727933 NB Inc., – v. –, 2023 NBKB 181

IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF MONCTON 727933 NB Inc. v. The Sovereign General Insurance Company, Economical Mutual Insurance Company, Northbridge General Insurance Corporation, Arch Insurance Company Canada Limited, and Intact Insurance Company 2023 NBKB 181 MC/390/2022 BETWEEN: 727933 NB Inc., – and – THE SOVEREIGN GENERAL INSURANCE COMPANY, ECONOMICAL MUTUAL INSURANCE COMPANY, NORTHBRIDGE GENERAL INSURANCE CORPORATION, ARCH INSURANCE COMPANY CANADA LIMITED, and INTACT INSURANCE COMPANY DECISION BEFORE: Justice Robert M.

Dysart AT: Moncton, New Brunswick DATE OF HEARING: August 24, 2023 DATE OF DECISION: October 24, 2023 APPEARANCES: Edwin G. Ehrhardt, KC, for the Plaintiff Hélène Beaulieu, KC, for the Defendants DYSART, J. [ 1 ] The parties have each brought a motion for

summary judgment against the other, arguing that there is no genuine issue requiring

a trial. [ 2 ] For the reasons set out below, I disagree. I am of the view that there are important, genuine issues which require a trial, and for that reason both motions are dismissed. INTRODUCTION [ 3 ] This case involves a claim by the Plaintiff numbered company against five insurers who each underwrote a 20% share of a subscription insurance policy providing coverage for, among other things, commercial property insurance on a building in Minto, New Brunswick.

The building was damaged by fire on November 13, 2021, just a few weeks after the coverage was placed. [ 4 ] The Plaintiff maintains that its loss is insured, and claims 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, as well as costs and disbursements. [ 5 ] The Defendants have refused to pay the claim, arguing that the Plaintiff made material misrepresentations and omissions when it applied for coverage and they argue that the policy is thus void ab initio or, alternatively, voidable.

TIMELINE [ 6 ] The following facts can be discerned from the various affidavits filed by the parties. [ 7 ] The property located at 77 industrial Park Road in Minto, New Brunswick (the “Property”), had been owned by the Eastland Group of Companies. The evidence before the Court suggests that Eastland went bankrupt. The Property was subject to a mortgage in favor of Marc Girouard, a private lender. [ 8 ] The property housed a large warehouse of some 60,000 square feet, together with an additional 6,000 square feet of office space.

It had previously been used as a manufacturing facility. [ 9 ] Either following a mortgage sale or as part of it (the evidence is lacking on that point), Earl Daniels (who would later become president of the Plaintiff numbered company) entered into discussions with Mr. Girouard for the purchase of the Property. [ 10 ] On September 10, 2021, a gentleman named Kraig Pasher, who is a “Business Insurance Broker” with Cooke Insurance Group, submitted a request for insurance coverage on behalf of Mr. Daniels with respect to the property.

That submission was sent to Courtney Cheeseman, a senior underwriter with Burns & Wilcox. Burns & Wilcox, it would seem, is a commercial insurance broker and underwriter. [ 11 ] It is undisputed that Mr. Daniels contacted Cooke Insurance Group to secure insurance for the Property. What is less clear is precisely what was said by Mr. Daniels to Mr. Pasher. [ 12 ] That said, we know what Mr. Pasher advised Ms. Cheeseman. [ 13 ] In his submission of September 10, 2021 (“Submission 1”), Mr. Pasher represented the following to Ms.

Cheeseman: “Earl Daniels has operated a tire shop in the community of Moncton for several years, he has come into an opportunity to purchase a former manufacturing facility in Minto, New Brunswick with the intention to turn it into a warehouse facility for storage of boats, RV's, vehicles, etc.” [ 14 ] Submission 1 contained photographs showing debris and clutter that had been left by the former occupant of the building, which had gone bankrupt and had removed its equipment. Mr. Pasher indicated that it would take six to eight weeks to remove the debris.

