IN THE SUPREME COURT OF BRITISH COLUMBIA
Citation: Peebles v. The Wawanesa Mutual Insurance
Company, 2012 BCSC 590 Date: 20120425 Docket: S090992 Registry: Vancouver Between:
Scott Peebles and Tor Quinn
Plaintiffs And
The Wawanesa Mutual Insurance Company
Defendant
Before: The Honourable Mr. Justice Willcock
Reasons for Judgment
Counsel for the Plaintiffs: Mark R. Steven
Counsel for the Defendant: David W. Pilley
Emi Tasaka, A./S
Place and Date of Trial: Vancouver, B.C.
January 23-27, 2012
Place and Date of Judgment: Vancouver, B.C.
April 25, 2012
Nature of the Claim
[1] The plaintiffs’ house on 94A Avenue in Surrey British Columbia was completely destroyed by an
explosion and fire on April 26, 2008. Their insurer, Wawanesa Mutual Insurance Company, denies its liability to indemnify them under the terms of the insurance policy in effect at the time. Wawanesa says the loss is excluded from coverage because it occurred after the dwelling had been vacant for more than 30 consecutive days. Further, Wawanesa seeks to void the coverage for damage to the dwelling on the
grounds the plaintiffs failed to advise it of a change in its occupation and use, which it regards as material to the risk insured. Last, Wawanesa says that by denying any material change in the risk insured on the proof sworn in relation to the loss the plaintiffs made a wilfully false statement and are thereby precluded from
advancing a claim.
Facts
[2] The plaintiff Tor Quinn (“Quinn”) was 33 years old in 2006, living in Edmonton when his mother, then
living in Victoria, was diagnosed with cancer. He considered buying a house in Vancouver in order to be closer to her. His friend, Scott Peebles (“Peebles”), who was interested in buying property as an investment, agreed to invest in a property with him. On July 1, 2006 they purchased a house on 94A Avenue in Surrey for $717,500. Each agreed to pay half the mortgage costs. Because Quinn intended to live in the house, he would pay expenses associated with occupancy: utilities and upkeep.
[3] Proof of insurance was necessary to obtain a mortgage. For that purpose Quinn and Peebles attended
at the offices of B&W Insurance, completed an application for habitational insurance and obtained coverage on terms described on a declarations page and policy wording issued by Wawanesa Mutual Insurance Company (“The Policy”). The Policy, effective for a year from June 29, 2006 was renewed for the term June 29, 2007 to June 29, 2008 and was in effect at the time of the explosion and fire.
[4] The Policy was written on a Homeowners Special Form. It afforded guaranteed replacement cost
coverage for the house and replacement cost coverage for personal property. The declarations page indicates coverage is provided on form “Special H”. Excerpts from the Policy wording read as follows:
SPECIAL FORM
If the Declarations indicate under FORMS APPLICABLE-SPECIAL H ... you are insured against the following perils:
INSURED PERILS
You are covered against all risks of direct physical loss or damage to the property described in Coverages A [Dwelling Building], B [Private Structures] and C [Personal Property] except:
(1) Losses excluded under LOSS OR DAMAGE NOT INSURED as described under SECTION 1-CONDITIONS;
[5] The Section 1 conditions exclude losses described as follows:
We do not insure: ...
(2) Loss or damage occurring after your dwelling has, to your knowledge been vacant for more than 30 consecutive days;
[6] The term “Vacant” is defined in the Policy:
“Vacant” refers to the circumstance where, regardless of the presence of furnishings: all occupants have moved out with no intention of returning and no new occupant has taken up residence; or in the case of a newly constructed house, no occupant has yet taken up residence.
[7] Quinn rented his Edmonton home and moved his few personal possessions to Surrey in a
medium-sized U-Haul. These consisted of a bed and a few pieces of furniture including a hutch, a corner cabinet, a dining table and six chairs, kitchen stools, a computer desk and a desk chair, a sofa, a television and a
stereo. There were some pots and pans in the kitchen of the new home. No pictures were hung on the walls and no telephone land line was installed but there was a cable television connection in the home. Two of the three bedrooms in the house were never furnished.
[8] When Quinn moved to Vancouver he worked locally, as an installer of fire protection systems. He lived
in the house with his few possessions from the summer of 2006 through to late 2007. In 2007 he met a girlfriend, Sandy Barlas, (“Barlas”) who lived in Maple Ridge. Quinn spent increasing amounts of time after 2007 at her house. Barlas felt uncomfortable staying at the house on 94A Avenue because Peebles
periodically dropped by unexpectedly to inspect his investment. Barlas resented this intrusion on her privacy. The resulting friction affected relations between Peebles and Quinn. Personal discomfort, coupled with rising real estate prices, led the owners to begin to discuss the sale of the house in September 2007 and to a decision in November or December 2007 to put the property on the market.
[9] Quinn and Peebles tried to sell the house themselves in December 2007, through a service and a
website; www.yousellahome.com. They were then contacted by an agent who offered to act on their behalf for a reduced commission and retained him to assist in marketing the property. There was apparently no rush to sell the property. Peebles did not put up signs until February 2008.
[10] Photographs taken on July 17, 2007 show some of the furniture then in the house, including the
computer desk, china cabinet and sofa. Most of this was removed before the end of the year. Quinn sold some of the furniture to a friend, Jason Woodward (“Woodward”), in late November 2007. Woodward needed furniture and Quinn didn’t like what he had and wanted to replace it. He did not plan to buy new furniture immediately, because he was then unsure whether he would continue to live in the house, and he wanted to use the proceeds of sale of the house to pay for new furniture. He therefore held off on the purchase of furniture. There was also evidence that Quinn and Peebles thought the house would be ready for sale if it contained no furnishings. Quinn moved his bed to a loft/storage room at Barlas’ house.
[11] He did not plan to move back into the house if it sold quickly but he was considering moving back in if
the house did not sell by the summer of 2008, so he could use the swimming pool.
[12] Quinn continued to work on the house with a view toward making it more marketable. In December
2007, with a friend, a sheet metal worker, he installed a new gas furnace. The furnace seemed to work well after installation.
[13] For a few months in late 2007 Quinn’s BC Hydro bill was re-directed to the address of a house owned
by Woodward on Hayward Street in Mission B.C. Quinn says this was an error that occurred when he opened a new hydro account for the Hayward Street property while he was doing renovation work for Woodward. The error was corrected before the explosion and Hydro bills were again directed to the 94A Avenue address. Quinn believes he continued to receive a cable television bill at 94A Avenue throughout the material period. The bill for Quinn’s cell phone was also directed to Woodward’s home in Mission from October, 2007 to January, 2008, inclusive. Quinn believes that was also done in error although he cannot recall what happened to lead to the error.
[14] Quinn’s connection to the 94A Avenue house became more tenuous in February 2008, when his
employer offered him work at a diamond mine in the Northwest Territories. His schedule thereafter had him in the north for three weeks work followed by a week off. He was away from the Lower Mainland from February 7-27; from March 4-26; and from April 1-23, 2008.
