Citation:

Schellak
          v. Barr and Duplessis

Date:
20030102

2003
          BCCA 5

Docket:

CA029044

COURT
          OF APPEAL FOR BRITISH COLUMBIA

BETWEEN:

JOYCE MARY SCHELLAK

PLAINTIFF

(RESPONDENT)

AND:

JANICE RAE BARR

and

ANDRE JUAN DUPLESSIS

DEFENDANTS

(APPELLANTS)

Before:

The
          Honourable Mr. Justice Esson

The
          Honourable Mr. Justice Donald

The
          Honourable Mr. Justice Thackray

L.P.
          Stevens

Counsel
          for the Appellants

C.R.
          Temple

Counsel
          for the Respondent

Place
          and Date of Hearing:

Vancouver,
          British Columbia

November 12, 2002

Place
          and Date of Judgment:

Vancouver,
          British Columbia

January 2, 2003

Written
    Reasons by:

The
    Honourable Mr. Justice Thackray

Concurred
    in by:

The
    Honourable Mr. Justice Esson

The
    Honourable Mr. Justice Donald

Reasons for Judgment of the Honourable
    Mr. Justice Thackray:

[1]

This case arose out of a motor vehicle accident on 13 March 1998 in
    which the respondent, Ms. Schellak, was injured.  The trial was heard by a
    judge alone who awarded damages under several different heads.  The heads
    of damages that are appealed are non-pecuniary general damages, past income
    loss and diminution of future earning capacity.

[2]

In reviewing this case I have had more than the usual amount of difficulty
    in analyzing the evidence.  I will therefore set forth some of the logistics
    of the trial in that they might account for some of these difficulties.

[3]

The trial commenced on 17 April 2001.  Ms. Schellak, commenced her
    testimony on 18 April.  Thereafter she testified on 20 April; 23 April (twice);
    29 April; 2 May; 9 May (twice); 28 May and finally on the last day of the
    evidentiary portion of the trial, that being 29 May 2001.

[4]

The trial consumed 23 days and stretched from 17 April to 11 June 2001.
    During the times between the testimony of Ms. Schellak, 31 witnesses testified.
    In addition, 25 medical-legal reports were filed as exhibits as were reports
    from an economist and an occupational therapist.  Also filed were medical
    reports and literature together with documentation in support of the claims
    for loss of income, both past and prospective.

[5]

To further complicate the trial, there was no clear plaintiffs case
    or defence case.  The witnesses were apparently called for their availability
    rather than in any particular order.

[6]

On 21 September the trial judge delivered her reasons for judgment.
    They reflect the logistical nightmare.  She was faced with a scatter of evidence
    from which she was expected to come to definitive conclusions on defined heads
    of damages.

NON-PECUNIARY
    DAMAGES

[7]

The trial judge awarded Ms. Schellak $80,000 for non-pecuniary general
    damages.

[8]

Ms. Schellak was 46 years of age at the time of the accident.  She
    was on her way to work when the collision occurred.  She suffered soft tissue
    injuries that ordinarily would resolve within a few months.  However, Ms.
    Schellaks complaints have continued with symptoms that wax and wane and
    flare up without aggravation.  The trial judge held that it is more likely
    than not that Mrs. Schellak is a part of the group of about 10% of people
    who suffer soft tissue injury who do not recover.  She further found that
    the respondents difficulties were materially contributed to by the motor
    vehicle accident.

[9]

In analyzing Ms. Schellaks problems, the trial judge noted that she
    has had a myriad of complaints.  Those complaints being to her jaw, neck,
    low back and buttocks.  As well as the physical injuries the trial judge said
    that Ms. Schellak suffered from anxiety and depression and had ongoing cognitive
    difficulties primarily related to her short-term memory and her ability to
    concentrate.

[10]

The
    defence submitted to the trial judge that the plaintiffs case was internally
    inconsistent.  Further, that there were too many independent experts and
    that the claim was pursued on too many different medical issues.

[11]

None
    of these defences prevailed.  With respect to the claim being internally inconsistent,
    the judge simply disagreed.  She held that Ms. Schellak was suffering from
    pain but doing her best to cope with it.  The trial judge said that inconsistencies
    in what the respondent told medical professionals, and inconsistencies in
    what they observed, are accounted for.  She said inconsistency is inevitable
    when one speaks to so many people about the same thing and in any event the
    symptoms themselves were not consistent in that they waxed and waned.

[12]

As
    to there being too many experts, or, what the appellants defined as claim
    building at the highest level, the trial judge held that there were specific
    reasons for the number of experts.  She cited the differences of opinion
    among the professionals on a number of fronts as to the correct diagnosis
    and indicated that Ms. Schellak was entitled to know the answer.

[13]

As
    to the claim being pursued on too many levels the trial judge said:

a plaintiffs counsel has to make a judgment call in cases of this sort, where
    the defence takes a very firm view that the case is worth hundreds of thousands
    of dollars less than is alleged, and is prepared to maintain that position
    throughout.

[14]

At
    trial the appellants submitted that the credibility of Ms. Schellak was the
    central issue of the case.  As I see it, this was an appropriate observation
    in that the matters noted above do not form defences as such.  The most that
    can be said of these matters is that they go to the issue of credibility,
    and that issue is reserved for the trial judge who found in favour of Ms.
    Schellak.

[15]

The
    appellants submitted in this Court that the trial judges finding of credibility
    in favour of the respondent does not follow from the evidence.  They point
    out a number of instances wherein Ms. Schellak did not advise her professional
    consultants of factors not related to the accident that might have impinged
    on her health.  The appellants say that rather than being admonished [by
    the trial judge], the plaintiff benefited from her lack of candour.

[16]

An
    example is the failure of Ms. Schellak to inform consultants about a drug
    charge laid against her son.  The trial judge found that the respondent did
    tip-toe around the truth in this regard and that this cannot be condoned.
    However, she concluded that in the context of the evidence as a whole, I
    accept the evidence of Ms. Schellak as to her motivation in protecting Jason
    [her son].

[17]

Similarly,
    with respect to not mentioning family stressors, the trial judge considered
    this in the context of the evidence as a whole and concluded that Ms. Schellak
    did not mention them because they were not the main factors that were causing
    her problems.

[18]

The
    trial judge further evaluated Ms. Schellaks credibility from the standpoint
    of the evidence regarding her  employment.  The trial judge said that part
    of the reason I accept her [Ms. Schellaks] evidence is because there was
    overwhelming evidence that she excelled at her job before the accident.

[19]

There
    is room at the appellate level to interfere with a trial judges finding as
    to credibility.  However, to do so there must be a compelling reason arising
    out of the trial judges analysis.

[20]

In
    the case at bar the trial judge tested Ms. Schellaks testimony from several
    different angles.  I am satisfied, to paraphrase Mr. Justice OHalloran in
Faryna v. Chorny
, [1952] 2 D.L.R. 354 (B.C.C.A.), that the trial
    judges finding of credibility was based not on one element only to the exclusion
    of others, but was based on all the elements by which it can be tested in
    the particular case.