“The plan is for people to begin storing their assets their (sic) beginning October 31, 2021.” [ 15 ] Submission 1 prepared by Mr. Pasher proposed various coverages, deductibles and limits for the property coverage, including: • $3 million limit on the building, equipment and stock with a $25,000 deductible on an actual cash value basis; • The building was described as being a 60,000 square foot structure, constructed in 1970. It had a concrete floor and metal walls.

There had been partial electrical, heating and plumbing renovations conducted in 2010; • “Occupancies: Building Owner” • “Insured: __________” (i.e. left blank) • “the building was built to be a manufacturing facility back in the early 1970s. It was home to many companies over the years but is now going to be sold off.” [ 16 ] Earl Daniels was identified as the intended insured. [ 17 ] On that same day, September 10, 2021, Ms. Cheeseman provided a formal quote back to Mr.

Pasher, on the following terms: • Three month term, September 10 to December 10, 2021; • “Business Description: VACANT” • Coverage had a limit of $3 million, based on an actual cash value basis, with a $25,000 deductible; • The premium for the property coverage portion was “$9,075 plus HST ” ; and • Conditions included “vacancy permit” – the significance of which neither party explained to the Court. [ 18 ] Still on September 10, 2021, Mr. Daniels confirmed in an e-mail his agreement to bind the coverage as per the quote from Burns & Wilcox. [ 19 ] A few weeks later, on October 1, 2021, Mr.

Pasher again wrote to Ms. Cheeseman, as follows: “… I don't think this policy has gotten issued yet, would it be possible to change the name from Earl Daniels to 727933 NB Inc.? they incorporated and received their official noted (sic) dated September 29, 2021.” [ 20 ] On October 5, 2021, Mr. Pasher submitted a second submission to Ms. Cheeseman (“Submission 2”) by email.

In his email to her, he writes: “The insured wants to get this wrapped up as soon as possible (today if he could) so this is at the top of my desk any (sic) if you require anything you have it immediately.” “Legal representation for insured is currently finalizing agreement for tenants to sign - if you require a copy of this, I will send it to you as soon as I obtain it.” [ 21 ] In Submission 2, the following is indicated:

• Insured is now 727933 NB Inc.; • The proposed term is October 8, 2021 to October 8, 2022 (i.e. one year); • “Building is 90% warehouse space to be used for the winter storage of recreational vehicles”; • “annual gross receipts: $150,000”; • “insured has purchased the building that consists of 90% … warehouse space to be utilized for the winter storage of recreational vehicles. … In addition, 10% of the building is office space which will be rented to two tenants (one of which is expected to be NB Power) and that office space will be utilized on a daily basis”; • “Business principals to maintain regular presence on premises as they will be occupying office space there”; • The proposed limit is increased to $3.9 million; • the proposed deductible is reduced from $25,000 to $10,000; • “Insured Interest: Building Owner”; • “Insured: ________” (left blank). [ 22 ] In addition, Submission 2 attached a Valuation Standard Report, apparently prepared by Mr.

Pasher. It estimated reconstruction cost for the building at $4.263 million. [ 23 ] Still on October 5, 2021, Ms. Cheeseman emailed Mr. Pasher with a quote for the requested coverage, writing: “Given the updates are partial, I am not able to offer replacement cost valuation. … Good news is though I am able to offer an annual term due to the amended occupancy as discussed.” [ 24 ] The Court has not been provided any evidence in relation to what may have been discussed between Mr. Pasher and Ms. Cheeseman other than what is contained in the correspondence. [ 25 ] Shortly thereafter, still on October 5, 2021, Ms.

Cheeseman forwarded an updated quotation to Mr. Pasher on the following terms: • One year term (October 5, 2021 to October 5, 2022); • Limit: $3 million; • Recovery on an Actual Cash Value basis; • $10,000 deductible; • Premium for Commercial Property Coverage: $16,500 plus HST.