[15] After removing most of his furniture, Quinn left enough personal possessions in the home so that he
could sleep there when he wished to do so. This occurred, from time to time, when his volatile relationship with Barlas erupted into overt hostility. That relationship endured until the summer of 2009 and was
described by Quinn as “on-and-off” from the summer of 2008 to the summer of 2009. According to Peebles, Quinn and Barlas fought quite a bit. Quinn says they could not go more than a week or two without a fight. On one such occasion in March 2008, Quinn returned to the 94A Avenue house. Arriving in Vancouver on March 26, he was picked up by Barlas and returned to her house, where he stayed from March 26-28. On March 29, he fought with Barlas, went to the 94A Avenue house and stayed there overnight. On March 30, 2008 he insured his Mustang, which had remained during this period, uninsured, in the carport at 94A Avenue. At that time there was little food in the house except what he referred to as “survival food”: “Mr. Noodle” and beer.
[16] From February 2008 onward Quinn’s cell phone bill was directed to Barlas’ house. Quinn says that
occurred at his direction so he could ask her to open the bill in his absence. His 2007 income tax
assessment dated May 5, 2008 was also addressed to Barlas’ home in Maple Ridge. He agrees the Canada Revenue Agency must have received that address from him.
[17] Peebles attended at the 94A Avenue house about three times a week, although he never stayed there
and had an established residence elsewhere. Peebles regularly checked the mail, the doors and windows, the heat, the pool skimmer and pump. Crystal Bleeker (“Bleeker”), Peebles’ then-girlfriend, testified she went to the house about three times a month with Peebles in the spring of 2008.
[18] Quinn says he moved most of his clothes over to Barlas’ house in December 2007 or January 2008
but he left little there. He took most of his clothes with him in a hockey bag when he travelled to the Northwest Territories. Thereafter he continued to keep some clothes at both Barlas’ home and the 94A Avenue house. On a proof of loss sworn after the fire, Quinn claimed to have lost clothing and food with a total value of $200. That figure was low because most of his clothes were with him when he travelled to work. Clearly, few valuable personal possessions belonging to Quinn were left at the 94A Avenue house. [19] In February 2007, Mr. Quinn insured a 1990 Chevy Astro Van. He did not think the van would pass an
Air-care inspection. As his insurance renewal approached he had the idea to insure the van at a Kelowna address so as to avoid the obligation to obtain an Air care inspection and approval. Accordingly, when he applied for insurance he made what he now concedes was a false declaration that he lived at a friend’s address in Kelowna. The insurance obtained on the basis of that misrepresentation was cancelled on April 24, 2008, two days after the explosion and fire. He says the cancellation was co-incidental and bore no relation to the fire loss. He insured another car, his Mustang, which he only used in warm weather, at the end of March 2008 and no longer required the use of the van.
[20] Quinn says after the agreement to market the house and while he was working up north, it was agreed
he would continue to pay electrical and gas bills but, because he would not live at the house, Peebles would reimburse him for half the 2008 utility expenses when the house sold. Peebles denies there was any
agreement to readjust responsibility for utility costs. He says they did agree to “square up on everything” after the sale but squaring up did not include reapportioning gas or hydro bills.
[21] When Quinn returned to the lower mainland on April 23, 2008 he was picked up by Barlas and
returned to her house, where he stayed and remained until May 6, 2008. He had missed the company of his girlfriend and he could not return to the 94A Street house with her because she owned dogs and Peebles did not want to have her dogs in the house while it was on the market.
[22] There was then no bed in the 94A Avenue house. It had been removed because Quinn was working
out of town and he wanted to be able to complete a sale without having to remove any more furniture from the house. There remained some minimal furnishings in the house (a hutch, appliances and a patio table and chairs in addition to drapes and carpeting); some equipment (a shop vac, hand tools and a ride-on mower); some personal possessions (a sleeping bag and pillow, an alarm clock, a few clothes and personal documents); and some food (noodles, juice and beer). These were described by Bleeker, who was last inside the house about five weeks prior to the explosion, as only “the bare essentials”.
[23] Peebles was at his nearby home on April 26, 2008 when the 94A house exploded. He went
immediately to the scene. He was interviewed at the scene by a police officer, Constable Yannike. Quinn attended shortly thereafter and was also interviewed. Unfortunately the statement given by Quinn to the police was not entirely true. The defendant says this statement contained more truth than fiction and urges me to accept as true most of what Quinn told the police
[24] Quinn found himself in an awkward situation. He was worried about the suspicion that might be cast
upon him because he had recently done work on the gas furnace. I infer from his description of this fear that he was uncertain about the effect of his possible negligence in installing the new furnace on his insurance or liability for losses resulting from the explosion. He knew the address on his car insurance falsely indicated he lived at an address in Kelowna. He did not want to start his discussion with the investigating police by admitting a lie with respect to his residence, so he perpetuated it.
[25] He told the investigating officer he had moved out of the house and to Kelowna in the summer of
2007, “about 6 months ago”. He said he and Peebles had decided to sell the 94A Avenue house because of conflict between them and because Peebles wanted the profits to pay down a line of credit. He claimed that after the decision to sell, the contract he had been working on at BCIT had ended in December or January. It was hard to pay for somewhere else to stay so he had accepted a high-paying job in the Northwest
Territories. When he moved out of the house he began staying with his girlfriend, then moved to Kelowna. He advised the officer that he stayed at the 94A Avenue house when he fought with his girlfriend. The
house had been fully furnished but he had moved all the furniture out and sold it all because he didn’t want to pay for storage.
[26] On examination for discovery, Quinn indicated that the only untruth he told the police officer was that
he lived in Kelowna. He did not elaborate or specifically address whether he had lied about moving out of the house six months earlier. He claims to have been so upset by having to admit one lie on his discovery, the statement to the police he had moved to Kelowna, that his answers to subsequent questions were not thoughtful and complete.
[27] Despite the lies on his auto insurance application and to the police after the explosion, Quinn,
surprisingly, struck me as an honest witness. He was clearly remorseful and emotionally affected by the admission of his lies. He frankly acknowledged that he didn’t know what had come over him when he spoke to the police, but fear. He agreed that he had first used a false Kelowna address on an insurance application in February 2008 and can now think of no reason to have lied about whether and when he had left the 94A Avenue house. There was no reason for him to think himself any less a suspect if the police believed he moved out in the summer or fall of 2007, rather than February 2008. He says he simply doesn’t know what was going through his head.
[28] The insureds also have to contend with statements made to the insurance broker, Melissa Morgan
(then known as Melissa Stewart but referred to in these reasons as “Morgan”). As she was closing the Fleetwood branch of B&W Insurance on April 26, 2008, the day of the explosion, Morgan dealt with Peebles, who had arrived with Bleeker, to report the claim. She took notes of her conversation with Peebles and later transcribed them into the computer records kept by B&W.
