Sask. River Bungalows v. Mar. Life (1994), 155 A.R. 321 (SCC);
73 W.A.C. 321
MLB headnote and full text
[French language version follows English language version]
[La version française vient à la suite de la version anglaise]
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The Maritime Life Assurance Company (appellant) v. Saskatchewan River Bungalows Ltd. and Connie Doreen Fikowski (respondents)
(23194)
Indexed As: Saskatchewan River Bungalows Ltd. and Fikowski v. Maritime Life Assurance Co.
Supreme Court of Canada
La Forest, L’Heureux-Dubé,
Gonthier, Cory, McLachlin,
Iacobucci and Major, JJ.
June 23, 1994.
Summary:
A life insurance policy provided for automatic termination if a premium was not paid within the 31 day grace period following a due date. The insured’s mailed premium was allegedly lost in the mail. The grace period expired without payment being received. The insurer mailed a late payment offer to the insured, permitting continuation of the policy subject to certain conditions. The offer was not responded to. A subsequent letter notified the insured that the policy had terminated and invited the insured to apply for reinstatement. Subsequent attempts at payment of the premium were refused. The insured, not diligent in picking up mail, claimed not to have been aware of the nonpayment. The insured died. The insured’s wife applied to enforce payment under the policy.
The Alberta Court of Queen’s Bench dismissed the action. The court held that the policy had terminated and the insured was not entitled to relief from forfeiture. The wife appealed.
The Alberta Court of Appeal, McClung, J.A., dissenting, in a judgment reported 127 A.R. 43; 20 W.A.C. 43, allowed the appeal. Harradence, J.A., stated that the policy had terminated, but the insured was entitled to relief from forfeiture. Hetherington, J.A., held that the policy remained in force. McClung, J.A., dissenting, held that the policy terminated and relief from forfeiture was not applicable. The insurer appealed.
The Supreme Court of Canada allowed the appeal and restored the trial judge’s decision.
Insurance – Topic 1226
Insurance contract – Premium – Payment of – Nonpayment – Waiver of defence of – After the grace period expired, the insurer sent a late payment offer to the insured, agreeing to accept late payment on conditions – No response was received – On November 28, 1994, the insurer sent a notice that the policy was technically out of force and that immediate payment was required – Again, there was no response – On February 2, 1985, the insurer sent a notice of lapse of coverage, inviting application for reinstatement with proof of insurability – Because the insured picked up its mail irregularly, it did not learn of the November and February notices until April 1985 – However, the insured waited a further three months before mailing the premium payment, which was rejected – The Supreme Court of Canada held that the policy was no longer in force – Although the November notice constituted a waiver of the requirement of timely payment, the waiver had been retracted by the time payment was tendered.
Insurance – Topic 1226
Insurance contract – Premium – Payment of – Nonpayment – Waiver of defence of – [See
Waiver – Topic 41
].
Insurance – Topic 3136
Payment of insurance proceeds – Actions – Relief against forfeiture – Extent of power to grant relief – The Supreme Court of Canada stated that “it is not necessary to determine whether our general power to relieve against forfeiture under s. 10 of the Judicature Act applies to contracts regulated by the Insurance Act. However, I would note that the existence of a statutory power to grant relief where other types of insurance are forfeited (Insurance Act, ss. 201, 205, 211), does not preclude application of the Judicature Act to contracts of life insurance; it merely imposes minimum standards on the industry. The appellant’s argument that the ‘field’ of equitable relief is occupied by the Insurance Act must therefore be rejected.” – See paragraph 36.
Insurance – Topic 3136
Payment of insurance proceeds – Actions – Relief against forfeiture – Extent of power to grant relief – The Supreme Court of Canada stated that “it is … unnecessary to determine whether relief from forfeiture can operate generally as a before-loss remedy in the insurance context. Clearly, the holder of a term life policy has no vested right to benefits until the loss insured against — death of the insured — has occurred. However, a modern understanding of the doctrine of relief would likely expand the notion of forfeiture to include less tangible losses, such as the loss of an option to convert a term policy into one under which benefits would be certain, or the loss of one’s insurability. This question remains open.” – See paragraph 38.
Insurance – Topic 3137
Payment of insurance proceeds – Actions – Relief against forfeiture – When available – A life insurance policy lapsed before the insured’s death for nonpayment of a premium – The payment was nine months overdue when the insured learned that the insurer had given notice that the policy had lapsed – The insured waited a further three months before sending the premium payment – The Supreme Court of Canada stated that the insured, by its conduct, was not entitled to relief from forfeiture – See paragraphs 30 to 35.
