Cite as: Metropolitan Life Insurance Company v. Boudreau, 1986 NSCA 2 IN THE SUPREME COURT OF APPEAL DIVISION Clarke, C.J.N.S.; Pace and Matthews, JJ.A. BETWEEN: METROPOLITAN LIFE INSURANCE COMPANY Appellant - and DONALD PAUL BOUDREAU and HEATHER FAITH BOUDREAU Respondents THE COURT: Appeal dismissed with judgment of Matthews, and Pace, J.A., concurring S.C.A. 01549
NOVA SCOTIA David R. Chipman, Q.C., and Elizabeth M. Haldane for appellant S. Clifford Hood for respondents Appeal heard: June 17, 1986 Judgment delivered: June 26, 1986 costs as per reasons for J.A.; Clarke, C.J.N.S.,
MATTHEWS, J .A. : The sole issue before Judge was correct in finding that a policy of life insurance was reinstated. The pertinent facts judge, Mr. Justice Kelly, in 29,1985: "There was substantially the facts of the matter and counsel for the three parties agreed upon a statement well there were a number certain witnesses gave further viva ~ evidence: "In 1981 Boudreau purchased life insurance from the of these policies continued in disputed by the company and accidental death policy as beneficiary. "Boudreau apparently decided the premiums on the other he could pay and, after corne vacilation, determined to enter into a decreasing term life policy which had much lower premiums. had already received a number on the more costly policy, these funds the first six month on the new policy, which 16, 1982. In May of 1982 forwarded to Boudreau a of hi s overpaid premium in the The next premium payment which is the policy now made on the 16th of July, to make the premium payment cashed the cheque from the the refunded premium in The terms of the policy things, that it would lapse the premium was due, July was reinstated. us is whether the trial were set out by the trial his decision dated November no disagreement on of facts and as of agreed exhibi ts and two policies of insurance company: One force and was not the proceeds of this was paid to the widow that the cost of policy was more than As the insurance company of premium payments they deducted from premium of $125.00 was payable on January the insurance company cheque for the balance amount of $336.62. date on the new policy, in dispute, was to be 1982. Boudreau failed on this date and never insurance company for the amount of $336.62. provided, among other 31 days f rom the date 16, 1982, unless it
- 2 "In the meantime, Boudreau his wife early in 1982 and relationship with Heather was also, along with representative of his estate in this matter. "One of the senior officials gave evidence in this matter and among other things indicated that the company had a document would be sent to parties paid their premium approximately the premium was due indicating the manner in which the policy could be reinstated .... " That official testified said "This is to remind you not been paid". He also said stipulate that the company might valid upon receipt of the payment, nor did the notice indicate to Mr. Boudreau that his policy had lapsed or that it would be necessary for him to apply for reinstatement. that the notice solicited the would have meant to him [Boudreau] it he was still in good standing". The trial judge continued: "Apparently such communication was sent to Boudreau and a payment was forwarded the amount of $125.00 for and the insurance company a 'a provisional receipt' October, 1982. The document company referred to as advised Boudreau to 'apply of the policy and requested enclosed reinstatement it to them. The document particular attention to had separated from commenced a common-law Faith Boudreau, who Boudreau's brother, the of ·the company a procedure whereby who had not 48 days after that the notice simply the premium shown below has that the notice did not not consider the policy He agreed premium of $125.00 and "it that upon payment of to the company in the overdue premium provided to Boudreau dated the 21st day of which the insurance a 'provisional receipt' for reinstatement' that he complete an application and return asked Boudreau to pay the 'description of any
- sickness or injury which might have occurred since the end of the grace period'. listed certain conditions as follows: 'Pending the submission reinstatement and action thereon by the the sum tendered is held, of the payer, without any rights on the part of the the understanding that: (a) If the application submitted and is approved, be applied to the payment of any amount required to effect the reinstatement, receipt will be issued provisional receipt become null and void. Book was submitted, it will be held temporarily, pending action for reinstatement. (b) If the application not submitted promptly declines to reinstate said sum will be returned and this provisional receipt shall thereupon become null and void. (c) Any cheque or draft received may be handled for collection in accordance of the collecting bank receipt shall be void if such cheque or draft is Company. I The evidence indicates and signed this application thereon generally indicating that he had problems and that there was There appears to be no question that at the of his accidental death Boudreau was in good application was wi tnessed Heather Boudreau, and was October, 1982. Apparently this document was placed in the envelope provided mailed to the company prior The day following his death, Nickerson, presented the office of the insurance company in Yarmouth. 3 The documen t also of the application for Company, subject to the order obligation or waiver of Company, and wi th for reinstatement is the said sum will and an official in place of this which shall thereupon If your Premium Receipt for reinstatement is or if the Company the said policy, the wi th the practice or banks, and this the full amount of not received by the that Boudreau completed form, the information no health no change of the risk. time on November 15, 1982, health .... This signed by his common-law wife, dated the 30th day of by the company but never to Boudreau I s death. his solici tor, Andre~v document to the branch
