Pederson v Allstate Insurance Company of Canada, 2023 ABKB 198

Court of King’s Bench of Alberta Citation: Pederson v Allstate Insurance Company of Canada , 2023 ABKB 198 Date: 20230405 Docket: 1703 11019 Registry: Edmonton Between: Kathryn Pederson Plaintiff - and - Allstate Insurance Company of Canada and Economical Mutual Insurance Defendants _______________________________________________________ Reasons for Decision of the Honourable Justice D.A.

Sulyma _______________________________________________________ Introduction [ 1 ] At issue is whether Allstate Insurance Company of Canada, as insurer, must pay to the Plaintiff Kathryn Pederson, the judgment awarded against Rayona Danyluk and Robert Norton in at a liability trial following a motor vehicle accident. Danyluk and Norton lied about the car accident underlying the claim by insisting throughout that Danyluk’s car was stolen and Norton was not the driver. Allstate asserts it is not liable asserts they have a provable defence under s 579 of the Insurance Act , r SA 2000, c I-3.

Pederson and Economical Mutual Insurance, Pederson’s insurer, says Allstate must pay because it should have been alerted to the need for further

investigation since there were “red flags” Allstate either ignored or dismissed. Facts [ 2 ] On February 17, 2003, Pederson was struck from the rear of her vehicle by a vehicle registered to Rayona Danyluk, who had been issued a standard automobile policy by Allstate Insurance with a policy limit of $1 million dollars. The driver sped off after the accident. Initially, the insured maintained that the vehicle was stolen, and the driver was unknown.

Allstate maintained that position until December11, 2012 when Michalyshyn J determined in the liability trial that the Defendants lied ( Pederson v Norton , 2012 ABQB 304 (KB)) ( Pederson #1 at para 151, 155, 175 ); see also Pederson v Norton , [2013] AJ No 1499 ( Pederson #2 at para 4 )) and the vehicle was driven by Norton with Danyluk’s consent and as a member of her household. [ 3 ] Ultimately, Pederson recovered judgment against Danyluk and Norton and brought this action to recover from Allstate’s policy and alternatively, her own SEF44 Endorsement issued by her own insurer, Economical Mutual Insurance. [ 4 ] In February of 2017 the parties agreed that if Allstate is not found liable to pay the balance of the judgment to the Policy limits, then Economical would pay the Plaintiff an agreed sum plus costs of the SEF44 action.

Parties’ Positions [ 5 ] Allstate maintains that up to and through to the completion of the liability trial, Danyluk and Norton claimed the vehicle was stolen, and that Norton had not been driving it at the time of the accident. Since then, Allstate has maintained that it is not liable pursuant to its policy as Danyluk and Norton were in breach of the policy because they lied, thus rendering the policy null and void.

Both Pederson and Economical challenge Allstate’s positions of denial of coverage. [ 6 ] It is not contested that the Plaintiff’s claim here is created by s 579(1) of the Insurance Act and the Plaintiff has met her evidentiary obligations under that section. Allstate has the onus of proving any of the eligible defences allowed by s 579 of the Act and related sections. It is also conceded that here the Plaintiff stands in the shoes of the Tort Defendants. [ 7 ] The history of the tort action and Allstate’s various positions with respect to coverage is long and tortuous.

It includes a number of non-waiver agreements between Allstate and its insured obtained over the years. Some issues must still be determined by me here and therefore I will not purport to summarize facts other than above and during the course of this judgment. [ 8 ] Allstate contends that on the facts here it could not declare a breach of the policy before the liability trial because there were two competing and inconsistent stories; Danyluk and Norton contended that the car was stolen and Norton was not driving and Norton’s ex-partner averred that Norton told her he had been driving.

There were inconsistencies, inaccuracies, and credibility and reliability concerns in both versions. [ 9 ] Pederson and Economical dispute that position. This raises the issue of the extent and content of an issuers duty to assess claims and determine whether they are covered by policies of insurance issued by them.

It also raises the issue of when Allstate had sufficient facts to appreciate the breach or the implication of the breach to entitle it to deny coverage and defend as a Third Party by Order and what level of investigation was necessary for Allstate to be protected by its lack of knowledge. [ 10 ] Both Pederson and Economical Mutual submit that although Allstate might claim that it never had full knowledge of its rights to waive them, Allstate was willfully blind and cannot thereby be excused by the Court.

