Supreme Court of Canada
Henwood v. Prudential Insurance Co. of America, [1967]
S.C.R. 720
Date: 1967-10-03
Margaret I. Henwood
(Plaintiff) Appellant;
and
The Prudential
Insurance Company of America (Defendant) Respondent.
1967: June 20; 1967: October 3.
Present: Cartwright, Martland, Judson,
Ritchie and Spence JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR
ONTARIO.
Insurance—Life—Disclosure—Application for
insurance requiring insured to answer certain questions—Untrue statements
respecting medical consultations for nervous condition—Whether concealment
“material to the insurance” within meaning of s. 149(1) of The Insurance Act,
R.S.O. 1960, c. 190 [rep. & subs. 1961-62, c. 63, s. 4].
[Page 721]
The plaintiff as beneficiary under a policy
of insurance issued by the defendant company to her daughter sued the defendant
following the death of the insured in an automobile accident. The sole defence
was that certain answers by the insured in the application for insurance were
not true and constituted material misrepresentations or non-disclosures which
induced the defendant to issue the policy. The application form included
questions as to whether the insured had ever been treated by a physician for
nervous disorders, or had any known indication thereof; whether she had been in
hospital, and whether she had in the past five years ever consulted or been
attended or examined by any physician or other practitioner. Although the
insured had undergone an emotional disturbance which lasted for more than a
year and had only cleared up a few months before the application was made, this
condition was not mentioned in any way in the application.
The trial judge dismissed the plaintiff’s
action after coming to the conclusion that the insured did consult some
physicians and psychiatrists for some illness and complaints and that she
failed to disclose those facts and that such information was material to the
defendant in considering the application for insurance. An appeal from the
trial judgment having been dismissed by the Court of Appeal, the plaintiff
appealed further to this Court.
Held (Spence
J. dissenting): The appeal should be dismissed.
Per Cartwright,
Martland, Judson and Ritchie JJ.: A misrepresentation is not necessarily
“material to the insurance” simply because it has been elicited in answer to a
question devised by the insurance company but where, as in the present case,
senior officials of the company testify that untrue answers given by the
insured would have affected the rate and the risk, there is evidence that these
answers bore a direct relation to the acceptance of the risk by the insurer.
If the matters here concealed had been truly
disclosed they would undoubtedly have influenced the defendant company in
stipulating for a higher premium and there was no evidence to suggest that this
was unreasonable or that other insurance companies would have followed a
different course. Accordingly, on the evidence before the Court, it had been
shown affirmatively that untrue answers respecting the medical advisers
consulted were material to the risk. This was enough to avoid the policy.
Per Spence J., dissenting: The
defendant failed to discharge the onus of establishing misrepresentation and
its materiality. The insurer chose to discharge that onus by calling certain
physicians consulted by the deceased and a nurse and then by calling two
officials who were its servants. The evidence given by these officials, who not
only testified as to the policy of their own company but testified that they
had no knowledge of the policies of other insurers, could not be accepted as a
discharge of the onus upon the insurer to prove that if the facts had been
truly represented they would have caused a reasonable insurer to decline the
risk or required a higher premium. If it were accepted that the defendant in
reciting its policy automatically recited the policy of a reasonable insurer,
then any idiosyncracy of an individual company expressed in its policy would
bind the Court to hold that non-disclosure of facts which were not in
accordance with that idiosyncracy was automatically material.
[Page 722]
[Mutual Life Insurance Company of New York
v. Ontario Metal Products Co. Ltd., [1924] S.C.R. 35, affirmed [1925] A.C.
344, applied; Zurich General Accident and Liability Insurance Co., Ltd. v.
Leven, [1940] S.C. 407, distinguished.]
APPEAL from a judgment of the Court of Appeal
for Ontario, dismissing an
appeal from a judgment of Landreville J. Appeal dismissed, Spence J.
dissenting.
Sanford World, for the plaintiff,
appellant.
Douglas K. Laidlaw, for the defendant,
respondent.
The judgment of Cartwright, Martland, Judson and
Ritchie JJ. was delivered by
RITCHIE J.:—I have had the benefit of reading
the reasons for judgment prepared by my brother Spence and it is with regret
that I find myself unable to agree with him.
At the time when application was made for the
life insurance policy here in question, the insured, in respect of whose death
the present claim is made against the respondent, appears to have been a frail
young woman who was 21 years old, weighed only 102 pounds, and had, two years
previously, undergone an emotional crisis caused by the breaking off of her
engagement due to religious differences with her fiance. The nervous condition
brought about by her unhappy love affair had resulted in consultation with the
family doctor and later with psychiatrists, as a result of which various
medications were prescribed. Her last visit to Dr. Murray, a psychiatrist
at St. Michael’s Hospital, appears to have been in June, 1962, and her mother testified
that during that summer her daughter’s health had not improved. She does not
appear to have returned to a normal condition until September, 1962, when her
mother was hospitalized for three months and she took over the household
duties. By February, 1963, she was well enough to go back to a job in which she
was employed at the time when she made the application for insurance.