[29] The material portion of the customer activity listing reads as follows:
... to report new claim, his house has exploded. His house has also been vacant and up for sale for the past 8 months
[30] An e-mail to her claims manager sent on April 27, 2008 contains a more detailed record of the
conversation with Peebles:
A house at 169th Street and 94A Avenue in Surrey exploded. Turns out the house has been vacant for the last 8 months and it was up for sale ... Co-owner Scott Peebles was in on Saturday just as we were closing at 5pm to put in the claim for the house. He told me that Tor was living in the house up until the 8 months ago when he moved out and went away to work in a mine. The house has been without furniture for 8 months, the appliances unplugged and the furnace turned off, they didn’t want to rent it out because they didn’t want it to get wrecked before they sold it. He had been driving by daily and checking it 2-3 times a week and there were also real estate agents showing it
occasionally.
[31] Morgan believes she accurately recorded the conversation with Peebles but acknowledges that some
of the words used are hers, not his. After Peebles reported the explosion and fire she began to complete a report of the claim. When she asked about the contents loss, Peebles said there were no contents; there was nothing in the house. She concluded from that information the house was vacant. That word may not have been used by Peebles. She is now unable to recall what was said about the sequence of events, from removing contents and listing the house for sale, to Quinn getting a job in the north. She believes Peebles said the house had been empty for eight months and up for sale. He may not have expressly said the house
had been up for sale for eight months. She knows Peebles said Quinn had left for work in a mine, and she believes she was told that occurred eight months earlier, but readily and honestly acknowledged she had no recollection of asking when Quinn left to work in the mine and could have mistakenly understood what she was told. She acknowledged Peebles was visibly agitated and there could have been some
misunderstanding of the information he provided to her.
[32] She advised Peebles of the vacancy exclusion. He asked how he was supposed to know of the
obligation to report vacancy to the broker or insurer. He asked if there would be any coverage. She advised Peebles these were matters he would have to take up with the insurer.
[33] It is not disputed Quinn left for the north for the first time in February 2008. It is also clear not all
appliances were unplugged. There was an electric range in place and there is no evidence that either it or the fridge were unplugged (a gas range in the house had never been connected; it was left in the kitchen to be seen by potential purchasers). There is also no doubt the furnace was left on, the heat was turned up and down to take into account the periods during which the house was unoccupied and the need to heat it up for showings.
[34] There are some apparent misunderstandings incorporated in Morgan’s e-mail. For example, there
would be no reason for Peebles to say Quinn left for the north in September 2007, rather than February 2008. I cannot accept that Peebles gave false or misleading information to Morgan with respect to that fact. That being the case, I conclude the e-mail reflects some misunderstanding of the facts and sequence of events. I cannot find Peebles told Morgan the house was emptied and put up for sale in September 2007 and that Quinn then left for the north.
[35] The evidence of Peebles and Bleeker is not particularly helpful in determining what was said to the
broker. Peebles denies he told Morgan there had been no one living in the house for eight months but he cannot recall what he did say. Bleeker denies Peebles said the house was vacant or that no one had been living there for eight months. Bleeker would not say the house was vacant or unoccupied. She says Quinn had his restored Mustang there and he would not leave it there if he had no intention to return. Neither witness adequately addressed the obvious fact Morgan, an impartial and, I find, truthful witness, must have obtained the information she recorded from Peebles. While there may have been some misunderstanding, there was no fabrication on her part.
[36] There is no doubt Peebles did tell her there was no furniture in the house (a slight overstatement), the
house had been put up for sale and Quinn had been working up north. He must have said one of these events occurred eight months ago, otherwise there is no reason Morgan would have referred to an eight month period. The notes and the other evidence are most consistent with the conclusion I reach by
inference: Peebles told Morgan there had been no furniture in the house for eight months. It is most likely, in my view, Peebles said the furniture had been removed about eight months earlier (overestimating how much time had passed since some the furniture was sold to Woodward in November 2007, about six months earlier), the house had been put up for sale and Quinn had taken a job in the north. Morgan appears to have erroneously assumed all three events occurred at the same time.
[37] Mr. Quinn and Mr. Peebles swore a Proof of Loss on December 29, 2008. That contained a statement
that since the policy was issued there had been no change in “use, possession, location or exposure” of the property described in the policy.
[38] After the fire Mr. Quinn stayed with Ms. Barlas in the Lower Mainland, when he was not working in the
Northwest Territories. He was offered a job in Fort McMurray after the death of his mother, and has
subsequently remained in Alberta. Recently, within the past year, he has retaken possession of his house in Edmonton and moved there.
[39] Mr. Quinn says he never regarded Barlas’ house as his home. It was a place to stay on his time off.
Between the time he bought the house and the explosion he never considered the 94A Avenue house to be vacant or unoccupied.
[40] Similarly, Peebles says he did not consider the house to be vacant in March or April 2008. He did not
think Quinn had moved out. He had removed his furniture but it was still his home.
Underwriting Evidence
[41] The defendant called evidence to establish the materiality of the change in occupancy of the property
to the insurer and that the insurer’s assessment of materiality was reasonable by accepted underwriting standards.
[42] Mr. Ricky Grass (“Grass”), an underwriter with 29 years experience and currently one of Wawanesa’s
Underwriting Managers, was asked to review a set of assumptions describing the state of affairs the insurer says existed at the time of the loss, including:
By the end of 2007, all furniture had been removed from inside the house, except one or possibly two hutches, a sleeping bag, alarm clock, a shop vac, a few tools, some personal documents, some clothes and some food.
When Mr. Quinn removed his furniture from the house, he did not intend to move back to the house, although that was a possibility if the house did not sell by the summer of 2008 and if Mr. Quinn then decided to use the pool.
In early 2008, Mr. Quinn normally slept at his girlfriend’s house in Maple Ridge and therefore stopped sleeping nights in the house, unless he had a fight with his girlfriend. This happened at least once, for one night in later March of 2008.
[43] He says if Wawanesa had been advised in early February 2008 of those facts, it would only have
continued the policy to the next renewal date with changes to coverage: reducing risks insured from all risks to fire and extended perils, and reducing limits of coverage from guaranteed replacement cost to simple replacement cost to limits. There would have been additional exclusions. The premium charged would have been approximately 36% higher than that paid.
[44] Grass testified in cross examination the insurer is not concerned with the fact an insured has little
furniture or may leave some rooms unfurnished. Nor is it important if the house is not occupied nightly. What is important, from an underwriting perspective, is that there is someone living in the house.
[45] He addressed the insured’s concerns with respect to an ambiguous provision in the Basic
Dwelling/Seasonal Dwelling coverage in the Policy. That provision appears in a clause excluding vandalism or malicious acts from coverage under that form when the property insured is vacant but says: “unoccupancy is not considered vacancy”. Grass said this provision reflects the underwriters’ view seasonal dwellings are not vacant when they are unoccupied (presumably because of the owners intention to return seasonally). [46] Grass said the insurer did not refund premiums after discovery of the material change because it took
the position the Policy was in force to expiry and it was lapsed on renewal. He understood the liability coverage continued. If the insureds did not require any continuing coverage, in his opinion, they could have terminated the Policy.
[47] The insurer also adduced in evidence the opinion of Bev Johnson, (“Johnson”) a senior personal lines
underwriter, with respect to the materiality of the change in circumstances considered by Mr. Grass. Johnson’s opinion was admitted by consent and she was not cross-examined. It was her opinion that occupancy is considered by reasonable insurers to be material to the determination of whether to issue a homeowner’s policy and the determination of the premium to be paid for the policy. There is no doubt on Johnson’s evidence that the view taken of materiality by Mr. Grass is one that would be considered reasonable by underwriters with an appreciation of the risks insured under a homeowner’s policy.