[21]

A
    defence pursued at trial and which forms the main basis for this appeal with
    respect to non-pecuniary damages, is that of causation.  The appellants submit
    that events that happened in the respondents life in or about 1999 either
    broke the chain of causation to the motor vehicle accident or, in themselves,
    caused the cognitive problems.

[22]

However,
    the alleged error of the trial judge in finding causation is based upon her
    finding as to Ms. Schellaks credibility.  The appellants say that in approaching
    the issue of causation the trial judge relied inappropriately on the plaintiffs
    subjective evidence.  They refer in particular to the passage from the trial
    judges reasons that I noted earlier regarding family stressors.

[23]

The
    appellants submit that this passage represents circular reasoning and suggests
    that the learned trial judge accepted the plaintiffs subjective view on causation.
    Further, they submit that the trial judge erred in relying on the plaintiffs
    strong motivation to return to work.

[24]

To
    better analyze this submission I would first turn to the trial judges reasons.
    She detailed the stressors that were put forth by the appellants as intervening
    causes.  She noted the stroke that had been suffered by Ms. Schellaks mother-in-law
    in 1999.  Then she acknowledged the problems with Jason, including school
    withdrawal and a marijuana charge. She also noted that Jasons girlfriend
    was pregnant and that he and his girlfriend were on social assistance and
    had moved into the Schellaks home, forcing the Schellaks to move to a condominium.

[25]

The
    trial judge then noted that the appellants acknowledged that chronic pain
    can result from soft tissue injuries but relied on family stress as the
    real causative factor.  She then made specific reference to the submissions
    of the appellants that the respondent should not be believed and she quoted
    from the appellants written submission:

It is
    also now a theory of the defence that the plaintiff and her husband, withheld
    information relating to their sons use of drugs and multiple unsuccessful
    attempts to continue his education with the specific intention of hindering
    this court in its mandate to make findings of fact and assess the claim on
    a basis that is fair to both parties.

[26]

The
    trial judge went on to detail the submissions of the appellants and to consider
    medical and lay evidence applying to the credibility of Ms. Schellak and to
    the issue of causation.  She said that the evidence of the professionals was
    of assistance to her in coming to her decision and noted that the decision
    as to the credibility of the evidence of Mrs. Schellak must be made by the
    court.

[27]

Madam
    Justice Martinson, after a further lengthy review of medical evidence, concluded
    as follows:

[71]
    The suggestion that Mrs. Schellak has a history of pre-accident difficulties
    in dealing with stress that makes her particularly vulnerable to stress and
    depression is not supported by the evidence. All of the non-expert witnesses
    called who have known Mrs. Schellak for a period of time say she is not a
    person who has reacted adversely to stress. These witnesses were subjected
    to lengthy cross-examination. On the contrary, they painted a picture of a
    person who has at least average coping ability.

[72]
    While the family stressors relied upon by the defendants were no doubt stressful,
    especially cumulatively, the only actual evidence I have is that they were
    not causing significant stress for Mrs. Schellak. Of course, I do not have
    to take that evidence at face value.  However, the kinds of stress in issue
    are not stresses that are out of the ordinary for families.

[73]
    It is true that there were some references in the clinical records to some
    stress related to marital difficulties and some medical difficulties she had.
    However, they do not suggest that she had any greater difficulty than the
    next person in dealing with them. Dr. Taylor, her long time family physician,
    did not support this suggestion. Mrs. Schellak and her husband Deiter Schellak
    say it is not true. Friends and co-workers who were questioned on her pre-accident
    ability to handle stress say that she handled stress well.

[74]
    The doctors who saw her most often, Dr. Taylor and Dr. Matishak, do not present
    a picture of someone who was reacting adversely to the stresses of life she
    was faced with. Rather, they found her behaviour to be consistent with injuries
    said to be caused by the accident. There is no doubt that it was stressful
    for her to have unusual shaking and numbness and not know what caused it.

[75]
    Other medical evidence supports the conclusion that the accident, not family
    stress, materially contributed to her condition. In Dr. Andersons opinion,
    Mrs. Schellaks emotional and cognitive difficulties were likely due to the
    accident. There was no evidence suggesting she would have developed her present
    constellation of symptoms if she had not been involved in the accident. She
    did have a prior history of emotional difficulties in the early 1990s, but
    she was coping well emotionally for several years prior to the accident. She
    led an active life prior to the accident.

. . .

[87]
    For all of these reasons I am satisfied that the plaintiff suffers from chronic
    pain, which causes her functional difficulties, including cognitive difficulties.
    The difficulties were materially contributed to by the accident:
Athey
    v. Leonati
, [1996] 3 S.C.R. 458.

[28]

In
    my opinion there has been no error committed by the trial judge on the issue
    of causation.  There was evidence before the trial judge upon which she chose
    to rely and there is no jurisdiction in this Court to say that her reliance
    was in any way in error.  This includes her reliance on the credibility of
    Ms. Schellak.

[29]

The
    appellants further submit that the test in
Yoshikawa v. Yu
[1996]
    B.C.J. No. 623 (C.A.) has not been met.  The principal issue in that case
    was the circumstances in which damages should be awarded with respect to chronic
    benign pain syndrome.  This issue was argued as one of causation and the application
    of the decision in
Maslen v. Rubenstein
(1993), 83 B.C.L.R.
    (2d) 131 (C.A.).

[30]

In
Maslen
, Mr. Justice Taylor, for the Court, set forth the matters
    to be considered in assessing the issue of causation for chronic pain.  The
    first is that it must be established that the pain is real.  The second is
    that the plaintiff must establish that his or her psychological problems have
    their cause in the defendants unlawful act.  The overall test is set forth
    as follows:

Chronic
    benign pain syndrome will attract damages  where the plaintiffs condition
    is caused by the defendant and is not something within her control to prevent.
    If it is true of a chronic benign pain syndrome, then it will be true also
    of other psychologically-caused suffering where the psychological mechanism,
    whatever it is, is beyond the plaintiffs power to control and was set in
    motion by the defendants fault.

[31]

Mr.
    Justice Cumming wrote separate reasons, similarly dismissing the appeal on
    the issue of causation.  Rowles J.A.  also cited
Maslen
with
    approval.

[32]

Counsel
    for the appellant on this appeal argues that the following passage from
Maslen
was not met by the trial judge:

Views
    expressed by doctors on the plaintiffs reliability, truthfulness or motivation
    cannot be decisive, for the law requires that these matter be decided by the
    court itself, and that they be decided on the basis of the evidence given
    at trial, which is often more extensive than, and sometimes different from,
    that on which medical witnesses have formed their opinions.

[33]

I
    do not agree that Madam Justice Martinson misapplied any of the points or
    principles contained in
Maslen
.

As I pointed out earlier,
    she specifically said that it is for the Court, not the witnesses, to determine
    issues of credibility.  She also, on several occasions, said that it was in
    the context of the evidence as a whole that she was making her determinations.

[34]

I
    do not find any substance in this ground of appeal.  I further find, to paraphrase
    Cumming J.A. in
Maslen
, that the conclusion of the trial judge
    that Ms. Schellaks injuries, both physical and cognitive, were causally related
    to the accident was supported by the evidence, and no basis has been shown
    for this Courts interference.