The application for insurance required the
insured to answer a number of intimate questions concerning her health. There
were eighteen questions which included a query as to whether the insured had
ever been treated by a physician for nervous disorders, or had any known
indica-
[Page 723]
tion thereof; whether she had been in hospital;
whether she had in the past five years ever consulted or been attended or
examined by any physician or other practitioner. Notwithstanding the probing
nature of these questions, the answers given by the insured gave no indication
whatever of her having had any medical or nervous troubles except for an X-ray
of her right foot which was treated by the family physician and a check-up by
an unknown doctor as a result of an automobile accident. The emotional
disturbance, which had lasted for more than a year and had only cleared up a
few months before the application was made, was not mentioned in any way in the
application form signed by the insured which forms a part of the contract of
insurance itself by virtue of the general provisions of the policy entitled
“Contract” which read as follows:
This policy is issued in consideration of
the application herefor and of the payment of premiums as provided herein. The
policy, together with the application, a copy of which is attached hereto and
made a part hereof at issue, constitutes the entire contract. All statements
made in the application will in the absence of fraud be deemed representations
and not warranties, and no statement will avoid the policy or be used as a
defense to a claim hereunder unless it is contained in the application.
This section of the contract must be read in
light of the provisions of s. 149(1) of The Insurance Act, R.S.O. 1960,
c. 190, as amended by 1961-62 (Ont.), c. 63, s. 4, which reads:
149.(1) An applicant for insurance and a
person whose life is to be insured shall each disclose to the insurer in the
application, on a medical examination, if any, and in any written statements or
answers furnished as evidence of insurability, every fact within his knowledge
that is material to the insurance and is not so disclosed by the other.
The unfortunate insured was killed in a motor
vehicle accident on May 17, 1964, and it is not disputed that the answers which
she made in the application for insurance had no bearing whatever on the
circumstances of her death.
The learned trial judge, after reviewing the
evidence in a manner most favourable to the appellant, was nevertheless unable
to disregard the fact that the insured had consulted physicians and
psychiatrists and had failed to disclose these facts. On these grounds he
concluded his judgment with the following findings of fact which governed the
disposition of the action and which were tacitly approved by
[Page 724]
the unanimous decision of the Court of Appeal
for Ontario, which dismissed an
appeal from his judgment without giving written reasons. The learned judge
said:
On the evidence before me, I can come to no
other conclusion but that (a) the insured did consult some physicians and
psychiatrist for some illness and complaints; (b) she failed to disclose
these facts for reasons unknown to me.
The defence alleges the untrue answers to
have been material to the risk. It affirms it, and I have before me no evidence
to contradict same. In the light of the decisions which have been quoted to me
and which I have read, I must find in favor of the defendant.
Had the plaintiff produced medical
testimony to support the inference that the sickness was not a nervous or
mental disorder; had it produced some expert evidence by some known underwriter
disagreeing with the opinion of the defence of materiality of the answers, the
decision might have been otherwise. I would hope to be found wrong in this
decision.
I agree that untrue statements were undoubtedly
made by the insured with respect to the medical advisers whom she had consulted
about her nervous condition and it appears to me that the only question
remaining to be determined on this appeal is whether, in making these
statements, the insured was concealing from the appellant a fact or facts
within her knowledge “material to the insurance” within the meaning of s.
149(1) of The Insurance Act, supra.
There is, in my view, no doubt that the question
of materiality is one of fact and, as the learned trial judge has pointed out,
no evidence was called on behalf of the appellant to contradict the categorical
statement made by the respondent’s own doctor to the effect that if true
information had been available to the respondent, the premium rate for the
policy would have been a very high one.
Dr. Roadhouse gave the following evidence
in this connection:
MR. LAIDLAW: NOW, Doctor Roadhouse, I
observe to you as a fact that this application form contained none of this
information. That is just a statement of fact. My question is this: If you had
had the information that I have now summarized for you, what action, if any,
would have been taken by you in your capacity as Associate Medical Director in
accepting or rejecting this application?
A. We would have required a medical
examination. We would have required statements from the doctors who had
attended her in the past. Had we obtained the history that is now apparent, we
would have issued the policy at a very high rate.
[Page 725]
It is also apparent from Dr. Roadhouse’s
evidence that if he had had access to the information which would have been
made available if the insured had answered the questions truthfully, the policy
would not have contained any accidental death benefit provision or any
provisions for non-occupational vehicle accident.
