NB Court declines summary judgment in insurance dispute over a building damaged by fire

The NB Court of King’s Bench has declined to grant summary judgment in an insurance dispute over a building damaged by fire, finding there were genuine issues requiring a trial.

The plaintiff sued five insurers—The Sovereign General Insurance Company, Economical Mutual Insurance Company, Northbridge General Insurance Corporation, Arch Insurance Company, and Intact Insurance Company. Each of these insurers underwrote a 20 percent share of a subscription insurance policy providing coverage for commercial property insurance on a building in Minto, New Brunswick. A fire damaged the building just a few weeks after the coverage was placed.

The plaintiff argued that its loss was insured and claimed damages for the actual cash value of the building, the cost of removing debris from the site, interest paid to its lender from the date of loss, and fees and disbursements.

On the other hand, the insurers refused to pay the claim, arguing that the plaintiff made material misrepresentations and omissions when it applied for coverage. The parties have each brought a motion for summary judgment against the other, arguing that there was no genuine issue requiring a trial.

However, the NB Court of King’s Bench ultimately found there were important, genuine issues which required a trial. Consequently, the court dismissed both motions.

The court noted that the Eastland Group of Companies owned the property in Minto. When Eastland went bankrupt, the property was subjected to a mortgage in favour of a private lender. The plaintiff company, through its president Earl Daniels, negotiated with the private lender to purchase the property.

The plaintiff claimed that the loss is covered as a named peril under the policy issued by the defendant insurers.

The defendants argued that the plaintiff made several material misrepresentations and omissions which vitiated the coverage, including representations that the plaintiff was the property owner when the policy was issued, which was allegedly not the case. The defendants also claimed that the plaintiff made misrepresentations regarding the occupancy and valuation of the property. The defendants argued that had the correct information been provided by the insured, they would not have underwritten the risk, or they would have demanded a higher premium.

After reviewing the evidence, the court was satisfied that there were genuine issues requiring a trial. For instance, the court was concerned that if the occupancy was material, why were no details requested by the insurer, especially in light of the fact they knew or should have known that the property would not be occupied for at least weeks following the issuance of the policy.

The defendants also argued that since the plaintiff was not the legal owner of the property until some three weeks after the policy issuance, it had no “insurable interest” in the property. However, the court questioned, “Does not being the legal owner automatically mean there is no insurable interest?”

Ultimately, the court was satisfied that neither party had met its burden of proof, and both failed to establish that there were no genuine issues requiring a trial in this case. The court found numerous questions remained unanswered, and the evidence of several missing witnesses will be necessary at trial.

The court said it could not fairly and justly adjudicate the dispute between the parties based on the evidentiary records produced before it. Accordingly, the court dismissed the motions for summary judgment.