Hemeon v. District of West Hants, 2008 NSSC 234 examines the interplay between section 69.4 of Canada’s Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”), and section 28 of Nova Scotia’s Insurance Act, R.S.N.S. 1989, c. 231.
The BIA provides for an automatic stay of proceedings in all litigation against a person who makes an assignment in bankruptcy, but then permits that stay to be lifted if the applicant can demonstrate that it will be “materially prejudiced” by the stay, or that lifting the is “equitable on other grounds”.
The Insurance Act provides that if a person obtains judgment against another for which there is insurance, and execution against the judgment debtor is returned unsatisfied, then the judgment creditor can bring the same action against the insurer, and the insurer will be liable up to the face value of the policy.
Although the case is based on Nova Scotia legislation, most provincial insurance legislation contains provisions similar to those interpreted in this case.
In Fleet v. Federated Life and Bellefontaine, 2008 NSSC 231 (CanLII), an insurance broker was found liable to re-imburse the insurer for payments made on a life insurance policy, where the broker inserted misleading answers about the insured’s health in an application for life insurance, and then forged the insured’s signature.
At trial, counsel for the plaintiff entered the broker’s entire transcript from the examination for discovery. The broker chose not to take the stand as a result, arguing that the plaintiff was bound by the evidence tendered, which denied that the broker forged the insured’s signature.
Justice G. Moir found that entering an adverse party’s discovery evidence does not make the adverse party a witness in the tendering party’s case, and therefore the tendering party is not bound by the adverse party’s discovery evidence.
His Lordship also found that the broker breached his contractual and fiduciary duties to the insurer, and was liable to reimburse the insurer for the amounts owed to the insured under the policy.