- C.H. Robinson Worldwide v Northbridge Insurance, 2015 ONSC 232
- January 12, 2016 | Authors: Dionysios Rossi; Graham Walker
- Law Firm: Borden Ladner Gervais LLP - Vancouver Office
- This case involved a claim made by a judgment creditor against a carrier's insurer following the loss of a shipment. The applicant, C.H. Robinson Worldwide Inc. ("Robinson"), had contracted with a motor carrier, KLM, to transport a shipment of food products. Pursuant to the contract between the parties, KLM was to be liable for the value of any shipments tendered to it and had to maintain insurance coverage. To this end, KLM applied for and obtained coverage (the "Policy") from the respondent, Northbridge Insurance ("Northbridge") and provided proof of coverage to Robinson. Unfortunately, KLM's truck was involved in an accident while carrying the shipment and the goods were destroyed.
KLM failed to pay Robinson for the loss, so Robinson obtained judgment against KLM in the Ontario Superior Court of Justice. Robinson then sought payment of the judgment from Northbridge pursuant to subsection 132(1) of the Insurance Act, RSO 1990, c I.8, which provides that where an insured person is liable for injury or damage to a person or property of another and has failed to satisfy a judgment awarding damages against them, a person entitled to damages may recover by an action against an insurer for the amount of the judgment up to the face value of the policy. This right of the claimant is "subject to the same equities as the insurer would have if the judgment had been satisfied."
Northbridge refused to pay Robinson, arguing that the Policy was void for misrepresentation and, in the alternative, that its liability to Robinson was limited to the maximum amount allowed under the Policy.
Brown C.J. noted that, as an applicant for insurance, KLM had a common law obligation to fully and accurately disclose all matters within its knowledge that were relevant to the nature and extent of the risk to be assumed by Northbridge. As it turned out, the insurance application had included a question regarding whether there were any contracts with shippers that stipulated limits of liability that superseded KLM's standard bill of lading. KLM had answered this question in the negative and did not give Northbridge a copy of its contract with Robinson. Under the Ontario Highway Traffic Act, RSO 1990, c H.8, any contract of carriage by a motor carrier is deemed to include the Uniform Conditions of Carriage that limit the carrier's liability to $4.41 per kilogram. Brown C.J held that KLM's contract with Robinson expanded its liability beyond this statutory limitation and, since this fact was directly relevant to the issue of insurability, KLM was obligated to disclose it. The Court found that the contract terms were material based on affidavit evidence stating that, if disclosed, this information would have affected the amount of the premium charged to KLM.
On the basis of the foregoing, Brown C.J. concluded that the Policy was void and Robinson's claims against Northbridge were dismissed.