The Proof of Loss contained a clause which dealt with the transfer of rights of recovery to the insurer. The Court held that even if the clause amounted to an assignment in law, there was no effective assignment of rights as there was no consideration.

Langdon v. Hudson Bay Transport Co., [2005] S.J. No. 599, Saskatchewan Court of Queen’s Bench

The plaintiffs commenced an action against the defendants arising out of an accident and claimed damage to property. The defendants admitted liability but quantum of damages was an issue. The plaintiffs were insured by Mennonite Mutual Fire Insurance Company of Saskatchewan (“Mennonite Mutual”). The defendants were insured by Manitoba Public Insurance (“MPI”).

The plaintiffs executed a Proof of Loss in favour of Mennonite Mutual which contained the following: “All rights to recovery from any other person are hereby transferred to the Insurer which is authorised to bring action in the Insured’s name to enforce such rights.” Mennonite Mutual and MPI subsequently negotiated a settlement and a Release was executed by Mennonite Mutual in favour of MPI.

The defendants brought a motion to have the claim dismissed. The defendants’ position was that Mennonite Mutual had no claim against MPI because the plaintiffs had assigned their rights to Mennonite Mutual, the action had been settled, and nothing remained to be litigated. Under the terms of the policy, there were certain items for which the plaintiffs were not compensated. The plaintiffs were claiming a further sum from the defendants.

The Court held that if the clause was interpreted as merely a reminder of the insurer’s right of subrogation, the clause added nothing to the insurer’s rights. However, even if the clause amounted to an assignment in law, the assignment was not effective as there was no consideration. The plaintiffs had not contracted out of their right to full compensation for their losses. The defendants’ motion was dismissed.

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