It is true that Dr. Roadhouse was employed
by the respondent company and that his statements regarding the materiality of
the untrue answers made by the insured are based in great measure upon his
experience with that company, but I do not think that his evidence can be
disregarded on this account or that his qualifications as a medical graduate of
the University of Toronto are to be ignored on account of his having been the
Associate Medical Director of the respondent insurance company for more than
eleven years. As has been indicated, his evidence was totally uncontradicted.
The evidence of Dr. Roadhouse is in
striking contrast to that given by Dr. McCullough, the insurance company
doctor who testified in the case of Mutual Life Insurance Company of New
York v. Ontario Metal Products Company, Ltd.
(hereinafter referred to as the Mutual Life case). In the latter
case the insurance company relied on the defence of misrepresentation in
exactly the same way as the respondent does in this case. As I have indicated,
the striking difference between the two cases lies in the evidence of the
company doctor. This is apparent from what is said by Lord Salvesen at p. 352
of the report of the proceedings of the Privy Council where the circumstances
are described as follows:
...the evidence which has impressed their
Lordships most is that of Dr. McCullough—a witness adduced by the
appellants and who, as their medical examiner in Toronto, was the person by whom they would naturally be guided in accepting
or declining the risk. Now Dr. McCullough states that if
Dr. Fierheller’s name had been mentioned, he would have noted it in the
answer to question 18, but he also emphatically states that if he had known at
the time all that Dr. Fierheller deposed to in evidence, he would still
have sent up the case with a recommendation for acceptance. In other words,
having, as the result of his own examination, passed Mr. Schuch [the insured]
as a healthy man, his opinion would not have been altered by his prior medical
history as now ascertained in great detail.
As the Mutual Life case is relied on by
the appellant, it appears to me to be desirable to stress the distinction that
[Page 726]
exists between the facts there disclosed and the
facts in the present case. In the Mutual Life case, Lord Salvesen had
occasion to say, at p. 350:
The main difference of judicial opinion
centres round the question what is the test of materiality? Mignault J. thought
that the test is not what the insurers would have done but for the
misrepresentation or concealment, but ‘what any reasonable man would
have considered material to tell them when the questions were put to the
insured’. Their Lordships are unable to assent to this definition. It is the
insurers who propound the questions stated in the application form, and the
materiality or otherwise of a misrepresentation or concealment must be
considered in relation to their acceptance of the risk.
It must, of course, be recognized that a
misrepresentation is not necessarily “material to the insurance” simply because
it has been elicited in answer to a question devised by the insurance company
but in a case where senior officials of the company testify that untrue answers
given by an insured would have affected the rate and the risk, there is, in my
opinion, evidence that these answers bore a direct relation to the
acceptance of the risk by the insurer. The question that remains to be
determined is whether, in treating the untrue answers as material, the
respondent was acting as a reasonable insurer, and whether it has sufficiently
discharged the burden of proving that its actions were those of such an insurer
by calling its own officials to prove the company’s practice.
Like the learned trial judge, I cannot escape
from the fact that there is no evidence to suggest that any reasonable
insurance company would have taken a different attitude, and I am also
impressed by the fact that Dr. Roadhouse spoke as a medical doctor who had
had 11½ years’ experience in the specialized field of underwriting in his
capacity as medical director of the respondent company.
Although the evidence of expert witnesses as to
whether or not other insurance companies consider a question to be “material”,
is admissible and may be relevant in such a case as this, I do not think that
when no evidence whatever has been adduced to suggest that the respondent’s
practice is anything but reasonable, it is seized with the burden of proving
the practice of other insurers.
My brother Spence has cited an excerpt from
Halsbury’s Laws of England, 3rd ed., vol. 22, at p. 188, para. 360, in
[Page 727]
which the learned authors, speaking of
materiality of representations in insurance policies, say:
...that the test hinges on whether the
representation is of such a nature as to influence the judgment of a prudent
insurer, not on whether the representation influenced the particular insurer
looking at the proposal.
I think it desirable to point out that the
authority relied on by the authors for this proposition is Zurich General
Accident and Liability Insurance Co., Ltd. v. Leven. That was a Scottish case which was
concerned with a motor vehicle liability policy in which the insured had failed
to disclose a six-year-old conviction under the Road Traffic Act and
evidence was called to show that the majority of insurance companies did not
regard a conviction which was “more than five years old” as being material to
the insurance. In the course of his judgment, the Lord Ordinary observed:
The insurance companies which call for
information as to convictions without any limit of time are in a small
minority, but it may be that experience will prove that they alone are prudent
insurers, certainly as regards convictions that are less than seven years old.
