Guardian Insurance Co. of Canada v. Victoria Tire Sales Ltd. et al.

Guardian Insurance Co. of Canada v. Victoria Tire Sales Ltd. et al.
Collection
Supreme Court Judgments
Date
1979-10-02
Report
[1979] 2 SCR 849
Judges
Laskin, Bora; Martland, Ronald; Ritchie, Roland Almon; Pigeon, Louis-Philippe; Dickson, Robert George Brian; Beetz, Jean; Estey, Willard Zebedee; Pratte, Yves; McIntyre, William Rogers
On appeal from
Quebec
Subjects
Insurance
Decision Content
Supreme Court of Canada
Guardian Insurance Co. of Canada v. Victoria Tire Sales Ltd. et al., [1979] 2 S.C.R. 849
Date: 1979-10-02
Guardian Insurance Company of Canada (Defendant) Appellant;
and
Victoria Tire Sales Ltd. and Peter Greenberg (Plaintiffs) Respondents.
1979: January 31; 1979: October 2.
Present: Laskin C.J. and Martland, Ritchie, Pigeon, Dickson, Beetz, Estey, Pratte and McIntyre JJ.
ON APPEAL FROM THE COURT OF APPEAL OF QUEBEC
Insurance—Liability insurance—Significant alteration made by insurer to policy coverage—Insured not told of change—Insurance card signed by agent—Authority of agent—Construction of contract—Intent of parties—Civil Code, arts. 1013, 1014, 1234, 1705, 2480—Insurance Act, R.S.Q. 1964, c. 295, s. 214—Highway Victims Indemnity Act, R.S.Q. 1964, c. 232, ss. 10, 12.
In October 1970 one of the respondents, Greenberg, was driving a car owned by the other respondent, Victoria Tire Sales Ltd. (“Victoria”), when he collided with a motorcycle. The cyclist recovered judgment against respondents, and the latter brought an action in warranty against appellant (“Guardian”), the insurer of Victoria. At the time of the accident, Victoria held two separate Guardian insurance policies, issued and countersigned by A. Diamond Inc. (“Diamond”) as “authorized representative”: a garage policy and a fleet policy. In the years prior to the accident, the garage policy covered third party liability in respect of cars owned by Victoria. However, the policy in effect in the year of the accident contained a rider stating that the restricted Insuring Agreement regarding third party liability stipulated in this policy no longer applied to automobiles owned by the insured. In addition, the fleet policy covered automobiles described in a schedule, including that involved in the accident, and contained an omnibus clause. In the application, as in the schedule to the latter policy, reference is made to the garage policy with respect to third party liability. With the fleet policy, the insurer supplied for each of the cars a Motor Vehicle Liability Insurance Card which the agent gave to Victoria. The Superior Court allowed Guardian’s contention that the rider contained in the garage policy precluded the liability of the insurer, and it dismissed the action in warranty against Guardian. This judgment was reversed by the Court of Appeal, and Guardian now appeals to this Court.
Held: The appeal should be dismissed.
