In the space of a week, two appellate decisions have dealt with relief from forfeiture. First, the Supreme Court of Canada issued its ruling in Marche v. Halifax Insurance (about which we sent an Update last week).
Today, the Court of Appeal has released its reasons in McEnaney v. General Accident Assurance.
The McEnaney case involved a claim for accident benefits by a driver whose licence had expired when the accident occurred. Although General Accident (as it then was) initially paid income replacement benefits, it terminated those benefits when it learned of the licence suspension. (The SABS provides that IRBs need not be paid to someone “not authorized by law to drive the automobile” at the time of the accident.)
The insured sought relief from forfeiture under s. 129 of the Insurance Act.
GA, however, brought a motion for summary judgment, dismissing McEnaney’s claim. The judge dismissed the motion without hearing from counsel for the insured. He concluded that there were issues of material fact as to whether relief from forfeiture was available on the facts of this particular case and that the case should proceed to trial.
GA appealed to the Divisional Court. It argued that, as a matter of law, relief from forfeiture is not available in relation to events that occur before the loss.
The Divisional Court allowed GA’s appeal and dismissed the action. It did so in on the basis of an earlier decision of the Court of Appeal, Pluzak v. Gerling Global (2001), 52 O.R. (3d) 520, in which that court had said that s. 129 of the Act “provides for relief from forfeiture for lapses in the process of making a claim on a policy after the loss”.
On appeal by the insured McEnaney, the Court of Appeal, relying on a Supreme Court of Canada case called Falk Bros Industries Ltd. v. Elance Steel Fabricating Co.,  2 S.C.R. 778, confirmed that s. 129 contains two parts: “The first applies when there has been imperfect compliance with a statutory condition as to the proof of loss to be given by the insured. The second applies where there has been imperfect compliance with any other matter or thing to be done or omitted by the insured with respect to the loss.”
Here, the question was whether McEnaney’s failure to have a proper licence could be characterized as falling within the second branch, “any other matter or thing to be done or omitted by the insured with respect to the loss”.
The Court ruled that it could not. It said that it was “difficult to imagine” an act or omission before the loss that would also be “with respect to the loss”, so as to qualify for relief from forfeiture. But it did not completely close the door on the possibility that a future case might involve such a situation: “An act or omission could conceivably be ‘with respect to’ an anticipated event, and so I find it unnecessary to say, as some cases have, that s. 129 only applies to an act or omission after the loss has occurred.”
So, the appeal from the Divisional Court’s ruling, that relief from forfeiture was not available to McEnaney in this case, was dismissed. But on another set of facts, it appears that a pre-loss event could, in theory, give rise to relief from forfeiture.
In an odd procedural twist, McEnaney’s appeal from the dismissal of the action was allowed. This was because the original motions judge had not heard any argument from McEnaney before ruling on the motion. It appears that McEnaney’s counsel had other submissions to make but never had the chance to do so.)
Unfortunately, today’s decision will probably have the effect of introducing greater uncertainty into relief from forfeiture cases. In the past, our office has successfully argued cases with facts similar to those in McEnaney. We have cited another Court of Appeal decision which was not mentioned in today’s reasons: Stuart v. Hutchins (1998), 40 O.R. (3d) 321, which held that relief from forfeiture (under either s. 129 of the Insurance Act or s. 98 of the Courts of Justice Act) is not available in relation to non-compliance with a condition precedent to coverage. We had thought that the law in this area was fairly settled but in light of today’s decision, that might not be true.