In any event, it is evident from their practice in the matter, standing in
contrast as it does with the well-known time-limited practice of most
companies, that they regard the ‘particular’ as to convictions, no matter how
old, as ‘material’.
In the Court of Appeal Lord Moncrieff stated the
matter thus:
It seems to me that the question of what is
prudent for an insurer to do must depend less upon the practice of others as to
the risks they underwrite than upon the individual practice which he finds,
according to the scale of his charges and his experience of insurance, to be
that upon which it is profitable for himself to do business.
In the present case it is not necessary to adopt
the language of Lord Moncrieff because, as I have indicated, there was no
evidence here as to the practice of the other insurance companies. The
determination of this appeal is to be governed by what was said by Lord Salvesen
in the Mutual Life case at pp. 351-2 where he said:
...it is a question of fact in each case
whether, if the matters concealed or misrepresented had been truly disclosed,
they would, on a fair consideration of the evidence, have influenced a reasonable
insurer to decline the risk or to have stipulated for a higher premium.
If the matters here concealed had been truly
disclosed they would undoubtedly have influenced the respondent
[Page 728]
company in stipulating for a higher premium and
as there is no evidence to suggest that this was unreasonable or that other
insurance companies would have followed a different course, I am satisfied
that, on the evidence before us, it has been shown affirmatively that untrue
answers respecting the medical advisers consulted by the insured were material
to the risk. This is enough to avoid the policy.
I would accordingly dismiss this appeal with
costs.
SPENCE J. (dissenting):—This is an appeal
from the judgment of the Court of Appeal for Ontario which by its judgment pronounced on April 14, 1966, dismissed without written
reasons an appeal from the judgment of Landreville J. pronounced on November 5,
1965.
The appellant was the named beneficiary under a
life insurance policy issued by the respondent to the daughter of the appellant
Margaret M. Henwood. The insured was born on May 1, 1943. The policy was issued on March
18, 1963, i.e., when the insured was only 19 years of age. The insured
died on May 17, 1964, as a
result of an automobile accident in which she, the passenger, and another
person, the driver, were both killed.
It was admitted at trial and repeated in
argument in. this Court, that the cause of death had no relation whatsoever to
any of the allegations as to misrepresentation, upon which allegations the
defence of the insurance company rested. Under the provisions of s. 149(2) of The
Insurance Act, R.S.O. 1960, c. 190, as amended by 1961-62 (Ont.), c. 63, s.
4, a failure to disclose or a misrepresentation renders the contract voidable
by the insurer and, therefore, the lack of any relationship between the said
failure to disclose or misrepresentation, and the cause of death is irrelevant,
except, that, in my view, that circumstance certainly does not lessen the onus
upon the insurer, with which I shall deal hereafter. Some of the facts are
relevant.
The late Miss Henwood had left high school in
January 1960 and took employment as a clerk in the office of a Toronto newspaper. She had been a
practising Roman Catholic and very devout in her religious beliefs. In that
year, she met a young man whose faith was that of a
[Page 729]
Jehovah Witness. Their relationship deepened and
the late Miss Henwood very seriously considered marriage to this young man but
she was concerned with their varying religious faiths. Moreover, her parents
objected most strenuously to the idea of marriage. There is no doubt that this
personal problem and also the vague antipathy between the late
Margaret Henwood and her father caused the insured a certain degree of
emotional strain. It must be remembered that at this time she was a mere girl
of 16 or 17 years of age. She became so worried that she stopped working
feeling she could no longer face people and she even was reluctant to ride in
street cars. Some of the facts showed, again in an indefinite fashion, that the
insured suffered a certain amount of stomach distress, perhaps some difficulty
in getting to sleep and some other vague complaints which, in my personal view,
were of a very minor nature. It would appear from the evidence that this
condition, and particularly the reason for it, that of the strain between
religious beliefs and her romantic desires, concerned the plaintiff, her mother
so that she arranged for an examination by the family physician, Dr. A.
Valadka.
Apart from other unrelated complaints such as
sprained ankle, etc., Dr. Valadka saw the insured on October 25, 1960, and
on infrequent occasions until December 6, 1961. On the first of these occasions, the insured’s complaint was as to
an allergic dermatitis, which certainly could have no relationship to the
misrepresentation alleged, but on March 27, 1961, the insured was complaining
of tiredness, and Dr. Valadka advised her to rest and to improve her diet
habits, feeling that she was underweight. On April 24, 1961, he again saw her
when she complained of tiredness and general exhaustion. He had blood tests
performed at St. Joseph’s Hospital in Toronto which showed only that her
hemoglobin count was a little below normal and he prescribed a form of iron
pills described as “Palaron” and also prescribed a parstelin tablet twice a day
“for her depressed condition”. Dr. Valadka saw her next on May 13, 1961, but then he did not see her until
December 9, 1961, when her weight had increased a few pounds to 107 but she
still complained of being tired. At this time, Dr. Valadka said that he
advised her to take up some sports such as swimming and to start to work. That
is the last time he
[Page 730]
saw her or even heard of her until he was
subsequently informed of her death. Dr. Valadka’s summary in
cross-examination and to the learned trial judge was as follows:
Q. Doctor, there is no doubt in your mind
that she had no suicidal tendencies of any sort? A. No, not at all. I never had
even an impression of that.
