Executive Summary: Key Legal and Evidentiary Issues

• Whether the Appellant, as insurance broker, was professionally negligent in failing to advise the Respondent of the full consequences of not complying with the Vacancy Permit’s inspection requirements.

• Disagreement exists as to whether the Appellant communicated that failure to perform 72-hour inspections would result in a complete lack of insurance coverage.

• The evidentiary record contains no specific memory or documentation from either party regarding communication of the consequences of non-compliance.

• Usual practice evidence from the Appellant is not sufficient for summary judgment, as credibility must be assessed at trial.

• The adequacy of the Appellant’s advice regarding obtaining whole and complete coverage, including fire loss and co-insurance, remains a triable issue.

• Summary judgment was denied due to unresolved factual and credibility issues, and the appeal to dismiss the action against the Appellant was dismissed.

Background and facts of the case

401683 Alberta Ltd. (Respondent) owned a rental property that was vacant at the time it suffered fire damage. The Respondent had an insurance policy with Co-Operators General Insurance Company, obtained through 6341004 Manitoba Ltd. operating as Schellenberg Insurance (Appellant). A Vacancy Permit was issued for the policy, requiring internal and external inspections every 72 hours to maintain coverage. The Appellant advised the Respondent of this inspection requirement, and the Respondent indicated it had engaged a company to perform the inspections.

It is not disputed that the Appellant advised the Respondent of the inspection requirement, provided the Permit, held insurance reviews with the Respondent, and provided the insurance policy. It is also agreed that Co-Operators advised the Appellant that failure to comply with the inspection terms would result in a complete lack of coverage. However, it is not agreed whether this specific information was passed on to the Respondent by the Appellant. Neither the Appellant nor the Respondent’s corporate officers have any specific memory of this information being communicated, and there is no correspondence showing the exact consequences of non-compliance.

The Respondent’s expert suggested it is an insurance broker’s professional duty not only to advise of the requirement for inspections, but also to specifically advise their client of the exact consequences of failing to strictly comply with those requirements. The Applications Judge also found a triable issue remained with respect to whether the Appellant properly advised the Respondent as to obtaining whole and complete coverage for the property, including fire loss coverage and co-insurance issues, as alleged in the Respondent’s pleadings.

Policy terms and clauses at issue

The key policy term at issue was the Vacancy Permit’s requirement for internal and external inspections every 72 hours. Co-Operators advised the Appellant that failure to abide by the inspection terms of the Permit would result in a complete lack of coverage in the event of damage to the property. The dispute is whether this information was specifically conveyed to the Respondent.

Court’s analysis and outcome

The Appellant sought summary judgment under Rule 7.3 of the Alberta Rules of Court, arguing there was no triable issue. The court reviewed the summary judgment test, emphasizing that summary judgment is only appropriate where there is no genuine issue requiring a trial. The court found that neither party had a specific memory or documentation of a discussion about the consequences of failing to comply with the inspection requirement. The Appellant’s assertion that it was her usual practice to provide such information was not sufficient to resolve the issue without a credibility assessment, which is a matter for trial.

The court concluded that a fair and just summary disposition was not possible due to unresolved factual and credibility issues. The appeal was dismissed, meaning the action against the Appellant will proceed to trial. No amount was ordered or awarded at this stage. The successful party in this appeal was 401683 Alberta Ltd., as the dismissal of the Appellant’s application allows their claim to continue. The total amount for costs or monetary award cannot be determined from this decision, as it was not addressed and may be determined at a later stage or by agreement between the parties.