[ 26 ] The quote also requested additional information from the insured: “Please inform if the risk is sprinklered.” [ 27 ] On the following day, October 6, 2021, Mr. Pasher emailed Ms. Cheeseman to confirm that, yes, the property was “sprinklered.” He also asked that Marc Girouard be added as a loss payee on the policy. He then asked to “bind” the coverage effective October 8, 2021 by sending a signed Commercial Insurance Binder dated October 6, 2021, which was signed by both Mr. Daniels as President of the numbered company and by Mr. Pasher.

PROPERTY OWNERSHIP [ 28 ] On October 14, 2021 – some 6 days after the insurance was issued to the numbered company, 727933 NB Inc. signed a Promissory Note for $200,000 in favour of Marc Girouard. Interest was calculated at 12%, the term was one year and Earl Daniels and Margaret Jean Allaby signed as guarantors.

Payments were to be $2,000 per month in “interest only.” [ 29 ] Also on October 14, 2021, the numbered company signed a collateral mortgage against the Property in the amount of $200,000, also in favour of Marc Girouard. [ 30 ] On October 26, 2021, the Property was transferred from Marc Girouard in trust and Eastland Group of Companies Inc., as transferors, to 727933 NB Inc. as transferee. [ 31 ] To clarify: the insured was not the registered owner of the Property until October 26, 2021 – nearly three weeks after the issuance of the policy by the Defendants. [ 32 ] According to the evidence of Mr.

Daniels, he paid $3,000 to Mr. Girouard as a deposit on the purchase of the Property, and Mr. Girouard covered the legal and closing fees – such that Mr. Girouard financed a total of $213,840.46 of the total price. No other details are provided regarding the deposit (such as when it was paid), and no Agreement of Purchase and Sale has been produced by the parties (if, indeed, one exits). [ 33 ] As noted, the Property was damaged by fire on November 13, 2021. [ 34 ] Following the fire loss, the Defendants appointed an adjuster to obtain a statement from Mr. Daniels.

Excerpts from that statement, given on November 25, 2021, include the following: I am the owner of 727933 NB Inc. […] I formed 727993 NB Inc just before I purchased the building at 77 Industrial … 4 months total now. I purchased the building 2 months previous to the loss. […] I bought the building at 77 industrial dr minto, and the plan was in spring to rent the entire building, after the winter storage season was over. (for the winter I rented space to Boats, cars, rvs) I purchased the property privately. I bought it for $216,000. […] The reason I put the building up for sale was that Mr.

Herrington (a customer) was putting a boat on a trailer in storage and his wife is a real estate agent. He was signing docs, and she gave me a business card. I called her to ask what she would list the building for. She looked into it and quoted 785k, so I said if she could sell the building for that go ahead. I had no intention of selling until she told me what she wanted to list it for. […] I have never dealt with insurance before nor had a claim. I get my insurance through cooks insurance, Dave Loveless handles all my insurance. I called him when I bought the building and he looked after everything.”

[Note: the above excerpts have not been altered – they are reproduced exactly from the original.] [ 35 ] Earlier this year, this Court issued a Judgment in favour of Marc Girouard in Court File MC-238-2022, where Mr. Girouard had commenced proceedings against Burns & Wilcox. The Judgment was for $213,780.00. It is uncontroverted that this Judgment was in respect of Mr. Girouard’s claim as loss payee in respect of the Property.

It is unclear why the Judgment was entered against Burns & Wilcox rather than the insurers who underwrote the risk. [ 36 ] Further, evidence provided by the Defendants indicates that the Judgment was paid by them (and not by Burns & Wilcox), and that they received, in exchange, an assignment of the collateral mortgage held by Mr. Girouard in respect of the Property. This was done in the Spring of 2023. No other explanation is provided.

THE PLEADINGS [ 37 ] The Plaintiff claims that the loss is covered as a named peril (fire) under the policy issued by the Defendants and seeks $640,300 as the Actual Cash Value of the building, together with $143,750 in clean-up costs, $2,140 per month in interest paid to Mr. Girouard following the fire (on the grounds that the insurance should have paid Mr.

Girard as loss payee, thereby extinguishing that debt), plus costs and disbursements. [ 38 ] In their Statement of Defence, the Defendants allege that the insured made a number of material misrepresentations and/or omissions which vitiate the coverage, including: • representations that 727933 NB Inc. was the owner of the Property when the policy was issued on October 8, 2021, which is not the case.