[35]

The
    appellants also submitted that the amount of the damages is in error and should
    be reduced to a figure of between $30,000 and $40,000.  In support they cited
    comparable cases.  Those cases are, for the most part, trial court decisions
    and while there are some similarities in the injuries, they are not comparable.

[36]

Indeed,
    it is a difficult, if not impossible, to find truly comparable cases.  In
Brisson v. Brisson
2002 BCCA 279

this Court said that
    precedent cases with respect to damage awards have limited value.  In
Cory
    v. Marsh
(1993), 77 B.C.L.R. (2d) 248 (C.A.) Mr. Justice Gibbs referred
    to the inutility of this exercise.  Nevertheless in
Cory
,
    McEachern C.J.B.C. following
Nance v. B.C. Elec. Ry.
(1951),
    2 W.W.R. (N.S.) 665, (J.C.P.C.) said that this is the tool that is to be used.
    In my opinion, the value of such cases is to illustrate the range outside
    of which this Court may vary the award, either upwards or downwards.  See
Vaillancourt v. Molnar
2002 BCCA 685.

[37]

The
    test to be applied on an appellate review of damages is as enunciated in
Nance
.
    Viscount Simon, in giving judgment for the Judicial Committee, said that an
    award should not be interfered with unless it is either so inordinately low
    or so inordinately high that it must be a wholly erroneous estimate of the
    damage.

[38]

It
    might be said that the award of $80,000 in the case at bar is on the high
    end of the range, but it cannot be said that it is so inordinately high that
    this Court is entitled to interfere.

[39]

I
    would dismiss the appeal of the award for non-pecuniary damages.

PAST
    LOSS OF INCOME

[40]

The
    trial judge awarded $120,000 under this head of damages.

[41]

Ms.
    Schellak testified that her income in 1989 was $12,535, $5,142 in 1990, $2,801
    in 1991 and $20,876 in 1992.  From tax returns it was established that Ms.
    Schellaks taxable income was as follows: 1993 - $33,217; 1994 - $18,972;
    1995 and 1996 (when she was living outside of Canada) - nil; 1997 - $13,109,
    1998 (2½ months) - $4,953.

[42]

Ms.
    Schellaks income history can be measured in several different ways.  One
    is that Ms. Schellaks income from 1989 until the accident averaged $12,118
    a year.  If the years 1989 to 1992 are excluded, her average income was $13,484
    a year.  Another way would be to delete 1995 and 1996, years in which there
    was no income, and arrive at an average income per working year of $15,479.

[43]

This
    history, in the circumstances of the case at bar, is, in my view, significant.
    The circumstances being that  Ms. Schellak is not a newly graduated student
    just entering the workplace nor a young adult entering into a new phase of
    a career.  We have here a mature adult who had been in the workplace for many
    years and, at the time of the trial,  within 15 years of a common retirement
    age.

[44]

While
    the trial judge alluded in several places in her reasons to evidence bearing
    on this head of damages, her reasons are confined to the following under the
    heading PAST WAGE LOSS:

Taking
    into account the real possibility of benefits, commissions, and base salary
    increases, as well as negative contingencies, I assess past wage loss at $120,000.

[45]

These
    brief reasons are not helpful to an understanding of how the award was calculated.

[46]

The
    appellants submit that there should have been a cut off date in 1999 when
    the other alleged causes for Ms. Schellaks problems arose.  For the reasons
    previously given I would reject that ground of appeal.

[47]

Their
    other submission is that the trial judge based her assessment on the real
    possibility of income being at a certain level.  The appellants submit that
    the standard to be met is a balance of probabilities and that the real possibility
    test is applicable to future events, but does not apply to past loss of income.
    The appellants are correct in that submission. I find it unnecessary to quote
    from passages confirming that proposition but for reference will cite
Steenblok
    v. Funk
[1990], 46 B.C.L.R. (2d) 133 (C.A.) and
Sales v. Clarke
(1998), 57 B.C.L.R. (3d) 36 (C.A.).

[48]

Taking
    into account that Ms. Schellak earned $7,000 between the accident and the
    commencement of the trial, the appellants submitted that the award represents
    an income in excess of $40,000 a year from the date of the accident to the
    trial.  Indeed, counsel for Ms. Schellak calculated it to be $40,997 a year.
    This, of course, far outstrips the income earned by Ms. Schellak in any year
    pre-accident.

[49]

The
    respondent, not knowing how the award was calculated, submitted that it could
    be justified by an adoption of the evidence of Mr. Carson, an economist.
    Mr. Carsons report said that the average income of women in an age bracket
    similar to that of the respondent and in the respondents field was $49,823
    a year as of 2001.

[50]

This
    is not relevant to the period 1998 to 2001.  Furthermore, two witnesses who
    worked with Ms. Schellak at Labour Ready were called as witnesses by the appellants.
    They are both employed in the private sector as managers in the personnel
    industry.  They testified that they were earning between $38,000 and $40,000
    annually.

[51]

Ms.
    Schellak had never earned $40,000 in a year and had an employment history
    that was inconsistent.  Yet the trial judge made an award that exceeded $40,000
    a year.  This was no doubt because she perceived the test as only one of real
    possibility rather than on a balance of probabilities.  The latter test,
    in the circumstances, would necessarily produce a more modest award.

[52]

Counsel
    for the appellants suggested that a proper award would be $70,000.  This,
    to me, seems most reasonable and I would make an award for past loss of income
    at that amount.

LOSS
    OF FUTURE INCOME EARNING CAPACITY

[53]

The
    trial judge awarded $570,000 under this head of damages.  In her reasons,
    under the heading FUTURE EARNING CAPACITY the trial judge indicated that
    she found the evidence of Mr. Russell McNeil, a registered occupational therapist;
    Dr. S.D. Anderson, a psychiatrist, Dr. van Rijn, a specialist in physical
    medicine and Dr. Joy, a psychiatrist, to be particularly helpful.

[54]

The
    reasons for judgment include a section outlining the challenge that the
    appellants brought against the income claim.  The trial judge noted that the
    appellants explored Ms. Schellaks pre-accident work record at length and
    submitted that it showed that she preferred part-time work and had considered
    a career change.  They questioned whether she would have been able to cope
    with the fast paced world of full-time employment.

[55]

The
    appellants further submitted that the witnesses that were called on behalf
    of Ms. Schellak, who were all doing well in high paid managerial positions,
    were not comparable to Ms. Schellak.

[56]

Under
    the heading DIAGNOSIS AND CAUSATION the trial judge said as follows:

[45]
    Part of the reason I accept her [Ms. Schellaks] evidence is because there
    was overwhelming evidence that she excelled at her job before the accident.
    Her employers Ms. Land and Mr. Cormack described her abilities in glowing
    terms. That fact that both made numerous efforts to accommodate her after
    the accident confirms that they considered her to be a highly valued employee.
    Ms. MacCave, a long time customer, similarly spoke very highly of her abilities.
    In fact, Ms. MacCave followed Mrs. Schellak when she changed jobs.

[46]
    The evidence of Ms. Land, Mr. Cormack and Ms. MacCave is important, and not
    just because it supports the evidence of Mrs. Schellak on the question of
    her motivation to return to work. Their evidence also confirms that after
    the accident Mrs. Schellaks ability to perform the job was significantly
    and adversely affected and continues to be affected.