Per Martland, Dickson, Beetz, Pratte and McIntyre JJ.: The appeal should be dismissed because the construction of the policies of insurance leads to the conclusion that Victoria was insured in respect to third party liability under the relevant Insuring Agreement of the fleet policy then in force. The question of the extent of the third party liability coverage during the year preceding the accident, that is, before the rider relied on by Guardian to avoid liability in the action in warranty in the case at bar was issued, does not present any difficulty. In issuing a fleet policy, Guardian clearly agreed to extend its third party liability coverage beyond that provided in the garage policy then in force. Otherwise, the reference to the garage policy both in the application section and in the schedule would be completely meaningless. Since a stipulation in a contract cannot be assumed to have no meaning (art. 1014 C.C.), this reference should be construed as a reference only to the limits and the premiums stipulated in the garage policy, and not to the Insuring Agreement stipulated in the said policy. It therefore follows that the fleet policy provided the insured with the broader third; party liability coverage stipulated in that policy within the dollar limits and for the premiums specified in the garage policy. In the circumstances, the rider in the garage policy can have only one meaning, namely that the restrictive Insuring Agreement respecting third party liability contained in the garage policy shall not apply to vehicles owned by Victoria. The only effect of this rider was to exclude the restricted third party liability coverage for the insured’s owned automobiles under the garage policy, leaving untouched the third party liability coverage that was provided under the fleet policy then in force. That was the situation when the fleet policy was renewed on April 9, 1970 for another year. As was the case for the preceding year, there are two possible interpretations of the reference to the garage policy: either the reference to the garage policy is to be construed as a reference to the coverage already provided or not provided under such policy, in which case the reference was totally useless, or it was intended to refer to the garage policy for the determination of the dollar limits of the coverage and the amount of the premium. The latter construction is that which ought to be accepted, because it is the only one that is compatible with the language used by the parties and the rule in art. 1014 C.C. Per Ritchie, Pigeon and Estey JJ.: Under the civil law embodied in the Civil Code of Quebec a contract is not to be identified with the document in which its terms are set forth. The contract is the agreement between the parties, the document is only evidence of it. At civil law the terms of a contract are to be ascertained in light of all the relevant facts. The Court of Appeal was justified in coming to the conclusion that, in light of all the facts, proof of coverage was established because at the time of the making of the contract it was intended on both sides that third party liability should be covered. In order to deny coverage, Guardian has to ask the Court to construe the two policies in a manner that fails to give a reasonable meaning to the words used and as if no account was to be taken of the card, as to which the least that can be said is that by issuing this card Guardian was representing that the car described in the card was covered with respect to third party liability. With regard to s. 214 of the Quebec Insurance Act, referred to by Guardian, this enactment provides a restriction in favour of the “assured”, not in favour of the insurer. It therefore does not restrict the application of general principles of the civil law as against the insurer.
Per Laskin C.J.: The issue raised by this appeal is not peculiar to the civil law of Quebec, and the same result would follow at common law. Two factors are critical to the disposition of this appeal, namely the course of dealing between the insurer and the insured and the agency position of Diamond. The trial judge wrongly regarded Diamond as agent for the insured. The latter put forward Diamond as its representative to solicit business on its behalf. The line of cases that hold an insurance agent to be an agent of the insured where he fills out an application for insurance, with answers to the questions therein supplied by the insured, has no application here. So far as the insured was concerned, having regard to its past relationships with the insurer and Diamond and possession of the Motor Vehicle Liability Insurance Card given to it along with the fleet policy, it had public liability coverage, which was also Diamond’s belief. Victoria relied on Diamond to obtain for it renewal of the same coverage that it had always had and it had the assurance of the card that this had been done. If it was necessary to do so, I would hold that the agent Diamond was a general agent, one with inherent powers, and thus could make representations which bound his principal without the necessity of proving actual or ostensible authority. In this case, however, the agent Diamond has actual authority, as reflected in the fact that he was authorized to countersign policies in order to give them validity, and had, as well, at least ostensible authority to issue Motor Vehicle Liability Insurance Cards.
General Security Insurance Company v. Bélanger, [1977] 1 S.C.R. 802; Agricultural Chemicals v. Boisjoli, [1972] S.C.R. 278, referred to.
APPEAL from a decision of the Court of Appeal of Quebec, reversing a judgment of the Superior Court. Appeal dismissed.
Gilles Y. Renaud, Q.C., for the appellant.
Philippe Casgrain, Q.C., for the respondent.
THE CHIEF JUSTICE—I agree with Pigeon J. that this appeal should be dismissed. It raises an issue which is not peculiar to the civil law of Quebec and, in my opinion, the same result as that reached by Pigeon J. would follow at common law.
The judgment of Hannen J. fastens exclusively on the terms of the two policies, the garage policy, which contained the exclusionary rider Q.E.F. 73, and the fleet policy which did not itself specify that public liability was not covered but contained the words under the public liability section “See Garage Policy” with an accompanying number. The application for the garage policy with the exclusionary rider was sent to Diamond to have the insured sign it and the rider, and this was done and the completed application was returned to the insurer. Along with the issue of the fleet policy about a month later, Diamond supplied the insured with a “Motor Vehicle Liability Insurance Card” for each of the cars owned by the insured as so specified in the fleet policy, showing coverage for public liability. The cards were supplied by the insurer to Diamond and given by Diamond to the insured.