Position of the Parties The Plaintiffs
[48] The plaintiffs say the Insurer must bring the case within the exclusion clause in the Policy to avoid the
obligation to indemnify its insureds and it cannot do so on the facts of this case.
[49] In considering the meaning to be given to the vacancy exclusion, relying upon the description of the
principles of construction set out in Brissette Estate v. Westbury Life Insurance Co. (1992), 96 D.L.R. (4th) 609 (SCC), at p. 611, the insureds say :
a) The court must search for an interpretation from the whole of the contract which promotes the true
intent of the parties at the time of entry into the contract;
b) Where words are capable of two or more meanings, the meaning that is more reasonable in
promoting the intention of the parties will be selected; c) Ambiguities will be construed against the insurer; and
d) An interpretation which will result in either a windfall to the insurer or an unanticipated recovery to
the insured is to be avoided.
[50] The insureds seek some assistance in the case law to define the word “vacant” and rely upon the
decisions in Morton v. Canadian Northern Shield Co. (1998), 50 B.C.L.R. (3d) 57 (C.A.); Metro General Insurance Corp Ltd. v. Smallwood, (2002) 218 Nfld. & P.E.I.R. 290 (SCTD); Wright v. Canadian Northern Shield Insurance Co., 2005 BCCA 599; and Wu v. Gore Mutual Insurance Co. (2009), 100 O.R. (3d) 131
(S.C.J.) among other cases, in support of the argument that the vacancy exclusion is inapplicable because Quinn had not absolutely and permanently moved out of the property.
[51] In addressing these cases the insureds ask the Court to pay particular attention to the following facts.
They say the house was always sparsely furnished. There was never much in it and little was removed. Some rooms were empty from the outset. Some of Quinn’s possessions were sold in November and December 2007, some were moved to Barlas’ house andsome were left on the insured property. Quinn still received some bills at the house. It remained his home or resting place; he had not moved to any other location. There was no settled intention to move in with Barlas. While Quinn was working in the north he spent a few of his weeks off with Barlas, but as Quinn, Bleeker, and Peebles testified, their relationship was rocky and Quinn never settled in her home.
[52] The Plaintiffs say it is important that Quinn spent one night in March at the property, in his sleeping
bag in his bedroom, less than 30 days before the explosion and fire. If that alone constituted occupation of the premises the loss ought not to be excluded.
[53] Quinn’s work in the Northwest Territories was always considered to be temporary. The situation at the
time of the loss should be regarded as a temporary arrangement, not a permanent move. They say regular, non-sporadic and frequent attendance at the house amounts to occupancy. They say occupancy is not confined to residency, having an abode, or dwelling at a location. What is material, they say, is whether there is sufficient occupation of the property to minimize the risk arising from the property being unwatched. [54] That being the case they say there was no failure on their part to advise the insurer of a change
material to the risk insured.
The Defendant
[55] While the insurer acknowledges Quinn’s statement to the police that he had moved to Kelowna after
his the job at BCIT had finished in December or January was patently untrue, it says the Court should accept as true Quinn’s statements to the police after the loss that:
a) he had moved out of the house “about 6 months ago”.
b) he and Peebles had decided to sell the 94A Avenue house because of conflict between them and
because Peebles wanted the profits to pay down a line of credit;
c) the house had been fully furnished but he had moved it all out and sold it all because he didn’t
want to pay for storage; and
d) when he moved out of the house he began staying with his girlfriend
[56] The insurer says while Quinn had a clear motive to lie about his move to Kelowna (to conceal the lie
told to avoid Aircare costs), there was no reason for him to invent other details of his move out of the house. The insurer says the only reason for Quinn to move his bed out of the house and leave only a sleeping bag was because he intended to bring an end to his domicile at the house. He acknowledged at his examination for discovery he “normally” slept at his girlfriend’s house when he was in the lower mainland in early 2008.
[57] The insurer says Quinn did not occupy the house because it was not his habitual abode or normal
residence; he had moved out and had no intention to return. One may abandon a residence without occupying another. In this case, however, Quinn did change the address for delivery for some mail and Barlas’ home is described as his address for tax purposes. There was no reason to make that change, the insurer says, unless it was his intention to make that his place of residence and to abandon the 94A Avenue house. The remaining bills sent to the house were for payment by Peebles, they were not personal to Quinn. [58] The insurer points to questions asked of Quinn on his examination for discovery about his intentions in
the spring of 2008:
Q. ...[Y]ou were not intending to move back in; is that correct?
A. If the house sold quickly I wouldn’t have moved back in. But I was talking about moving back in if it didn’t sell by the summer so then I could use the swimming pool.
Q. Is it fair to say you had no intention of moving back in although that was a possibility? Your intention was to sell it?
A. Yeah, that was the original intention was to hopefully sell it.
[59] This passage follows a reference to Quinn “moving out” most of his belongings in late 2007. In light of
Quinn’s other evidence of use he was occasionally making of the premises the references to “moving out” and “moving back in” may be references to plans to bring furniture back into the house, rather than to continually use it as a place to sleep from time to time.
[60] The insurer says the jurisprudence, including the cases cited by the Plaintiffs and Hirst v. Commercial Union Assurance Co. of Canada (1979), 70 B.C.L.R. (2d) 361 (C.A.); and Price v. Zurich Insurance Co.,
2003 BCCA 72, calls for us to look to the totality of the evidence, including the intention of the owner; the presence or absence of possessions in the premises; the circumstances under which any possessions found in the premises may have been left or deposited there; the condition of the premises, including whether the premises had utilities hooked up; the length of time the premises may have been unoccupied; the use
typically made of the premises; and any other relevant matters. Doing so, it says, the Court should be driven to the conclusion Quinn had decided to move out and not to return as an occupant.
[61] This is consistent with what Quinn told Constable Yannike and with what Peebles told Morgan. Quinn
had moved out and Peebles knew that. The insurer says there was only a remote possibility Quinn would move back in and that is not enough to amount to occupancy or to refute the fact of vacancy.
[62] Further, the insurer says that if the contingent intention to return is sufficient to negate vacancy,
moving out still materially changes the risk insured. The house was “unoccupied” even if it was not “vacant” as defined by the policy and the policy is void as a consequence of that material change.
Applicable Law Vacancy
[63] There is little dispute with respect to the applicable principles of law. First, as the issue is the nature
and extent of the obligation assumed by the insurer pursuant to the terms of the policy of insurance, I must look to the plain meaning of the words used in the policy. The policy should be read as a whole and
common-sense effect is to be given to all its terms. Its words should not be strained but where there is ambiguity, it should be resolved in favour of the recipient of the contract rather than its drafter.