The Defendants deny that the insured had any insurable interest in the Property; • misrepresentations regarding occupancy of the Property (and specifically that the tenants would be present daily, and that the insured’s principals would be regularly on-site); and • misrepresentations regarding the valuation of the Property.

The Defendants plead that the purchase price of $200,000, which was not disclosed to the underwriter, is significantly less than the requested limit of $3 million and the proposed replacement cost of over $4 million included in Submission 2. (Of course, the insured is not seeking that amount, but rather a much lower $640,300 as ACV.) [ 39 ] The Defendants plead that, had such information been provided by the insured, the risk either would not have been underwritten or, if it was, they would have demanded a higher premium.

As a result, the Defendants plead that the policy is void ab initio due to the insured’s failure to abide by its duty of utmost good faith, or alternatively it is voidable. EVIDENCE ON THE HEARING [ 40 ] The Court received a number of affidavits filed by the parties, including three affidavits from Earl Daniels and one from Courtney Cheeseman. It is noteworthy that the Court did not receive any evidence from Mr. Pasher, nor from Marc Girouard. They are, of course, not parties. But it would seem that they have personal knowledge relating to many of the questions raised in this litigation.

Earl Daniels [ 41 ] In his first affidavit, sworn on February 6, 2023, Mr. Daniels states that he contacted Cooke Insurance on or about September 10, 2021, but he denied that he requested insurance coverage on the Property at that time. That affidavit reads, in part: “Somehow, there was a mistake, or misunderstanding with respect to what I was communicating, and apparently the person who originally took my phone call felt that I immediately required insurance, which was not the case, as the Plaintiff did not own the property. I received a bill for insurance.

When I got the bill, I called again and was able to speak with Dave Loveless who I normally dealt with. Mr. Lovelace indicated he did not understand how this had happened, (neither did I ), and he indicated that he would “fix” it. It was subsequently “fixed” by issuance of the policy in the name of the Plaintiff. While the records of the Defendants may show that there was a “first” policy and then a “second” policy, the defendant only ever wanted one policy, in the name of 727933 NB Inc., who only acquired the property subsequently in October of 2021.

If there was a “first” policy issued, it was not at the request of the Plaintiff or myself, and was what Mr. Lovelace referred to as a “screw up.”’

[ 42 ] Presumably, Mr. Daniels was then confronted with the e-mail he had sent on September 10, 2021, requesting to bind the insurance policy in his personal name, because in his second supplemental affidavit sworn on August 2, 2023, he states: 15. It was never my intention to purchase insurance from September 9, 2021, only to October 12, 2021 - I was making inquiries as to what it would cost to insure the property, as I needed to have insurance on it in order to obtain financing from Girouard for the purchase price. 16.

Further, I wanted to access the building prior to the actual sale going through so that I could start cleaning it up and removing debris, as the season for storage was about to start soon, with people wanting to store their motorcycles, vehicles, boats, RV's, etc., in the fall. I was accordingly advised by Girouard that before I could go in and begin cleaning (that is, before the purchase closed), I would need some insurance. I did speak to Pasher about this, and accordingly, this is why I confirmed that we wanted the insurance contract to be bound from September 10, 2021. 17.

It was for the above reasons that insurance was required as soon as possible, so I could start cleaning up the building. … [ 43 ] Mr. Daniels’ evidence on that point is completely contradictory, seriously calling into question his reliability as a witness. [ 44 ] Mr. Daniels goes on to say in his affidavits that: • he never represented to Mr. Pasher that the numbered company had purchased the Property by October 8, 2021 – he says he told Mr.

Pasher that he had a deal to purchase the Property – but again, no Agreement of Purchase and Sale nor any details about the deal have been provided; • he never represented to Mr. Pasher that he had tenant leases being prepared; • he never represented to Mr. Pasher that the replacement cost for the building was over $4 million; • he never represented to Mr. Pasher that he had tenants lined up, or that one of them was NB Power; • he never represented to Mr. Pasher that the leased office space would be used daily; • he never represented to Mr.