Two factors are, in my view, critical to the disposition of this appeal. One is the course of dealing between the insurer and the insured. The second is the agency position of Diamond. The insured, for a number of years, had obtained public liability coverage under garage and fleet policies issued by the insurer. The 1970 policies, which are in issue here, effected a change. The trial judge called them new policies and not simply renewals. That is so on the assumption of the conclusion as to their effect reached by the trial judge. It would be a more convincing finding if this was a case of the initial establishment of a relationship between the insurer and the insured. However, so far as the insured was concerned, and Diamond as well, the insured was merely effecting a renewal of a relationship that had existed for some time.
On the evidence, there was a perfunctory signing of the renewal application, on the reasonable assumption that the coverage was the same. The evidence shows that at the time the application for the renewal of the garage policy, with the accompanying rider, Diamond was of the view that the insured was covered for public liability, and the employee of the insured, to whom the documents came for signature on behalf of the insured, had no awareness that any different coverage was to be provided than what had been the case under previous policies. The trial judge says the insured “knew or could have known and should have known and must be found to have agreed” to the exclusion of the public liability coverage. I treat this ambiguous finding as saying simply that the insured was bound by the signature of one of its employees to the renewal application.
I do not think that this is enough in the present case. Contracts of insurance are uberrimae fidei. The insured dealt with Diamond who had the authority of the insurer to countersign insurance policies in order to give them validity. The trial judge regarded Diamond as agent for the insured. This is a crucial conclusion as to a legal relationship and I am unable to agree with it. Diamond represented the insurer in any dealings with the insured, as in the issue and countersignature of the policies, in the delivery of the Motor Vehicle Liability Insurance Cards and in the collection of premiums from the insured. Diamond was put forward by the insurer as its representative to solicit business on its behalf. It could only be minimally that Diamond could be considered an agent of the insured, and I can see no legal consequences that could flow against the insured from Diamond’s dual character when, in the main, Diamond was the insurer’s agent.
The line of cases that hold an insurance agent to be agent of the insured where he fills out an application for insurance, with answers to the questions therein supplied by the insured, has no application here.
What then does the record show as to Diamond’s conduct in the present case? A letter from Diamond to the insurer, dated March 26, 1971, contains the following sentences:
…We have always assumed that public liability protection for owned vehicles was not required under the fleet schedule (currently Policy No. 8003623) because such protection was provided by the Garage Liability Policy. In fact, the third party liability section of the fleet policy does now contain and always has contained a wording “see garage policy No. 8731469” ….
We do not have a copy of such an exclusion on the current policy and in fact, I have gone back to five or six years of policies, copies of which I have in the office, and cannot find any such exclusion in any year but in each case, I do find on the Fleet Policy the wording see garage policy for liability coverage. I have even checked our correspondence file and cannot find any letter from your office indicating that the basic coverage has been restricted. Finally, I think a check of past claims over the years would certainly indicate that payments have been made for some damage to Insured’s vehicles.
Follow-up correspondence between the insurer and Diamond does not alter what I have reproduced from Diamond’s letter above-quoted. Two paragraphs of a later letter dated April 16, 1971 from Diamond to the insurer help to fill out the picture; they are as follows:
I was quite shocked to see your copy of Q.E.F. 73 actually signed by insured. No one recalls precisely the circumstances of obtaining this particular document but our practice in those days was for a clerk to mail out the renewal policy together with an enclosure memo which was marked “please sign and return”. This you can see from your records. In practice, this request for signed documents was not followed up and the fact is very few insurers ever asked us to do so. When signed documents were returned to our office, we simply sent them on to insurers without any other notation in our file. On occasion, a client might send the document directly back to the insurer. This is quite a possibility with regard to Victoria Tire Sales as they were in the habit of frequently contacting the Guardian, direct.
