CITATION: Broadgrain Commodities Inc. v. Continental Casualty Company, 2017 ONSC 4721
COURT FILE NO.: CV-15-530476-00
DATE: 20170803
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
BROADGRAIN COMMODITIES INC.
Plaintiff
- and -
CONTINENTAL CASUALTY COMPANY
carrying on business as CNA CANADA
Defendant
Rui M. Fernandes, for the Plaintiff
Marc D. Isaacs and Hilary Weise, for the Defendant,
HEARD: July 11, 2017
MONAHAN J.
REASONS FOR JUDGMENT
[1] Broadgrain Commodities Inc. (“Broadgrain”) is a global marketer, handler, and originator of grains, oilseeds, and related products for both feed and food markets. In September 2014, it entered into a contract with Beidahuang Grain Group Co. Ltd. (the “Buyer”) for the sale and shipment of 26 containers of sesame seeds, to be delivered from Tin Can Island, Nigeria to Xingang, China. The goods were insured by Continental Casualty Company carrying on business as CNA Canada (“CNA”) under a policy of marine insurance (the “Insurance Policy”) in favour of Broadgrain.[^1]
[2] The goods were damaged in transit. Broadgrain sought compensation under the Insurance Policy but CNA denied coverage on the basis that the cause of the damage was expressly excluded under the terms of the Insurance Policy. Broadgrain commenced the present action on June 16, 2015 to seek compensation for the losses that resulted from the damage to the goods.
[3] CNA moves for summary judgment to dismiss the action on two grounds: (i) Broadgrain did not have an “insurable interest” in the goods at the time of the loss; and (ii) Broadgrain did not sustain any loss since, despite the damage to the goods, it was paid in full by the Buyer for the shipment in question.
[4] For the reasons that follow, I would deny the motion on the first ground, but grant summary judgment in favour of CNA on the second.
Facts
[5] On August 8, 2014, the Insurance Policy was issued by CNA in favour of Broadgrain. Subject to a right of early termination, the Policy was to be in effect from August 8, 2014 until June 30, 2015 (the “Insurance Period”). The following clauses in the Insurance Policy are of particular relevance for this proceeding:
- Insured
Broadgrain Commodities Inc., Qadtrade Inc. and its Subsidiary, Associated, Affiliated and Interrelated Companies and Joint Ventures in which it has now or may have a direct or indirect interest and other entities for whom they have instructions to insure or deem themselves responsible to insure.
- Loss Payable
Loss, if any, payable to the Insured or Order
- Subject Matter Insured
All goods and interests, including property of others which the Insured has a responsibility to insure, consisting primarily of, but not limited to grains, cereal, pulses and beans, sesame seeds, soybeans, DDGS, corn, wheat, special crops, caraway and coriander, By-Products and vegetable oil.
[6] Note that the definition of “Insured” included, in addition to Broadgrain and related entities, “other entities for whom they have instructions to insure or deem themselves responsible to insure.” Moreover, the “subject matter insured” included not just Broadgrain property but “property of others which the Insured has a responsibility to insure…” As such, this was an “open policy” intended to insure not merely Broadgrain and its property but also the property of others in respect of which Broadgrain had an obligation to insure under various contracts entered into during the Insurance Period.
[7] The September 4, 2014 contract between Broadgrain and the Buyer, in conjunction with the invoices issued pursuant to the contract, provided that the shipment of sesame seeds was on delivery terms “CIF Xingang.”[^2] Under a CIF (or ‘cost, insurance freight’) contract, the seller delivers the goods on board the vessel, at which point the risk of loss or damage to the goods passes on to the buyer. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port (in this case Xingang), as well as purchase insurance on behalf of the buyer to insure against the buyer’s risk of loss of or damage to the goods during transit.[^3]
[8] In accordance with these delivery terms, the contract specified that: (i) risk of loss or damage to the commodity “shall pass from the seller to the buyer at the time the container is stuffed and sealed”; (ii) the seller is to obtain insurance for the goods; (iii) title to the commodity shall pass from seller to buyer after receipt of payment by the seller; and (iv) the buyer shall grant the seller a security interest in the cargo “until all buyers’ accounts are settled.” Payment terms were 10% of the purchase price to be paid within five working days of signing the contract, and the balance was to be paid upon presentation of required documentation by the Seller, including proof of insurance, to the Buyer’s bank. These provisions of the sale contract were sufficient to bring the Buyer and its interest in the sesame seeds within the definition of “Insured” and “subject matter insured,” respectively, under the Insurance Policy.