Pasher that the principals of the numbered company would be routinely on-site. [ 45 ] Mr. Daniels acknowledges that he may have provided what he calls a “guesstimate” of the annual revenue he anticipated from the building, but he could not be sure. [ 46 ] As for the evidence from the Defendants, the most pertinent evidence comes from the Affidavit of Ms. Cheeseman, sworn June 6, 2023.

In it, she asserts the following: • She is a senior underwriter for Burns & Wilcox and is authorized to bind the defendant insurers; • “As part of the submission process, I rely on complete, thorough and accurate submissions on behalf of an intended Insured, through his agent as I must rely on the truth and accuracy of such information to evaluate the risk intended to be covered by insurance.”

• “At no time did Kraig Pasher, Earl Daniels nor the Plaintiff disclose that the Plaintiff had acquired the Property on October 26,2021 for $200,000 nor that previously the Property was up for sale.

Based on Submission 1 and Submission 2, I verily believed andrelied on the fact that Earl Daniels was the initial owner of the Property and that he had subsequently incorporated and transferred theProperty to the corporation.” • “The purchase price of $200,000, which was well under the coverage requested for the value of the Property, and the fact thatneither Earl Daniels nor the Plaintiff was the owner of the Property was information material to my assessment of the risk on September10, 2021 and October 5, 2021, and was not disclosed.” • “The Purchase and Sale Agreement and the purchase price was $200,000 in comparison to the insured value of $3,000,000 ACVwere information that were material facts which needed to be disclosed to me.” • “The use and occupancy of the Property was also material information which needed to be disclosed to me as it would affect thepremiums charged.” • “I was unaware that the location was up for sale, which would also have been impactful on the assessment as to the exposure andwas also a material fact which was not disclosed.” • “Submission 2 also described that 10% of office space was anticipated to be tenant occupied and would be utilized on a dailybasis.

Had this representation been untrue, this further non-disclosure would have resulted in a higher premium being imposed as ahigher proportion of the Property was unoccupied at the time of the request for coverage.” • “Had the Plaintiff [or] his agent, Kraig Pasher, disclosed the material information stated above, the policy as currently presentedwould not have been issued nor would the policy limits have been granted to the extent of $3,000,000. […] These facts would haveaffected my decision to offer coverage and the premium paid. […] The non-disclosed information would have raised further concerns inregards to providing coverage.” [47] That is the pertinent evidence before the Court on these competing motions for

summary judgment. POSITIONS OF THE PARTIES [48] At the hearing, counsel for the Plaintiff, which filed the first of these “mirror” motions for

summary judgment, candidlyacknowledged that, in light of the obvious (or at least apparent) inconsistencies in the evidence of Earl Daniels, combined with asignificant amount of missing evidence in relation to the role of Cooke Insurance, Mr. Pasher and Marc Girouard, there are indeedgenuine issues in this matter which require a trial. As a result, while the Plaintiff did not formally withdraw its motion, it acknowledgedthat

summary judgment should not be granted. [49] As for the Defendants, they maintain that the evidence before the Court proves that there were material misrepresentations madein Submission 1 and Submission 2, and that the source of those misrepresentations, whether it was Earl Daniels or Mr. Pasher, isimmaterial. The Defendants say it is uncontroverted that Ms. Cheeseman, the underwriter, states under oath that there weremisrepresentations and omissions which, had she been provided the correct information, would have affected the coverage and/or thepremiums charged.

