Insurance law – Fire insurance – Termination of policy – Statutory provisions – Interpretation
1037466 Alberta Ltd. (c.o.b. Shadified Salon and Spa) v. Intact Insurance Co.,  A.J. No. 245, 2017 ABQB 172, Alberta Court of Queen’s Bench, March 13, 2017, B.R. Burrows J.
The insured’s salon and spa was destroyed by fire on September 26, 2012. The insured made a claim on its fire insurance policy and the insurer took the position the policy was terminated on December 20, 2011.
The principal of the insured took over operation of the business in the fall of 2011 from his father who became seriously ill and moved back to Lebanon. The principal of the insured and his brother were very busy in the fall of 2011 running the salon and spa, and taking turns travelling to Lebanon to be with their father. As a result, the insured neglected to make the insurance premium payments required by the policy for the period October 1, 2011 to October 1, 2012.
On November 30, 2011, the insurer sent a notice of termination to the insured by registered mail addressed to the insured’s business address. The notice of termination stated that the effective date of cancellation or termination of the policy was December 20, 2011.
The insured denied receiving the notice of termination and denied that the notice arrived at the insured’s business premises.
In 2011, the relevant statutory condition in the Insurance Act, RSA 2000, c. I‑3, s. 549 provided:
Termination of Insurance
5(1) This contract may be terminated
(a) by the insurer giving to the insured 15 days’ notice of termination by registered mail or 5 days’ written notice of termination personally delivered…
(5) The 15 days mentioned in clause (a) of subcondition (1) of this condition commences to run on the day following the receipt of the registered letter at the post office to which it is addressed.
15 …Written notice may be given to the insured by letter personally delivered to the Insured or by registered mail addressed to the Insured at the Insured’s latest post office address as notified to the Insurer…
The insured admitted that on December 2, 2011, the notice of termination arrived in the City of Edmonton at the post office to which it was addressed.
The insured took the position the words “post office to which it was addressed” in statutory condition 5(5) were ambiguous and must be read as meaning “postal address of the insured”. The insured argued the actual meaning of the words “post office to which it was addressed” was revealed when the legislature amended the statutory condition in 2012 to read “the 15-day period referred to in subparagraph 1(a) of this condition starts to run on the day the registered letter or notification of it is delivered to the insured’s postal address”. In summary, the insured submitted that the words “post office to which it was addressed” should be understood to have the same meaning as the words “insured’s postal address” in the 2012 statutory condition.
The court rejected the insured’s submissions. The words “post office to which it is addressed” in statutory condition 5(5) are not ambiguous and the meaning was authoritatively stated in the decision of the Supreme Court of Canada in Lumbermens Mutual Casualty Co. v. Stone  S.C.R. 627. The amendment to the statutory condition in 2012 was not an attempt to clarify the meaning of “post office to which it is addressed”, but rather was a change of legislative policy. After the amendment, the insured no longer bears the risk that the notice will not be delivered by the postal service after it is received in the destination post office; however, this was not the legislative policy which applied at the time the insurer sent the termination notice.
This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at firstname.lastname@example.org or email@example.com or review their biographies at http://www.harpergrey.com.
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