…
You asked how we missed the fact that no coverage for Public Liability was in force. Actually, we have always assumed that Public Liability insurance was in force simply because the Fleet policy indicated that this was so. As noted above, we depended upon the insurance company’s rating ability and would certainly not have questioned those rates or even worked out premiums which might have been charged had the vehicles been rated individually.
So far as the insured was concerned, having regard to its past relationships with the insurer and Diamond and possession of the Motor Vehicle Liability Insurance Card given to it along with the fleet policy, it had public liability coverage which was also Diamond’s belief. I am of opinion that, in the circumstances, there was a reliance by the insured on Diamond to obtain for it renewal of the same coverage that it had always had and it had the assurance of the Card that this had been done. Indeed, insurance contracts involve a type of expertness where it is reasonable to expect an insured to be guided by the professional experience of the insurance agent. If it was necessary to do so, I would hold that the agent Diamond was a general agent, one with inherent powers, and thus could make representations which bound his principal without the necessity of proving actual or ostensible authority. Article 1705 of the Quebec Civil Code states the applicable doctrine in these terms:
Art. 1705. Powers granted to persons of a certain profession or calling to do anything in the ordinary course of the business which they follow, need not be specified; they are inferred from the nature of such profession or calling.
As to the common law, I would refer to the Restatement of Agency 2d (1958), s. 8A; Fridman, The Law of Agency (4th ed. 1976), at pp. 101-102; and cf. Bowstead on Agency (14th ed. 1976), at p. 71 (referring to “usual authority” as a third type additional to actual and apparent authority). In this case, however, the agent Diamond has actual authority, as reflected in the fact that he was authorized to countersign policies in order to give them validity, and, as well, at least ostensible authority to issue Motor Vehicle Liability Insurance Cards, with the nature of the protection shown thereon, which were supplied to him by the insurer.
For these reasons, as well as for those of my brother Pigeon, I would dismiss the appeal as proposed by him.
The judgment of Martland, Dickson, Beetz, Pratte and McIntyre JJ. was delivered by
PRATTE J.—I agree with my brothers the Chief Justice and Pigeon J. that this appeal ought to be dismissed, but I reach this conclusion on somewhat narrower grounds than those expressed in their reasons which I have had the advantage of reading. I therefore feel obligated to write separately.
The facts are not in dispute: on October 8, 1970, one of the officers of the respondent, Victoria Tire Sales Limited (“Victoria”), was involved in an accident when he was driving a vehicle that belonged to Victoria. It was held that this accident was due to the negligence of the driver of the vehicle, one Greenberg, who was in the employ of Victoria and Victoria was therefore held responsible towards the victims of the accident.
At the time of the accident, Victoria was insured with the appellant, Guardian Insurance Company of Canada (“Guardian”), under two separate policies: one was known as a garage policy and the other one as a fleet policy.
The question for determination here is as to whether the liability incurred by Victoria and its co-respondent Greenberg as a result of the accident of October 8, 1970 was covered under either one of these two insurance policies. The answer to this question turns on the interpretation of these two policies which can best be arrived at by first making reference to the history of the contractual relationship between the parties.
Indeed, for many years, Victoria had been insured by Guardian under the two types of poli- cies: a garage policy and a fleet policy. Although there is some relationship between the two policies, the policy-year, under each one of the policies was different; it expired on March 5 in the case of the garage policy and on April 9 in the case of the fleet policy. Also, although both policies contained an Insuring Agreement with respect to third party liability, the agreement stipulated in the garage policy was much more restrictive than that contained in the fleet policy in that it did not protect a person other than the insured: it did not contain the omnibus clause.