That, they argue, amounts to a full defence such that there is no genuine issue requiring a trial. LAW AND ANALYSIS [50] Rule 22 of our Rules of Court was amended in 2017 following the Supreme Court of Canada’s decision in Hryniak v. Mauldin,2014 SCC 7 , amendments which fundamentally altered the manner in which actions may be decided by the courts in asummary fashion. [51] In Russel et al v. Northumberland Co-operative Limited, 2019 NBCA 70, Justice LeBlond succinctly explained the newapproach to such motions and he further set out a roadmap for trial judges to follow on motions for

summary judgement, creating two-step analysis. He wrote:

[21] The Rule therefore provides a two-step process with specific reference to the central question: is there a genuine issue requiring a trial? [22] In step one, the judge must determine if the evidence put before him reveals a genuine issue requiring a trial. At this point, there is no need to resort to the fact-finding powers contained in Rules 22.04(2) and (3). Adjudication under step one may include cross- examination on any affidavit (Rule 39.03). Any such cross-examination does not trigger the mini trial prescribed by Rule 22.04(3).

If, on the filed evidence alone, the judge can fairly and justly adjudicate the dispute, there will be no genuine issue requiring a trial and the judge must grant

summary judgment. There is no discretion under the Rule to refuse to do so (see 22 King Street Inc. et al. v. The Bank of Nova Scotia , 2018 NBCA 16 , [2018] N.B.J. No. 42 (QL) ). The motion judge in this case granted

summary judgment on that basis and therefore did not need to proceed to step two. [23] A judge only proceeds to step two if the assessment of the filed evidence leads to the conclusion that there may be a genuine issue requiring a trial. […] […] [26] The ultimate objective will continue to be justice according to law. Conventional trials will not disappear, but the new mindset requires a shift away from them as the default and as being always the best mechanism in seeking justice, to a mindset guided by an answer to the central question: is there a genuine issue requiring a trial?

That question can only be answered by fully exploiting the opportunities of Rule 22. [27] A by-product of the culture shift will be a reduction in the number of civil trials. Rule 22 motions, with or without mini-trials, will determine if judges have the level of confidence required to do what they have always done in conventional trials, i.e. find facts and apply relevant legal principles to those facts, with the difference that they will be doing so proportionally, fairly and in a much more timely and affordable fashion. The culture shift will benefit litigants and the court process.

The Supreme Court was clear in Hryniak that the

summary judgment motion, as an alternative model of adjudication, is no less legitimate than a conventional trial. [28] The burden of proof to establish there is no genuine issue requiring a trial will always be on a balance of probabilities. That burden will more readily be met with fulsome use of the broad scope of admissible evidence now permitted under Rule 22. The old adage of putting one’s best foot forward and leading trump or risk losing is far more significant under the new version of Rule 22 than it was under its previous iteration.

This was fully canvassed in O’Toole at paras. 70-73 . [ 52 ] Here, neither party requested to cross-examine the opposing affiants, nor was there any request for a mini-trial. Ultimately, though, it is for the Court to determine whether there is doubt as to whether there is a genuine trial requiring a trial, and whether, if there may be a genuine issue requiring a trial, a mini-trial is required. [ 53 ] As stated, counsel for the Plaintiff acknowledged at the hearing that

summary judgment should not be granted for either party – conceding that his client had not proven that there is no genuine issue requiring a trial. As a result, the Court will not address the Plaintiff’s claim, which for obvious reasons – not the least of which is a serious question as to Mr. Daniels’ credibility – falls far short of the mark. [ 54 ] As for the Defendants’ motion, I am satisfied at the first step of the analysis that there is indeed a genuine issue requiring a trial. While there does not appear to be any dispute that at least some of the information conveyed to Ms. Cheeseman by Mr.

Pasher was inaccurate – including that the Plaintiff had, by October 5, 2021, “purchased” the Property – the Court has serious questions as to the bare assertions made by Ms. Cheeseman that such “misrepresentations and omissions” were material. [ 55 ] For example, she states that the Plaintiff failed to disclose that the Property had “previously been up for sale” – i.e. she suggests that she was unaware that Mr. Daniels was purchasing the Property in the fall of 2021. But that is difficult to accept in light of the clear representations in Submission 1 that Mr.

