The most widely read magazine for Canadian lawyers
Issue link: https://digital.canadianlawyermag.com/i/50810
GILBERTSON DAVIS EMERSON LLP BARRISTERS AND SOLICITORS practice restricted to CIVIL LITIGATION, INSURANCE LAW Angela Emerson John L. Davis John L. Davis Professional Corporation R. Lee Akazaki Jody W. Iczkovitz Jonathan J. Weisman Counsel: James E. Adamson 20 Queen Street West, Suite 2020 Toronto, Ontario M5H 3R3 Tel: (416) 979-2020 Fax: (416) 979-1285 email: office@gilbertsondavis.com Insurance and Risk Management in Commercial Leases Dawn Michaeloff LEGAL REPORT: INSURANCE LAW Quebec courts do not recognize the doctrine of estoppel, which prevents new defences from being introduced once a case has begun. A similar doctrine of "fi n de non recevoir" has been used in Quebec courts. In a review of the doctrine of fi n de non recevoir, Jean-Charles René, a commercial litigation lawyer with Ogilvy Renault LLP in Montreal, wrote, fi n de non recevoir "bars an insurer from adding to its reasons for denial of coverage on the basis that it is deemed to have waived the right to do so. According to the case law, such a waiver does not need to have been expressly stated in writing, but may be tacit, provided that it is unequivocal." In an interview, René says this has led to insurers reserving the right, in writing, to bring forward any clause in the future that may support the refusal of coverage. The Ezefl ow ruling will end that practice by telling insurers to lay out all grounds for denying a claim at the outset of the action. "This recent decision, rather than responding to the previ- ous invitation of the Court of Appeal to re-examine the tradi- tional rule which prevents insurers from invoking additional reasons for denial of coverage, instead provides an incentive for insurers to be extra careful in applying the insurance policy, both in situations where the insurer denies coverage from the outset and in those where the insurer assumes the defence of the insured subject to certain reservations," wrote René in a review of the case. "Meanwhile, insureds would be well advised to require their insurer to state its position precisely as soon as it is apprised of a situation that could trigger a claim, thereby forcing the insurer, so to speak, 'to make its bed and lie in it.'" As such, the ruling goes against others that have given insur- ers leeway to introduce new grounds at later points in an action. "The courts have hesitated throughout the years as to how [strict] they would forbid an insurer raising another ground. But the last position in Quebec was, so long as there was no formal waiver of the insurer's right to invoke another ground of denial, another ground could always be raised at another point if the insurer had good reason to come up with this ground," says René. "Now with this case it seems that the courts may be stricter This is a desktop guide to the insurance and risk management provisions of a commercial lease. This publication will identify and discuss the types of insurance typically required of landlords and tenants as well as subrogation, release and indemnity provisions; and damage and destruction provisions. It explains industry phrases and terminology and provides invaluable tips and precedent clauses. ORDER your copy today Hardbound • Approx. 170 pp. • February 2009 • Approx. $90 P/C 0299010000 • ISBN 978-0-88804-483-9 canadalawbook.ca ME R G I N G T R A D I T I O N WI T H T E C H N O L O G Y For a 30-day, no-risk evaluation call: 1.800.263.2037 Canada Law Book is a Division of The Cartwright Group Ltd Prices subject to change without notice, to applicable taxes and shipping & handling. 38 FEBRU AR Y 2009 www. C ANADIAN Law ye rmag.com MICHAELOFF_Insurance and Risk Managemnt (CL 1-4sq).indd 1 1/22/09 2:20:55 PM CL0209 as to the insurer's duty to state its complete and formal posi- tion at the outset of whatever claim is reported . . . if they say this is the reason they cannot later add another." This means insurers will need to be much more careful when denying claims and it could lead to the insured getting a laundry list of reasons why they have been denied. If an insurer does not cite a specifi c reason for denial, that reason would be lost to them if the action is taken to court, says René. A dissenting opinion in Ezefl ow from Justice Marc Beaure- gard said excluding one part of a policy or another simply be- cause it wasn't cited at the beginning of an action would, in effect, transform the general commercial liability policy into a warranty. He said Lombard had not acted in bad faith and clearly stated the damages were not covered under the policy. Simply not stating one clause or another shouldn't matter. "According to Beauregard, it was clear that in taking certain clauses in the insurance policy, the insurer was not waiving the right to argue that the claim was also excluded by other clauses