Q. Would it be fair to say that it would be
virtually impossible to—impossible to accidentally take a fatal overdose of
whatever you prescribed for her?
His LORDSHIP: Iron pills?
MR. WORLD: Well, she had parstelin, your
lordship.
A. Only twenty-four tablets for a short
period of time, no.
His LORDSHIP: How would you describe her
condition generally, though? Was she a very sick girl?
A. No, I had the impression she’s like the
normal average, teen-age girl at that age when they usually start to have some
problems, discussions at home, arguments with parents, or especially father due
to some disagreement about the dates and things like that, but nothing unusual.
Q. Did you ever hear about her boy friend?
A. She mentioned having a boy friend, and she mentioned of difficulty getting permission
for dating boy friend.
Q. Is it unusual for a girl of that age, at
that time, to be low in hemoglobin and nervous, is that an unusual condition?
A. At that age, it’s quite frequent that girls are a little bit anemic,
especially if they put themselves on certain diets—if they start diet for some
reason.
Q. She had gained three pounds, you say? A.
She went from 104 in March to 107 in December; December, 1961.
I stress that this is the opinion of the general
practitioner who was the family physician.
Dissatisfied with her daughter’s condition, the
plaintiff arranged that she should see a Dr. Blake, a psychiatrist. She
saw Dr. Blake only on three occasions and discontinued the attendances
because she was unable to meet the financial demands of such a course.
Dr. Blake died subsequently and therefore we have no information as to
what occurred on those three attendances. Again, the plaintiff arranged that
her daughter, the insured, should see a person whom she chose as a Roman
Catholic psychiatrist, and was recommended to a Dr. Cyril V. Murray, in
the outpatients’ clinic at St. Michael’s Hospital, in Toronto. She attended Dr. Murray in April 1962 and in accordance with
the practice in the clinic she was interviewed by Dr. James L. Mclntyre,
who took a history, and by a public health
[Page 731]
nurse, Miss Dorothy M. Carr. There is little to
be gained by reciting the evidence of either Dr. Mclntyre or Miss Carr as
it is chiefly a repetition of that set out above. Dr. Murray’s
consultations with the insured covered only the three months from April 1962 to
June 28, 1962. Again, he
repeats the two sources of emotional strain which worked upon the insured and,
to the learned trial judge’s question, “The main cause being what?”, he
replied:
A. Well, my feeling was that the main cause
was the conflict over her boy friend, and it was during this period that she
first began to seek help for the condition as outlined.
Q. There was no organic, of course,
sickness or disease?
A. Nothing organic, no, sir, no.
Cross-examined by counsel for the appellant,
Dr. Murray gave his opinion definitely that there was no suicidal tendency
and that the medication which he prescribed for her by name “Mellaril”, a
tranquilizer, could not be accidentally taken in a fatal overdose. He diagnosed
the condition as a temporary one and to the learned trial judge’s question:
Q. I just haven’t got a correct picture of
how that girl was at that time. Would you describe—how would you describe her
condition, as a slight condition of depression or anxiety, or would you
describe it as medium, or grave?
he replied:
A. I would describe it as medium or
moderate.
Dr. Mclntyre had given his tentative
diagnosis as “endogenous depression” and added he could find no organic cause
in examination. Blakiston’s New Gould Medical Dictionary defines “endogenous”
as being produced within; due to internal causes, but particularly in
psychology, arising from within the body and directly affecting the nervous
system, as a hereditary or constitutional disorder. There was no evidence
whatever of any hereditary tendency to mental disorder.
As I have said, the insured did not see
Dr. Murray after June 1962. The appellant, the insured’s mother, swore
that the reason for this was that the insured felt that she was not getting anywhere,
that her problem with the young man was not solved, and “she felt she wanted to
get a job”. On September 10, 1962, the appellant herself became a
[Page 732]
patient at St. Michael’s Hospital and underwent
a very serious surgical operation. The appellant was discharged from the
hospital on December 8, 1962.