[64] Jurisprudence on the meaning of “vacancy” in insurance policies will be of some assistance in
determining what meaning has been ascribed to the term by other courts involved in the same exercise as that in which I am engaged. Cases cited to me in argument addressing on the definition of “vacancy” in exclusion clauses are summarized below. Where, as here, however, the policy contains a definition of the word, care should be taken not to substitute a judicial definition for one chosen by the contracting parties. Of most assistance in interpreting the policy for consideration in this case are those cases where similar or identical wording have been considered: Price, supra; Metro General, supra; and Maracle Estate v. Bay of Quinte Mutual Insurance Co., 2010 ONSC 5217.
[65] In Cody v. Beaver Insurance Co. (1964), 45 D.L.R. (2d) 531 (Alta. App. Div.), the Court considered a
rider to an insurance policy which did not covercertain losses occurring while the building insured was vacant. Macdonald J.A. held the insured premises were not vacant despite the owners having rented the house and moved out most, but not all, of their furniture, because it was not their intention to abandon the premises or leave them unoccupied. They intended to make the premises immediately available to the incoming tenant. Citing Bledsoe v. Farm Bureau Mutual Ins. Co., 341 S.W. 2d 626 (Kansas City Court of Appeals, Missouri)(at 630) the Court held: “The term "vacant" is generally construed to mean empty and without inanimate objects. It implies entire abandonment, non-occupancy for any purpose”.
[66] The Court also adopted the following passage from Joyce on Insurance, 2nd ed., vol. 4, para. 2225c,
cited in Metcalfe v. General Accident Assurance Co. of Canada (1929), 64 O.L.R. 643 (App. Div.), at 648:
A mere temporary vacancy or absence of the owner, tenant, or occupant, or a temporary period of non-user, which is reasonable in view of the contemplated uses of the property and of all the
circumstances, and which is evidenced by some act or acts fairly showing not only an intent to return but also an intent not to vacate or give up occupancy or use of the premises nor to abandon them for the purposes of their use, will not of itself operate as a breach of a condition as to vacancy or non-occupation.
[67] Cody is cited in Burke v. Campbell et al. (1978), 20 O.R. (2d) 300 (HCJ), in support of the conclusion
that whereas 'vacant' may be taken to apply to inanimate objects and 'unoccupied' to animate occupancy, the vacancy exclusion refers to premises free of household furniture and effects as well as animate occupancy. In Burke, Craig J. observes (at 305):
Macdonald, J.A., felt that the word "vacant" should be interpreted not only by reference to the question whether, at the time of the loss, the house was in the occupation of some person or
contained household goods and chattels, but in light of all the surrounding circumstances, particularly the actions and intentions of the insured, to determine whether the premises were vacant. In that case there was no intention on the part of the insured to leave the premises vacant or abandoned; the insured expected a tenant immediately after the premises were cleaned. The premises therefore were not vacant.
[68] Following Cody, it cannot be said a temporary period of non-occupation generally amounts to vacancy,
in the absence of a definition of vacancy the policy that encompasses temporary non-occupation.
[69] Once premises are abandoned, however, visits will not re-establish occupancy. In Cormier et al. v. Economical Mutual Insurance Co. (1978), 20 N.B.R. (2d) 188 (App. Div.), the Appeal Division of the New Brunswick Supreme Court held (at para 9):
The authorities ... are consistent with Lambert v. Wawanesa Mutual Fire Insurance Co. [1945] 1 D.L.R. 694 (Ont. C.A.) where it was held that seven or eight visits made by the owner of the
premises and even his occasionally staying on the premises overnight, being mere visits and not for the purpose or with the thought of continuing to make it in any sense his regular dwelling would not affect the continuation of the vacancy created when he moved away from the property and was living at a hotel.
[70] In Hirst, the Court considered a policy that excluded claims for damage occurring while the building
insured was to the knowledge of the insured vacant for more than 30 consecutive days. “Vacant” does not appear to have been defined in the policy. Carrothers J.A., at para. 13 held:
The Respondents contend that the word "vacant" contained in the exclusionary clause of the policy must be interpreted not only by reference to the question whether at the time of the loss the premises were in the actual occupation of some person or persons, or contained household goods and
chattels, but in the light of all the surrounding circumstances, particularly the actions and intentions of the insured. In support of this contention the Respondents cite amongst other cases that of Cody v. Beaver (1964) 48 WWR, 178 in the Alberta Court of Appeal, which I would distinguish on its facts as I would many of the other cases which were cited to us. Taking into account all the circumstances here, I consider that what I can only describe as non-occupation of the insured premises for a
protracted period renders the word "vacant" an apt description of the premises at the time of the loss. I use the word "non-occupation" as being by both persons and by chattels or either of them. I do not consider sporadic inspection tantamount to occupation by a person or persons and I do not consider installed wall-to-wall carpeting and drapes left there by the vendors to constitute an inanimate occupation by possession-of the insured. Nor can I interpret a mere intention to occupy as to contributing to an actual occupation.
[71] Occasional or sporadic inspection while only fixtures are left in situ will not amount, therefore, to
evidence of intention to remain in occupation.
[72] In Serban v. B.C.A.A. Insurance Co., [1985] I.L.R. 7498, Dohm J. expressed doubt with respect to
whether use, resembling in many respects the use of the premises by Quinn in this case, could amount to occupancy, but decided the case on the defence that the insured failed to disclose a change material to the risk: that material change arose from the abandonment of the premises by a tenant, and the failure of the insured to re-let or reoccupy the space. The analysis of the vacancy exclusion is not particularly helpful. The Court concluded the insured’s son had never become an occupant; never having regularly lived in the sparsely-furnished premises and never having considered the premises his abode. Cases where occupancy has never been established may be distinguished from instances, such as the case at bar, where there is no doubt the insured has established occupancy but the insurer argues occupancy has been abandoned.
before me: the absence of furnishings.
[73] In Nicoli v. Liberty Mutual Insurance Co. (1996), 31 O.R. (3d) 326 (Gen. Div.), the policy did not insure
loss or damage occurring after the dwelling had been vacant for more than thirty consecutive days (even if partially or fully furnished). Borins J. was satisfied it was never the intention of the insured to abandon the insured cabin, a seasonal dwelling, and that to the extent it had not been used for several months, this was to permit renovations to be made, following which it was to be used as a seasonal home. To render the
building vacant, the Court held, there must be a permanent abandonment of the house as a place of residence. A mere temporary absence from the dwelling with intent to return is not a vacancy. This is another example of the burden that must be discharged by an insurer seeking to establish abandonment of occupancy.
[74] In Harnden v. Farmers' Mutual Fire Insurance Co., [1998] I.L.R. I-3522, Kiteley J, considered the
standard vacancy exclusion in a policy that did not define vacancy. No one resided at the property; the insureds and their son were at various times at the property; the son was involved in "watching over" the house; and one insured was "back and forth". The Court found neither of the insureds intended to abandon the property. Both intended to safeguard their investment in order that a sale would be completed. While the house was not being used as a residence, it would have been used as such as soon as the sale closed. The Court found the property was neither vacant nor unoccupied.
[75] Having regard to the circumstances, if the intention to abandon premises that have been occupied is
not established by the insurer that is the end of the question. The contrasting cases of Harnden and Hirst
suggest that frequency of inspection, use and presence on the property may make a difference between occupation and vacancy where that intention is not clearly established. A property may be vacant if there is only “sporadic inspection” but occupied if it is “watched over”. Visits to the premises by a non-occupant, however, will not constitute occupancy.