[9] The cargo was loaded on board the MV New Yorker at Tin Can Island in Nigeria on October 15, 2014, at which point the risk of loss passed from Broadgrain to the Buyer. Broadgrain declared the shipment to CNA and the certificates of insurance under the Insurance Policy were issued by CNA, which certified that “Broadgrain Commodities Inc. is insured subject to the conditions of Open Policy No. 2013202 against which the interest insured hereunder has been declared.”[^4] Further, the certificates identify Broadgrain as “Additional Loss Payee.”
[10] The Buyer had paid 10% of the contract value shortly after execution of the contract in September 2014. Upon presentation of all required documentation by Broadgrain, including the certificates of insurance,[^5] the final payments were made by the Buyer on December 11 and 12, 2014, while the goods were still in transit to Xingang. The total paid by the Buyer to Broadgrain was $883,852.66 USD, the full contract amount.
[11] The goods arrived in Xingang on December 17, 2014. Upon inspection it was determined that the goods had sustained damage during transit. The record before me on this motion does not permit me to resolve the cause of the damage or the precise point during transit when the damage occurred. The cargo was subsequently determined to be unfit for human consumption and was sold for salvage, with the proceeds of the salvage sale being retained by the Buyer.
[12] On December 22, 2014, Broadgrain informed CNA of a potential insurance claim for water damage under the Insurance Policy. CNA reviewed the claim and in March 2015 agreed to cover the losses for goods in 2 of the 26 containers, but denied the claim for the remainder on the basis that the cause of damage was “condensation and/or sweat,” which was not a “transit related fortuity” and thus not an insured risk under the Insurance Policy.[^6]
[13] On June 16, 2015, Broadgrain issued a Statement of Claim in which it sought damages of $550,081.38 USD, representing the difference between the contract value and the amounts that had previously been recovered, either through the salvage sale of the cargo by the Buyer or the partial insurance payment by CNA in March 2015.
[14] Although CNA had initially agreed to reimburse Broadgrain for losses sustained to two of the containers, on February 7, 2017 it brought this motion for summary judgment on the basis that Broadgrain did not have an insurable interest in the goods at the time of damage or, in the alternative, that Broadgrain did not suffer any loss as it had been paid the full contract amount by the Buyer.
[15] For its part, Broadgrain conceded that it had been paid by the Buyer for the shipment, but claimed that the Buyer had subsequently deducted the amount of the loss it had suffered (namely, the difference between the contract value and the amounts realized by the Buyer on the salvage sale) from payments due to Broadgrain in respect of future shipments.[^7] On this basis, Broadgrain maintained that it had, in fact, suffered a loss. Alternatively, Broadgrain argued that it was entitled to claim under the Insurance Policy even in the absence of a loss. Broadgrain further alleged that CNA was estopped from denying the claim on either of the grounds advanced on this motion by virtue of the fact that it had previously reimbursed Broadgrain for damage to two containers of cargo, thereby acknowledging Broadgrain’s right to claim under the Insurance Policy.
[16] The Insurance Policy provided that it was to be subject to “Canadian Law and Usage.”[^8] Both parties filed expert reports (the “Expert Reports”) discussing the common practice in Canada with respect to the manner in which marine insurance claims are handled under CIF contracts. CNA’s expert was of the view that once the goods had been loaded for transit and the risk passed to the buyer, the marine insurance certificate would be assigned to the buyer who then could typically make any claim under the policy.[^9] Conversely, Broadgrain’s expert was of the view that it was normal and common practice for the named insured (or seller) to file and handle the claim transaction and to then receive payment under the insurance policy on behalf of the buyer.[^10]
[17] CNA subsequently argued that both Expert Reports should be excluded on the basis that the Experts had opined on the proper interpretation of the contract between the parties, which amounted to an improper attempt to speak to the “ultimate issue” before the court. As Broadgrain pointed out in its response, recent jurisprudence has expressed reservations over the exclusion of expert evidence on the basis of the so-called “ultimate issue” doctrine.[^11] In any event, it is my view that the Expert Reports do not speak to the ultimate issue before the court, as they merely comment on what the authors regard as the existing practice with respect to the handling of marine insurance claims. I would not exclude the Expert Reports on the basis of the “ultimate issue” doctrine. Nevertheless, although they provide interesting background to the dispute between the parties, I ultimately find the Expert Reports to be of limited assistance in resolving the legal questions raised on this motion.