Insurance – Topic 3137
Payment of insurance proceeds – Actions – Relief against forfeiture – When available – The Supreme Court of Canada stated that “the power to grant relief against forfeiture is an equitable remedy and is purely discretionary. The factors to be considered by the court in the exercise of its discretion are the conduct of the applicant, the gravity of the breaches and the disparity between the value of the property forfeited and the damage caused by the breach” – See paragraph 32.
Waiver – Topic 15
Retraction of waiver – The Supreme Court of Canada stated that “waiver can be retracted if reasonable notice is given to the party in whose favour it operates” – See paragraph 27.
Waiver – Topic 41
Essential elements – General – The Supreme Court of Canada stated that “waiver will be found only where the evidence demonstrates that the party waiving had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them. The creation of such a stringent test is justified since no consideration moves from the party in whose favour a waiver operates. An overly broad interpretation of waiver would undermine the requirement of contractual consideration.” – See paragraph 20.
Cases Noticed:
Holwell Securities Ltd. v. Hughes, [1974] 1 All E.R. 161 (C.A.), refd to. [para. 11].
Alan (W.J.) & Co. v. El Nasr Export and Import Co., [1972] 2 Q.B. 189 (C.A.), refd to. [para. 18].
Tudale Explorations Ltd. v. Bruce (1978), 88 D.L.R.(3d) 584 (Ont. Div. Ct.), refd to. [para. 18].
Mitchell and Jewell Ltd. v. Canadian Pacific Express Co., [1974] 3 W.W.R. 259 (Alta. C.A.), refd to. [para. 19].
Marchischuk v. Dominion Industrial Supplies Ltd. et al., [1991] 2 S.C.R. 61; 125 N.R. 306; 73 Man.R.(2d) 271; 3 W.A.C. 271, refd to. [para. 19].
Federal Business Development Bank v. Steinbock Development Corp. (1983), 42 A.R. 231 (C.A.), refd to. [para. 19].
Duplisea v. Eaton (T.) Life Assurance Co., [1980] 1 S.C.R. 144; 27 N.R. 369; 26 N.B.R.(2d) 319; 55 A.P.R. 319, refd to. [para. 24].
Anguish v. Maritime Life Assurance Co. (1987), 77 A.R. 189; 51 Alta. L.R.(2d) 376 (C.A.), refd to. [para. 24].
McGeachie v. North American Life Assurance Co. (1893), 20 O.A.R. 187 (C.A.), affd. (1893), 23 S.C.R. 148, refd to. [para. 24].
Reierson v. Northern Life Assurance Co. of Canada, [1977] 1 S.C.R. 390; 8 N.R. 351, refd to. [para. 24].
Hartley v. Hymans, [1920] 3 K.B. 475, refd to. [para. 27].
Rickards (Charles) Ltd. v. Oppenhaim, [1950] 1 K.B. 616 (C.A.), refd to. [para. 27].
Guillaume v. Stirton (1978), 88 D.L.R.(3d) 191 (Sask. C.A.), refd to. [para. 27].
Shiloh Spinners Ltd. v. Harding, [1973] A.C. 691 (H.L.), refd to. [para. 32].
Liscumb v. Provenzano Estate (1985), 51 O.R.(2d) 129 (H.C.), affd. 55 O.R.(2d) 404 (C.A.), refd to. [para. 33].
Stenhouse v. General Casualty Insurance Co. of Paris, [1934] 3 W.W.R. 564 (Atla. C.A.), refd to. [para. 37].
Swan Hills Emporium & Lumber Co. and Wenger v. Royal General Insurance Co. of Canada (1977), 2 A.R. 63 (C.A.), refd to. [para. 37].
Johnston v. Dominion of Canada Guarantee & Accident Insurance Co. (1908), 17 O.L.R. 462 (C.A.), overruled. [para. 37].
Statutes Noticed:
Insurance Act, R.S.A. 1980, c. I-5, sect. 201, sect. 205, sect. 211 [para. 36].
Judicature Act, R.S.A. 1980, c. J-1, sect. 10 [para. 31].
Authors and Works Noticed:
Snell’s Equity (29th Ed. 1990), pp. 541, 542 [para. 32].
Waddams, S.M., The Law of Contracts (3rd Ed. 1993), paras. 604 [para. 27]; 606 [paras. 18, 27].
Counsel:
James D. McCartney and Brian E. Leroy, for the appellant;
James S. Peacock, for the respondent.
Solicitors of Record:
MacKimmie Matthews, Calgary, Alberta, for the appellant;
Code Hunter, Calgary, Alberta, for the respondent.
This appeal was heard on March 14, 1994, before La Forest, L’Heureux-Dubé, Gonthier, Cory, McLachlin, Iacobucci and Major, JJ., of the Supreme Court of Canada.
On June 23, 1994, Major, J., delivered the following judgment in both official languages for the Supreme Court of Canada.