[76] In Morton , the policy excluded coverage for certain losses occurring while the building insured was
under construction or vacant. Hall J.A. held the Chambers Judge fell into error in concluding the premises were not vacant because of the intention of the insured to re-occupy if a development permit did not issue. The Court of Appeal held the only reasonable inference on the facts was that the permit would have issued. The case before the Court of Appeal was held to be stronger than Hirst in that the intention to re-occupy was based on an "if" that was not likely to occur (at para. 15).
As I view it, the primary and overriding intention of the respondent at the time of the loss was to demolish the dwelling. His plans were to that end and I see nothing in the evidence to suggest that that end would not have been accomplished.
[77] Property will be considered to be vacant if there is only a remote possibility an insured may change his
plans after quitting his occupation. The question the Court must ask is whether the abandonment appears to be permanent. It should consider whether there anything more than the remote possibility that exists in almost every case that the occupant will return to the property.
[78] A definition of vacancy similar to that which appears in the Wawanesa policy, but not identical to it,
was considered in Metro General. The policy provided (at para. 4):
‘Vacant' means the occupant(s) has/have moved out with no intent to return. A newly constructed dwelling is vacant after it is completed and before the occupant(s) move(s) in. Furthermore, the dwelling is also vacant when the occupant(s) move(s) out and before any new occupant(s) move(s) in.
[Emphasis added]
[79] The critical features distinguishing the definition in that case from the definition before me are: (1) the
presence of the highlighted last sentence in the above definition; and (2) the omission from it of the words “regardless of the presence of furnishings” appearing in the Wawanesa policy.
[80] The Court in Metro General upheld a judgment at trial for the insured. In doing so the Court,
considering the insured’s acknowledgement she had moved out of the insured dwelling, made an
observation that is noteworthy in the case at bar. Barry J. held at para. 9, while the insured “may have been correct that she had "moved out" in the sense of one meaning ordinarily used by a layperson ... the question is whether, in law, she should be held to have moved out in accordance with the provisions of the insurance policy when she is entitled to have any ambiguity in wording construed against the insurer”. So, in the case at bar, the question is not whether the premises were acknowledged by the insured to be vacant, in the sense of the ordinary meaning, but whether they were vacant as that term is defined in the policy. [81] The Court in Metro General held (at para. 19): “the trial judge was entitled to consider whether
Ms. Smallwood had removed all her possessions in order to determine whether she had ‘moved out’". The presence of some furnishings appears to have been critical to that conclusion. The case cannot be relied upon for assistance in interpreting what “moved out” means in the Wawanesa policy, which expressly calls for that determination to be made regardless of the presence of furnishings.
[82] However Barry J also considered Ms. Smallwood’s intention to return, concluding, (at para. 22) “...
because Ms. Smallwood (as in Harnden) had an intent to return for contents (and presumably an intent to return personally or by an agent if her sale fell through) I conclude her house was not "vacant" at the time of the damage”. The case may stand as authority for the proposition that the “intention to return” in this wording need not require an “intention to reoccupy”. In the alternative, it may stand for the proposition that “no intent to return” must be read strictly against the insurer and means abandonment must be absolute: the premises are not vacant if the occupant who has moved out plans to return if a conditional sale is not completed. [83] The former reading of the policy is no longer open in British Columbia as a result of the consideration
of the same policy wording in Price. In that case a tenant had moved out of the insured premises with no intention of returning. On appeal, the insured owner argued the insurer ought not to be entitled to rely upon the ambiguous exclusion clauses in the policy. It was in that context Prowse J.A., for the Court, considered whether the vacancy exclusion was so ambiguous as to be unenforceable. The Court found the vacancy exclusion to be unambiguous and dismissed the appeal. The exclusion clause was held to describe
return “as an occupant” (at paras. 16-17):
The words "moved out" in the definition of "vacant" cannot properly be read in isolation from the words "with no intent to return". The words are interconnected and must be read together, as they would be by a reasonable policyholder. Thus, premises are vacant when the occupant (in this case, the tenant) has moved out with no intent to return. The phrase "moved out with no intent to return" connotes permanence. Thus, it is apparent that this phrase does not apply to an occupier who moves out of premises temporarily with the intent to return to live there. Rather, it indicates that the occupant has moved out with no intent to return to live there. That is not to say that the former occupant might not return for other transitory purposes, for example, to clean up the premises or to return the keys.
In other words, when the phrase, "moved out with no intent to return" is read as a whole, it is apparent that the premises would be regarded as vacant within the meaning of the policy if the occupant moved out with no intent to return "as an occupant". They would not be vacant if the occupant intended to return to occupy the premises. Thus, to use examples referred to by counsel for Mr. Price, premises would not be vacant within the meaning of this definition if the occupant moved out temporarily, for example, to stay with parents or friends, but they would be vacant if the occupant moved out with no intent to return except, for example, to clean up the premises or to obtain the return of a damage deposit. Further, in some cases, the occupant may have "moved out with no intent to return" without taking all of his or her possessions or furnishings, as occurred here (and as is contemplated by the second exclusion clause).
[84] The same wording was again considered in Maracle Estate, where Leroy J held (at para. 53) :
In insurance vernacular the word vacant, standing alone and undefined in the policy contract is distinguishable from the word unoccupied by reference to contents. A property is not vacant until it is unoccupied and the contents have been removed. The instant policy specifically modifies the default characterization by defining the word vacant to mean the occupants have moved out with no intent to return. A dwelling is also vacant when the occupants move out and before any new occupants move in[.]
[85] Leroy J. went on to hold that(at para. 67):
The definition in this policy has been considered in other courts - Zimmerman v. Royal & Sunalliance Insurance Company, [2007] CanLII 37900 - Mr. Justice Matheson citing the BCCA in Price v. Zurich Insurance Co., [2003] B.C.J. No. 243 - "The phrase "moved out with no intent to return" connotes permanence. The phrase does not apply to an occupier who moves out of premises temporarily with the intent to return to live there. That is not to say that a former occupant might not return for
transitory purposes. The premises would be regarded as vacant within the meaning of the policy if the occupant moved out with no intent to return "as an occupant". Further, in some cases the occupant may have moved out with no intent to return without taking all of her possessions or furnishings as occurred here. The third sentence of the definition reinforces the definition in the first sentence by making it manifestly clear that the premises are vacant where the occupant has moved out with no intent to return and before a new occupant has moved in. The presence of furnishings may make it more difficult for the insurer to prove that the insured moved out without intention to return but the fact of furnishings remaining does not mean necessarily that the insured intends to return to occupy the premises."
[86] There is a clear finding in Maracle Estate thatthe insured was incapable of forming an intention to
return to the premises. The conclusion that she had no intent to return was irresistible. She would never resume residence in the insured premises.
[87] So, Quinn’s acknowledgement that he had moved out is not determinative, he must have done so with
no intention of returning. But the intention to return must ba as an occupant and not solely for transitory purposes.