During the time the appellant was hospitalized and for a considerable time
thereafter, the insured carried on all the housework. The appellant testified
that that included arising at 6:30 a.m., preparing breakfast for the
appellant’s husband and for her sons, and two boarders, and preparing seven
lunches for them to take out. She did all the cooking, all the laundry, and the
management of the financial end of paying the bills and the appellant added,
“she did a very fine job”. The appellant was able to gradually take over from
her daughter after she was released from the hospital so that in February 1963
the insured was free to take a position and did so with a hardware company in
Toronto where she was a bookkeeper and where she continued to be employed until
the date of her death.
One William Clark, an agent for the respondent
insurance company, had issued certain policies in connection with the
appellant’s family and called at the house on frequent occasions to collect
premiums. On March 18, 1963, i.e.,
one month after her return to employment, he took from the insured an
application for the policy in question. It is as to questions 5a, 7b, 9a, 11
and 17 that the respondent complains as to failure to disclose and
misrepresentation. Those questions and answers are as follows:
5a. How much has your weight changed in the
past year?
None
Gain Loss
x
..... ...lbs. ...lbs.
7. Have you ever been treated by any
physician or other practitioner for or had any known indication of:
. . .
b. nervous or mental disorder, paralysis,
or severe or frequent headaches?
Yes No
x
..... .....
9. Have you ever:
a. been in any hospital, sanitarium, or
other institution for observation, rest, diagnosis, treatment, or any
operation?
Yes No
x
..... .....
11. Other than as disclosed in the answers
to Questions 7 through 10, have you, within the past 5 years, ever consulted or
been attended by or been examined or had a check‑up by any
physician or other practitioner?
Yes No
x
..... .....
[Page 733]
17. What are the full particulars with
respect to each and every part of Questions 6 through 16 to which the answer is
“Yes”?
|
|
Condition and Names and Complications, or Other
Reason (If operated, so state)
|
|
|
|
Name and Addresses of Physicians and Hospitals
|
|
lc x-ray
|
foot (right, sprain)
|
7-60
|
1
month
|
8-60
|
Dr. Valadka, Bloor
St. W.
|
|
11
|
Check-up—result of car accident—x-ray
taken
|
12-60
Result-ok.
|
|
|
Dr. Unknown St. Joseph’s Hospital
|
The learned trial judge disposed of 5a, the
question as to change of weight in the past year, by pointing out that every
human being varies in weight in any year and that the variation in the weight
of the insured was of only a few pounds and therefore was negligible.
Question 9a—“Have you ever been in any hospital,
sanitarium, or other institution for observation, rest, diagnosis, treatment,
or any operation?” was answered in the negative. As the learned trial judge
points out, the insured never was a patient in bed in a hospital although she
did go to the out-patient department for her consultation with Dr. Murray.
Since Anderson v. Fitzgerald, the doctrine of contra
proferentem has been well established in reference to the terms of an
application for insurance. The words in an application should be construed in
their ordinary and usual fashion, and certainly any person reading section 9a
would never believe that it applied to a visit to an out-patient department of
a hospital and would certainly be of the opinion that he was being asked
whether he had ever been confined in bed in a hospital as a patient. I am
unable to find in the insured’s answer to question 9a non-disclosure or
misrepresentation upon which the respondent can rely.
Questions 7b, and 17, the answers to which give
the detail as to which question 11 asked only an affirmative or negative
answer, must be the subject of more particular consideration.
Section 7b asks whether the insured had ever
been treated by any physician or other practitioner or had any known indication
of “nervous or mental disorder, paralysis, or severe or frequent headaches”.
There was no evidence
[Page 734]
whatsoever of paralysis or severe or frequent
headaches, so the alleged non-disclosure or misrepresentation is reduced to the
words “nervous or mental disorder”. Again, the question must be interpreted as
the words are understood in the ordinary use of the English language and, in my
view, “nervous or mental disorder” means a mental illness and may well be a
euphonious designation of insanity. The respondent had called as its witness
the psychiatrist whom the insured consulted. The respondent was dealing with
question 7 and its answer, yet counsel for the respondent never asked and may
indeed be said to have refrained from asking whether there was any “nervous or
mental disorder”. Indeed on examination-in-chief by counsel for the respondent,
Dr. Murray was not asked to give any diagnosis and his only approach to a
diagnosis was an answer to a question by the learned trial judge who asked
whether Dr. Murray would describe the insured’s condition as a “...slight
condition of depression or anxiety or would he describe it as medium or grave”,
to which Dr. Murray replied he would describe it as medium or grave. It is
to be noted that the word “depression” was used by the learned trial judge and
I am of the opinion it was not used in a technical‑medical sense.
Dr. Murray also stated in the answer to His Lordship’s question that if
things were better with her boy friend she would have recovered rapidly.
