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Insurer without knowledge of policy breach cannot be estopped from denying coverage.
An insured motorcyclist died in an accident while in breach of his insurance policy due to alcohol consumption, but his insurer provided a defence for three years without knowledge of the breach.
The insurer ceased defending and denied coverage upon discovering the breach; a third-party claimant sought a declaration that the insurer was estopped from denying full coverage.
The majority held that promissory estoppel requires the promisor to have actual knowledge of the facts demonstrating the breach, as a promisor cannot intend to alter a legal relationship by promising to refrain from acting on information it does not have.
The court also rejected constructive knowledge arising from a breach of a duty to investigate as a basis for estoppel, holding that the insurer's duty to investigate fairly runs to the insured, not to third-party claimants.
The concurrence agreed the appeal should be dismissed but disagreed that actual knowledge is an absolute requirement, preferring an objective analysis of the promisor's intent.