Motion for Summary Judgment
[18] In Hryniak v. Mauldin,[^12] the Supreme Court of Canada interpreted amendments to Rule 20 of the Rules of Civil Procedure,[^13] which provides that a court may grant summary judgment if it is satisfied that “there is no genuine issue requiring a trial with respect to a claim or defence.”[^14] Karakatsanis J. held that the Rule 20 amendments were intended to effect a culture shift, one in which the justice system moves away from the assumption that a conventional trial is the expected or ideal method to resolve civil claims.
[19] In Hryniak, the Supreme Court made it clear that the summary judgment procedure should be interpreted broadly, favouring proportionality and meaningful access to the affordable, timely, and just adjudication of claims. In practice, “[W]hen the use of the new [summary judgment] powers would enable a judge to fairly and justly adjudicate a claim, it will generally not be against the interest of justice to do so.”[^15] At the same time, the Supreme Court emphasized that the process must be such that the motions judge is able to have confidence that she can find the necessary facts and resolve the dispute fairly. The standard for fairness is “whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.”[^16]
[20] Both parties are expected to “put their best foot forward” and counsel are therefore expected to adduce their best and most complete evidence as if the proceeding were a trial. As noted in Sweda Farms v. Egg Farmers of Ontario,[^17] the court will assume that the parties have put all the evidence that they can muster for the motion before the court, and assume that the parties have no further evidence for trial.
[21] In this instance, while there are certain areas of disagreement with respect to the facts, the record before me is largely undisputed. Moreover, as I will explain below, it is not necessary to resolve the few factual differences between the parties in order to satisfactorily determine the legal issues before me. The motion largely turns on the proper interpretation of key provisions in the contract, considered in the context of the Canadian Marine Insurance Act (the “CMIA”),[^18] and certain undisputed facts. In my view, therefore, this is an appropriate matter for summary judgment in light of Hryniak.
Insurable Interest
[22] CNA argues that, under a CIF contract such as was utilized in this case, risk of loss or damage to the goods is transferred to the Buyer once the goods are delivered to the carrier. If the goods become lost or damaged in transit, the Buyer will be able to make a claim under the policy because the insurance policy has been assigned to it and it has an insurable interest at the time the loss or damage occured. Conversely, CNA claims, Broadgrain cannot claim under the policy because it has parted with an interest in the goods, and it has assigned the insurance policy to the Buyer.
[23] The legal authorities cited by counsel for CNA in support of its position on insurable interest is of limited assistance. Counsel relies on two 19^th^ century decisions of the Nova Scotia Court of Appeal in which persons who had sold and shipped goods were deemed to no longer have an insurable interest in the goods and thus could not claim on a policy of insurance.[^19] Counsel also made reference to two Federal Court decisions where there are statements made in obiter to the effect that, where goods are shipped on CIF terms and the goods are loaded on board the ship, the seller no longer has an insurable interest and cannot claim under a policy of insurance.[^20] Counsel for CNA also relies on a passage from a leading text in the area, Strathy and Moore’s The Law and Practice of Marine Insurance in Canada, where the learned authors state that a seller on a CIF contract who has parted with “an interest in the goods” cannot sue under an insurance policy.[^21]
[24] In fact, the CMIA defines insurable interest in extremely broad terms. The relevant provisions are as follows:
2(1) marine adventure means any situation where insurable property is exposed to maritime perils, and includes any situation where
(a) The earning or acquisition of any freight, commission, profit or other pecuniary benefit, or the security for any advance, loan or disbursement, is endangered by the exposure of insurable property to maritime perils, and
(b) Any liability to a third party may be incurred by the owner of, or other person interested in or responsible for, insured property, by reason of maritime perils;
7(1) In order to recover under a contract for a loss, the insured must have an insurable interest in the subject-matter insured at the time of the loss, but need not have such an interest when the contract is concluded.