Dr. Mclntyre who was not a psychiatrist,
and in fact who had graduated only in 1959, the trial taking place in October
1965, gave as I have said a tentative diagnosis of “endogenous” depression.
Blackiston, op. cit., describes “depression” in psycho-pathology as
A mental state of dejection usually
associated with manic depressive psychosis. Mild depression with anxiety and
hypochondria is frequently seen in youth of both sexes and often occurs
whenever the adult sex problem becomes acute, as after engagement or marriage.
Depression may also occur as a result of an external situation, being relieved
when the external situation is removed.
Neither Dr. Murray nor Dr. Mclntyre
ever used the words “neurosis” or “psychosis” in their evidence. It is true
that Dr. Roadhouse used the former word and I shall deal with his evidence
hereafter.
Question No. 17 asked the full particulars in
respect of each and other information; questions 6 through 16 to which the
answer was in the affirmative, therefore, required the insured to give the
detail in reference to
[Page 735]
question 11 and which she had answered in the
affirmative. In answer to question 17 the insured was required to recite any
consultation, attendance or examination by any physician or other practitioner
within the last five years. The insured gave the name of Dr. Valadka, to
whom I have referred above, as to an x-ray of the right ankle for a sprain, and
a check-up—the result of a car accident when x-rays were taken—the said
check-up taking place at St. Joseph’s Hospital and the name of the doctor
not being known to the insured. In the five years previous to the date of the
application, i.e., March 18, 1963, the insured had consulted Dr. Valadka, Dr. Blake, Dr. Mclntyre
and Dr. Murray, as I have outlined above. There is, therefore, in the
insured’s answer to question 17 at least non-disclosure. The insured signed the
declaration immediately following question 17 which read, in part, “I hereby
declare that all the statements and answers to the above questions are complete
and true and include full particulars...”
The respondent has not alleged that there was
any fraud on the part of the insurer and has repeated that disclaimer in
argument before this Court. Therefore, to effect the avoidance of the policy
the non-disclosure or misrepresentation not only must be established but its
materiality must be established. The onus of establishing misrepresentation and
its materiality is upon the insurer: Joel v. Law Union and Crown Insurance
Company;
Ontario Metal Products Company v. Mutual Life Insurance Company of New York, affirmed on appeal by the Judicial
Committee sub nom. Mutual Life Insurance Company of New York v. Ontario
Metal Products Company, Ltd.
The insurer in the present case chose to attempt
to discharge that onus by calling the physicians and the nurse to whom I have
referred above, and then by calling two officials who were its
servants—Dr. Robert Roadhouse and Miss Alice Degnan. Dr. Roadhouse
was the associate medical director of the respondent. He had graduated from the
University of Toronto in the
year 1950 and he testified that for the 11 years previous he had occupied the
aforesaid position, i.e., since May 1953. If one adds to the year 1950
the inevitable one or two years internship which medical doctors are always
required to undergo, it would
[Page 736]
seem that Dr. Roadhouse’s reference to
being in the practice of medicine for “a short time” is by no means an
exaggeration. Dr. Roadhouse had listened to the evidence throughout the
trial prior to the time when he was called and that evidence was summarized for
him by counsel for the respondent. He testified that he would have classified
the insured’s condition as “severe neurosis” as it fell within the definition
of such an illness in the rating manual used by the respondent company, i.e.,
consisted of episodes of more than three months’ disability or requiring
shock treatments. In the first place, there is no remote suggestion that shock
treatment was ever considered by any physician as being required for or
beneficial to the insured. As I have said, the word “neurosis” was never used
by any medical witness prior to its use by Dr. Roadhouse and he seems to
have felt himself entitled to use that designation because of the attendance on
two psychiatrists “plus treatment with a specific anti-depressant which was
parstelin”. Dr. Roadhouse testified and Miss Degnan, an underwriting
consultant, confirmed that had such a situation been revealed to the respondent
then the insured would have been required to have a medical examination, she
would have been required to produce statements from the attending physicians,
and she would have been rated as “special class 3” at least. Moreover, no
accidental death benefit would have been issued. Dr. Roadhouse’s
cross-examination was revealing. He testified that for the purposes of medical
underwriting the respondent regarded severe episodes of neurosis as involving
more than three months’ disability and that disability was “illness requiring
an individual to either resign their job or inability to carry on in the job”.