In March of 1969, Guardian issued to Victoria a garage policy bearing No. 8731403, effective from March 5, 1969 to March 5, 1970, which provided, amongst other things, for third party liability coverage under the following Insuring Agreement:
NOW, THEREFORE IN CONSIDERATION OF the payment of the premium specified and of the statements contained in the application and subject to the limits, terms and conditions herein stated and subject always to the condition that the Insurer shall be liable under the section(s) or subsection(s) of the following Insuring Agreements A, B for which a premium is specified in Item 3 of the application and no other—
SECTION A—THIRD PARTY LIABILITY
The Insurer agrees to indemnify the Insured, his succession or his administrators, against the liability imposed by law upon the Insured for loss or damage arising from the ownership, use or operation of any automobile in the business of the Insured stated in Items 1 and 2 of the application, and for pleasure use, and resulting from:
SUBSECTION 1
BODILY INJURY TO OR DEATH OF ANY PERSON OR DAMAGE TO PROPERTY OF OTHERS NOT IN THE CARE, CUSTODY OR CONTROL OF THE INSURED:
Provided…
The third party liability section on the face of the policy (Subsection 1 of Section A) specified the limits to be $100,000 and the premium to be calculated at the rate of $1.53 per $100 of payroll of Victoria with a minimum premium of $113 and an advance premium payment of $306.
There is no question that under this policy No. 8731403 Victoria was covered for third party liability under the restricted Insuring Agreement above quoted.
Shortly thereafter, Guardian issued to Victoria a fleet policy bearing No. 8003623 to be in effect during the period April 9, 1969 to April 9, 1970. The application section of the policy contained information regarding the automobiles to be insured and the type of coverage. In so far as the automobiles were concerned, the application referred to a schedule which gave the description of the automobiles and the particulars of the coverage. As regards the type of coverage, the introductory part of item 3 of the application section read as follows:
This application is made for insurance against one or more of the perils mentioned in this item, but for insurance under the section(s) or subsection(s) for which a premium is specified in this item and no other and upon the terms and conditions of the insurer’s corresponding Quebec policy form and for the following specified limit(s) and amounts.
Thereafter followed a reference to the 3 different perils covered by the 3 different Insuring Agreements identified as Section A Third Party Liability, Section B Medical Payment and Section C Loss of or damage to insured automobile. While the limits of the coverage and the amount of the premium were both shown under Sections B and C, similar information was not given under Section A dealing with third party liability which contained only a reference to the garage policy which was then in force and had been issued as of March 5, 1969. The same reference to the same garage policy was made in the schedule under the column headed “Section A Third Party Liability”, which included a column for the Limits and a column for the Premium.
The Insuring Agreement in the fleet policy of April 9, 1969 contained an omnibus clause; it read as follows, the words that are different from the language used in the garage policy having been underlined for ease of comparison:
NOW, THEREFORE, IN CONSIDERATION OF the payment of the premium specified and of the statements contained in the application AND SUBJECT TO THE LIMITS, TERMS AND CONDITIONS HEREIN STATED and subject always to the condition that the Insurer shall be liable under the section(s) or subsection(s) of the following Insuring Agreements A, B, C for which a premium is specified in Item 3 of the application and no other.
SECTION A—THIRD PARTY LIABILITY
The Insurer agrees to indemnify the Insured, his succession or his administrators, and in the same manner and to the same extent as if name herein as the Insured, every other person who with the consent of the Insured, or the consent of an adult member of the Insured’s household other than a chauffeur or domestic servant, personally drives the automobile, against the liability imposed by law upon the Insured or upon any such other person for loss or damage arising from the ownership, use or operation of the automobile within Canada, the United States of America or upon a vessel plying between ports thereof and resulting from:
BODILY INJURY TO OR DEATH OF ANY PERSON OR DAMAGE TO PROPERTY:
Provided…
The extent of the third party liability coverage during the 1969-70 policy-year does not in my view present any difficulty. In issuing a fleet policy to be effective as of April 9, 1969, the Insurance Company clearly agreed to extend its third party liability coverage beyond that provided in the garage policy then in force. Otherwise, the reference to the garage policy both in the application section and in the schedule would be completely meaningless. If Victoria was then content with the restricted third party liability coverage under the garage policy and did not wish to benefit by the extended coverage under the omnibus clause contained in the fleet policy, no information regarding third party liability coverage would have been given in the application section and the schedule of the fleet policy, and in such case no coverage would have been granted. A stipulation in a contract cannot be assumed to have no meaning. Article 1014 C.C. reads:
1014. When a clause is susceptible of two meanings, it must be understood in that in which it may have some effect rather than in that in which it can produce none.