[57]

Madam
    Justice Martinson concluded as follows:

[89] In my view, Mrs. Schellak will likely suffer chronic pain indefinitely
    and she will continue to experience cognitive and functional difficulties
    that will affect her life generally and her ability to work at a job of her
    choosing. She will likely only be able to work at part-time sedentary employment.

[58]

Madam
    Justice Martinson ended her short reasons on this heading as follows:

[104]
    I accept her evidence that she was at the point where it was her turn when
    the accident happened. Being successful at her job gave her self-esteem. She
    would likely have continued working full-time and done well, advancing to
    a managerial position.

[105]
    I have considered the evidence that even without the accident she would not
    have thrived as a permanent placement consultant. In my view, it is likely
    that she would have done well, given the skills she had acquired and the loyal
    client base she had developed.

. . .

LOSS OF FUTURE EARNING CAPACITY

[110]
    I had the benefit of Mr. Nordin and Mr. Carson, a labour economist. I have
    taken into account the fact that in the permanent placement field, working
    part-time is not likely an option. I have considered benefits and commissions
    that Mrs. Schellak is likely to have obtained.

[111]
    I have considered both positive and negative contingencies and have taken
    into account a negative contingency reduction of 19%. In particular, I have
    concluded that there is a real possibility that she will retire at age 63.
    I assess her award for future earning capacity at $700,000. From that must
    be deducted an amount for her residual earning capacity. I assess her residual
    earning capacity at $130,000. She is therefore entitled to an award for loss
    of future earning capacity of $570,000.

[59]

The
    respondent submitted on this appeal that the trial judge properly applied
    the negative contingency at 19%. Counsel went to great lengths in doing mathematical
    calculations to substantiate that figure.  Whether he is right in that regard
    I do not know.  I must confess to not understanding what positive and negative
    contingencies the trial judge considered, what figures she applied to them,
    and how the mathematics came out at 19%.  This will not bear on my judgment.

[60]

I
    do accept the respondents submission that while the trial judges assessment
    of residual earning capacity might be on the low side there is no ground
    on which this Court could interfere with her assessment.

[61]

The
    respondent submitted that the trial judge followed the procedure set forth
    in
Ryder v. Paquette
[1995] B.C.J No. 644 (C.A.).  Mr. Justice
    Lambert set this out as follows:

The assessment of the loss of income earning capacity involves as the
    best evidence, as it is in many cases of the loss of income earning capacity,
    a comparison with what would be likelihoods or possibilities in the future
    for this young woman if the accident had not happened and comparing them with
    the likelihoods and possibilities in the future after the accident has happened,
    and then taking the difference between those two amounts and adjusting it
    for its present value. That is not the end of the inquiry but it is the best
    method in many cases of tackling the assessment of the extent to which the
    capacity to earn income has been effected by the accidents.

[62]

Even
    accepting that the trial judge adopted the above-noted approach, this does
    not bear upon the appropriateness of the trial judges introduction into that
    formula the figures that she chose to use.  Nor, of course, does it bear upon
    the likelihoods and possibilities for Ms. Schellaks future.  The figures
    and the likelihoods must arise out of the evidence.

[63]

The
    appellants submitted that the evidence the trial judge must have relied upon
    to come to the figures that she did was that of Ms. Land.  Ms. Land is a friend
    of Ms. Schellak, having met when they both worked for Manpower Temporary Services
    in about 1992.  Ms. Land is the area manager for the Burnaby and Calgary offices
    of Coape Staffing Network, a North American firm of personnel placement consultants.
    She started with that company in 1998.

[64]

Ms.
    Schellaks evidence is that while with Manpower she was an office manager.
    There was a commission structure in place but she earned very little by way
    of commissions.  She resigned and moved to Bradson Personnel in November 1993.
    In the spring of 1994 she asked to be transferred to the Fraser Valley office.
    In the summer of 1994 her employment was terminated.  She remained unemployed
    until December 1994 when she moved to Indonesia where she did not earn income.

[65]

Ms.
    Land testified that when Ms. Schellak returned from Indonesia in 1996, Ms.
    Land facilitated her in obtaining employment with Labour Ready.  Ms. Schellak
    testified that she started in early February 1997 and quit on 18 April 1997.
    She was not there long enough to earn any commissions.  She was unemployed
    over the summer of 1997.  She started as a floater with Manpower on 14 September
    1997.  When the accident occurred on 13 March 1988, Ms. Schellak had a salary
    of $30,000 a year and was entitled to earn commissions.

[66]

In
    May 1998, Ms. Schellak returned part-time to Manpower. She worked until June.
    In May 1998, Ms. Land telephoned Ms. Schellak and asked if she would be interested
    in going to work for Coape.  Ms. Land had heard from someone at Manpower that
    Ms. Schellak had been in a car accident but when she spoke with Ms. Schellak
    she thought that Ms. Schellak was still working.  Ms. Schellak was very interested
    in the job.

[67]

On
    2 July 1998, Ms. Land offered Ms. Schellak a position at a salary of $35,000
    a year.  Ms. Schellak declined the offer but said that she hoped to be able
    to resume work in a few months.  Ms. Schellak returned to Manpower in November
    but quit in December.

[68]

On
    15 December 1999  Ms. Land wrote to Ms. Schellak and offered her employment
    at $35,000 a year.  Ms. Schellak accepted and commenced work in January 2000.
    In February she terminated her employment and never returned to that office.
    Ms. Schellak testified that she did work subsequently for a short time for
    Manpower and also in the Calgary office of Coape where she had moved due to
    her husbands employment.

[69]

Ms.
    Land testified that if all had gone well Ms. Schellak would have received
    a raise to $40,000 in January 1999.  In the year 2000, the base salary would
    be the same but Ms. Schellak would have had the opportunity, depending on
    her sales, of earning bonuses of between $3,500 and $5,000 a month.  Business
    was slower in 2001 reducing the bonuses to between $2,500 and $3,500 a month.

[70]

Another
    scenario described by Ms. Land was that Ms. Schellak might have become the
    manager of a new branch in Langley.  If that occurred, her base salary would
    have been $50,000 a year plus commissions.  She also spoke of an additional
    percentage for being a manager of up to $1,500 a month.  Ms. Land also put
    forth the potential for the base salary going up $5,000 a year to a maximum
    of $60,000.  The Langley branch never opened.

[71]

Yet
    another scenario was for Ms. Schellak to become the manager of the Burnaby
    branch in June, 2000.  The base salary would have been $50,000 rising over
    two years to $60,000.  There would also have been salary overrides.

