The insured’s failure to disclose, on an application for property insurance, that he intended to use the house as a rooming house constituted a misrepresentation of a material fact. The Court held that the policy of insurance was voidable by the insurer.

Lee v. Canadian Northern Shield Insurance Co., [2005] B.C.J. No. 1715, British Columbia Supreme Court

The insured purchased a Homeplan insurance policy through the defendant Success Realty Insurance Ltd. (“Success”) which was underwritten by the defendant Canadian Northern Shield Insurance Company (“CNS”).

The insured’s house was destroyed by fire. Shortly after the fire, CNS advised the insured that it was cancelling the policy on the basis that it had not been advised that the property was being operated as a rooming house. The insured asserted that the defendants knew, through an employee of Success, that the house would be used as a rooming house. The employee of Success testified that had she been told that the property was to be used as a rooming house, she would not have prepared a home evaluation, and would have told the insured to get an insurance policy through the commercial lines department.

The Court did not accept the insured’s description of the events which occurred at the time the insurance was purchased.

The Court found that the insured did not disclose to the defendant that he intended to rent out rooms in the house to unrelated tenants. It was irrelevant whether the failure to disclose was deliberate or inadvertent. The insured had an obligation to advise the defendants of all material facts. It was material that the insured intended to use the house as a rooming house. The Court held that the policy of insurance was void due to material misrepresentation.

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