The reference to the garage policy, if it has to have any meaning, as it must, should be construed as a reference only to the limits and the premiums stipulated in the garage policy, and not to the Insuring Agreement stipulated in said policy. If the insured intended to have only the restricted coverage of the garage policy, no reference whatsoever was required in the fleet policy; such restricted coverage was already provided in the garage policy previously issued.
It therefore follows that with the issue of the fleet policy in April of 1969, Guardian agreed under such policy to provide the insured with the broader third party liability coverage stipulated in that policy within the dollar limits and for the premiums specified in the garage policy.
We now come to the policy-year 1970-71 during which on October 8, 1970, one of the automobiles owned by Victoria and then driven by one of its officers, was involved in an accident for which both were held responsible.
Early in March of 1970, Victoria made an application to Guardian for a new garage policy to take effect from March 5, 1970 to March 5, 1971. This application was accepted and a new policy bearing No. 8731469 was issued before the end of March of 1970, for the one-year period commencing on March 5, 1970. In so far as is relevant to this litigation, this new policy was identical to that just expired as regards coverage and premium, except that it contained a rider known as Q.E.F. No. 73 the material part of which read as follows:
Q.E.F. No. 73
EXCLUDING OWNED AUTOMOBILES ENDORSEMENT
(Service Stations, Storage Garages and Parking Lots)
(For attachment only to Garage Policy Q.P.F. No. 4) Notwithstanding anything contained to the contrary in subsection 1 of section A of the Insuring Agreements of the Policy, it is hereby understood and agreed that the Policy shall not cover the liability imposed by law upon any person insured by the Policy for loss or damage arising from the ownership, use or operation of any automobile owned, hired or leased by or registered in the name of the Insured.
The language of this rider is clear: the restrictive Insuring Agreement respecting third party liability contained in the garage policy shall not apply to vehicles owned by Victoria. The dollar limits and the premium specified on the face of the policy with respect to the third party liability coverage were not affected by this rider; they remained identical to what they were in the previous policy. The only effect of this rider was therefore to exclude the restricted third party liability coverage for the insured’s owned automobiles under the garage policy, without any reduction in premium, and leaving untouched the third party liability coverage that was provided under the fleet policy then in force which was due to expire on April 9, 1970.
This interpretation was confirmed by the conduct of both parties when the fleet policy No. 800 3623 which was due to expire on April 9, 1970 was renewed for another year through the issue of a renewal certificate under the same policy number and on the basis of the information contained in the application section of such original policy.
This renewal certificate essentially contained on its face the same information as that provided in the application section of the 1969 policy. As regards the description of the automobiles it referred to the schedule and under the column respecting Third Party Liability, reference is also made to the schedule. The schedule which is stated to form part of the policy contained at the top the following provision:
Particulars of the described automobiles are as listed below. Insurance under the section(s) or subsection(s) of the insuring agreements shall apply to a described automobile only if a premium is specified opposite the description of the automobile in the premium column designated for such section or subsection.
In the column entitled Section A Third Party Liability, Limits, Premium $, the following appears: “See Garage Policy 8731469”.
The reference to the garage policy which is contained in the renewal certificate and in the schedule must clearly be interpreted in such a way as to be effective; one can hardly assume that the parties intended to refer to the garage policy for no reason whatsoever. As was the case for the previous year, two interpretations are possible: either the reference to the garage policy is to be construed as a reference to the coverage already provided or not provided under such policy in which case the reference was totally useless, or it was intended to refer to the garage policy for the determination of the dollar limits of the coverage and the determination of the amount of premium payable therefor while the coverage itself was that set out in the Insuring Agreement of the fleet policy itself which contained the reference. Clearly, the latter construction is that which ought to be accepted because it is the only one that is compatible with the language used by the parties and the rule expressed in art. 1014 C.C. quoted above.