[88] In Wright, supra, the Trial Judge found that a standard vacancy exclusion was applicable and
dismissed the action. The landlord had been advised of the tenant’s intention to vacate the insured property. A few pieces of the tenant’s personal property were left in the house. The former tenant had no interest in them. The former tenant sporadically visited the house to tend to and take vegetables that had been planted in a solarium. The property may have been occupied at times by vagrants. The front door was not a door that could be locked. Relying on Hirst and Morton, the Trial Judge found the premises were vacant to the knowledge of the insured and the insurer could rely on the exclusion to deny coverage.
[89] In the judgment on appeal, at para. 7 the Court cited the Trial Judge’s discussion of the test as to
vacancy, including his summary description of the decisions in Price ; Hirst ; Morton and Jeselon v. Elite Insurance Management Ltd., [1983] B.C.J. No. 1328 and his conclusion (at para. 7):
I take from all of the foregoing that, absent anything in the policy by way of definition, the question of whether premises are vacant is to be determined having regard to all of the circumstances, including the intention of the owner and the last tenant (in the case of rental premises); the presence or
absence of possessions in the premises; the circumstances under which any possessions found in the premises may have been left or deposited there; the condition of the premises, including whether the premises had utilities hooked up; the length of time the premises may have been unoccupied; the use typically made of the premises, and any other relevant matters.
The question is not to be determined exclusively by reference to the presence or absence of inanimate objects, as is suggested in Miller. The foregoing is consistent with the holding of Hutchinson C.C.J., in Jeselon, and with the comments of MacDonald J.A., of the Alberta Court of Appeal, who said in Cody v. Beaver Insurance Co. (1964), 45 D.L.R. (2d) 531 at 534, in the context of construing a similar term in an insurance policy:
It does seem to me that the clause must be construed in a reasonable manner so as to afford proper protection to both parties rather than give it a meaning that would
mislead the insured. ...
[90] The Court of Appeal neither expressly adopted this reasoning nor found fault in it. Hall J.A. reviewed
the cases cited by the Trial Judge, and stated, at para. 10, a common sense approach has to be taken to the question, and held (at paras. 13-14):
In my opinion, taking a reasonable view of all the circumstances as suggested in Cody, supra, the occasional visitations by [the former tenant] to the home should not be found to change the state of this house from being vacant to being occupied. That conclusion seems in accord with the one reached in Lambert,supra, where occasional occupation of a residence usually empty did not suffice to sustain coverage. The "mere visits" noted in Lambert somewhat parallel the occasional
attendances of [the former tenant] in this case to get vegetables.
In the case at bar, I do not consider it would be reasonable to find that [the former tenant] in her sporadic visits to the house to obtain vegetables from the solarium manifested any intent to exercise dominion over the house. There can be no realistic suggestion that she would have considered herself to be a tenant of the premises. She and her partner had moved out and ceased paying rent. In my opinion, it would not be commercially realistic to hold that this house was occupied in July and August up to the time of the fire in early September. In ordinary parlance, I consider that this house
was vacant to the knowledge of the insured at the relevant time. I do not accept the argument of counsel for the appellant that the actions of [the former tenant] in occasionally visiting the home should result in a finding different from the conclusion of the trial judge.
[91] The specific definition of vacancy in the policy now before the Court was considered in Wu, supra.
While Nolan J. in that case noted that the contract defined “vacancy” he did not explicitly consider how the wording, in the words of Leroy in Maracle Estate, “modifies the default characterization by defining the word vacant” . Nor did the Court appear to have been referred to the decisions considering the similar wording in
Price and Maracle Estate.
[92] The policy excluded losses occurring after the insured dwelling had, to the knowledge of the insured
been vacant, “even if partially or fully furnished”, for more than thirty consecutive days; and (at para. 52):
"Vacant" refers to the circumstances where, regardless of the presence of furnishings:
a) all occupants have moved out with no intention of returning and no new occupant has taken up residence; or
b) in the case of a newly constructed dwelling, no occupant has yet taken up residence.
[93] Finding the tenants had left the premises leaving no one occupying the property, the Court concluded
the fact the owners attended the home on a regular basis did not result in occupancy. The Court held (at para. 87):
... no one slept or cooked there and it was no one's "habitual abode" for more than 30 days. Thus, I find that the property was "vacant" for more than 30 consecutive days ... It was no tenant's habitual abode and the [owners] had no intention of moving in themselves. Indeed, the new tenant was not going to move in until November 1, 2006.
[94] In finding the mere intention to return for the purpose of inspection did not amount to occupancy, the
case is consistent with Price and stands in contrast to Metro General.
[95] Like Wright, however, Wu is a tenant-occupant case, rather than an owner-occupant case. There is no
doubt on the facts in Wu, as in Wright, that the occupant had abandoned the property with no intention of returning. The issue in Wu might properly have been defined as whether the non-occupant owner’s intention to return to inspect could create an occupancy. Where the policy says the property insured is vacant if the
occupants have moved out with no intention of returning, the owners’ intentions to visit the property are irrelevant if they were not occupants.
[96] In summary, the Court’s objective in construing the vacancy exclusion in this case must be to give
effect to the words of the definition in the policy. The phrase, "moved out with no intent to return" is to be read as a whole. The words are interconnected and must be read together, as they would be by a
reasonable policyholder. The phrase connotes permanence. It does not apply to an occupier who moves out of premises temporarily with the intent to return to live there. A mere temporary vacancy or absence of the occupant, or a temporary period of non-user, which is reasonable in view of the contemplated uses of the property and of all the circumstances, and which is evidenced by some act or acts fairly showing not only an intent to return but also an intent not to abandon the premises for the purposes of their use, will not of
itself operate as a breach of a condition as to vacancy or non-occupation.
[97] Occupancy is not re-established by a return for transitory purposes or intent to return for such
purposes, but premises are not considered to be vacant within the meaning of this definition if the occupant moves out temporarily, for example, to stay with parents or friends. Premises would be vacant if the
occupant moved out with no intent to return except, for example, to clean up the premises or to obtain the return of a damage deposit. Property will be considered to be vacant if there is only a remote possibility an insured may change his plans after quitting his occupation.
Material Change
[98] In denying the claim the insurer also relies upon Statutory Condition 4 [Insurance Act, R.S.B.C. 1996,
c. 226] which provides:
Material change
4. Any change material to the risk and within the control and knowledge of the insured avoids the contract as to the part affected by the change, unless the change is promptly notified in writing to the insurer or its local agent; and the insurer when so notified may return the unearned portion, if any, of the premium paid and cancel the contract, or may notify the insured in writing that, if the insured desires the contract to continue in force, the insured must, within 15 days of the receipt of the notice, pay to the insurer an additional premium; and in default of such payment the contract is no longer in force and the insurer must return the unearned portion, if any, of the premium paid.
[99] If the insurer seeks to deny the claim on the basis of a failure to disclose a material change it must
make the well-established case, as described by Nolan J. in Wu (at para. 85) by establishing there was: first, a material change to the risk; second, the change was within the control of the insured; and third, the insured had knowledge of the change.
