Sereda v. Consolidated Fire and Casualty Insurance Co., 1934 CanLII 133 (ON CA)
Sereda v. Consolidated Fire and Casualty Insurance Co.
 O.R. 502
COURT OF APPEAL
LATCHFORD, C.J., RIDDELL and FISHER, JJ.A.
JUNE 6, 1934
Insurance - Automobile - Automobile encumbered by lien - Fact of encumbrance not stated in policy - Liability of insurance company - The Insurance Act, R.S.O. 1927, ch. 222, sec. 175, Statutory Condition 6(1)(c).
The Insurance Act, R.S.O. 1927, ch. 222, sec. 175, Statutory Condition 6(1)(c), relating to automobile insurance, provides that, "Unless otherwise specifically stated in the policy, or endorsed thereon, the insurer shall not be liable . . . if the automobile is or becomes encumbered by any lien or mortgage." * This Statutory Condition is expressed in unambiguous language and, if the existence of a lien or mortgage on the automobile is not stated in a policy to which the aforementioned Act applies, the insured cannot recover on the policy. The Act makes no exception and a Division Court, as a Court of equity and good conscience, or the Court of Appeal on an appeal from a Division Court has no right to make one in a case where it is sympathetic towards the plaintiff's claim. In the present case the application for the policy sued upon was signed by the plaintiff in blank and the agent of the defendant company filled in the blanks. The plaintiff's automobile was subject to a conditional sale agreement but the agent in filling in the blanks stated that the automobile was free from encumbrances. The agent at one time knew that the plaintiff's automobile was subject to the conditional sale agreement but either by inadvertence, forgetfulness or fraud omitted to mention the existence of the encumbrance in the application which he filled in for the plaintiff. The plaintiff's automobile was subsequently destroyed by fire and the action brought by the plaintiff to recover the value of the automobile was dismissed on appeal because of non-compliance with Statutory Condition 6(1)(c) (supra). However, since the policy was void ab initio the defendant had no right to retain the premium paid by the plaintiff, and the necessary amendments were allowed to enable the plaintiff to recover the premium in this action.
*Part VI of The Insurance Act, R.S.O. 1927, ch. 222, which includes sec. 175, was repealed by sec. 2 of The (Autombile) Insurance Act, 1932, 22 Geo. V, ch. 25, which came into force on September 1st, 1932. The (Automobile) Insurance Act, 1932, 22 Geo. V, ch. 25, is applicable to all contracts of automobile insurance made after September 1st, 1932. The contract of insurance in the present case was made before September 1st, 1932.
AN appeal by the defendant from the judgment of His Honour Judge Mahon, sitting in the First Division Court of the County of Kent, in favour of the plaintiff for $200.00 and costs.
The plaintiff's claim was for "the sum of Two Hundred ($200.00) Dollars, the value of an automobile owned by him, which was destroyed by fire on the 1st day of March, 1933. The said automobile was insured by the defendant under Policy No. 458797, under which the defendant's liability to indemnify the plaintiff commenced March 8, 1932, and expired March 8, 1933."
The facts as found by the learned trial Judge were as follows: The automobile in question, at the time the policy sued upon was applied for and at the date of the fire, was subject to a conditional sale agreement. The plaintiff is a farmer of Russian birth whose honesty impressed the learned trial Judge. The plaintiff in 1931, at the instance of one Johnston, an insurance agent, applied for a policy of insurance on his automobile with The American Automobile Insurance Co. and at that time the plaintiff in a written application for the policy stated that the automobile was subject to a conditional sale agreement. In 1932, before the expiry of the policy of insurance which the plaintiff had applied for in 1931 and which had been issued, the same agent suggested to the plaintiff that he should renew the policy and the plaintiff signed his name to a folded paper submitted by the agent. No questions were asked by the agent, and the plaintiff, according to the finding of the learned trial Judge, apparently assumed that as he had given full information in the preceding year there was no need for further questions and answers. In fact, the paper sumbitted by the agent and signed by the plaintiff was an application for a new policy with the defendant company. The agent, or some one for him, filled in the blanks on the application with the result that the application stated that the automobile was fully paid for and the space for the amount of the encumbrance was left in blank. As a result of this application the policy sued on was issued by the defendant company. The defendant company at the trial contended that it was relieved from liability because of the material misrepresentations of fact contained in the application. The learned trial Judge was of the opinion that the agent knew the automobile was subject to the conditional sale agreement and that the knowledge of the agent was the knowledge of the defendant company which could not be permitted to take advantage of the misstatements contained in the application. He, therefore, gave judgment in favour of the plaintiff.