[72]

Out
    of this speculation as to the future, counsel for Ms. Schellak prepared for
    this Court charts illustrating the potential income range, and suggested that
    this was the basis for the trial judges assessment of damages.  The mid
    point in the range in one chart shows income as a placement consultant as
    follows:

1998

$83,000

1999

$79,000

2000

$91,000

2001

$76,000

[73]

Another
    chart produced by the respondent shows the income she submits she would have
    earned as a manager:

1998

$83,000

1999

$79,000 to $91,000

2000

$120,800*

2001

$111,700*

* based upon Ms. Lands income

[74]

In
    response to these calculations, counsel for the appellants presented his mathematical
    version of the evidence.  It shows that the award is consistent with a salary
    of close to $70,000 per annum up to retirement at age 63.  He further submitted
    that this Court, in assessing the award on the inordinately high test, should
    find it noteworthy that $70,000 per annum is more than $30,000 higher than
    the earnings used to compute the award for past wage loss, which in turn was
    significantly higher than any single year of pre-accident earnings.

[75]

Without
    accepting any of the above noted figures, what they do illustrate is the disparity
    between the pre-accident income employment, income history and the award.
    As this Court noted in
Vaillancourt
, supra, employment history
    must be considered in assessing a loss of income earning capacity.  These
    principles can be found in
OBrien (Guardian ad litem of) v.
Anderson
[2000] B.C.J. No. 1747;
Hay v. Hofmann
[1999] B.C.J.
    No. 77;
Parypa v. Wickware
[1999] B.C.J. No. 270; and
Rosvold
    v. Dunlop
2001 BCCA 1.  Those cases, and most others involving this
    form of claim, refer to the same principles and to the same precedent cases,
    in particular,
Steenblok
, supra, and
Brown v. Golaiy
(1985),
    26 B.C.L.R. (3d) 353 (S.C.).

[76]

In
Parypa
, Mr. Justice Cumming said that in assessing the loss
    perhaps the factor most difficult to overlook is the appellants sporadic
    work history.  He continued as follows:

While past work history is not determinative of what will occur in
    the future, it is a significant factor to consider when estimating the likelihood
    of what would have happened in the future but for the accident.

[77]

In
    the case at bar, Mr. Derek Nordin, a vocational rehabilitation consultant,
    called as a witness by the respondent, agreed that a persons employment history
    is generally very important in projecting what might happen in the persons
    future employment.

[78]

As
    an illustration of how far removed the award is from the lengthy track record,
    I note that the residual earning capacity figure of $130,000 as found by the
    trial judge is about what Ms. Schellak earned as an average in the ten years
    preceding the accident.  The award, for the 13 year period to retirement,
    exceeds that by $570,000.

[79]

The
    trial judge set the future earning capacity figure at $700,000.  She did not
    explain how she arrived at this figure and whether capitalization was applied.
    The evidence of Mr. Carson, an expert witness called on behalf of Ms. Schellak,
    was that if Ms. Schellak had earned the industry average until retirement
    at age 63, and if she had no residual earnings, a claim for lost earnings
    would be in the amount of $507,700.  After deducting contingencies and adding
    benefits he arrived at a present value figure of $500,000.

[80]

Counsel
    for the appellants thereby submitted that the trial judge, in coming to a
    figure of $700,000, must have assumed that the plaintiffs earnings would
    have exceeded the industry average quite substantially."

[81]

I
    find considerable weight in this argument.  I similarly find substance in
    the appellants submission that the evidence does not support a finding that
    Ms. Schellak would have been a top earner in the personnel field.  As pointed
    out by the appellants, at the time of the accident Ms. Schellak had not so
    established herself and her track record mitigated against her ever doing
    so.

[82]

I
    would in many circumstances say that the figure suggested by Mr. Carson, that
    being a net of $370,000, would be appropriate.  However, his figure uses the
    industry average, a figure that does not conform with either the evidence
    of witnesses of comparable employment to that of Ms. Schellak or with the
    employment history of Ms. Schellak.

[83]

The
    appellants submit that the trial judge arrived at an uninjured earning capacity
    that was inordinately high.  I agree with that submission.  It is often said
    in making assessments for this head of damage that mathematical precision
    is neither possible nor even desirable.  That is certainly the situation in
    the case at bar.

[84]

On
    the basis of the evidence, the principles of assessment, and that the trial
    judge was of the opinion that Ms. Schellak was bound to do well in the future,
    I would award  $300,000 to Ms. Schellak under this head of damages.

SUMMARY

[85]

I
    would dismiss the appeal on the issue of non-pecuniary damages.  The award
    of $80,000 is, in my opinion, within the appropriate range.  I would allow
    the appeal of the award of  $120,000 for past loss of income and substitute
    a figure of $70,000.  I would also allow the appeal of the award for loss
    of future income earning capacity.  For the trial judges award of $570,000,
    I would award $300,000.

The
    Honourable Mr. Justice Thackray

I AGREE:

The Honourable Mr.
    Justice Esson

I AGREE:

The Honourable Mr.
    Justice Donald


Citation:

Bell Pole Company v. Commonwealth
          Insurance Company

Date:  20030103

2003 BCCA 7

Docket:  CA027142

COURT OF APPEAL FOR
BRITISH COLUMBIA

BETWEEN:

BELL POLE COMPANY

APPELLANT

(RESPONDENT BY CROSS APPEAL)

(PLAINTIFF)

AND:

COMMONWEALTH INSURANCE COMPANY

AMERICAN HOME INSURANCE COMPANY

GERLING GLOBAL GENERAL INSURANCE COMPANY

THE SOVEREIGN GENERAL INSURANCE COMPANY

ROYAL INSURANCE COMPANY OF
CANADA

RESPONDENTS

(APPELLANTS BY CROSS APPEAL)

(DEFENDANT)

AND:

AON REED STENHOUSE INC.

RESPONDENT

(DEFENDANT)

Before:

The
          Honourable Madam Justice Southin

The
          Honourable Madam Justice Rowles

The
          Honourable Madam Justice Ryan

J.
          E. Gouge, Q.C. and

J.
          Christian

Counsel for the Appellant

(Respondent by Cross Appeal)

D.
          B. Kirkham, Q.C. and

G.
          J. Tucker

Counsel for the Respondents

(Appellants by Cross Appeal)

B.
          T. Gibson, Q.C.

Counsel for the Respondent,

Aon Reed Stenhouse Inc.

Place and Date of Hearing:

Vancouver, British Columbia

1st, 2nd and 3rd October,
          2002

Place
          and Date of Judgment:

Vancouver, British Columbia

3rd
          January, 2003

Written Reasons by:

The
    Honourable Madam Justice Southin

Concurred in by:

The Honourable Madam Justice Rowles

The Honourable Madam Justice Ryan

Reasons for Judgment of the Honourable Madam Justice
    Southin:

[1]

In this appeal and cross appeal from
    the judgment of the Honourable Mr. Justice Pitfield pronounced 7th April,
    2000, awarding to the appellant, the plaintiff below, judgment in the sum
    of $443,668.34 ("by-law coverage" of $250,000 and $193,668.34 in
    respect of "extra expense"), the principal issue is whether the
    appellant, who gave to its insurers, here respondents, five of the defendants
    below, a Statement of Values for "by-laws" of $250,000.00, by the
    operation of what was at the relevant time, 1st May, 1995 (date of the loss),
    the
Insurance
    Act
, R.S.B.C. 1979, c. 200, s. 14 (now R.S.B.C. 1996, c. 226,
    s. 12), is entitled to a further $585,474.19 on the by-law provision.