[100] Materiality is a question of fact. There is no doubt vacancy or non-occupancy (as those terms are
commonly understood), can amount to a material change in the risk insured: Burke v. Campbell (1978), 20 O.R. (2d) 300 (HCJ); Royal Bank of Canada v. Safeco Insurance Co. of America (1988), 85 A.R. 357 (Q.B.);
Wood v. Gore Mutual Insurance,[1980] I.L.R. 715 (SC); Mohammed v. Canadian Northern Shield Insurance Co., [1992] B.C.J. No. 1423;(SC); and Knight Ventures Ltd. v. Cumis Insurance Society, Inc., [1983] I.L.R. 6159 (SC).
[101] The change in risk in Serbanv. B.C.A.A. Insurance Co. was described in terms that bear some
attention in the case at bar (at 7501):
These factors and others clearly show ... that the son ... did not occupy the home ... as is required under the policy. I have no doubt whatsoever that had the insurers been advised of those
circumstances, that they would either increase the premium, but more likely would have cancelled the insurance. The residence was for all purposes unoccupied throughout that year. At best, the occupation was temporary and periodic and I include the father and mother's attendance at that premise and taken it together, in my view does not amount to occupation as contemplated by the policy.
as a result of the premises becoming “unoccupied” even if they are not considered to be “vacant” pursuant to the definition of “vacant” in the policy. In Wood, Cashman L.J.S.C. held that a house had not become vacant where the occupants had moved out temporarily due to flood damage but that the insured’s failure to advise their insurer of a material change in the risk, arising from the fact the premises were uninhabitable, avoided the coverage (at 722):
The house remained unoccupied from January 30th until April 23rd, when the fire occurred. That change was within the control and knowledge of the plaintiffs and the evidence is clear that neither of them gave the notice in writing required by the Statutory Condition. It was apparent to others that there had been some degree of vandalism and there is evidence from Cpl. MacIntosh of the Sidney R.C.M.P. that the fire had been deliberately set, although I hasten to add that there is no suggestion that the plaintiffs or either of them are parties to that. Furthermore, the back door was unlocked and had remained in that condition for some considerable period of time.
In my respectful view, this unoccupied residence exposed as it was to vandalism, where entry could so easily be obtained by any person, constituted a change material to the risk, a change that was within the control and knowledge of the insured, and that being so they were under a contractual duty to notify the defendant of those circumstances.
[103] In Marche v. Halifax Insurance Co. 2005 SCC6, McLachlin.CJ, for the majority, held:
It is well established in insurance law that vacancy can be a change material to the risk: e.g., Arcand v. Grenville Patron Mutual Fire Insurance Co. (1923), 25 O.W.N. 175 (H.C.), and this is reflected in the common and accepted practice of including 30-day vacancy exclusion clauses in insurance policies.
[104] There is an issue in this case arising out of the non-refund of premiums once Wawanesa denied the
claim, relying on the vacancy exclusion and a material change in risk. After learning of what it regarded as a material change in the risk insured, Wawanesa retained the premium and treated the policy as subsisting in relation to risks not affected by the material change (Mr. Grass referred specifically to liability coverage). The insureds never gave notice of the material change to the insurer and never sought a refund of unearned premiums. This situation requires consideration of the extent to which material change voids coverage where the policy continues in effect.
[105] If notice of a material change is not given to the insurer, the part of the contract affected by the change
is void. Statutory Condition 4 addresses any uncertainty that might otherwise arise with respect to continuing coverage after a material change is brought to the insurer’s attention. Where notice is given the insurer must make a choice between continuing on the risk (in which case it must set out the terms on which it will do so); or cancelling the policy.
[106] The failure to refund the unearned premium does not in itself preclude the insurer from arguing that a
material change has voided the coverage in whole or in part.
[107] Where a policy is voidable an insurer may be said to have elected to treat the policy as continuing by
failing to cancel the policy or continuing to collect premiums. An election to treat the contract as continuing will have the effect of continuing coverage even in the absence of detrimental reliance; election is distinct from estoppel: Brown and Donnelly, Insurance Law in Canada, loose-leaf (consulted 21 March, 2012)
(Carswell: Toronto, 1999) at 12.4. Further, there may be cases where the failure to void the coverage or refund unearned premiums is regarded as evidence going to the insurer’s real assessment of materiality. There are few authorities treating the effect of a failure to return unearned premiums following the discovery of a material change in risk on the insurer’s liability for claims arising before notice of the change. None were cited in which the insurer unequivocally refused to pay a claim because of a material change but failed to refund unearned premiums.
[108] In Renshaw v. Phoenix Insurance Co. [1942] O.J. No. 294 (HCJ), Makins J. considered the effect of
an insurer’s failure to expressly cancel a policy after learning of a material change in the risk insured. The insured advanced a claim for indemnity for damage sustained before notice of the change had come to the insurer’s attention: materiality of the change (moving of the insured structure from its foundations to another location) was conceded. After learning of the material change the Insurer had taken no action to bring the policy to an end. At trial the Court held the policy would be avoided unless the condition requiring written notice of material changes had been waived. Addressing that question the Court discussed the conduct of the insurer’s agent, Mr. Talon, as follows(at paras. 6-7):
Not only did Mr. Talon say nothing, but there was nothing in writing asked between either him and the plaintiff or the company and the plaintiff.
Statutory condition No. 22 provides as follows:
No condition in this policy shall be deemed to have been waived by the insurer either in whole or in part unless the waiver is clearly expressed in writing signed by an agent of the insurer." Nothing of that sort took place, so that I must hold that the statutory conditions as applicable to this case were not waived by any person and that the policy remained void until such time as the plaintiff had, as promised, put his cement foundation under the house. That was never done.
[109] An appeal was taken from that judgment (Renshaw v. Phoenix Insurance Company of Hartford, Conn., [1943] O.R. 223 (C.A.)). The argument on appeal, as summarized in the headnote was:
As soon as the company has notice of [a material change] , then the company, in order to be
relieved of liability, must comply with statutory condition 7, the provisions of which render the contract merely voidable, not void: Kline Brothers and Company v. The Dominion Fire Insurance Company
(1912), 47 S.C.R. 252 at 254, 256, 9 D.L.R. 231. On the authorities and the pleadings, since [there was] was a change material to the risk, and the insurer did not comply with the condition, the appeal should be allowed and judgment entered for the plaintiff.
[110] In response, the insurer argued:
The cases upon which counsel for the appellant has relied do not refer to conditions made obligatory by the legislature; rather, they are conditions intended for the mutual benefit of the insurer and the insured. Kadishewitz v. Laurentian Insurance Co., [1931] O.R. 529, [1931] 4 D.L.R. 401. There is a marked distinction between such a condition and a statutory condition: Dubinski v. Stuyvesant Insurance Co., [1934] 3 D.L.R. 291 at 294, 42 Man. R. 145, 1 I.L.R. 186, [1934] 1 W.W.R. 669. It is submitted that statutory conditions are the governing factors, and they must be strictly construed. Since there was a change material to the risk, and no notice in writing was given, the appellant is confronted with an insurmountable obstacle. There can be no waiver of the condition unless made as provided by statutory condition 22. There seems to be no case reported where there has been a waiver of the statutory condition except in writing: Logan v. The Commercial Union Insurance
