The statutory conditions under the fire insurance part of Manitoba’s Insurance Act must be read into a homeowner’s insurance policy. The statutory conditions are valid, despite the Supreme Court of Canada ruling in KP Pacific Holdings Ltd. v. Guardian Insurance Co. of Canada, [2003] S.C.J. No. 24 (S.C.C.).

Casey v. Federated Insurance, [2004] M.J. No. 167 Manitoba Court of Queen’s Bench

Mr. Casey, a former Western Canada claims manager, was insured pursuant to a homeowner’s insurance policy by Federated Insurance. While he was insured by the policy, a serious hailstorm occurred, following which he inspected his roof and observed no damage. He made a claim under his policy of insurance with respect to some windows which were smashed, and that claim was paid promptly by Federated Insurance. Some time later, he observed that many of his neighbours were having their roofs replaced, so he contacted Federated Insurance who dispatched an adjuster to inspect the roof. The adjuster did not detect any damage, and no claim was made. About six years after the hailstorm, it was determined that Mr. Casey’s roof had been damaged during the storm and needed to be replaced. Section 14 in Mr. Casey’s policy of insurance includes a limitation clause under the heading “Statutory Condition”. The clause bars any claim made one year after the loss or damage occurred.

Mr. Casey commenced an application against Federated Insurance, seeking leave of the court pursuant to section 14(1) of the Limitation of Actions Act to commence an action against Federated Insurance for proceeds pursuant to his policy of insurance. Mr. Casey argued that the Statutory Condition in section 14 is unenforceable by virtue of section 142, of Part IV, the fire insurance part, of the Insurance Act, which provides:

Effect of Statutory Conditions

142    The conditions set forth in this section shall be deemed to be part of every contract in force in Manitoba and shall be printed on every policy with the heading “Statutory Conditions” and no variation or omission of or addition to any statutory condition shall be binding on the insured.

Subsection 14 of the Insurance Act establishes a two-year limitation period. However, subsection 14 of the Insurance Act is subject to the Limitations of Actions Act, which incorporates a discoverability provision into the limitation period. The court determined that on the facts, it was clear that Mr. Casey had satisfied the discoverability provisions of the Limitations of Actions Act, therefore the only question to decide was whether the statutory condition contained in the fire insurance part of the Insurance Act could be read into Mr. Casey’s homeowner’s insurance policy.

Federated Insurance argued that the statutory condition contained in section 142 of the Insurance Act did not apply because the policy in question was an all-risk policy of insurance. Section 142 is contained in the fire insurance part of the Insurance Act, and its application should be limited to “loss of or damage to property arising from the peril fire”. Federated Insurance relied upon the decision of the Supreme Court of Canada in KP Pacific Holdings Ltd. v. Guardian Insurance Co. of Canada, [2003] S.C.J. No. 24 (S.C.C.) which concluded that only the general insurance part of the Insurance Act R.S.B.C. applied to the homeowner’s policy, and that the fire insurance part of the Insurance Act R.S.B.C. did not apply to homeowner’s insurance policies.

The court reviewed KP Pacific Holdings Ltd., and concluded that although some of the provisions of the BC and Manitoba legislation were comparable, there were material differences between the two legislative schemes, such that the court was not bound by KP Pacific Holdings. The court preferred the approach found in Chiasson v. Century Insurance Co. of Canada (1978), 86 D.L.R. (3d) 342, a decision of the New Brunswick Supreme Court Appeal Division. In Chiasson, the New Brunswick Court of Appeal held that the statutory conditions contained in the fire insurance part of the Insurance Act R.S.N.B., applied to a homeowner’s policy.

The court applied Chiasson, and determined that Federated Insurance could not contract out the Manitoba legislation, and that Part IV of the Insurance Act incorporated the discoverability provisions contained in the Limitations of Actions Act into the policy of insurance. Mr. Casey was granted leave to commence an action against Federated Insurance with respect to the damages caused to his roof by the hailstorm.

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