Mohammad v. The Manufacturers Life Insurance Company

[Indexed as: Mohammad v. Manufacturers Life Insurance Co.]

Ontario Reports

Court of Appeal for Ontario

Simmons, Lauwers and Nordheimer JJ.A.

January 29, 2020

149 O.R. (3d) 428 | 2020 ONCA 57

Case Summary

Insurance — Application for insurance — Misrepresentation and non-disclosure — Insured applying for life insurance without disclosing that he had a criminal past, was a member of a terrorist entity engaging in terrorist activities, and had entered Canada illegally — Motion judge erring in finding that since the application form did not ask about such issues, they were not material — Applicant knew that past activities put him at risk of physical harm — Insurer could not be faulted for not inquiring as there was no suggestion that it ought to have known about applicant's past — Beneficiary's claim for death benefit dismissed.

Insurance — Misrepresentation — Life insurance — Insured applying for life insurance without disclosing that he had a criminal past, was a member of a terrorist entity engaging in terrorist activities, and had entered Canada illegally — Motion judge erring in finding that since the application form did not ask about such issues, they were not material — Applicant knew that past activities put him at risk of physical harm — Insurer could not be faulted for not inquiring as there was no suggestion that it ought to have known about applicant's past — Beneficiary's claim for death benefit dismissed.

The plaintiff's husband applied for life insurance. On the application he provided a social insurance number and stated that he had just moved to Canada. He did not disclose that he had been convicted in Greece many years earlier of various offences, [page429] including manslaughter. He was also a member of a terrorist entity and had engaged in terrorist activities. He entered Canada fraudulently by using an alias. He was deported from Canada in 2013. After he died in 2015 the plaintiff claimed a death benefit under the policy, resulting in litigation. The defendant insurer moved for summary judgment to dismiss the action for the applicant's failure to reveal material facts. The motion judge dismissed the motion, noting that the application form did not ask anything about the applicant's immigration status, citizenship, or criminal history, and that as such those issues were not material. The defendant appealed.

Held, the appeal should be allowed.

Summary judgment was granted to dismiss the action. The applicant's past activities were material to the risk that he posed for the purpose of having his life insured. He was well aware that those activities, coupled with his illegal entry into Canada, put him at serious risk of physical harm. He had an obligation to reveal to the defendant any information material to his application. There was no suggestion that the defendant ought to have known of the information relating to the applicant's past, and therefore could not be faulted for not having inquired into it. The intentional withholding of the information was sufficient to establish fraud.

Sagl v. Cosburn, Griffiths & Brandham Insurance Brokers Ltd., [2009] O.J. No. 1879, 2009 ONCA 388, 249 O.A.C. 234, 72 C.C.L.I. (4th) 193, [2009] I.L.R. I-4839 [Leave to appeal to S.C.C. refused [2009] S.C.C.A. No. 303], distd

Other cases referred to

Carter v. Boehm (1766), 3 Burr. 1905 (Eng. K.B.); Vrbancic v. London Life Insurance Co. (1995), 1995 CanLII 1055 (ON CA), 25 O.R. (3d) 710, [1995] O.J. No. 2745 (C.A.)

Statutes referred to

Insurance Act, R.S.O. 1990, c. I.8, ss. 183(1), 184(2) [as am.]

APPEAL from the dismissal of the motion for summary judgment of S. O'Brien J., [2019] O.J. No. 6465, 2019 ONSC 3386 (S.C.J.).

Gordon Jermane, for appellant.

Michael K. Walter, for respondent.

A. Overview

[1] The defendant appeals from the summary judgment granted by the motion judge that determined that the plaintiff was entitled to payment of the death benefit for her husband, pursuant to a life insurance policy. For the following reasons, we allow the appeal, set aside the judgment below, and substitute judgment dismissing the action.

B. Background

[2] On April 10, 1987, the respondent's husband (the "deceased") completed an application for life insurance with a predecessor to the appellant. He required the life insurance in order to obtain [page430] a mortgage. On the application, the deceased provided a social insurance number. He also stated that he had "[j]ust moved to Canada from Spain".

[3] Unbeknownst to the appellant, the deceased had been convicted in Greece many years earlier of various offences, including manslaughter. At the time, the deceased was a member of a terrorist entity known as the Popular Front for the Liberation of Palestine ("PFLP"). Along with a fellow terrorist, he stormed an El Al civilian aircraft in 1968, throwing grenades and firing live rounds at the occupants. At least one person was killed.

[4] Not long after he was convicted, the deceased was released as the result of a hostage negotiation that arose when other members of the PFLP stormed another plane and demanded his release. The deceased then moved to Lebanon. Eventually, in 1987, the deceased came to Canada. He did so fraudulently by using an alias. That is also how he obtained his social insurance number. Eventually, the deceased's past activities were discovered by Canadian authorities. In 2013, the deceased was deported to Lebanon from Canada. He died from lung cancer in 2015.

