Last November, Madam Justice Stewart ruled on a matter dealing with broker negligence. The matter, Bronfman v. BFL Canada Risk, 2013 ONSC 5372 (CanLII), involves a break in at the Bronfman residence in November of 2008. The Bronfmans were robbed of jewellery and numerous valuables. The matter revolves around the question of just how far an insurance broker must go to ensure a client’s policies are adequate, and whether a form letter outlining a customer’s coverage limits is enough to get a broker off the hook. Justice Elizabeth Stewart ruled that BFL, the broker, was negligent in failing to review how many valuables the Bronfmans kept in their home and for failing to advise them to upgrade their coverage. The broker is appealing the decision and the matter will be heard by the Court of Appeal shortly.
The Ontario Court of Appeal will consider the broker’s challenge that the judge relied on “common sense” and not “objective evidence,” and that she “failed to consider the uncontroverted evidence that Mr. Bronfman knew he was underinsured.” The broker also says the judge was wrong in “distinguishing jurisprudence based on personal wealth.” Citing the Bronfman’s wealth as a factor, Her Honour distinguished a previous insurance case, Duncan v. Michael Palermo & Associates Insurance Ltd., 1995 Carswell Ont. 2676 (Ont. Gen. Div.), relied upon by the broker, that held that a form letter outlining coverage limits was adequate notice. The notice of appeal says the judge was wrong in “dictating that legal principles … do not apply to those individuals of significant wealth.” The judge, however, wrote that “a form letter…has no application to the facts of this case.” (emphasis added) And, later she wrote: “The inadequate coverage for jewellery is among the gaps that should have been reviewed with them by Goldsmith [the Bronfman’s broker], and the covering letter do not serve to eliminate that obligation.” Of further interest is Her Honour’s observation of the often complicated and confusing language used by insurers in their forms. She remarked: “The covering letters are in the nature of “form letters” and are not straightforward or easily understood. The policies themselves contain language and provisions which are complicated and contradictory to the lay reader (and arguably even to someone with a legal background). It is far from probable that Paul would have clearly understood the implications of those letters and policies or that they would have necessarily triggered any questions or concerns.”
Mr. Goldsmith, Her Honour wrote: “is the insurance professional who is being compensated for his brokerage role. It is his duty to make such investigations that would have permitted him to discover an obvious coverage gap of this nature and to ensure the Bronfmans were aware of it and provided with appropriate recommendations to remedy it (see: Cosyns v. Smith, 1983 Carswell Ont. 797 (Ont.C.A.). The real failure of Goldsmith in this case was his lack of appreciation of the likelihood that the Bronfmans owned valuable jewellery worth well in excess of $20,000.00 and his failure to ascertain the true extent of their possessions and to provide them with advice as to how much special coverage they needed, where they could get it and how much it would cost them. This is the proper role of a professional insurance broker and it is Goldsmith’s failure to discharge that role which is fully causative of and responsible for the damages suffered by his clients, the Bronfmans.” (Paragraph 92)
One wonders whether the Court of Appeal will revisit Zefferino v. Meloche Monnex Insurance Company, 2013 ONCA 127 (C.A.), wherein the plaintiff sued his insurance company alleging that the insurer should have offered him optional income replacement benefits, and claiming a loss of IRBs which should have been available to him. The plaintiff argued that the previous case law did not require a plaintiff to prove that the acts or omissions of the insurer caused the loss, but rather only that the insurer had a duty to inform the insured, that it breached its duty of care and that there was a gap in coverage.
The Court of Appeal in Zefferino did not accept the plaintiff’s position and held that a plaintiff is not relieved of the normal factual burden of proof in an insurance broker context and must show causation. There was no evidence to prove that Zefferino would have purchased optional insurance coverage other than a bald and self-serving assertion, and therefore his action failed. Given its findings in Zefferino, will the Court of Appeal when it hears the appeal in Bronfman v BFL accept the trial judge’s common sense approach or require objective evidence? Will the Court of Appeal open the door to a common sense approach in claims against brokers for failing to advise of optional benefits?
Contributed by Roelf Swart, an OTLA member and a lawyer practising with Elkin Injury Law – Barristers P.C. in St Catharines, Ont.