April 4th, 1934. The appeal was heard by LATCHFORD, C.J., RIDDELL and FISHER, JJ.A.
J.L.G. Keogh, for the defendant, appellant, contended that Johnston was not the agent of the defendant when the American Automobile Insurance Co. policy was issued. Even if he later became the defendant's agent, any knowledge acquired by him prior to his appointment as the agent of the defendant could not be imputed to the defendant: O'Keefe v. London and Edinburgh Insurance Co. Ltd.,  Northern Ireland L.R. 85. It was submitted that the plaintiff, by suing upon the policy, adopted the statements appearing thereon and was precluded from denying that they were his statements: Dorsht v. Trans-Canada Insurance Co., 1933 CanLII 183 (ON CA),  O.R. 98; Rocco v. Northwestern National Insurance Co. (1929), reflex, 64 O.L.R. 559; St. Regis Pastry Shop and Baumgartner v. Continental Casualty Co. (1928), reflex, 63 O.L.R. 337; Sikorski v. Continental Insurance Co., 1933 CanLII 201 (SK CA),  2 W.W.R. 388; Newsholme Bros. v. Road Transport and General Insurance Co. Ltd., reflex,  2 K.B. 356. The plaintiff was responsible for the fraudulent omission on the part of Johnston to communicate to the defendant a material circumstance, namely that there was a lien on the automobile and consequently the contract of insurance was void ab initio: Bowstead on Agency, 8th ed. p. 329; Ontario Ladies' College v. Kendry (1905), reflex, 10 O.L.R. 324, at p. 328; Provident Savings Life Assurance Society of New York v. Mowat (1902), 1902 CanLII 2 (SCC), 32 S.C.R. 147. Counsel also referred to the provisions of The Ontario Insurance Act, R.S.O. 1927, ch. 222, sec. 175, Statutory Condition 6(1)(c), and submitted that, since it was not stated in the policy that the automobile was encumbered by a lien, when in fact it was so encumbered, the defendant could not be held liable: Gatehouse v. Merchants Casualty Co., reflex,  2 D.L.R. 895.
J.A. McNevin, K.C., for the plaintiff, respondent, contended that Johnston was the duly authorized agent of the defendant and knew of the lien on the automobile, and that the knowledge of the agent was the knowledge of the principal. The defendant company is estopped from setting up misrepresentations by its own agent. Counsel invoked the provisions of The Division Courts Act, R.S.O. 1927, ch. 95, sec. 55, under which the Division Court Judge is empowered to give such judgment as appears to him "just and agreeable to equity and good conscience." Reference was made to Porter's Laws of Insurance, 7th ed., pp. 22, 23; Guardian Assurance Co. v. Connely (1891), reflex, 20 S.C.R. 208; Great Northern Insurance Co. v. Whitney (1918), 1918 CanLII 42 (SCC), 57 S.C.R. 543, 4 C.E.D. (Ont.) 397; Dowdy v. General Animals Insurance Co. (1915), reflex, 33 O.L.R. 258; Rockmaker v. Motor Union Insurance Co. Ltd (1922), reflex, 52 O.L.R. 553.
Keogh, in reply, contended that the "equity and good conscience" provision did not justify a Judge in deciding a case contrary to established law: 3 C.E.D. (Ont.), p. 225.
Cur. adv. vult.
J.L.G. Keogh, for the defendant, appellant.
J.A. McNevin, K.C., for the plaintiff, respondent.
June 6th, 1934. The judgment of the Court was delivered by RIDDELL, J.A.: The plaintiff sues in the First Division Court of the County of Kent: "The plaintiff's claim is for the sum of Two Hundred ($200.00) Dollars, the value of an automobile owned by him, which was destroyed by fire on the 1st day of March, 1933. The said automobile was insured by the defendant under Policy No. 458797, under which the defendant's liability to indemnify the plaintiff commenced March 8, 1932, and expired March 8, 1933." He also claims costs.