[5] None of the information respecting his involvement with the PFLP was provided by the deceased when he applied for the life insurance policy (the "policy"). The policy was issued insuring the life of the deceased. The respondent was the spouse of the deceased and is the sole beneficiary of the policy. The policy insured the deceased's life for $75,000.

[6] The application for the policy did not contain any questions concerning the deceased's status as a citizen or permanent resident of Canada, nor did it contain any questions asking whether he had been convicted of any crimes. The application did, however, contain the following warning:

The Owner and insured agree that the meaning and importance of the questions in the Application have been explained and each question is fully understood. They declare that the statements recorded in the Application are true and complete to the best of their knowledge and belief, and form the basis of any policy which is issued. They understand that the Company requires complete and accurate answers in order to provide insurance and that THE COMPANY MAY CANCEL THE POLICY OR ANY RIDER OR DENY A CLAIM IF ANY ANSWERS ARE INCORRECT.

(Emphasis in original)

C. Decision Below

[7] The motion judge granted summary judgment in favour of the respondent awarding her payment under the policy. She found that, in providing his social insurance number, the deceased did not misrepresent his immigration status. The motion judge noted that [page431] the application form did not contain any questions that asked anything about the deceased's immigration status or citizenship. She also concluded that the deceased had not failed to disclose all material facts in his application. In so concluding, the motion judge found that the appellant's failure to ask any questions relating to immigration status or criminal history "signaled that these issues were not material".

D. Analysis

[8] In our view, the motion judge made a palpable and over-riding error in finding that the deceased's failure to reveal his past activities did not constitute a failure to reveal material facts that vitiated the policy. We begin with s. 183(1) of the Insurance Act, R.S.O. 1990, c. I.8, which reads:

183(1) An applicant for insurance and a person whose life is to be insured shall each disclose to the insurer in the application, on a medical examination, if any, and in any written statements or answers furnished as evidence of insurability, every fact within the person's knowledge that is material to the insurance and is not so disclosed by the other.

[9] The past actions of the deceased were material to the risk that he posed for the purpose of having his life insured. On this point, the motion judge's reliance on the decision in Sagl v. Cosburn, Griffiths & Brandham Insurance Brokers Ltd., [2009] O.J. No. 1879, 2009 ONCA 388, 249 O.A.C. 234, leave to appeal to S.C.C. refused, [2009] S.C.C.A. No. 303, is misplaced. The materiality of the unrevealed information in Sagl, a fire insurance case, is of an entirely different kind than is the case here. There the insurer made no inquiries about information related to the ownership of the property, which it knew or should have known existed, such that the trial judge was entitled to infer that this inform-ation was not material. Here there is no suggestion that the appellant ought to have known that the information related to the deceased's past existed, and therefore cannot be faulted for not having inquired into it.

[10] The motion judge also erred in relying on the absence of questions in the application form as disposing of the deceased's obligation to reveal material facts. It is a principle of long standing that an applicant for insurance has an obligation to reveal to the insurer any information that is material to the application: Carter v. Boehm (1766), 3 Burr. 1905 (Eng. K.B.). This principle was stated by Morden A.C.J.O. in Vrbancic v. London Life Insurance Co. (1995), 1995 CanLII 1055 (ON CA), 25 O.R. (3d) 710, [1995] O.J. No. 2745 (C.A.), at p. 727 O.R.:

The trial judge also appears to have held that simply giving full answers to the questions of the insurer's agent amounted to full disclosure. This is not necessarily so. "As a general rule the fact that particular questions relating to [page432] the risk are put to the proposer does not per se relieve him of his independent obligation to disclose all material facts".

(Citations omitted)

[11] The deceased knew that his past activities were relevant to his application for life insurance. Indeed, shortly after he applied for the life insurance, the deceased filed an affidavit in his immigration proceedings in which he said that his life would be in danger if he were to be deported to Israel. He was well aware that his past activities, coupled with his illegal entry into Canada, put him at serious risk of physical harm. It is clear to us that the deceased intentionally hid his past activities from the appellant, just as he hid them from the Government of Canada when he sought entry to this country.

[12] Having concluded that there was a failure to reveal a material fact by the deceased, the issue is then whether that withholding was fraudulent. Section 184(2) of the Insurance Act provides that:

(2) [W]here a contract, or an addition, increase or change referred to in subsection 183 (3) has been in effect for two years during the lifetime of the person whose life is insured, a failure to disclose or a misrepresentation of a fact required to be disclosed by section 183 does not, in the absence of fraud, render the contract voidable.

[13] Our conclusion that the deceased intentionally withheld this information is sufficient to establish fraud.

E. Conclusion

[14] The appeal is allowed, the judgment below is set aside, and in its place, judgment is granted allowing the appellant's motion for summary judgment and dismissing the action. The appellant is entitled to its costs of the appeal fixed in the agreed amount of $5,000, inclusive of disbursements and HST. As also agreed, there will not be any order as to costs of the action, including the motion below.

Appeal allowed.

End of Document