In other words, it seeks to substitute for the
    sum of $250,000.00, the sum of $835,474.49.

[2]

The respondent insurers, by their cross
    appeal, say that the appellant, knowing full well that its "by-law"
    risk was far in excess of $250,000.00, was not entitled, having misled the
    insurers, to the $250,000.00.

[3]

What each side says on the "extra
    expense" issue, I shall set out hereafter.

[4]

The sixth defendant below, here also
    a respondent, was the insurance broker who arranged the policy in issue.

As against it, the appellant alleged breach of its duty to take reasonable
    care in and about the appellant's business.

The learned trial judge dismissed that part of the action and the appellant
    seeks to overturn that result.

[5]

Underlying the s. 14 issue is the proper
    application of the parol evidence rule.

By my reckoning, the trial of this action took
    some 30 days, many of which were consumed with oral evidence and argument
    thereon as to what the contracting parties intended by the words of the policy.

[6]

This case does not require a disquisition
    on the rule.

It is sufficient to say
    that, as I understand the judgment of Iacobucci J. in
Eli
    Lilly & Co. v. Novopharm Ltd.
, [1998] 2 S.C.R. 129, the rule,
    whatever may have been its state of health before that judgment, is now alive
    and well.

This case falls to be determined
    on the words of the policy.

[7]

A principal, if not the only, business
    of the appellant is the treating of poles with preservatives.

It carries on business at many locations.

We are concerned here with its plant at Carseland, Alberta, and more
    particularly with a structure known as the "full-length treatment tank"
    which was destroyed by fire on 1st May, 1995.

The parties are agreed that the cost of replacing that structure as
    and where it stood, if such were feasible, was $464,525.51.

The insurers have paid that sum.

[8]

But replacement on that site was not
    feasible for two reasons:

first, the
    ground beneath and around the tank having become degraded from the preservative
    solutions used for many years, the authorities in Alberta would have required,
    before reconstruction, remediation of the site - apparently an expensive proposition
    - and, secondly, the structure of the tank not being to modern standards for
    the prevention of soil degradation, the authorities would have required, if
    not immediately then very soon, an up-to-date system which would not cause
    spillage of chemicals.

[9]

The appellant decided, therefore, to
    construct a treatment tank of modern design with attendant works at a different
    site at a cost of some $4 million.

The learned trial judge found, in paragraph 175
    of his reasons for judgment, that the cost of the new tank itself, that is
    to say "replacement cost" within the meaning of the policy, was
    slightly over $1.3 million.

Nothing
    said to us raises any doubt in my mind as to the soundness of that finding.

It is the difference between that sum and the
    amount already paid by the insurers which the appellant claims.

[10]

By the insurance policy, known as the
    "Master 10" policy, why I do not know, the insurers agreed thus:

ALEXANDER & ALEXANDER

REED STENHOUSE LIMITED

POLICY NUMBER:

RSL107902/4

(Replacing policy # RSL107902/3
    and

Cover Note # 0107902)

DECLARATIONS

IN CONSIDERATION OF THE PREMIUM CHARGED, THE INSURERS NAMED IN THE LIST
    OF SUBSCRIBING INSURERS FORMING A PART HEREOF, HEREINAFTER CALLED THE INSURER(S),
    DO HEREBY SEVERALLY AND NOT JOINTLY AGREE, EACH FOR THE LIMIT OR SUM INSURED
    (OR PERCENTAGE OF THE TOTAL LIMIT OR SUM INSURED UNDER THIS POLICY) SET AGAINST
    ITS NAME IN THE LIST OF SUBSCRIBING INSURERS, TO INDEMNIFY THE INSURED FOR
    LOSS AS HEREINAFTER SET FORTH, SUBJECT TO THE LIMITS OF LIABILITY CITED HEREIN
    AND FURTHER SUBJECT TO ALL CONDITIONS, TERMS AND LIMITATIONS OF THIS POLICY
    AS ARE PRESENTLY CONTAINED HEREIN OR WHICH MAY BE ENDORSED HEREON.

NAMED
          INSURED:

BELL
          POLE CO. LTD. AND/OR DAVIS POLE INC.

ADDRESS
          OF INSURED:

P.O. Box 339

Lumby
, B.C.

V0E
          2G0

PERIOD
          OF INSURANCE:

...

PREMIUM
          PAYABLE:

FULL
          TERM:

$ 136,497.

* * *

POLICY SECTION A

GENERAL
    CONDITIONS

These
    conditions apply to all sections of this policy unless specifically otherwise
    stated.

* * *

4.

LIMIT OF LIABILITY

The
    Insurers' liability for the cumulative total of adjusted net claims resulting
    from any one loss, casualty, disaster or occurrence (including all costs,
    fees, charges and expenses) shall not exceed $7,000,000.

*
    * *

5.

...

REPORTING
    AND PREMIUM
ADJUSTMENT

Solely
for the purpose of premium calculation and adjustment the Insured
    agrees to file with ALEXANDER & ALEXANDER the following:

(a)

with
respect
    to all property
- as of policy expiration, a revised Statement of Values
    declaring 100% of the total value of all property intended to be insured by
    this policy during its term (or portion thereof).

The policy rate shall be applied to 50% of the
    difference between the values declared at policy inception and expiration
    and any resulting additional (or return) premium shall be paid by (or refunded
    to) the Insured.

* * *

6.

CO-INSURANCE (STATED AMOUNT)

Notice
    is hereby accepted that the Statement of Values filed with Insurers represents
    at least 90% of the value of the interests insured herein.

As this is the basis of the premium charged for this policy and on
    the understanding that these values shall not be reduced during the policy
    term without prior approval by the Insurers, it is agreed that the Insured
    shall maintain insurance by, or concurrent in form, range and wording with
    this policy on the interests hereby insured, so that the limit of liability
    on the said interests shall be not less than the limit of liability cited
    in clause 4 herein and that, failing to do so, the Insured shall be a co-insurer
    to the extent of an amount sufficient to make the limit equal to the aforestated
    limit and, in that capacity, shall bear its proportion of any loss that may
    occur.

[In paragraph 82 of his reasons for judgment, the learned trial judge
    remarked, "Counsel for all parties agreed in submissions before me that
    the co-insurance portion of the clause is incomprehensible and likely unenforceable
    as a result."]

POLICY
    SECTION B1

LOSS
    OF PROPERTY

1.

INSURED PROPERTY

This
    section of this policy insures all property of every kind and description,
    except as excluded below.

2.

EXCLUDED PROPERTY

This
    section of this policy does not insure:

(a)

land
and/or water;

* * *

3.

INSURED PERILS

This
    policy section insures against All Risks of direct physical loss of or damage
    to the Insured Property except as specifically excluded herein.

* * *

6.

VALUATION

For
    the purposes of settling losses, the value of the Insured Property is agreed
    as follows:

* * *

(e)

All Other Property

"REPLACEMENT
    COST"

Replacement
    cost shall mean the cost of repairing, replacing or reconstructing (whichever
    is the least) the property on the same site using new materials of similar
    kind and quality without deduction for depreciation but is subject to the
    following:

(i)

until
the property is
    actually repaired, replaced or reconstructed, the maximum amount recoverable
    shall be the actual cash value of the lost or damaged property;

(ii)

the
Insured shall exercise
    due diligence and dispatch in effecting repair, replacement or reconstruction;

(iii)

replacement need not be effected on the same site,
    nor be of same or similar style, construction or occupancy PROVIDED that the
    Insurers shall not be liable under this clause for that portion of the increased
    replacement cost that is directly attributable to the inclusion of this provision.