8(1) Subject to this Act, a person who has an interest in a marine adventure has an insurable interest.
8(2) A person has an interest in a marine adventure if the person has a legal or equitable relation to the adventure, or to any insurable property at risk in the adventure, and may benefit from the safety or due arrival of insurable property, may be prejudiced by its loss, damage or detention or may incur liability in respect of it.
9(1) A defeasible interest and a contingent interest are insurable interests.
9(2) A buyer of goods who has insured them has an insurable interest even though the buyer might have elected to reject the goods or to treat them as at the seller’s risk for any reason, including a delay in delivering them.
10 A partial interest of any nature is an insurable interest.
[25] The CMIA further specifically identifies a number of interests that are insurable, including a mortgagee who has an insurable interest in the subject-matter insured who may insure on their own behalf, as well as “on behalf and for the benefit of any other interested person or both on the person’s own behalf and on behalf and for the benefit of any other interested person.”[^22] Further, the owner of insurable property “has an interest in its full value, even where a third person has agreed, or is liable, to indemnify the owner in case of loss.”[^23]
[26] Plainly, Parliament intended to depart from earlier, more restrictive definitions of insurable interest and to define an insurable interest in the broadest possible terms. Any person who “may benefit from the safety or due arrival of insurable property, may be prejudiced by its loss, damage or detention or may incur liability in respect of it” is defined as having an insurable interest. Moreover, it is specifically provided that a “contingent or defeasible interest” as well as a “partial interest of any nature” is insurable, and that even where the goods are at the risk of a third party, such as where an owner of property has a right to be indemnified by a third party, the owner still has an insurable interest in the “full value” of the property. Parliament attempted to make clear that, in effect, any real interest of any kind in a “marine adventure” should qualify as an insurable interest for the purposes of marine insurance contracts.
[27] This broad and expansive approach to the definition of insurable interest follows the leading modern authority on the issue, the Supreme Court of Canada’s decision in Kosmopoulos v. Constitution Ins. Co. of Canada.[^24] At issue in Kosmopoulos was whether the sole shareholder of a corporation had an insurable interest in the assets of the corporation. Previous Canadian and United Kingdom authority had held that the shareholder did not have an insurable interest in the corporation’s assets. The Supreme Court critically reviewed the reasoning in the earlier jurisprudence, noting that a primary motivation for defining an insurable interest narrowly was to prevent contracts of insurance from being used as wagering contracts. The Supreme Court noted that this was no longer a meaningful risk as “[t]here seem to be many more convenient devices available to the serious wagerer.”[^25] Then again, even assuming that public policy wished to limit wagering, seeking to do so by adopting a narrow definition of insurable interest in insurance contracts would do little to advance the goal.
[28] The Supreme Court concluded that there was little to commend the restrictive definition of insurable interest as “the reasons advanced in its favour are not persuasive and the policies alleged to underlie it do not appear to require it.” Moreover, where an insurer seeks to deny a claim on account of a lack of an insurable interest by the insured, this is “merely a technical objection…which has no real merit.”[^26] Accordingly, the Supreme Court overruled the previous authority on the issue and defined an insurable interest in broad terms as follows:[^27]
[I]f an insured can demonstrate, in Lawrence J.’s words, “some relation to or concern in the subject of the insurance, which relation or concern by the happening of the perils insured against may be so affected as to produce a damage, detriment, or prejudice to the person insuring”, that insured should be held to have a sufficient interest. To “have a moral certainty of advantage or benefit, but for those risks or dangers”, or “to be so circumstanced with respect to [the subject matter of the insurance] as to have benefit from its existence, prejudice from its destruction” is to have an insurable interest in it.
[29] This expansive interpretation of insurable interest is consistent with marine insurance’s role as a vital underpinning of maritime trade. The undertaking of a “marine adventure” is an enterprise with inherent risk. An efficient and properly functioning marine insurance market allows that risk to be shared, thereby enabling those engaged in maritime commerce to pursue their commercial activities without the threat of ruinous losses.[^28] An efficient marine insurance market becomes all the more critical in the modern context, where international trade in goods and services constitutes a primary means of raising global living standards. A narrow, technical definition of insurable interest would undermine these important public policy goals, in that such an approach would increase uncertainty, litigation risk and, ultimately, the cost of insurance itself.