The certificate for the renewal of the fleet policy for the year April 9, 1970 to April 9, 1971 was delivered to Victoria on April 22, 1970 together with the pink cards for each one of the vehicles listed in the schedule. In these cards, the insurer certified that Victoria was covered for third party liability under the fleet policy. It is not necessary to consider the extent to which, if any, an insurer might be bound by a pink card as distinct from the policy itself. Be it sufficient to say that in the circumstances of this case the issuance of the pink cards can only serve to confirm the interpretation of the fleet policy which I have adopted above. Indeed, it cannot be assumed that Guardian issued the cards to mislead Victoria or anybody else; it has not been suggested either that the cards had been issued in error or should have referred to the garage policy. The submission urged by Guardian is that, because of the rider Q.E.F. No. 73 that was attached to the garage policy, there was no third party liability coverage at all for the insured’s own vehicles under the fleet policy. Such submission is not compatible with the issuance of the cards; it does not follow from a proper interpretation of the rider and is in any event contrary to the subsequent agreement that was formed upon the delivery of the fleet policy renewal certificate together with that of the cards; the reference to the garage policy as contained in the renewal certificate would be devoid of any meaning if the rider Q.E.F. No. 73 should be construed so as to negate the third party liability coverage provided in the Insuring Agreement in the fleet policy.
The construction of the policies of insurance that were in effect at the time of the accident leads me to the conclusion that Victoria was then insured in respect to third party liability under the relevant Insuring Agreement of the fleet policy then in force.
As to the other points dealt with by the Chief Justice and Pigeon J. in their reasons, I do not believe that they arise for decision in this case and I simply do not wish to express any views thereon.
I would dismiss the appeal with cost.
The judgment of Ritchie, Pigeon and Estey JJ. was delivered by
PIGEON J.—This is an appeal by leave of this Court from the unanimous judgment of the Court of Appeal of the Province of Quebec reversing the judgment of the Superior Court and maintaining respondents’ action in warranty against the appellant. The facts which gave rise to this litigation are as follows.
On October 8, 1970, a Ford motor car owned by respondent Victoria Tire Sales Ltd. (“Victoria”) and driven by the other respondent, Greenberg, was involved in a collision with a motorcycle. On the action instituted against them by the cyclist, the latter recovered judgment for $48,083.50 with interest and costs. The action in warranty which had been instituted by Victoria and Greenberg against Guardian was tried subsequently and dismissed by Hannen J. who upheld Guardian’s denial of insurance coverage. In appeal, Rinfret J.A. (as he then was) held in reasons concurred in by Dubé and Bernier JJ.A., that, in the circumstances of this case, it was necessary to consider not only the wording of the two policies issued by Guardian to Victoria, but all the relevant facts.
Here is in brief the situation disclosed by the record. Victoria was carrying on a business described in the application for the Garage Automobile Insurance Policy, (the “Garage Policy”) as “Repairs, Selling & Servicing of Tires & Parking of Automobiles on their Premises”. It had for many years been protected by two policies issued yearly by Guardian through A. Diamond Inc. who countersigned the policies as “Authorized Representative”. It should be noted that it was provided in each of these policies that it would not be valid unless so countersigned. The Garage Policy provided insurance against legal liability for bodily injury or death or damage to property of others up to $100,000. No automobile was specifically described in that policy. The other policy was called a Fleet Policy, it covered six described cars listed in a schedule stating the coverage. The Ford car with which we are concerned is the third item listed in this schedule, at the top, of which one reads:
PARTICULARS OF THE DESCRIBED AUTOMOBILES ARE AS LISTED BELOW. INSURANCE UNDER THE SECTION(S) OR SUBSECTION(S) OF THE INSURING AGREEMENTS SHALL APPLY TO A DESCRIBED AUTOMOBILE ONLY IF A PREMIUM IS SPECIFIED OPPOSITE THE DESCRIPTION OF THE AUTOMOBILE IN THE PREMIUM COLUMN DESIGNATED FOR SUCH SECTION OR SUBSECTION.