The defendant, an insurance company, sets up various defences, amongst them, The Insurance Act, R.S.O. 1927, ch. 222.
However hard the case may be against the plaintiff, and however much our sympathy may go out to him, we have no right to wrest the law in his favour. This Court has authoritatively declared - what, indeed, is elementary - what are the duty and functions of the Court:
"The Court is not a self-created body with original powers; it is not a benevolent autocrat with full powers to act as it should think fit; the Court is an institution organized by the people through their representatives for the purpose of giving to those applying to it their rights according to law, the law not being made by the Court but laid down for it by authority; the Court has no right to give a decision in accord with its own views of equity and good conscience, as distinct from the rules laid down for it. The Court has no right to take power unto itself which is not conferred by the people. The supposed legal maxim, Boni judicis est ampliare jurisdictionem, derives from times when Judges were paid largely by fees and the more cases the more pay; it has been long discredited and the more reasonable dictum substituted, Boni judicis est ampliare justitiam: Rex v. Philips (1757), 1 Burr. 292, at p. 304, per Lord Mansfield; Broom, Legal Maxims, 9th ed., p. 57, and notes": Scott v. Scott (1929), reflex, 64 O.L.R. 422 esp. at pp. 425, 426.
Nor does the statutory provision that the Judge "may make such order or judgment as appears to him just and agreeable to equity and good conscience," (The Division Courts Act, R.S.O. 1927, ch. 95, sec. 55) or the fact that the Division Court is a Court of Equity and Good Conscience entitle the Judge or us on appeal from him to decide contrary to law - any more than that other Court of Equity and Good Conscience, the former Court of Chancery could, at least from Lord Eldon's time, depart from its former decisions to do what might be considered the just thing in a particular case; see the cases mentioned in Bicknell & Seager's Division Court Manual, 4th ed. (1928), p. 117; 3 C.E.D. (Ont.), pp. 225, 226.
Moreover, our modern method of interpreting a Statute, as has been said so often, is to credit the legislators with a perfect knowledge of what they intended to make law, and with a sufficient acquaintance with the English language to express precisely what they meant. A Statute, then, is considered to mean what its language expresses; and if there is no ambiguity, etc., in it, the legislation is read with its literal meaning.
With these oft-repeated statements, there does not seem to be any difficulty in the case - I propose to deal with only one defence, that of the Statute. The Legislature has seen fit to make special legislation concerning automobiles, namely, Part VI of The Insurance Act, R.S.O. 1927, ch. 222, sec. 175, Statutory Condition 6(1)(c) of which reads: "Unless otherwise specifically stated in the policy, or endorsed thereon, the insurer shall not be liable ... if the automobile is ... encumbered by any lien or mortgage." There is no such provision in or endorsed on this policy of insurance; and consequently, the insurer is not liable, unless we are to take it upon ourselves, against all precedent and principle, to legislate to cover this special case. It would appear that the agent of the company who effected the insurance at one time, at least, knew of the existence of the encumbrance, and either by inadvertence, forgetfulness, carelessness or fraud omitted to mention the existence of the encumbrance in the application which he was filling up for the plaintiff; but the Statute makes no exception, and we have no right to make one.
This does not dispose of the case. The policy was void ab initio and the defendant had no right to retain the premium paid by the plaintiff. That the plaintiff had the right to recover, and we should allow an amendment of his claim to enable him to obtain it in this action - if the parties cannot agree as to the amount, there should be a trial before the Division Court Judge to determine it, costs thereof to be in the Judge's discretion; if the parties agree, judgment is to be entered in this action for the amount. We have held that where a point of law has not been raised in the Court below, upon which a party succeeds in this Court, no costs will be given - consequently, there will be no costs (except in the case of a new trial) in the Division Court; success being divided in this Court, there will be no costs of the appeal.
I have not set out the facts fully as I accept them as found by the trial Judge, and set out in his reasons for judgment.
Appeal of the defendant allowed without costs; plaintiff allowed to amend claim to enable recovery of premium.
Provided by CanLII and retrieved on October 14, 2014.