[30] The facts in the current proceeding illustrate some of the difficulties that would arise from defining insurable interest narrowly. The contract of sale in this case provided that title to the goods would pass from Broadgrain to the Buyer upon full payment for the goods. Final payment occurred on December 11/12, 2014, while the goods were still in transport. When the goods arrived at Xingang and were found to be damaged, it was not immediately possible to determine the precise point in time that the damage occurred, since the containers had been sealed at the port of origin and had not been opened until their arrival at the destination.
[31] Under a narrow interpretation of insurable interest where, for example, only the person with legal title to the goods would have an insurable interest in them, the appropriate claimant under the Insurance Policy would turn on whether the damage occurred prior to, or after, December 11/12, 2014 (the date title to the goods passed from Broadgrain to the Seller).[^29] Because the timing of the damage was unknown at the time the New Yorker arrived in port on December 17, 2014, it would have been unclear as to whether Broadgrain or the Buyer was the appropriate party to submit the insurance claim. Moreover, if only one of them submitted a claim, and subsequent investigation determined that the loss occurred at a point in time where the entity submitting the claim did not hold title to the goods, the claim would have been invalid for lack of an insurable interest. It would be even more problematic from a legal perspective if, after due inquiry, it was not possible to determine the precise point in time at which the damage to the cargo occurred.
[32] It is difficult to see what would be achieved from an adoption of this approach to the definition of insurable interest. Not only would it produce delay, confusion, and added cost, it might well result in insurance claims being denied on purely technical grounds without regard to the broader purposes underlying contracts of marine insurance. As Strathy and Moore observe, this would serve neither the interests of the insured or the insurers.[^30]
[33] In light of these various considerations, it is my view that Broadgrain had an insurable interest in the goods during the entire time they were in transit. Even though the risk of loss under the contract of sale passed to the Buyer upon the goods being loaded on board the New Yorker on October 15, 2014, Broadgrain retained title to the goods until final payment, namely, December 11/12, 2014. Even after payment of the full contract amount and the passing of title in the goods to the Buyer, the contract provided that Broadgrain retained a security interest in the goods “until all Buyers’ accounts are settled.” Such a security interest would qualify as an “equitable relation to the adventure” for purposes of s. 8(2) of the CMIA. Moreover, to the extent that Broadgrain was at risk of being ‘short-paid’ on future shipments as a result of damage to the goods transported on the New Yorker, this indicated that Broadgrain would continue, throughout the voyage, to “benefit from the safety or due arrival” of the cargo, or be “prejudiced by its loss, damage or detention.” Since it is undisputed that the goods were damaged while in transit, and Broadgrain had an insurable interest throughout the voyage, it necessarily follows that Broadgrain had an insurable interest at the time of loss.
[34] Nor is this conclusion affected by the question of whether Broadgrain “assigned” the certificates of insurance to the Buyer when it presented the required documentation to the Buyer’s bank on December 11/12, 2014. The Buyer was certainly entitled to claim under the Insurance Policy for any insured losses it suffered, regardless of whether there was an “assignment” of the certificates, since Buyer fell within the definition of “Insured” and its property in the goods was included as part of the “Subject Matter Insured.” However, Broadgrain’s Insurance Policy with CNA was an “open policy” for the Insurance Period, and was not limited to the transaction between Broadgrain and the Buyer. As such, Broadgrain’s right to claim for its insured losses under a valid policy where it was the named insured could not be affected by the delivery over, or assignment of, the certificates of insurance to the Buyer on December 11/12, 2014.
[35] I therefore conclude that Broadgrain had an insurable interest in the goods at the time of loss and would deny CNA’s motion for summary judgment on this ground.
Broadgrain’s Proof of Loss
[36] CNA argues that, as Broadgrain was paid in full by the Buyer, it did not suffer any loss and its claim should be dismissed on this basis. Broadgrain contends that it did suffer a loss in the sense that it claims to have been ‘short-paid’ by the Buyer on subsequent shipments. In the alternative, it argues that it was entitled to be compensated even if it did not suffer any loss.