If
    there is in force any law, by-law, regulation or ordinance restricting or
    prohibiting repair, replacement or reinstatement of property, at the Insured's
    request this policy shall also pay for:

(A)

the
loss of any undamaged
    portion of insured property due to the necessary demolition or removal thereof;
    plus

(B)

the
increased cost to
    repair, replace or reinstate the insured property.

However, the Insurers' maximum additional liability
    for this item shall be based on the cost of repairing, replacing or reinstating
    the property on the same site, with property of like size, function and style
    to the minimum standards required by law, having due regard to changes required
    by any law, by-law, regulation or ordinance,

(provided
    that the liability of the Insurers shall be limited to the amount of insurance
    which would have existed in the absence of provisions (A) and (B) unless and
    until the damaged or destroyed property is actually repaired, replaced, constructed
    or reconstructed and unless this is executed with due diligence and dispatch).

* * *

STANDARD
    CONDITIONS

If
    any of these clauses conflict with any other conditions provided elsewhere
    in this policy, the terms more favourable to the interest of the Insured shall
    apply.

* * *

3.

MISREPRESENTATION

When
    applying for insurance hereunder, if the Insured has intentionally given,
    to the prejudice of the Insurers, a false description of the property to be
    insured, or has fraudulently misrepresented or fraudulently omitted to communicate
    any circumstances that are material to be made known to the Insurers in order
    to enable them to judge the risk to be undertaken, this contract is void as
    to any property in relation to which the misrepresentation or omission is
    material.

* * *

13.

TERMINATION

This
    policy may be terminated:

* * *

(b)

by
the Insurers giving
    to the Insured thirty days' notice of termination (either by registered mail
    or personally delivered or served). ... If this contract is terminated by
    the Insurers:

(i)

any
premium actually
    paid by the Insured that is excess over the pro rata premium earned for the
    expired term shall be immediately refunded, but in no event shall such pro
    rata earned premium be deemed to be less than any minimum retained premium
    specified in this policy.

* * *

28.

POLLUTION AND CONTAMINATION
    EXCLUSIONS

This
    policy does not insure any loss or damage resulting from the discharge, seepage
    or spill of any contaminant or pollutant; however, this exclusion shall not
    apply to:

(a)

loss
of or damage to
    insured property caused by a peril not otherwise excluded occurring directly
    as a result of such discharge, seepage or spill;

(b)

loss of or damage to insured property caused
    by such discharge, seepage or spill if resulting directly from a peril not
    otherwise excluded occurring to insured property.

This
    policy does not insure any costs, fines, penalties or expenses:

(
i
)

imposed on the Insured,

(ii)

incurred
by the Insured,
    or

(iii)

sustained
by the Insured

at
the order of any Government Agency, Government Authority or Court
    in connection with any kind or description of environmental impairment, including
    seepage or pollution or contamination from any cause.

[11]

There are two points to be noted:

1.

This policy does not expressly
    require the insured to warrant the correctness, or at least its belief in
    the correctness, of the Statement of Values or any part thereof, whether that
    in existence at the time the policy comes into effect or that which is submitted
    at policy expiration pursuant to clause 5(a).

2.

It does not limit recovery
    to the value ascribed to an item of property listed in the Statement of Values
    in effect at the time of loss.

Indeed,
    property acquired after the beginning of the policy period is insured.

Thus, this insured could have built itself during
    the policy period, works worth millions of dollars and, if those works were
    destroyed within the policy period, the insurers would have had to pay the
    loss, being entitled to set-off against the loss the proper premium.

[12]

When this policy came into effect on
    1st January, 1995, the extant Statement of Values, as I understand the evidence,
    was that dated 9th March, 1994, delivered during the period of the immediately
    preceding policy.

[13]

At the time of the loss, the most recent
    Statement of Values was that of 14th March, 1995.

I set out part of it so that the reader may see its structure:

BELL
    POLE CO. LIMITED

JANUARY
    1995

Based
    on Insurance Appraisal

Worksheet
    (May 1990 Valuation);

4%
    Increase in January 1992 on

Buildings/Equipment

Replacement Cost

Carsland, B.C.

Construction

Equipment

Office

$
313,825
.

$   91,605.

General Plant

259,220.

Millwright Store

31,934.

5,476.

Oil Pump House

749.

3,328.

Propane Shed

640.

2,600.

Storage Shed

1,456.

Wire Shed

2,808.

1,092.

Peeler

34,285.

231,038.

Shavings Bin

29,640.

Boiler House

38,736.

111,037.

Butt Tank

244,774.

CCA Plant

440,266.

558,873.

Fixation Chamber

292,004.

Full Length

457,138.

Pentachoropheno

6,987.

Tank Farm

317,669.

$
871,686
.

$2,605,494.

Logs & Poles

$ 1,000,000.

Profits

7,325,000.

There then followed
    statements of value for the property of the appellant at Haney and Lumby,
    British Columbia, and then this:

Logs & Poles

$   500,000.

Bylaws

250,000.

Extra Expense

200,000.

There then followed a series of descriptions for property at other
    locations in British Columbia.

[14]

The "Total Insured Values"
    was given as $22,249,484.

[15]

It is curious that the Statement of
    Values which is on the letterhead of the respondent broker not only misspells
    Carseland but also puts it in British Columbia.

Nothing turns on this.

[16]

In their amended statement of defence
    bearing date the 7th January, 2000, which suffers the defect of prolixity,
    the insurers pleaded,
inter alia
:

34.

The policy of insurance issued by the Defendants
    to the Plaintiff, for the period January 1, 1995 to January 1, 1996 contains
    certain provisions (quoted at paragraphs 4 and 5 of the Statement of Claim)
    providing for replacement cost coverage and further providing that if there
    is in force any law, bylaw, regulation or ordinance restricting or prohibiting
    repair, replacement or reinstatement of property, the insurers will pay the
    increased costs of complying with such legal requirements.

In the insurance industry this is referred to
    as "bylaw coverage".

35.

The Plaintiff, for several years, engaged Alexander
    & Alexander (formerly known as Reed Stenhouse Ltd.) as its insurance broker.

Alexander & Alexander ("A&A") drafted a standard
    property policy, referred to as the "Master Ten" policy, which A&A
    utilized on behalf of its clients (that is, the insureds) generally.

A&A required the insurers with whom it dealt to subscribe to the
    Master Ten wording proffered by A&A.

36.

The policy issued to the Plaintiff, for both
    the 1995 and prior years, was the Master Ten policy.

37.

A&A were aware that insurers would generally
    require a sublimit of liability with respect to "bylaw coverage".

For the purposes of Master Ten wording, A&A negotiated with the
    insurers that there would be no sublimit with respect to bylaw coverage, on
    the condition that the individual insured, through its broker, would estimate
    the approximate exposure under the "bylaw coverage" in the event
    of a loss under the policy and declare such value in a Statement of Values
    ("SOV").