Daniels had “come into an opportunity to purchase a former manufacturing facility in Minto” (see page 121 of the record), and that it was “now going to be sold off” (see page 125). [ 56 ] As for her suggestion that the Agreement of Purchase and Sale and the purchase price were material information she required for her assessment of the risk, one must ask, then, why she did not request that information when the purchase was clearly communicated to

her in Submission 1. In Submission 2, it states that “Insured has purchased the building” – so, if the purchase price was material, whywas it not requested, as she had done with respect to whether the building was “sprinklered?” [57] She had a document, purportedly prepared by Mr. Pasher, which calculated replacement cost for the building. But Ms.Cheeseman did not accept that figure, and only agreed to insure on an ACV basis.

Again, if the purchase price was relevant, why did shenot request it? [58] I simply do not accept her assertion that the insured failed to disclose that the Property was being purchased. [59] Likewise, she states that the fact the Property was subsequently listed for sale by the insured would have been a material changein the risk, but she fails to explain why.

It is no more than a bare assertion. [60] She points to issues of “occupancy” as being material, but Submission 1 made it clear that “people [would] begin storing theirassets [there] beginning October 31, 2021.” There was no representation as to when the office tenants might begin to occupy theProperty. If that was material, why were the leases (copies of which Mr. Pasher had offered to send) not requested by Ms.

Cheeseman?None of the materials confirmed when occupancy by the tenants would begin, other than the winter storage of boats and RVs which wasanticipated to start on October 31, 2021, several weeks after the policy was issued. [61] Counsel for the Plaintiff also points out that, in their various email exchanges, Mr. Pasher and Ms. Cheeseman refer todiscussions they had had – presumably, an exchange of information that is not necessarily captured in those emails.

That, he argues,suggests that there is additional evidence that needs to be presented to the Court, especially surrounding the issue of “occupancy” relatedto the policy issued on October 6, 2021. [62] The Defendants argue that Ms. Cheeseman’s evidence of what constitutes a material misrepresentation is uncontradicted and thatthe Court should accept that as a fact. They cite Henwood v. Prudential Insurance Co. of America, (SCC), where theSupreme Court of Canada held that an insured had materially misrepresented her health on an insurance questionnaire.

The defendantinsurer in that case had led evidence from its Associate Medical Director, who testified that if the insurer had received accurate answersto its questions, the insurer likely would have issued the policy at a much higher premium. [63] The Supreme Court held that the trial judge did not commit any error in accepting that uncontradicted evidence, notwithstandingthat the witness was a long-standing employee of the insurer, writing: It is true that Dr.

Roadhouse was employed by the respondent company and that his statements regarding the materiality of the untrueanswers made by the insured are based in great measure upon his experience with that company, but I do not think that his evidence canbe disregarded on this account or that his qualifications as a medical graduate of the University of Toronto are to be ignored on accountof his having been the Associate Medical Director of the respondent insurance company for more than eleven years.

As has beenindicated, his evidence was totally uncontradicted. [64] It must be noted, however, that the Supreme Court went further, holding that the evidence as to materiality also had to bereasonable: The question that remains to be determined is whether, in treating the untrue answers as material, the respondent was acting as areasonable insurer, and whether it has sufficiently discharged the burden of proving that its actions were those of such an insurer bycalling its own officials to prove the company’s practice. [65] This has recently been re-stated by the Nova Scotia Court of Appeal in Linden v.

CUMIS Life Insurance Company, 2015 NSCA20 , where Justice Fichaud, writing for the majority, quoted with approval from the decision of the Application judge: [52] … I note the case of Henwood v. Prudential …, where the Supreme Court of Canada held that senior officials from the insurancecompany itself could also testify as to their practice and policies in relation to certain information, as to whether it would affect theirpremium or acceptance of the contract. [53] This was the case here, and the court did have the benefit of that evidence.

The court must also consider whether the insurer’sposition is objectively reasonable in the circumstances. I find that the misrepresentations noted here were clearly material. They werethe subject of specific questions on the form, thereby objectively demonstrating their importance to the respondent. They related to

fundamental issues relating to a person’s health, i.e. hospitalization and treatment, and the use/abuse of drugs. Accurate answers to thesequestions would have led the respondent to details and information relating to the extent of Mr. Linden’s health difficulties. Had Mr.Linden answered those questions accurately, there is no doubt that the respondent would have been assessing a very differentapplication. It is my conclusion that a reasonable insurer, given this information, would clearly have required a higher premium ordeclined the risk. It is on that basis that I find the contract was voided by Mr.