- 4 "The company official Roy, indicated that the provided in all instances desired by a policy holder. of the policy was less than would be automatically of the outstanding premium not be required to be a policy with a face amount in excess of $50,000.00, the insurance company, required the completion of this document primarily to determine if there had the risk, particularly health changes .... ' It is significant that in evidence an internal memo Company had received the application form prior to the death of Boudreau, the policy would have been reinstated. The obligation of an insurance company to reinstate is provided in s. 148(2) of 1967, c. 148 (the Act): "Where a contract lapses two years applies for reinstatement of the contract, if within that time he (a) pays the overdue indebtedness under the together with interest in the contract, but not exceeding six per centum per annum, compounded annually; and (b) produces (i) evidence satisfactory of the good health; and (ii) other evidence insurer of the insurability, of the person whose insurer shall reinstate the contract." who gave evidence, Mr. application form was not where reinstatment was If the face amount $50,000.00, the policy reinstated upon payment and the form would completed. As this was as a matter of policy, been any changes in the Company also produced which indicated that if the the Insurance Act, R.S.N.S. and the insured wi thin premiums and other contract to the insurer, at the rate specified to the insurer satisfactory to the life was insured, the
- 5 The terms of the policy concerning premium payment and reinstatement are similar: "Premium Payment The benefits provided policy depend on the payment due Premiums are payable alive, on or before their the premium schedule on be paid at our Head Office in Canada or any other office we designate or to your sales representative. A receipt signed by our and countersigned by the will be given for a premium representative. "You may change the frequency our approval. "Reinstatement If you premi urns, you may reinstate the insured is alive if you: 1. Request reinstatement the due date of the first unpaid premium; 2. Provide evidence of insurability satisfactory to us; and 3. Pay all overdue premiums reinstatement with a rate set by us not exceeding the if any, specified Province in which or delivered." In respect to reinstatement, the trial judge said: "If Boudreau complied policy and the Act in the terms could not properly on a 'provisional receipt' he had substantially complied the policy, a contract of adhesion. "Boudreau impliedly by forwarding his premium, request of the company. by your of premiums when while the insured is due dates as shown in page 3. Premiums may President or Secretary sales representative paid to the sales of payment with have stopped paying policy while the wi thin 5 years of to the date of compound interest at maximum, in the statutes of the this policy is issued with the terms of the effecting reinstatement, be changed by words forwarded to him after with the terms of requested reinstatement apparently upon the The only aspect of the
- 6 requirements in the policy Act not complied with by was to provide evidence of insurability satisfactory to the insurance company. by forwarding the reinstatement insurance company was requesting some information on insurability such as his Although Boudreau completed before a witness prior to his death, it clearly was not delivered to the after his death. It is of the evidence, and indeed, evidence of the witness Boudreau was insurable prior the company would have had received the form completed. In a consideration the fact of late delivery, the document after Boudreau's affect the position of matter." The appellant argued that in Zurich Life Insurance Company v. Davies, [1981] 2 S.C.R. judge, Chief Justice Laskin provisions of the agreement before has no application here. He also contended that the contra proferentem had no application dealing with the insurance contract but the Act. With those arguments I agree. This case has its own \that nothing was said to Mr. Icorrespondence that lapse of \that Boudreau apply for reinstatement. ISO informed after he forwarded and in the Insurance Boudreau was that he It appears clear that application the from Boudreau matters affecting his occupation and health. and signed this form insurance company until just as clear from all particularly the for the defendant, that to his death and reinstated him if they in question properly of reinstatement, or the delivery of death, should not the plaintiffs in this 670, cited by the trial was simply interpreting the him and, as such, it maxim as we are not only the provisions of unique facts. It is clear Boudreau in any of the one premium would necessitate Boudreau was only the premium. The notice
- 7 was silent on this important to send notice of reinstatement with the required conditions if the face value of the policy no such requirement where the was never communicated to Mr. any other insured. The appellant irrelevant. Although appellant's cases ci ted by the trial judge facts of this case, he was unable to cite any helpful case law. The appellant also argued that "the was simply a sum tendered to to be reinstatement". That is, the reminder notice which simply you the premium shown below has not been paid". By letter dated May informed Boudreau "Your Policy is now paid to July 16, and the premium due at that time will be $125.". also provided for a grace period of a provision for reinstatement. premium within the period of grace. There was nothing in to indicate to an insured that be insured upon payment of the overdue premium. point. The Company's policy was over $50,000.00, with value was under $50,000.00 Boudreau, nor apparently to argued that this was counsel urged that the were not applicable to the sum of $125.00 pay a premium if there was however, not in accord wi th said, "This is to remind 3, 1982, the appellant Company 1982, The policy 31 days and, as mentioned, Boudreau did not pay the the premium reminder notice he would not continue to The evidence