Allstate submits the threshold for it to deny coverage is certainty of the transgressions and breaches by the insured. Pederson and Economical Mutual submit the test is first to recognize that an investigation is required to uncover the “something more” and once a sufficient investigation is completed to act on reasonable grounds to determine coverage. [ 11 ] Pederson’s brief reviews all the facts that should have raised a number of red flags for Allstate requiring investigation.

She further submits that despite these facts, on July 28, 2003, Allstate stated it had conducted a thorough investigation and that the vehicle had been stolen. [ 12 ] Pederson further points out that Allstate did not interview Norton until February 2007 and took two photos of him. She submits that on that date the adjuster had more than enough factual information to determine he was a liar. Further, at the same time Allstate ought to have realized and investigated that Norton’s story was contrary to the story told by Danyluk and others.

At that stage she submits that Allstate knew their insurerd were lying and ought to have gone off coverage and applied to be added as a Third Party by Order. Instead, Pederson claims she was prejudiced by the decision to ignore these serious contradictions. She submits Allstate chose to take a risk of not going off coverage and instead gambled that its position of no liability would be the correct one. [ 13 ] Allstate answers that the Tort Defendants never wavered in their evidence that the vehicle was stolen and the driver at the material time was unknown.

It submits that the mere presence of evidence that contradicts the Tort Defendants was not, and is not, sufficient for Allstate to declare the Tort Defendants’ liars and in breach of the policy. Analysis [ 14 ] The leading case in this area of law is Trial Lawyers Association of British Columbia v Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47 ( Bradfield SCC) an appeal of in Bradfield v Royal Sun Alliance Insurance Company of Canada, 2019 ONCA 800 .

[15] In Bradfield, a coroner’s report disclosed the presence of alcohol in the insured’s blood, a breach of the insurance contract, butthe insurer did not know this until discovery examinations. The insurer then immediately declared a breach of the policy, ceaseddefending its insured, and denied coverage. The plaintiff, who had sued the insured’s estate, rejected the insurer’s position that itsexposure was limited to the statutory minimum, because (1) the insurer had waived its rights to deny coverage by its conduct and (2) theinsurer was estopped by its provision of a defence to the insured.

Waiver [16] The Supreme Court of Canada decision did not deal with waiver, as the parties agreed that s 131 of the Insurance Act, R.S.O.1990, c. I.8, as it was at the relevant time, precluded waiver by conduct and required that any waiver of rights must be in writing. I notethat in Alberta, a similar provision (s 517) was in effect from the date of the accident until July 1, 2012; the trial decision was renderedon May 9,

Section 517 provided: 517(1) No term or condition of a contract is deemed to be waived by the insurer in whole or in part unless the waiver is stated inwriting and signed by a person authorized for that purpose by the insurer.

(2) Neither the insurer nor the insured is deemed to have waived any term or condition of a contract by any act relating to theappraisal of the amount of loss or to the delivery and completion of proofs or to the investigation or adjustment of any claim under thecontract. (emphasis added) [17] I conclude that waiver by conduct is precluded by the statute, as it was in effect from the time of the accident untilMichalyshyn J’s decision. No waiver by conduct could arise after that decision. [18] In any event, waiver requires that the party waiving its rights had: (

a) Full knowledge of the deficiency that might be relied upon; and (

b) The unequivocal and conscious intention to relinquish the right to rely on the contract. (see Saskatchewan RiverBungalows Ltd. v Maritime Life Assurance Co, (SCC), [1994] 2 SCR 490 (at para 19, emphasis added). [19] It cannot be said that Allstate had knowledge that Danyluk and Norton were lying, and therefore in breach of the contract.Allstate knew that there was contrary evidence to Danyluk and Norton’s, but that is not full knowledge of the material facts.

It is onlyknowledge that there were competing versions of the events. [20] Economical and Pederson suggest that Allstate was willfully blind or that it should have investigated further. I will addressthese concerns within the estoppel argument, as they raise similar issues. [21] Nor was there any evidence that Allstate unequivocally and consciously demonstrated its intention to relinquish its rights.Economical submits that Allstate’s explicit election to defend, its decision to not go “off coverage”, and its failure to investigate furtherconstitute such an intention.

The Supreme Court of Canada in Bradfield noted that an election to defend communicates only that theclaims against its insured are of a type that fall within the terms of coverage (at para 48), nothing more. Further, the Court indicated thatthe insurer’s duty to investigate is a duty to the insured (para 34) and not to third parties (at para 35). I will deal with the question ofgoing off coverage when discussing the Non-Waiver Agreements (NWA) later in these reasons.