Linden’s misrepresentations, and I dismiss the applicant’sclaim. [66] It is reasonable to accept that, if the underwriter asks the question, the answer is likely material to the assessment of the risk.Here, however, there is no suggestion by the Defendants that any of the alleged misrepresentations were part of a questionnaire used bythe underwriter. [67] Ms.

Cheeseman alleges that she did not know the Property was recently purchased, which is difficult to understand given theclear indications in Submission 1 and Submission 2 that the Property was indeed being purchased. [68] If the purchase price or details of the Agreement of Purchase and Sale were material, why were they not requested? [69] If occupancy was material, why were no details requested by Ms.

Cheeseman, especially in light of the fact that she knew orshould have known that the Property would not be occupied for at least a period of weeks following the issuance of the policy? [70] Why is it material that the Property was later listed for sale? Ms. Cheeseman provides no explanation. [71] If the Court is not provided with any rationale for the proposition that the alleged misrepresentations are material, how can theCourt determine whether the underwriter’s position is objectively reasonable? [72] Also, in the present case, it would seem that Ms.

Cheeseman’s employer, Burns & Wilcox, was named as a defendant in an actionby Marc Girouard, and that the Judgment issued by this Court was paid by the Defendants. One must therefore question whether Ms.Cheeseman is an appropriately objective witness on these issues. [73] The Defendants also argue that, since the Plaintiff was not the legal owner of the property until some three weeks after theissuance of the policy, it had no “insurable interest” in the property. But does not being the legal owner automatically mean there is noinsurable interest? [74] In Kosmopoulos v.

Constitution Insurance Co., (SCC), Justice Wilson held as follows: 42. […] 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, orprejudice to the person insuring", that insured should be held to have a sufficient interest.

To "have a moral certainty of advantage orbenefit, but for those risks or dangers", or "to be so circumstanced with respect to [the subject matter of the insurance] as to have benefitfrom its existence, prejudice from its destruction" is to have an insurable interest in it. […] [75] More specifically, the Ontario Court of Appeal in Rose Corp. v.

American Home Insurance Co., (ON CA),held that having entered into an Agreement of Purchase and Sale, the insured had “purchased” the subject property for the purposes ofthe policy in question. [76] Here, the evidence establishes that the insured, at the very least, paid a deposit of $3,000 towards the property. Both parties referto an Agreement of Purchase and Sale, but neither has produced it.

The timing of that payment and the signing of the Agreement ofPurchase and Sale may be important. [77] Can it really be said that the numbered company did not have "some relation to, or concern in the subject of the insurance, whichrelation or concern by the happening of the perils insured against may be so affected as to produce a damage, detriment, or prejudice tothe person insuring"? Recall that Mr. Daniels had already commenced the clean-up of the Property prior to the transfer. Is that not “an

interest” in the Property? [ 78 ] In the end, I am satisfied that neither party has met its burden of proof and both have failed to establish that there are no genuine issues requiring a trial in this case. Quite the contrary.

I am satisfied that numerous questions remain unanswered, and the evidence of several missing witnesses will be necessary at trial. [ 79 ] I am satisfied that, based on the evidentiary record before me, I am not able to fairly and justly adjudicate the dispute between the parties. [ 80 ] I am likewise satisfied that a mini-trial will not assist in that regard, because the missing evidence would still be absent, or the matter would become a full-blown trial. Not all cases lend themselves to

summary judgment, and based on the evidentiary record before me, I believe this is such a case. DISPOSITION [ 81 ] The Plaintiff’s motion for

summary judgment is dismissed. [ 82 ] The Defendants’ motion for

summary judgment is also dismissed. [ 83 ] Each party shall bear their own costs. DATED at Moncton, New Brunswick this 24 t day of October 2023. _____________________________________ Robert M. Dysart, Judge of the Court of King’s Bench of New Brunswick