[37] Dealing briefly with the second Broadgrain argument, it is inherent in a contract of marine insurance that the insured can only claim for losses it has incurred or suffered. This is evident from the definition of a contract of marine insurance under s. 6(1) of the CMIA as one where “the insurer undertakes to indemnify the insured…against losses…” (emphasis added). In this instance, the Insurance Contract explicitly provided that “it is understood and agreed that it is the intention of this insurance to indemnify the Insured [Broadgrain]…for all losses covered hereunder…” (emphasis added).[^31] It is clear, therefore, that Broadgrain can only claim under the Insurance Policy to the extent that it suffered a loss.
[38] Turning to the question of whether there is evidence supporting the assertion that Broadgrain suffered a loss, there is undisputed evidence on the record that Broadgrain was paid in full by the Buyer for the shipments in question. The only evidence that Broadgrain suffered any loss is a single paragraph in the affidavit of Taimy Cruz, sworn March 2, 2017, in which she avered the following: “When Beidahuang realized that the cargo was damaged, they short-paid Broadgrain on other shipments of goods that Broadgrain had sold them and that were currently in transit.”
[39] No further details were provided with respect to these alleged short-payments, much less documentation of any kind. Moreover, Broadgrain had ample opportunity to provide such evidence. During the first examination of Ms. Cruz, which occurred in August 2016, one of the undertakings provided by Broadgrain counsel was to make best efforts to produce all relevant email correspondence between Broadgrain officials and the Buyer with respect to the transaction. Broadgrain counsel responded by indicating that there was no further non-privileged and relevant email correspondence.[^32]
[40] On a motion for summary judgment, the moving party bears the onus of establishing the absence of a genuine issue for trial. However, r. 20.04(1) imposes an evidentiary burden on the responding party to present by way of affidavit, or other evidence, specific facts showing that there is a genuine issue for trial.[^33] In other words, as discussed above, each side must “put its best foot forward.” The court is entitled to assume that the record contains all the evidence which the parties will present if there is a trial, absent exceptional circumstances.
[41] In assessing whether there is a genuine issue for trial, the Supreme Court of Canada has held in Guarantee Co. of North America v. Gordon Capital Corp. that “a self-serving affidavit is not sufficient in itself to create a triable issue in the absence of detailed facts and supporting evidence” (emphasis added).[^34] This principle has been applied on numerous occasions by the Court of Appeal,[^35] as well as by this Court.[^36] For example, in Wong v. Toronto Police Services Board, Thorburn J. made the following pertinent findings and observations:[^37]
A judge hearing a motion for summary judgment is to assume that the parties have advanced their best case. A responding party cannot create a genuine issue for trial by claiming that more and better evidence will emerge, or by relying on a self-serving affidavit…or denial in the absence of supporting evidence. The responding party has an evidentiary burden to set out, by way of affidavit or otherwise, detailed facts and coherent evidence to show that his or her claim has a real chance of success.
Bald assertions will not constitute genuine issues for trial. As stated by the Court of Appeal in Goldman v. Devine, “Self-serving evidence that merely asserts a defence or a claim without providing some detail or supporting evidence is not sufficient to create a genuine issue for trial…” There must be some meaningful support for the representations made. [Footnotes omitted.]
[42] Here, apart from the single sentence in paragraph 18 of Ms. Cruz’s affidavit where it is baldly asserted that Broadgrain was short-paid on subsequent shipments to the Buyers, Broadgrain has produced no evidence of any kind in support of its claim. Given the non-trivial amounts involved, namely, $550,000 USD, one might have expected that Broadgrain could have produced some documentation or records showing the circumstances relating to the alleged short-payment(s), such as whether the short-payment(s) related to a single shipment or multiple shipments, the dates, and the amounts involved. Indeed, Broadgrain was able to produce printouts of the “credit advice” with respect to the payments from the Buyer to Broadgrain for the shipments that arrived in Xingang on December 17, 2014, showing the date of payment, the precise dollar amounts paid, along with a reference number for the transaction.[^38] No explanation has been provided as to why similar documentary evidence was not available in respect of the other shipments where Broadgrain claims to have been short-paid. The absence of any supporting detail or documentation means that I can give little or no weight to the self-serving assertion in Ms. Cruz’s affidavit.
[43] Accordingly, given the undisputed evidence that Broadgrain was paid in full for the shipments in question, and in the absence of any contrary credible evidence, I find that there is no genuine issue for trial with respect to whether Broadgrain suffered a loss on this transaction.
