehicle. Apparently, plates were issued and a registration was issued to Mr. Myrol, and the vehicle was registered in his name for the following month. [ 8 ] On September 28, 2012, the three individuals again attended at Cherry Insurance in Saskatoon. At this time, because the vehicle was already registered in the name of Drew Myrol, Mr.

Myrol completed and executed the transfer of ownership form attached to the certificate of registration that had been issued to him one month earlier. Mr. Myrol transferred the vehicle to the plaintiff, Bryan Young. The amount shown as paid for the vehicle is $5.00. The witnesses testified that this amount was paid in front of the insurance agent. Again it is very clear that this is nothing more than a nominal or token consideration for the transfer of the vehicle. The amounts for registration of the vehicle and issuance of the plates were paid, probably by Mr.

Nagel, and a certificate of registration was issued to the plaintiff, Bryan Young. The plates remained valid, the registration remained valid, and Mr. Young possessed a valid driver’s licence on January 8, 2013. [ 9 ] On January 8, 2013, Mr. Young was operating the vehicle on Highway 2 north of Moose Jaw. At that time, he hit a snowdrift, lost control of the vehicle, and rolled it in the ditch. He had consumed no alcohol and no charges were laid. He committed no breach of the terms of insurance, that would allow the insurer to deny coverage. [ 10 ] A proof of loss was properly filed.

The defendant determined that the vehicle was a total loss. The defendant did a further investigation and obtained statements from the individuals involved. Those individuals honestly disclosed the circumstances laid out above, pursuant to which the plaintiff had the vehicle registered in his name. By letter dated July 29, 2013, the defendant advised coverage was denied because the plaintiff had no financial interest in the vehicle, and that the plate was cancelled effective January 3, 2013. The plaintiff then brought this action. [ 11 ] As mentioned above, Mr. Sanderson testified for the defendant.

He testified that he has been an adjuster with SGI for 30 years. He has dealt with the issue of insurable interest. He said that SGI will receive a claim from one spouse when the vehicle is registered in the name of the other spouse. The reason for this is that in their view both spouses have a mutual financial interest in the

property and the policy. He said the same is true when they are dealing with a claim from a son or daughter. However, “the policy”changes when the individuals are outside of the family circle. ANALYSIS [12] For a number of reasons, I have determined that the defendant cannot rely upon the concept of insurable interest to denycoverage in this matter. I begin by noting that the concept of insurable interest is one developed under the common law, and initiallydeveloped to deal with private insurers. The insurance that we deal with here is not a private insurance coverage.

Rather, it is a statutorycoverage, enacted under The Automobile Accident Insurance Act. In other situations, SGI will refer to themselves as the administrator ofThe Automobile Accident Insurance Act, as opposed to “the insurer”. In

Part I of the Act, it refers to an application for registration andcertificate of insurance. In

Part III of the Act, dealing with vehicle coverage, it speaks of an owner’s certificate.

Section 57 of TheTraffic Safety Act, RSS 1978, c T-18.1 makes it an offence for anyone to operate a vehicle without a valid certificate of registration orregistration permit. These different terms would seem to indicate that the acts of registering a vehicle, obtaining licence plates, andobtaining valid insurance for the vehicle are all separate acts. However, that is not the case. They are one and the same. The standardform certificate of registration is issued when one pays for and purchases the licence plates.

It refers to the registered owner and thatcertificate of registration then goes on to refer to “Automobile Accident Insurance Act coverage, Saskatchewan Certificate ofRegistration, subject to the AAIA and its regulations. Personal injury: See AAIA Guide. Vehicle physical damage: Actual cash value. Vehicle deductible: $700.00. Liability: $200,000.00.” According to the evidence of Mr. Sanderson, Mr. Nagel could not have registeredthe vehicle in his name or put plates on it or placed insurance on the vehicle.

In order for the plaintiff to lawfully operate that vehicle, hehad to put plates on the vehicle in his name, and in so doing he obtained a certificate of registration and certificate of insurance. He alsoobtained, in my view, a statutory entitlement to insurance coverage. I emphasize the statutory entitlement because I could find nothing inthe legislation that refers to the concept of insurable interest. In other words, in my view, the insurer is using a concept completelyforeign to the legislation to attempt to say that statutory coverage is denied or not available.

I have the greatest difficulty in acceptingthis is appropriate. [13] I am reinforced in that view by the evidence of Mr. Sanderson, and in particular his reference to insurable interest as “policy”. The Automobile Accident Insurance Act is Saskatchewan legislation, validly enacted by the Legislature of the Province ofSaskatchewan.