Estoppel [22] The requirements of estoppel were set out in Bradfield SCC at para 15: The equitable defence therefore requires that (1) the parties be in a legal relationship at the time of the promise or assurance; (2) thepromise or assurance be intended to affect that relationship and to be acted on; and (3) the other party in fact relied on the promise orassurance. It is, as we will explain, implicit that such reliance be to the promisee's detriment.

Legal Relationship [23] In Bradfield, the Supreme Court rejected the premise that the right of a plaintiff to sue the insurer in s. 258 of the OntarioInsurance Act creates a legal relationship for the purposes of establishing promissory estoppel, (s 579 of the Act is identical) for tworeasons: (

a) a claimant can only sue upon recovering a judgment against the insured (para 43); and (

b) the plaintiff can only bring the claim on “his "own behalf and on behalf of all persons having such judgments or claims ...against the insured" (at para 44). [24] The Court held that this “would appear to foreclose claims in which [plaintiff] "steps into the shoes" of [insured’s] estate andasserts an estoppel on that basis.” In other words, the only rights of the insured that the plaintiff acquires under s 579 is to sue to enforcethe judgment – not to assert some other cause of action on behalf of the insured.

I note, however, that these conclusions were essentiallyobiter as the Court chose not to definitively conclude that these types of claims were foreclosed in the absence of fuller submissions (atpara 45). [25] Here, Pederson, unlike Bradfield, had recovered judgment before Allstate refused coverage, but there is clearly a question asto whether s 579 of the Act creates a legal relationship permitting a non-party to the contract to assert a cause of action on behalf of theinsured, as opposed to on their own behalf and on behalf of all persons having judgments against the insured.

[ 26 ] I conclude it is unlikely there is a sufficient legal relationship between Pederson and Allstate to meet the first element of the test for estoppel, but if I am wrong, I will consider the remaining portions of the test. The promise or assurance is intended to be acted upon [ 27 ] In Bradfield , the Supreme Court stated that there was no conduct by the insurer that amounted to “clear and unequivocal” or “unambiguous” that it would refrain from denying coverage based on a later revealed policy breach.

It rejected the assertion that the insurer’s decision to defend constituted such conduct, saying (at para 47): Where, therefore, an insurer responds to a claim against its insured by defending, it is communicating — to the insured and to the third-party claimant — only that the claims against its insured are of a type that fall within the terms of coverage.

In no sense can such a limited communication, without more, be taken as a promise to indemnify the claimant if the insured is found at fault, irrespective of any later-revealed or later-occurring policy breaches . (emphasis added) [ 28 ] The Court then went on to discuss NWA’s noting that in cases of questionable coverage, insurers often rely on reservation of rights letters of NWAs to reserve their rights to deny coverage (at para 49).

The Court noted that this raises further problems for a third party asserting estoppel, as how would a third party become aware of such agreements, and in the absence of that knowledge argue an estoppel unavailable to the insured party (at pars 49). Detrimental reliance [ 29 ] As argued by Economical here, in Bradfield , it was argued that detrimental reliance can be presumed where litigation has proceeded to an advanced stage. The Court noted that it had never expressed an opinion on a presumption of prejudice and declined to do so in Bradfield because it was unnecessary to the resolution.

On the other hand, the Court noted that these cases dealing with presumed prejudice involved claims by the first party insured, not third party claimants, and suggested that this distinction required consideration. [ 30 ] Economical relies on Rosenblood Estate v Law Society of Upper Canada [1989] OJ No 240, 37 CCLI 142 (Ont HCJ) at para 62-63 , aff’d [1992] OJ No 3030 ; 16 CCLI (2d) 226 (ONCA) ; ICBC v Nisbet , 2009 BCSC 1570 (at para 76 ) and Personal Insurance Company v Richinger , 2012 NWTSC 19 ( Alexander ) (at para 41 ) to argue that prejudice should be presumed.

Both these cases were by first-party claimants. A distinction between a first party insured and a third party is reasonable. In Rosenblood , the insured’s estate sued the insurer for its decision after examinations for discovery to go off coverage based on the insured’s dishonest conduct. The Court held: If the estate had been advised of an off coverage position earlier the defence could well have been conducted differently. Settlement negotiations could have been conducted earlier and interest claims accordingly reduced.

A sworn rather than an unsworn affidavit on production could have been obtained together with production of all written material dealing with the criteria for collateral second mortgages. Production of the criteria could have provided a possible defence which might have been of use as a settlement tool. Examinations for discovery could well have been conducted with a different emphasis. [ 31 ] These same considerations do not apply to a third party, who is actually the plaintiff in the liability action, and not the defendant.