- 8 is clear that, in circumstances such as here, when the premium is paid after receipt of the only requires the completion reinstatement where the amount $50,000.00, and further that administratively reinstates the policy upon receipt of that application provided there are no medical impairments noted. Section 148(2) of the Act sets out three conditions to bring about reinstatement: 1. The overdue payment is interest; 2. The insured is to produce to the insurer of good health; 3. Other evidence sa tisfactory insurability of the insured. Upon these conditions having reinstate the contract". It will be recalled issue was the first to be paid by Mr. up to that time having been deducted company had to his credit. \is apparent from the evidence Ireminder notice to Boudreau. Very shortly thereafter Boudreau aid the $125.00. The first condition was thus met. reminder notice the appellant of the application for of the insurance exceeds the appellant routinely and to be paid together with evidence satisfactory to the insurer of the been met "The insurer shall that the premium payment in Boudreau, the premiums from funds which the As the trial judge said, it that the appellant sent a
- 9 It was only after the Company forwarded to Boudreau Receipt" , dated October 21, application form for reinstatement. set out the amount due as $125.00 and that "Additional amount required - Nil". Therefore, it is clear that the appellant waived any requirement of interest. In that communication appellant required that Boudreau was in good health. There was nothing said as to when that information would have to be filed with the Company or that any deadline had to be met. There is no question, completed and signed that form. was in form satisfactory to the appellant and that it "Would have been approved as there mentioned" . Condi tions 2 and the information contained in the that the form be sent to the appellant. no question, Mr. Boudreau was time of his death. The form provided by the appellant to wife. A few days intervened; of an accident. All of the insurer were met wi thin a reasonable undue delay. receipt of the $125.00 that its form "Provisional 1982, together with the The provisional receipt of October 21, 1982, the ,. produce evidence that he Boudreau The evidence is that this are no medical impairments 3 of s. 148 (2) were met with form. There only remained As well there was ln good health up until the was placed in the envelope be mailed by his common-law Mr. Boudreau died as a result condi tions stipulated by the time. There was no
- 10 The appellant relied J., (as he then was) in Northern Life Assurance Co. of Canada v. Reierson (1977),1 S.C.R. 390. differed substantially from those one of the provi sions of the premi urn be not paid wi thin the shall automatically terminate". insured read, "Thi s premi urn must March 1, 1972, in order to continue this contract in effect". No such warning was given to Boudreau. the cheque in payment of premium "N.S.F.". The insured was then informed that the insurance was out of force because the This was one of the facts characterized by Mr. Justice Dickson as "of critical importance". insured persons, Mr. Scobie, was paid one week later. Mr. at p. 397-98: "If the Scobie Company sum of $69.20 immediately after expiry of the days of grace, other questions might arise as to waiver but the difficulty which remains, so far as the respondent nothing whatever was done in response to the demand until after the death of that the insurance coverage force .... " The facts in Reierson differ in important aspects from those before us. Al though I recognize that does set out certain conditions, upon the reasons of Dickson, However, there the facts before us. In Reierson group policy stated, "If any days of grace this policy The notice sent to the be paid not later than Further, in Reierson was returned by the bank days of grace had expired. The following day one of the died. The overdue premium Justice Dickson commented had given Shelemey the March 3 following is concerned, is that Scobie and after advice was no longer in the provisional receipt I am mindful of the comments
- 11 of Dickson, J., in Dupli sea v. (supra) at p. 454: "There is a further reason for this conclusion. In Blanchette v. C.I.S. (3d) 561 at pp. 575-6, [1973] 838, [1973] 5 W.W.R. 547, my brother Pigeon rejected out of hand the suggestion that an insurance company should have the benefit of a been at risk. If the in the case at bar is valid, have the benefit of the the cheque received from of receipt until date of - without having been at risk. found objectionable in Blanchette." From the facts, as found is reasonable to conclude that informing Boudreau that upon completion of the form in accord with s. 148(2)(a) and (b) the I am of the opinion that the were met by Mr. Boudreau. For these reasons, the appeal with costs. ; (eel/,..Jo r;< J.A. Concurred in - if ~ Clarke, C. J . N. S. r"· Pace, J.A. ~~ T.· Ea ton Lif.e Ass·urance Co. Ltd. (1973), 36 D.L.R. S.C.R. 833, at p. premium without having argument of the company the company would moneys represented by Mr. Duplisea from date payment - a full month That is what was by the trial judge, it the appellant was simply policy would be reinstated. conditions of that section I would dismiss I ...::::::: .. / - --:;;:~''- ,~~~ -~~-
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