The issue of whether a nominal owner of property, with no beneficial interest in the property, has an insurable interest, in the context of title insurance, is a novel one which has not been decided by a Canadian court. The insurer’s application for summary judgment was dismissed.

Nadvornianski v. Stewart Title Guaranty Co., [2006] O. J. No. 2611, Ontario Superior Court of Justice

The insured, the sole registered owner of a property, was a named insured under a policy of title insurance. The insured had entered into a nominee agreement under which the insured agreed that she would hold registered title to the property solely as nominal title holder for the beneficial owners. The beneficial owners were not named insureds under the policy. Under the agreement, the insured had no right, ownership or interest in the property itself.

During renovations to the property, the exact locations of a water line and sewer line, which were the subject of an easement on the property, were discovered, resulting in an alteration of the original renovation design. The insured claimed that this diminished the value and marketability of the property and claimed coverage under the title insurance policy. The insurer brought an application for summary judgment on the basis that the insured had no insurable interest in the property.

The Court noted that the issue of whether a nominal owner of property, with no beneficial interest in the property, has an insurable interest, in the context of title insurance, is a novel one which has not been decided by a Canadian court. Although the insured put no money into the property and had no expectation of financial gain from the resale of the property, the Court held that there was a genuine issue of whether the insured was exposed to a risk of pecuniary loss. There was nothing in the evidence before the Court to show that the credit union had released the insured from her covenant under the mortgage. The insurer’s motion for summary judgment was dismissed.

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