Executive Summary: Key Legal and Evidentiary Issues

• Dispute centered on whether an insurance agent misrepresented coverage available under a farm insurance policy.

• Plaintiff believed coverage included both existing and future-produced leafcutter bees and larvae.

• The Court found no contract existed between the plaintiff and the insurance agent, only with the insurer.

• O’Reilly Insurance Ltd. was held liable in negligence for failing to disclose that the requested insurance coverage was not available.

• Plaintiff failed to prove the actual availability of alternative insurance or quantify damages with sufficient evidence.

• Nominal damages and costs were awarded for the negligence, despite rejecting the bulk of the claim.

Facts and procedural background

Russell Kushniruk is a Saskatchewan-based farmer and teacher who raises leafcutter bees for pollination services. He insured his bees and anticipated larvae through The Co-operators via their exclusive agent, O’Reilly Insurance Ltd., beginning in 2017. After skipping a year, he renewed a similar policy in 2021. In both instances, Kushniruk dealt primarily with Gordon Ross, a farm and commercial advisor at O’Reilly. In 2017, Kushniruk had successfully made a claim under the policy following a windstorm and believed the same type of coverage would be provided in 2021.

In 2021, after another windstorm, Kushniruk again filed a claim. This time, The Co-operators denied it, citing a loss adjustment clause that stated no loss was covered if the number of bees or cocoons recovered equaled or exceeded the amount initially released. The insurer also indicated the 2017 claim had been paid in error and was not precedent-setting. Kushniruk subsequently brought a summary judgment application against O’Reilly Insurance Ltd. claiming $118,100 in damages for breach of contract and negligence.

Summary judgment and legal analysis

Both parties agreed that the matter was suitable for summary judgment. The plaintiff sought judgment on breach of contract, negligence, and damages. The defendant alternatively requested summary dismissal or, if a trial were necessary, partial summary judgment on the quantum of damages. The Court declined to grant partial summary judgment due to procedural and substantive limitations but found the case appropriate for full summary resolution.

No contract found between agent and insured

The Court undertook a detailed analysis of the legal relationship between O’Reilly and Kushniruk. It found that O’Reilly acted as an exclusive agent for The Co-operators and had no independent authority to offer or alter insurance coverage. Their role was confined to receiving customer input, entering it into the insurer’s system, and binding the policy upon approval. There was no evidence of a contractual agreement between Kushniruk and O’Reilly. Moreover, there was no meeting of the minds that would support an implied contract. Consequently, the Court held that the claim for breach of contract could not succeed.

Negligence established due to failure to disclose

Despite the absence of a contract, the Court determined that O’Reilly owed Kushniruk a duty of care in its capacity as a professional insurance agent. That duty included accurately informing customers about the scope of coverage and alerting them when requested coverage was unavailable. Evidence showed Kushniruk had expressly requested the same coverage he believed he had in 2017, including protection for larvae that would be produced during the season. O’Reilly failed to clarify that such coverage was not available in Saskatchewan, breaching the standard of care expected of a reasonable insurance agent. The Court found O’Reilly negligent for not informing Kushniruk of the policy limitations.

Damages not proven beyond premium paid

Although the Court found negligence, it rejected Kushniruk’s claim for over $118,000 in damages. The plaintiff failed to provide corroborating or expert evidence to quantify the alleged loss in production. There was also no evidence that equivalent coverage was available elsewhere in the insurance market. The Court concluded that damages were speculative and not proven on a balance of probabilities.

However, the Court held that Kushniruk was entitled to be restored to the position he was in before the negligent misrepresentation. As such, it awarded him $963, the amount he had paid for the misunderstood portion of the policy. The Court also awarded costs in the amount of $4,400 under Column 2 of the King’s Bench Tariff.