On May 9, the Ontario Superior Court released a decision which reminds us of three important lessons:
- A court will allow juries to use their common sense to make decisions;
- Telling your insurer you had a fur coat when you didn’t will probably be considered a wilful misrepresentation; and,
- Relief from forfeiture is not an available remedy when you make a wilful misrepresentation.
In 2003, a fire occurred in the Pinders’ home, the Plaintiffs. The Pinders submitted a claim to their insurer, Farmers’ Mutual Insurance Company, for various items that they claimed were lost in the fire. Farmers’ Mutual denied coverage citing, among other things, that the Pinders were using portable electric heaters throughout their home and that they made wilfully false statements on the Proof of Loss form. In December 2017, a jury trial was conducted.
The jury decided that the Pinders were in fact using portable electric heaters to warm their house (presumably voiding coverage) and they did make wilfully false statements in the Proof of Loss form effectively voiding their insurance coverage. The Pinders brought a motion to, among other things, not enter the jury’s verdict on account that there was no evidence to support the jury’s finding and grant them relief from forfeiture.
Was there Evidence to Support the Jury’s Finding?
Yes. Justice Vallee noted that a judge may refuse to accept a jury’s verdict only when the decision is “bad in law or devoid of evidentiary support” – in other words, if there is no evidence to support the conclusion. This was not such a case.
The Pinders argued that throughout the trial, it was never established or even uttered that they used portable electric heaters to warm the majority of their house. Counsel for Farmers’ Mutual urged the jury to consider the totality of the evidence and infer that most of the house was in fact being warmed by portable heaters. Although circumstantial, Justice Vallee decided that there was enough evidence to allow the jury to come to their conclusion.
Is Relief from Forfeiture an Available Remedy?
No. Relief from forfeiture is a principle enumerated in s.129 of the Insurance Act and s.98 of the Courts of Justice Act. It is an equitable remedy that allows a court to “look past” an insured’s improper compliance with certain contractual or statutory requirements and force an insurer to maintain coverage for a loss.
Justice Vallee cited several cases which were appropriate candidates for such a remedy: a late filing of a notice to arbitrate, a Proof of Loss form that did not provide adequate particulars of items lost, or a party’s exaggeration of a claim designed for “puffery” or to establish a better negotiating position.
In this case, Farmers’ Mutual argued that the Pinders’ policy was void because they wilfully misrepresented items on the Proof of Loss. This was differentiated from alleging fraud as that would require the element of intent to deceive. During the trial, Ms. Pinder was cross-examined regarding each item on the Proof of Loss. She admitted that some items were duplications, some were described incorrectly, some values were wrong, and that some items didn’t exist. Among those items was a fur coat which, despite significant investigation, could not be proven to have ever been bought. In fact, considering that the Pinders were receiving social assistance and were using their RRSPs at the time in question, they simply could not have made such a lavish purchase.
The jury had the latitude to believe or not believe what the Pinders were saying and more importantly were not tasked with finding intent to deceive Farmers’ Mutual. The jury concluded that the Pinders did not make wilfully false statements regarding 29 items and did make wilfully false statements regarding 39 items, including the fur coat.
Justice Vallee concluded that this was not a case of improper compliance but one of wilful misrepresentation which did not invite relief from forfeiture as an available remedy.
Judgment was entered in favour of Farmers’ Mutual.
The moral of this story is simple: wilful misrepresentation does not require an insured’s intent to deceive their insurer – fraud, on the other hand, does. An insured has an obligation to investigate and report, to the best of their ability, the items that were lost and their accurate value. The courts will allow some flexibility regarding compliance with such contractual reporting obligations and may find it equitable to relieve an insured if strict compliance isn’t satisfied – wilful misrepresentation is not an instance when such relief will be granted.
It is also important to remember that courts will typically trust juries to use their judgment and life experience to consider the available evidence and come to their appropriate conclusions. We, like the courts, should trust juries to conclude that if it walks like a duck and quacks like a duck, it’s probably a furry duck.
See Pinder v. Farmers' Mutual Insurance Company (Lindsay), 2018 ONSC 2910