On the evidence, the insured had ceased her
employment in the newspaper office in August 1961. It was not established that
she was forced by her condition to resign or advised either by a physician or
anyone else that she should do so but merely that she felt with her frequent
absences from work “it had to be all or nothing”. As I have pointed out,
Dr. Valadka testified that on December 6, 1961, he advised the insured to
start work. The insured had expressed the desire to work in June 1962 when she
ceased to see Dr. Murray and she commenced strenuous work in September
1962 when the appellant, her mother,
[Page 737]
was hospitalized. On this evidence, I am of the
opinion that the respondent had not discharged the onus of showing that even
under the respondent company’s policy the insured had suffered such severe
neurosis as would characterize her failure to completely answer question 17 as
a material non-disclosure. In the first place, I do not see how
Dr. Roadhouse was entitled to assume that the insured suffered neurosis;
in the second place, I do not see how it had been proved that the insured’s
condition, if it amounted to neurosis, was severe.
It should be noted that Dr. Roadhouse
specifically disqualified himself from expressing any opinion on psychiatric
subjects and did so not once but repeatedly. It should also be noted that both
he and Miss Degnan declared that their answers as to the materiality of the non‑disclosure
were based upon the practice of the respondent company alone and that they had
no knowledge of the policy of other insurers. The test of materiality is what
would influence the judgment of a prudent insurer. Halsbury, 3rd ed., vol. 22,
at p. 188, para. 360, says:
It may nevertheless be necessary or
advisable to have evidence of experts as to insurance practice, seeing that the
test hinges on whether the representation is of such a nature as to influence
the judgment of a prudent insurer, not on whether the representation influenced
the particular insurer looking at the proposal.
MacGillivray on Insurance Law, 5th ed., 1961, at
p. 402, para. 827, says:
The test is, whether if the matter
misrepresented had been truly represented it would have influenced a reasonable
insurer to decline the risk or to have stipulated for a higher premium.
Mutual Life Insurance Company of New York v.
Ontario Metal Products Company, Ltd. per Lord
Salvesen at pp. 351-2, says:
In their view, it is a question of fact in
each case whether, if the matters concealed or misrepresented had been truly
disclosed, they would, on a fair consideration of the evidence, have influenced
a reasonable insurer to decline the risk or to have stipulated for a higher
premium.
I am of the opinion that the evidence given by
Dr. Roadhouse and by Miss Degnan cannot be accepted as a discharge of the
onus upon the insurer to prove that if the facts had been truly represented
they would have caused a reasonable insurer to decline the risk or required a
higher premium.
[Page 738]
Counsel for the respondent stressed that such
evidence was at least some evidence upon the subject and it was not
contradicted at all.
I have reached the view which I have set out,
however, on the basis that these two witnesses not only testified as to the
policy of their own company but testified that they had no knowledge of the
policies of other insurers. This, therefore, would require the Court to hold
that the respondent in reciting its policy automatically recites the policy of
a reasonable insurer. If one were to arrive at such a conclusion, then any
idiosyncracy of an individual company expressed in its policy would bind the
Court to hold that non-disclosure of facts which were not in accordance with
that idiosyncracy was automatically material. It must be remembered that if a
company wishes to take the position that any non-disclosure is material to it
no matter what the view of reasonable insurers, then it should put the answers
of the questionnaire by the insured in the position of conditions or
warranties.
As pointed out by Lord Salvesen, supra, the
question of materiality is a question of fact. In my opinion, the learned trial
judge made a direct finding on this question of fact when he said:
I, in turn, am tempted to flatly disagree
with him. In March 1963, the circumstances were vastly different. For some
months Margaret had ceased going out with the young man which was the serious
cause of her conflicts of emotions. She was working steadily and appeared to be
a happy girl. She was frail, as she always had been, and I come to no other
conclusion that her anxieties and depression had long vanished. I find much
quarrel with the ambiguities and looseness of the words in the medical
questions of the application form. I give the following as examples:
5a How much has your weight changed in the
past year?
I give it as common knowledge that one’s
weight is never static. Within ounces and a few pounds gained or lost, it
varies in every year. Taken verbatim and accurately therefore the answer “none”
would be an untrue one. I hold as a fact that Margaret varied but a few pounds
one way or the other. In March 1961 she weighed 104 lbs. and on the application
date, in the same month, two years later, she weighed 102 lbs.
As I have said, that was a clear finding of fact
that the non-disclosure or misrepresentation was not material, and I can only
conclude that the learned trial judge was misled into believing that his duty
was to dismiss the action once misrepresentation or non-disclosure had been
proved despite the failure to prove its materiality.
[Page 739]
For these reasons, I would allow the appeal with
costs throughout and award judgment to the appellant in the sum of $15,000 with
interest at 5 per cent per annum from the date of the issuance of the writ.
Appeal dismissed with costs, SPENCE J.
dissenting.
Solicitors for the plaintiff, appellant:
Olch, World & Torgov, Toronto.
Solicitor for the defendant, respondent:
John J. Robinette, Toronto.
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