It cannot be presumed that a plaintiff would conduct the litigation differently had it known there was a possibility that the insurer might take an off coverage position. [ 32 ] Similarly, in Nesbit it was the insured, not the third party, seeking to require the insurer to pay the damages awarded against him, in spite of his false statements concerning an accident. The paragraph cited by Economical does not stand for the proposition it asserts.

In Nesbit , the insured argued that no detrimental reliance was required to establish estoppel, and the court found that, at best, the cases Nesbit relied on once “properly examined, go no further than to confirm that detriment becomes a rebuttable presumption in certain circumstances.” (at para 76) At para 80, the Court held that the right circumstances did not exist in that case. In particular, the Court noted that Mr.

Nesbit’s conduct (much like the conduct of Danyluk and Norton) consisted of continuous lying, and that estoppel was not available. [ 33 ] In Alexander , the insurer applied for a declaration that it be permitted to deny coverage, although it had commenced defending the insured’s estate. The Court noted (at para 41): There must also be a course of conduct by the insurer upon which the insured relied to his detriment: Rosenblood , supra . Thus, unlike waiver, estoppel requires that the insured establish prejudice. [ 34 ] The insured’s estate, the third party plaintiff and their insurer opposed the application.

In addressing detrimental reliance from the perspective of the insured’s estate: “Is the Estate prejudiced if the Personal is now allowed to deny coverage?”. It inferred prejudice to the insured, but refused to address the question of prejudice to the third party claimant (at para 50). [ 35 ] I conclude that the there is no presumption of detrimental reliance by Pederson, and that she has not established any evidence of such reliance.

Payment over Statutory Limits of $200,000.00 [ 36 ] Pederson and Economical Mutual also submit that payments made such as the theft loss, Allstate’s retention of counsel to defend Danyluk, and Allstate defending Norton through counsel were acts affirming coverage, and that such affirmative acts continued as Allstate defended both Danyluk and Norton through a five-day trial and Allstate paid a total of $448,163.26 to the parties, despite the $200,000.00 statutory limit.

This, they argue, reinforces the estoppel/waiver argument. [ 37 ] At issue on the question of overpayment is whether the limit includes pre-judgment interest and taxable costs. [ 38 ] Allstate replies it has not paid amounts in excess of the minimum limits of the policy, but has simply paid the limits to

reimburse the Fund and paid post-judgment interest. No prejudgment interest was paid nor other amounts over the statutory limit. [ 39 ] In Li v Nguyen , 1999 ABQB 1032 , the sole issue was whether the insurer was required to pay interest and costs over the $200,000.00 liability limit. Moore CJ held that pre-judgment interest, as part of damages, and taxed costs and taxed costs in “civil action defended by the insurer” did not fall within the statutory limit (at para 13, referencing s 306(c), now s 564(

c) of the Act). [ 40 ] Unlike the situation in Li , Allstate did defend its insured here, so those costs fall within the clear language of s 564(c). Further, Allstate raises a distinction between pre-judgment costs and post-judgment costs.

As noted by Moore CJ, pre-judgment interest is part of the damages arising from the accident and is therefore included within the statutory limit. [ 41 ] Moreover, in Schoff v Royal Insurance Company , 2004 ABCA 180 the Court of Appeal held that pre- and post-judgment interest and party and party costs were payable by the insurer in addition to the $200,000.00 statutory limit (at para 61) in a case where it held that the insurer was entitled to rely on misrepresentations to deny overage.

The Court of Appeal did not address the distinction between pre- and post-judgment interest. [ 42 ] I accept Allstate’s position and do not find that there was an overpayment. Conclusion on Estoppel [ 43 ] I conclude that there is no legal relationship between Pederson and Allstate sufficient to ground a claim in estoppel. Even if I am wrong in that regard, and s 579 creates such a relationship, I further find that Allstate’s conduct in defending Danyluk and Norton was not a representation to Pederson that it would refrain from denying coverage.

Finally, I conclude there is no evidence that Pederson relied on any representation to her detriment and that there is no basis to presume that there was such prejudice. Nor did Allstate overpay its statutory obligations. Duty to investigate [ 44 ] Much of the Plaintiff’s and Economical’s submissions focussed on asserting that Allstate should have investigated further once it became aware of the alleged “red flags” that Danyluk and Norton were lying. Did Allstate have sufficient knowledge of a breach by its insured? [ 45 ] I will not go into detail of these alleged facts.