Estoppel and Waiver
[44] Broadgrain argues, in the alternative, that CNA should be estopped from denying its insurance claim since CNA did, in fact, cover Broadgrain’s loss in connection with two of the containers that suffered damage during the voyage in question. Broadgrain argues that CNA’s decision to indemnify Broadgrain operates as a waiver of CNA’s right to later take the position that Broadgrain is not the proper party to make the insurance claim.
[45] I find little merit in this argument. An insurer will have waived strict performance by an insured where the insurer had full knowledge of its rights and gave an unequivocal and conscious decision to abandon them.[^39] Broadgrain’s claim fails on both these components of the test. At the time CNA agreed to compensate Broadgrain for two of the containers, it did not know that the Buyers had paid Broadgrain in full for the entire contract value.[^40] Moreover, in agreeing to partially compensate Broadgrain, it expressly disclaimed any waiver of its rights under the Insurance Policy. In any event, Broadgrain has not provided any evidence that it altered its position or otherwise relied to its detriment on CNA’s initial payment, which are additional requirements in order to claim waiver or estoppel.
[46] I therefore conclude that CNA did not waive any of its rights and is not estopped from denying the claim on the basis that Broadgrain did not suffer a loss.
Conclusion
[47] Broadgrain had an insurable interest in the goods at the time the loss occurred. However, because it has been established that Broadgrain was paid in full for the goods, and that there is no evidence sufficient to raise a genuine issue for trial on whether Broadgrain suffered a loss, CNA is entitled to summary judgment and Broadgrain’s claim for indemnity under the Insurance Policy is hereby dismissed.
[48] CNA is entitled to its costs in the action on a partial indemnity basis, payable within 30 days. If the parties are unable to agree on the quantum of costs, I am prepared to receive written submissions of no more than three (3) pages, exclusive of any bills of costs or offers to settle, within three weeks of the date hereof.
Monahan J.
Released: August 3, 2017
CITATION: Broadgrain Commodities Inc. v. Continental Casualty Company, 2017 ONSC 4721
COURT FILE NO.: CV-15-530476-00
DATE: 20170803
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BROADGRAIN COMMODITIES INC.
Plaintiff
- and -
CONTINENTAL CASUALTY COMPANY
Carrying on business as CAN CANADA
Defendant
REASONS FOR JUDGMENT
Monahan J.
Released: August 3, 2017
[^1]: See Marine Cargo Program Policy 2013202, August 8, 2014, Exhibit A [Reply Motion Record (“RMR”), Affidavit of Taimy Cruz sworn March 2, 2017 (“Cruz Affidavit”), Tab 1(A)]. [^2]: The September 4, 2014 contract for the sale of the goods is set out in the RMR at Tab 1(B). The invoices issued by Broadgrain pursuant to the contract are dated October 15, 2014, under the heading “Delivery Terms.” The invoices refer to “CIF Zingang.” See Exhibit C [RMR, Cruz Affidavit, Tab 1(C)]. [^3]: George R. Strathy & George C. Moore, The Law and Practice of Marine Insurance in Canada (Markham: LexisNexis Canada, 2003) at pp. 87-88 [Strathy & Moore]. [^4]: Exhibit E [RMR, Cruz Affidavit, Tab 1(E)]. [^5]: There is some dispute between the parties as to whether the insurance certificates were “assigned” to the Buyer, or merely delivered to them. I return to the significance of this issue below. [^6]: Letter from Frederico Rossi, CNA Canada to Broadgrain, March 24, 2015 [RMR, Tab 1(L)]. [^7]: Cruz Affidavit, at para. 18. [^8]: Insurance Policy, c. 62. [^9]: Expert Report of Alan Jervis, March 13, 2017 [Supplemental Motion Record, Tab 2(B)]. [^10]: Expert Report of Justin MacGregor, February 28, 2017 [RMR, Tab 2(D)]. [^11]: The Honourable Mr. Justice Alan W. Bryant, The Honourable Mr. Justice Sidney N. Lederman & The Honourable Madam Justice Michelle K. Fuerst, The Law of Evidence in Canada, 3rd ed (Toronto: LexisNexis Canada, 2009) at pp. 833-34. [^12]: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 [Hryniak]. [^13]: Rules of Civil Procedure, R.R.O. 1990, Reg. 194 [Rules of Civil Procedure]. [^14]: Rules of Civil Procedure, r. 20.04(2)(a). [^15]: Hryniak, at para. 59. [^16]: Hryniak, at para. 50. [^17]: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at paras. 