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Case Comment: B. McCurdy Trucking v. Zurich Insurance, SCC, file 31420
Published in the September 2006 issue of Transportation Notes - View Article
In a decision of the Ontario Court of Appeal released earlier this year, Zurich Insurance Company was successful in obtaining summary judgment in a case involving an unusual claim for loss of property which was seized by the police as a result of a criminal investigation. The insured sought leave to appeal to the Supreme Court of Canada. In August of this year the Supreme Court refused to grant leave.
The insured, McCurdy Trucking Inc., purchased two dump trailers which it maintained were covered under a fleet policy issued by Zurich. The factually complicating factor was that the trailers had been stolen, a fact which was apparently unknown to the insured.
The matter began as two summary judgment motions. The plaintiff sought a declaration that the vehicles were covered under its fleet policy while Zurich sought an order dismissing the action on several grounds.
The motions judge accepted affidavit evidence to the effect that the plaintiff was innocent of any involvement in, or knowledge of, the theft and this issue was not raised at any further stage of the proceedings.
Having found that the plaintiff was innocent the next issue for determination was whether the plaintiff had an insurable interest in the property. The motions judge relied upon the leading case of Kosmopoulos v. Constitution Ins. Co. of Canada, a decision of the Supreme Court of Canada. The motions judge stated the law as follows: “an insurable interest arises if the insured had, as a matter of fact, an expectation of benefit from continued use of the property and an expectation of detriment from loss of the property”.
Zurich cited an older case from an intermediate court to the effect that a person may have an insurable interest in property which had been previously stolen, but such an interest ceases to exist when the insured is informed by the police of the earlier theft. The motions judge rejected this proposition. As the Court of Appeal decided the case on another issue, it did not comment on this point. It appears to us that the motions judge was correct on this point. If the insurable interest arises, the fact that the insured is advised of a previous theft should not eliminate that interest.
The issue of greater interest is, in our view, whether the loss in this case can be said to arise from a peril covered by the policy.
The policy was an “all perils” policy which, by its terms, covered certain specified perils (including theft) as well as collision coverage. The motions judge approached the question as though the only issue were fortuity. He read the “all” in “all perils” as all encompassing: “ I conclude, quite simply, that “all perils” means just that. The loss in this case, the seizure by police, was completely fortuitous.”
This is an unconventional reading of the policy and it is fortunate that the Court of Appeal has set the matter right. As the Court noted in a brief endorsement, if the loss is characterized as seizure by the police, none of the perils listed provide cover. If the loss is said to be the prior theft, coverage is clearly not available as the loss predated the policy inception date. The Supreme Court has now made this ruling final.