There were, indeed, many indications that they were lying. However, I agree with Allstate that this conflicting information was not conclusive. Each side could lead evidence at trial that if accepted by a trial judge would lead to success.

The competing stories were mutually exclusive and each version could be attacked on the basis of credibility and reliability. [ 46 ] This case is not like, for example Logel (Litigation Administrator of) v Wawanesa Mutual Insurance Co, [2008] OJ No 3717 , aff’d 2009 ONCA 252 , leave to appeal refused [2009] SCCA No. 198 when the insurer had incontrovertible evidence, the coroner’s report, that the insured had alcohol in her system.

The Court concluded that Wawanesa had waived the insured’s breach of the statutory conditions (no alcohol) by conducting the defence. (I note here that this was an insured’s estate alleging waiver and estoppel, not a third party). [ 47 ] In Bradfield in contrast, the insurer did not have the requisite knowledge at the time it elected to defend and once it did have that knowledge, it went off coverage. The Court of Appeal noted there was no requirement that the insurer must obtain the coroner’s report ( Bradfield CA at para 39 ).

The duty to investigate [ 48 ] The Supreme Court went further (at para 35): Secondly, there is no basis in law for a third-party claimant such as Mr. Bradfield to be able to ground an estoppel argument in any alleged breaches of an insurer’s duty to its insured.

In other words, the duty to investigate fairly, in a balanced and reasonable manner, is owed only to the insured, not third parties . (emphasis added) [ 49 ] The Court discussed the insurer’s duty to the insured to investigate fairly, in a balanced and reasonable manner, noting that an insurer’s duty to “know the things that were within [its] grasp” is related to their presumed knowledge of its own files and issues of public notoriety.

The Court went on to express concern that a principle requiring insurers to “go the extra mile to find policy breaches” would be counter-productive to the purpose of the duty (para 34). In particular, it noted that there was a reciprocity of obligations between the insurer and the insured that does not exist with a third party claimant (paras 36-37). [ 50 ] The Court expressly rejected the request to allow third party claimants to piggy-back on the relationship between insured and insurer, concluding (at para 37-38): We see no justice in impressing RSA with such a duty while Mr.

Bradfield owes no corresponding obligation. ... It would effectively mean that a contract of liability insurance provides greater protection to, and imposes fewer (indeed, no) obligations upon, third parties like Mr. Bradfield than it provides to and imposes upon the first-party insured. This result effectively runs contrary to the clear expression of legislative intent in s. 258(11) of the Insurance Act , which provides that an insurer is entitled to assert any defences against the claimant as it could raise against the insured.

Conclusion on investigation [ 51 ] I conclude that there was no obligation on Allstate to conduct further investigation, and that in fact, it could not have knowledge of the insured’s breach until Michalyshyn J concluded the trial and made findings of fact based on credibility and reliability. [ 52 ] I conclude that this is sufficient to dismiss the claim against Allstate, but I will address some of Economical’s further arguments. Non-waiver agreements [ 53 ] Allstate obtained four signed non-waiver agreements (NWA) from Danyluk, from Norton, and from Danyluk and Norton before the liability trial.

As the Supreme Court of Canada noted in Bradfield (at para 49 ): In cases of questionable coverage, insurers often rely on reservation-of-rights letters or non-waiver agreements to preserve their right to deny coverage upon investigating the claim... It is unclear to us how and whether a third party would ever obtain knowledge of a rights-reserving instrument of this kind, and in the absence of such knowledge, the third party could conceivably argue an estoppel unavailable to the insured.

In this way, Trial Lawyers’ submission once more appears to give more to the third party than to the first-party insured. [ 54 ] Economical argues that Allstate should not be permitted to enforce the third and fourth NWA, arguing that once an insurer declares a breach of coverage, it must apply to the Court to become a Third Party by Order. It alleges the following reasons: 1. Allstate put itself in a conflict of interest with their insured by “knowingly endorsing unbelievable and likely false statements...despite having knowledge of the ... inconsistencies”; 2.

Allstate “concocted a plan” to retract the denial of coverage and allege potential coverage breaches in order to “get the benefit of Allstate’s Witnesses claim of theft”; and 3. Allstate should have gone off coverage and retained new independent counsel for Danyluk and Norton. [ 55 ] First, neither Economical nor Pederson have any standing to assert a conflict of interest. Moreover, I do not accept the assertion that Allstate knowingly endorsed likely false statements.

