Fine’s Flowers Ltd v General Accident Assurance [1977] ONCA [liability in contract]

Fine’s Flowers Ltd v General Accident Assurance [1977] ONCA [liability in contract]

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  Intermediaries may also be liable in tort
  
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    This liability is only excluded or modified if the terms of a contract expressly exclude or modify any tort claim
    
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  Intermediaries may also be liable in equity through a breach of fiduciary duty
  
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    1) fiduciary has scope for exercise of some discretion or power, 2) fiduciary can unilaterally exercise that power or discretion so as to affect beneficiary’s legal or practical interests, and 3) the beneficiary is peculiarly vulnerable or at the mercy of the fiduciary holding the discretion or power (Frame v Smith)
    
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      When customer relies on expertise of intermediary to obtain insurance protection, such a relationship may arise
      

1. 
   Duty to Procure Appropriate Insurance or Advise that it is Unavailable
   

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  Where client seeks particular coverage and intermediary agrees to procure it, latter are under a duty to obtain such coverage or advise that they are unable to obtain it, and explain options available
  
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  Most common errors intermediaries make:
  
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    Inappropriate or inadequate coverage for client
    
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    They forget about the exclusions in the policy
    
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    Don’t pay attention to particular circumstances of customers who buy insurance
    
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      So don’t get insurance for specifics of circumstances, or don’t explain specifics of the policy
      
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    Insufficient limits to coverage
    

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  How far must an agent or broker go to determine what is appropriate cover?
  
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    Depends on the extent to which the client has relied on the agent’s expertise
    
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      If agent has special knowledge about the nature and availability of relevant coverage, as seen in Fine’s Flowers, then P can be said to have relied on the agent for that expertise
      
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      On the other hand, sometimes agent not in breach of duty since client has special knowledge placing latter in best position to determine adequacy of amount of cover
      
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    Note: even if intermediary is negligent, customer must show causal link between negligence and inadequacy of coverage
    

2. 
   Duties Regarding Renewal, Cancellation and Updating
   

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  Traditional rule was that mere reliance on intermediary did not give rise to duty on intermediary to ensure impending expiry brought to customer’s attention
  
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    But recently, some provinces accept that where there is history of intermediary arranging renewals, a duty arises to notify customer of impending expiry or proposed non-renewal
    
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    History of intermediary may attract reasonable reliance, and an undertaking to renew
    
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    But while reliance is reasonable, it may not displace totally the customer’s obligation to protect his own position
    

3. 
   Duty to Convey Information
   

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  Broker also has a duty to convey info from customer to insurer, to take reasonable care that info forwarded properly
  

4. 
   Duty to Third Parties
   

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  Typically US is more likely to find broker liable to unconnected third party, notionally not unlikely that judgement is also found for judgment creditors
  
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  Some third parties do get protection for liability
  
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    E.g. mortgagee, unnamed insureds, judgment creditor
    
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  Liability generally explained on the basis of a broader assumption of responsibility directly related to the objective of the business transacted between intermediary and the customer
  

5. 
   Duty Owed to Insurers
   

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  Where intermediary has authority to bind the insurer, must transmit all material info received from customer, otherwise insurer will be unable to deny liability by misrepresentation or non-disclosure
  
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    Liability also incurred if insurer fails to follow instructions to transmit info to customer
    

6. 
   Defences
   

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  When insurer alleges that intermediary procured inadequate insurance, two general defences
  
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    Showing adequacy of cover
    
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    Contributory negligence on the part of the insured