The Sovereign General Insurance Company v Walker, 2011 ON CA
597 (Released September 19, 2011)
The respondent Marie Walker slipped and fell at the Power Centre
in Burlington, Ontario, and sustained serious and permanent
injuries. The Walkers sued Emshih Developments Inc.
("Emshih"), the owner, and Sun Shelters,
the maintenance company retained to clear the property of snow and
ice. Sun Shelters was bankrupt and did not defend the action but
Emshih notified its insurer, The Sovereign General Insurance
Company ("Sovereign"), of the claim.
Sovereign declined to participate.
The Walkers settled the action with Emshih and obtained a
judgment against Sun Shelters for $100,000 in damages and related
relief. The Walkers then brought an action against Sovereign under
s. 132 of the Insurance Act, which allows a third party to recover
against an insurer where the insured has failed to satisfy a
judgment for damages. Alternatively, they relied on s. 129 of the
Act, which gives a court jurisdiction to grant relief from
forfeiture where there has been imperfect compliance with a
condition in an insurance policy. The Walkers moved for summary
judgment on their claim. Sovereign brought a crossmotion to dismiss
the action, claiming that Sun Shelters did not give effective
notice of the action as required by the policy, thereby breaching
the policy and relieving Sovereign from liability coverage.
On appeal from the motion judge's decision granting summary
judgment to the Walkers, the Court upheld the motion judge's
decision that the notice given by Emshih was effective under s.
3(a) of the policy. Notice was required "by or for the
insured". On a plain reading of the provision, notice may be
given by a person other than the insured. Section 3(a) must be
interpreted in light of its purpose, which is to make Sovereign
aware of a claim against its insured so that it has the opportunity
to deal with it. The Court held that if the notice is to be given
on an insured's behalf, the party giving it should have
sufficient proximity to the claim to have knowledge of the
information required by s. 3(a). The Court held that Emshih was
such a party and its notice to Sovereign constituted effective
notice under the policy. Sovereign was aware of the action but made
no effort to contact its insured or seek its assistance. It cannot
now complain that Sun Shelters breached its duty to cooperate.
The Court also upheld the motion judge's decision that the
Walkers would be entitled to relief from forfeiture under s. 129 of
the Act. The law has treated the failure to give timely notice of a
claim as imperfect compliance rather than non-compliance. Even if
this was not the state of the law, Sovereign had actual notice of
the claim and it made a conscious decision not to participate in
it. This was clearly a case of imperfect compliance. The only
remaining question under s. 129 is whether forfeiture of the
insurance proceeds would be inequitable. The motion judge made two
key findings of fact: first, there was no bad faith by Sun
Shelters, Emshih or the Walkers; and second, although Emshih gave
Sovereign notice of the Walkers' claim over five years after
the accident occurred, Sovereign suffered no prejudice from the
late delivery of the notice. The Court upheld these findings of
The appeal was dismissed. Sovereign was given effective notice
in accordance with the policy conditions for liability coverage,
and the Walkers were entitled to relief from forfeiture.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).