An insurer is required to defend unless there is a known policy breach (at para 47), and until Michalyshyn J’s decision, Allstate had an obligation to defend its insured. It could not know, although it suspected, that the insured was lying. That is precisely why it entered into the NWA. That is precisely the purpose of the NWA. [ 56 ] Finally, there is no evidence that anyone “concocted” a plan; the NWA was a reasonable approach to the insurer’s changing knowledge. The NWA is evidence that, in fact, Allstate had no unequivocal and conscious intention to relinquish its rights.

Can Allstate prove fraud? [ 57 ] Allstate suggests that Allstate cannot prove fraud within the meaning of 554(1)(

b) or (c), which reads: 554(1) If ... (

b) the insured contravenes a term of the contract or commits a fraud, or (

c) the insured wilfully makes a false statement in respect of a claim under the contract, a claim by the insured is invalid and the right of the insured to recover indemnity is forfeited. [ 58 ] Adopting the definition of civil fraud in Hryniak v Mauldin , 2014 SCC 7 at para 87 : ...the tort of civil fraud has four elements, which must be proven on a balance of probabilities: (1) a false representation by the defendant; (2) some level of knowledge of the falsehood of the representation on the part of the defendant (whether knowledge or recklessness); (3) the false representation caused the plaintiff to act; (4) the plaintiff’s actions resulted in a loss. [ 59 ] The Alberta Court of Appeal in Abbas v Esurance Insurance Company of Canada , 2023 ABCA 36 (at para 21 ) discussed the

interpretation of this section: “Fraud” and “false statement” have well-known meanings at common law. This condition brings into play the canon that if a legislature “borrows terms of art in which are accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken and the meaning its use will convey to the judicial mind unless otherwise instructed”.

According to Black’s Law Dictionary, “fraud” is “[a ] knowing misrepresentation or knowing concealment of a material fact made to induce another to act to his or her detriment”. The same highly regarded dictionary defines “false statement” this way: “An untrue statement knowingly made with the intent to mislead”. [ 60 ] Economical suggests that there is no evidence that Danyluk had “some level of knowledge of the falsehood of the representation”. When the trial decision is read together with the costs decision, it is clear that Michalyshyn J found that both Danyluk and Norton lied.

In the Costs decision at para 4, he said: The evidence of both Norton and Danyluk was rejected at trial. Bluntly, they each lied. They lied at trial, and before trial in sworn

affidavits and during examinations. But for their lies, virtually all of the pre-trial steps regarding liability, and the entire liability trial, would have been avoided. [ 61 ] In my view this is sufficient to establish that Danyluk and Norton both met the requirements of fraud as defined by the Supreme Court of Canada and the Court of Appeal, and that they wilfully made false statements. They lied at trial, in affidavits, and in examinations. Lying, by its very nature, implies knowledge of the truth.

The nature of the lie – that the car was stolen by an unknown person – cannot be said to have been inadvertent or mistaken. It was both wilful and caused Allstate to defend, at a not insignificant cost. [ 62 ] I also note that this argument is entirely inconsistent with Economical and Pederson both arguing it was obvious that Danyluk and Norton were lying and Allstate should have gone off-coverage. Conclusion [ 63 ] As noted by Wittman J in Schoff , the statutory regime has provided a means for third parties to be protected from misrepresentations by defendants, while still permitting insurers to deny coverage.

At para 57: … the legislation has set out a solution for misrepresentation when third parties are involved. The regime applicable in this case provides, regardless of any misrepresentation, fraud or violation of conditions of the policy, the insurer is liable to third parties to a minimum limit of $200,000.00. A legislative bright line has been drawn delineating the parameters of public protection in cases of a denial of coverage.

Beyond that, the basis upon which an insurer can deny coverage to a third party judgment creditor is the same as a denial to the insured. [ 64 ] I dismiss Economical and Pederson’s claim against Allstate. [ 65 ] If the parties are unable to agree on costs, they may speak to costs within 30 days of this decision. Heard on the 18 th to 20 th days of October, 2021. Dated at the City of Edmonton, Alberta this 5 th day of April, 2023. D.A. Sulyma J.C.K.B.A. Appearances: Terrence M. Kulasa, James H. Brown & Associates for the Plaintiff Richard J.

McRae & Alexandra Smart for the Defendant All State Insurance Company of Canada Douglas J. Boyer, McLennan Ross LLP for Defendant Economical Mutual Insurance