33-34, aff’d 2014 ONCA 878, leave to appeal to SCC refused, [2015] S.C.C.A. No. 97. [^18]: Marine Insurance Act, S.C. 1993, c. 22 [CMIA]. [^19]: Outram v. Smith (1876), 11 N.S.R. 187 (C.A.); Pugh et al. v. Wylde et al. (1876), 11 N.S.R. 177 (C.A.). [^20]: Green Forest Lumber Ltd. v. General Security Insurance Co. of Canada, 1977 CanLII 3086 (FC), [1977] 2 F.C. 351 (F.C.T.), aff’d 1978 CanLII 3630 (FCA), [1978] 2 F.C. 773 (F.C.A.), aff’d 1980 CanLII 158 (SCC), [1980] 1 S.C.R. 176; Union Carbide Corp. v. Fednav Ltd., [1997] F.C.J. No. 655 (F.C.T.). [^21]: Strathy & Moore, at p. 88. Note, however, that the reference in this passage to a seller parting with “an interest in the goods” should be read in light of an earlier discussion by the authors of the fact that courts in recent years have adopted a broad definition of insurable interest. Strathy and Moore conclude that “on a practical level, what this means is that if someone takes out a policy of insurance, and pays the premium, and has an ‘interest’ in the property at the time of the loss, such that he or she can demonstrate prejudice from the loss or destruction of the property, the court will generally find that an insurable interest exists.” See Strathy & Moore, at pp. 83-86. Thus, I read the later reference to the owner having parted with “an interest in the goods” as dealing with situations where the owner can no longer demonstrate any prejudice flowing from the loss or destruction of the property and, for that reason, no longer has an insurable interest. [^22]: CMIA, s. 16(2). [^23]: CMIA, s.16(3). [^24]: Kosmopoulos v. Constitution Ins. Co. of Canada, 1987 CanLII 75 (SCC), [1987] 1 S.C.R. 2 [Kosmopoulos]. [^25]: Kosmopoulos, at para. 31. [^26]: Kosmopoulos, at para. 41, citing Stock v. Inglis (1884), 12 Q.B.D. 564 (C.A.). [^27]: Kosmopoulos, at para. 41. [^28]: See Strathy & Moore, at pp. 1-2. [^29]: This is because in order to recover under a contract of marine insurance, the insured must have had an insurable interest in the subject matter insured at the time the loss occurred. See CMIA, s. 7. [^30]: Strathy & Moore, at p. 83. [^31]: Insurance Contract, c. 58. [^32]: See letter from Charles Hammond of Fernandes Hearn LLP to Isaacs & Co., dated February 2, 2017, provided during argument on July 11, 2017. [^33]: Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 1998 CanLII 4831 (ON CA), 111 O.A.C. 201 (C.A.), at para. 17. [^34]: Guarantee Co. of North America v. Gordon Capital Corp., 1999 CanLII 664 (SCC), [1999] 3 S.C.R. 423, at para. 31. [^35]: Rozin v. Ilitchev, 2003 CanLII 21313 (ON CA), [2003] 66 O.R. (3d) 410 (C.A.), at para. 8; Goldman v. Devine, 2007 ONCA 301, at para. 23; HSBC Securities (Canada) Inc. v. Firestar Capital Management Corp., 2008 ONCA 894, at paras. 27-28, leave to appeal to SCC refused, [2009] S.C.C.A. No. 81. [^36]: Fairfield Sentry Limited et al. v. PwC et al., 2017 ONSC 3447, at paras. 81-85. [^37]: Wong v. Toronto Police Services Board, 2009 CanLII 66385 (ON SC), [2009] O.J. No. 5067 (S.C.), at paras. 46-47. [^38]: See Exhibit H and Exhibit I [RMR, Cruz Affidavit]. [^39]: Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490, at para. 20. [^40]: Cross Examination of Federico Rossi, p. 44, q. 176 [Joint Book of Cross Examination Transcriptions].