No contract existed between plaintiff and defendant, who was merely the broker
In a recent homeowners’ insurance case, a Newfoundland and Labrador court has found there was no genuine issue for trial based on the pleadings, but there might be a triable issue on a claim which had not been pleaded, and the plaintiff could therefore apply to amend his statement of claim.
In Gushue v. South Coast Insurance Agency Limited, 2021 NLSC 124, the plaintiff alleged in his statement of claim that he had a homeowners’ insurance policy with the defendant and that the defendant had breached the insurance policy by failing to pay certain losses that the plaintiff suffered when a fire destroyed his house.
The defendant filed an application seeking the dismissal of the plaintiff’s claim under Rule 17A of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D, or alternatively under Rule 14.24(1)(b).
The plaintiff’s affidavit, submitted in reply to the defendant’s application, stated that he had asked the defendant to make or to effect a change to his insurance policy to reflect the fact he had begun living in the insured house as opposed to renting it, but this change had not been made before the loss occurred. The plaintiff claimed that the defendant breached a duty owed to the plaintiff by failing to effect the requested change.
The Supreme Court of Newfoundland and Labrador found that the plaintiff’s statement of claim made a claim in contract, while his affidavit made a claim in tort, specifically negligence, which were two significantly different claims.
Regarding the Rule 17A claim, the court determined that there was no genuine issue for trial on the current pleadings because the allegation in the statement of claim was that the plaintiff and the defendant had an insurance contract that the defendant breached.
However, the evidence established that there was no contract of insurance between the plaintiff and the defendant, and that the defendant was an insurance broker. The plaintiff’s counsel admitted during the hearing that the defendant was the broker through which the plaintiff obtained the insurance policy, and that the insurer was Lloyd’s of London.
The court then held that, while there was no genuine issue for trial, there may be a triable issue regarding whether the defendant breached its duty, based on the plaintiff’s affidavit which stated facts that could potentially show a claim in negligence.
“I do not feel it would be just to penalize the Plaintiff with the dismissal of his claim as a result of his counsel’s cavalier approach to pleadings when there are facts before the Court which may amount to a good cause of action against the Defendant,” wrote Justice George Murphy, adding that he emphasized the word “may” to clarify that he was not saying the plaintiff had a good cause of action.
The appropriate course of action was to give the plaintiff an opportunity to apply to amend his statement of claim, the court concluded. The court will grant the relief sought by the defendant under Rule 17A if the plaintiff fails to apply within 30 days for leave to amend, or if the plaintiff applies but does not succeed. The court then said that it was deferring its decision on the Rule 14.24(1)(b) claim.