It would seem to me that to deny coverage, that denial must be based upon a valid rule of law, presumably one flowingfrom the legislation, and cannot be a matter of policy of the administrator. [14] I note that in other contexts, courts have ruled that a corporation or government cannot have a policy that is contrary to orinconsistent with a statutory instrument. See for example Ainsley Financial Corp. v Ontario Securities Commission (1994), (ON CA), 121 DLR (4th) 79 (CA); Skyline Roofing Ltd. v Alberta (WCB), 2001 ABQB 624 and Climenhaga v Canada (Office ofthe Superintendent of Bankruptcy), 2008 ABQB 340.

In the Ainsley Financial Corp. case the Court said: The authority of a regulator, like the Commission, to issue non-binding statements or guidelines intended to inform and guide thosesubject to regulation is well established in Canada. The jurisprudence clearly recognizes that regulators may, as a matter of soundadministrative practice, and without any specific statutory authority for doing so, issue guidelines and other non-binding instruments. ...

Having recognized the Commission’s authority to use non- statutory instruments to fulfil its mandate, the limits on the use of thoseinstruments must also be acknowledged. A non- statutory instrument can have no effect in the face of contradictory statutory provision orregulation. ... Nor can a non-statutory instrument pre-empt the exercise of a regulator’s discretion in a particular case. ...

Mostimportantly, for present purposes, a non-statutory instrument cannot impose mandatory requirements enforceable by sanction; that is, theregulator cannot issue de facto laws disguised as guidelines. ... [15] In this case, in my view, under the provisions of The Automobile Accident Insurance Act, the plaintiff is statutorily entitled torecover damages. The defendant and his counsel have identified no provision in the legislation that defeats or disentitles him. Theyargue only that the plaintiff does not have an insurable interest.

The defendant cannot utilize a non-statutory policy guideline to defeat oroverride the plaintiff’s statutory entitlement. [16] Both parties referred me to the cases of Fink v Saskatchewan Government Insurance, (SK KB), [1993] 115Sask R 174 (QB) and Kosmopoulos v Constitution Insurance Co. of Canada, (SCC), [1987] 1 SCR 2. Mr. Harmon, for

the defendant, argued that the Fink case was wrongly decided. Further, that to be consistent with Kosmopoulos , I must determine that the plaintiff did not have an insurable interest here. I disagree with this argument. In the Kosmopoulos case, the Supreme Court of Canada launched an attack on a restrictive or technical

interpretation of the concept of insurable interest. At paragraph 42, the Court advanced the following definition of insurable or sufficient interest: In my view, there is little to commend the restrictive definition of insurable interest. As Brett M.R. has noted over a century ago in Stock v. Inglis , supra , it is merely “a technical objection ... which has no real merit ... as between the assured and the insurer”. The reasons advanced in its favour are not persuasive and the policies alleged to underlie it do not appear to require it. They would be just as well served by the factual expectancy test.

I think Macaura should no longer be followed. Instead, if an insured can demonstrate, in Lawrence J.’s words, “some relation to, or concern in the subject of the insurance, which relation or concern by the happening of the perils insured against may be so affected as to produce a damage, detriment, or prejudice to the person insuring”, that insured should be held to have a sufficient interest.

To “have a moral certainty of advantage or benefit, but for those risks or dangers”, or “to be so circumstanced with respect to [the subject matter of the insurance] as to have benefit from its existence, prejudice from its destruction” is to have an insurable interest in it. To the extent that this Court’s decisions in Clark v. Scottish Imperial Insurance Co. , supra , Guarantee Co. of North America v. Aqua-Land Exploration Ltd. , supra , and Wandlyn Motels Ltd. v.

Commerce General Insurance Co. , supra , are inconsistent with this definition of insurable interest, I respectfully suggest that they should not be followed. [ 17 ] Applying that decision, the plaintiff here had a relation or concern with this property. He benefitted from its existence. He would be prejudiced by its destruction. He was required by law to have the vehicle registered if he was to operate it. He complied with the law by registering the vehicle and did not act contrary to any law. He had an insurable interest in this vehicle.

In my view, the Fink decision is rightly decided and is entirely consistent with the Kosmopoulos decision. These decisions are binding upon me. I conclude that the plaintiff Bryan Young had an insurable interest in this vehicle and properly insured the vehicle. The defendant was wrong to deny coverage on the basis that he did not have an insurable interest. [ 18 ] Accordingly, the plaintiff will have judgment. The appraised amount of the loss was $9,291.16. The deductible was $700.00, leaving a balance owing of $8,591.16. The plaintiff will have judgment in that amount.

That sum will bear interest under The Pre- judgment Interest Act from January 8, 2013 to the date of this judgment. In addition, the plaintiff will have costs of issuance of this judgment and $15.00 for the cost of service by registered mail. I would award a counsel fee as costs, but my jurisdiction to do so has been removed by a judgment of the Court of Queen’s Bench. [ 19 ] Dated at the City of Moose Jaw, in the Province of Saskatchewan this 30 th day of April 2015. D. Kovatch, J