In the first Premium Column entitled: “Section A, Third Party Liability”, the following was typewritten, “See Garage Policy 8731469”. Save for the number of the relevant garage policy, the schedules for previous years always bore that same mention. The problem is that, whereas in previous years the wording of the Garage Policy was such that it did cover third party liability in respect of cars owned by Victoria, the Garage Policy issued about a month prior to the Fleet Policy did not because it included a rider in the following terms:
Q.E.F. No. 73
EXCLUDING OWNED AUTOMOBILES ENDORSEMENT
(Service Stations, Storage Garages and Parking Lots)
(For attachment only to Garage Policy Q.P.F. No. 4)
Notwithstanding anything contained to the contrary in subsection 1 of section A of the Insuring Agreements of the Policy, it is hereby understood and agreed that the Policy shall not cover the liability imposed by law upon any person insured by the Policy for loss or damage arising from the ownership, use or operation of any automobile owned, hired or leased by or registered in the name of the Insured.
This endorsement was mentioned in the application and a copy signed by the insured was in Guardian’s hands. It is on the basis of this endorsement that coverage is denied.
There are, however, other important facts which require consideration. Some of these are mentioned in a letter written by Diamond to Guardian under date April 16, 1971, from which I quote:
I think our position in asking that you honour this claim must be based on the fact that the Automobile Fleet Policy does not show the usual term “not covered” under the Public Liability section and instead, has always shown the words, “see garage policy number such and such”. I think it was fair of us to assume that this meant that the Public Liability protection was afforded under the Garage Liability Policy, so named. Granted that the last two renewals of the Garage Liability Policy contained a type reference to Q.E.F. 73, we cannot find any record of receiving a copy of that endorsement nor have we a copy of any correspondence from your office indicating such a drastic change in the protection. (I assume that lack of reference to this endorsement on previous policies clearly means that the vehicles were insured during those terms). It must also be noted that even the last two renewals of the Fleet policies still contained the reference under the Public Liability section to “see garage policy, etc.”
Lionel, I hope you do believe that our office would never knowingly allow our client to be unprotected as respects Public Liability for his owned vehicles. This is so basic as to make us unfit for licensing if we were to permit such a gap in their insurance. I know that we would refuse to write the insurance rather than knowingly allow such improper protection. And one final point, you referred in your second-2-last paragraph that “no coverage exists at this moment”. I trust you are referring solely to the claim as you will recall that while you were in my office, you agreed to hold covered the Insured’s vehicles pending settlement of this matter. We are operating on the assumption that as of this moment, full insurance is in force.
What happened is, I think, quite clear from the evidence and the exhibits. Guardian had been providing coverage for public liability, including public liability for automobiles owned by Victoria, under the Garage Policy. The premium for this protection was a percentage of the payroll. When the 1970 policy was prepared, Guardian had decided that it would no longer provide such coverage under the Garage Policy. In fact, it may have so intended the year before, because the 1969 Garage Policy mentions Endorsement Q.E.F. No. 73, but it seems that it was not attached and, therefore, was not effective. However, it was included the following year. This meant that coverage for the owned automobiles was to be provided in the Fleet Policy and a premium for each car should have been stipulated in the Schedule instead of the reference to the Garage Policy, but this was overlooked and no one realized it before the accident occurred. With the Fleet Policy Guardian supplied and Diamond forwarded to the insured, for each of the cars a “Motor Vehicle Liability Insurance Card” (the “Card”) describing the insured vehicle and mentioning the Fleet Policy number. The card issued by Guardian in respect of Victoria’s 1964 Ford car is as follows: Name and Address of Insurance Company GUARDIAN-UNION Group of Insurance Companies Head Office 240 St. James St. W. Montreal 1, Que.
Name and Address of Insured Victoria Tire Sales Ltd. 707 St. James St. West, Montreal, Que.
Insured vehicle—year make serial no. 1964 Ford, Galaxie, Ser. 463C64637978
Effective Date April 9th, 1970 8003623
Date of Expiry April 9th, 1971 Arthur Diamond Inc.
MOTOR VEHICLE LIABILITY INSURANCE CARD CANADA INTER-PROVINCE
This certificate is subject to the terms and conditions of the insurers standard automobile policy.
This certifies that the party named herein is insured against liability for bodily injury and property damage by reason of the operation of the motor vehicle described h