The SOV would identify the maximum anticipated
    claim for bylaw coverage which could arise from any one loss.

A premium would be paid on the value so declared.

38.

This process was followed in the Plaintiff's
    case.

In particular:

a)

the
Plaintiff represented
    to the insurers, in a Questionnaire, that it was aware of the exposure under
    the bylaw coverage; and

b)

in
a SOV submitted by the Plaintiff to the
    insurers, the Plaintiff specifically represented that the exposure under the
    bylaws coverage was $250,000.

39.

These representations were made for the purpose
    of obtaining a policy which did not contain a sublimit for bylaw coverage.

40.

The insurers relied on the Plaintiff's representations
    in the SOV and Questionnaire and agreed to the Master Ten policy proffered
    by A&A.

The policy omitted any
    sublimit with respect to bylaws coverage.

41.

The standard conditions attached to the policy
    include standard condition 3 which provides:

"When
    applying for insurance hereunder, if the insured has intentionally given,
    to the prejudice of the insurers, a false description of the property to be
    insured ... this contract is void as to any property in relation to which
    the misrepresentation or omission is material."

42.

If in fact the "New Treatment Facility",
    or any substantial portion of it, was required by law as a result of the fire,
    such as to fall within the bylaw coverage of the policy, such exposure is
    something which was known, or ought to have been known, to the insured, at
    the time of the application for the policy, that is, as of January 1, 1995.

43.

At the time of the application, the insured represented
    that the potential loss which could be claimed against the insurers pursuant
    to the bylaw coverage would be $250,000.00.

In its Statement of Claim, the Plaintiff claims
    some $5,000,000 under the bylaw coverage.

If in fact there is $5,000,000 of loss falling
    within the bylaw coverage, then the Plaintiff is in breach of statutory condition
    3 and the contract of insurance is void in relation to the bylaw coverage
    claim.

43(a).

Alternatively, the Plaintiff
    sought bylaw coverage up to a maximum amount of $250,000 and the policy provides
    bylaw coverage only to that extent.

44.

In answer to the entire Statement of Claim, the
    Defendants say that it was not within the reasonable expectation of the parties,
    at the time the contract of insurance was concluded, that a $5,000,000 modernization
    would be covered by the policy.

[17]

To these pleas, the appellant replied:

5.

In reply to the allegations in paras 34-44 of
    the Insurers' Defence:

a.

The Plaintiff expressly denies the representation
    alleged by the Insurers.

b.

If, as the Plaintiff denies, it represented to the Insurers that
    the additional cost of replacement to comply with regulatory requirements
    in effect at the time of the fire would be $250,000, such an estimate was
    not a "description of the property to be insured", but rather an
    estimate of a cost to be incurred in an unforeseeable future event.

[18]

The principal officer of the appellant
    who dealt with the matter of insurance coverage was Mr. Ken Stewart.

[19]

As to the accuracy or otherwise of
    the item in the Statement of Values, "Bylaws $250,000", the learned
    judge said:

[38]

On examination for discovery Stewart testified
    that he continued to hold the view, even after the fire, that the estimate
    of by-law exposure in the statement of values was a fair reflection of the
    real exposure.

In fact, his or the
    company's honest belief in that regard was pleaded in a reply to the insurers'
    statement of defence.

The assertion
    of the belief is not credible.

Bell,
and Stewart
    in particular, had large amounts of information pointing to a much larger
    by-law exposure.

[39]

When Aon was joined as a defendant in the proceeding,
    Stewart's posture changed.

Only then
    did Stewart begin to focus on available limits, separate policies and a professed
    willingness on Bell's part to pay for more coverage
were
it available.

The earlier reply was amended to delete the
    claim with respect to Bell's honest belief.

[20]

The learned judge made this significant
    finding:

[50]

The attribution of the amount of $250,000 to by-laws
    was not inadvertent or unintentional.

At
    the same time, my previous findings that Bell knew and believed it could limit
    coverage by deliberately stating an amount that did not represent value and
    that Bell intended the amount of $250,000 to be a limit on by-law
coverage,
mean that Bell did not act with fraudulent intent.

[21]

In other words, the learned judge found
    that the appellant intended a sub-limit of $250,000 and, having so intended,
    that is the limit of cover.

[22]

It is common ground that, by these
    passages, the learned judge held it to be a term of the contract of insurance
    that by-law coverage was limited to $250,000.00.

[23]

The appellant submits that this cannot
    be right because there was no agreement on the part of the insurers to such
    a term.

The insurers did not, as I
    understood their factum and oral argument, confront this proposition directly.

What they say in paragraph 59 of their factum is this:

The
    Insurers' position on the appeal and cross-appeal, in summary, is as follows:

a)

Bell Pole's position that the SOVs must be ignored altogether has
    no merit.

The policy must be construed
    with reference to the SOVs as a vehicle by which the insured can restrict
    coverage.

b)

The only question is whether Bell Pole was entitled to use the SOVs
    to
effect
partial coverage for bylaws without disclosing
    that fact to the Insurers.

c)

If Bell Pole was not entitled to use the SOVs to
effect
partial coverage without disclosure to the Insurers,
    then the Insurers' cross-appeal on the misrepresentation issue must be allowed
    and the bylaw coverage declared void on the basis that there was an intentional
    false description of the property to be insured.

d)

If Bell Pole was entitled to effect partial coverage without disclosure
    to the Insurers, then the Insurers' cross-appeal on the misrepresentation
    issue must be dismissed, but Bell Pole's appeal on the sub-limit issue must
    also be dismissed, as the filing of the SOV had the effect of creating a $250,000
    sub-limit for bylaws.

[24]

It was common ground that in the Statement
    of Values, the item "Logs & Poles $500,000." had been agreed
    to be a sub-limit.

If either side had
    denied that that sub-limit existed, the remedy of the other was rectification
    of the instrument.

Equity has no difficulty,
    subject to any statutory constraint, in mending an instrument, albeit it cannot
    mend a bargain.

See
Can-Dive Services Ltd. v. Pacific Coast Energy Corp
(2000), 74
    B.C.L.R. (3d) 30 (B.C.C.A.).

[25]

On this point, Mr. Gouge is right.

The appellant could not create a "sub-limit", sub-limits
    being contractual terms, in the absence of some provision in the contract
    permitting it to do so.

A contracting party may not create a term
in pectore
.

[26]

There being no such term, s. 14 does
    not come into play.

[27]

But does it therefore follow that,
    in the circumstances of this case, the appellant is entitled to point to the
    combined effect of General Condition 4 and clause 6 of Policy Section B1 and
    say that the insurers must pay the full replacement cost?

[28]

What we have here is an insured which,
    knowing full well:

i)

that
the premium on its policy was fixed on an
ad valorem
basis;

ii)

that the cost of replacement of an item of insured property, the full-length
    treatment tank, if it were destroyed by a peril insured against, because of
    regulatory requirements, would far exceed the cost of replacement as is, where
    is,

put in the Statement of Values, without informing the insurers, and
    in order to keep down its premium, a grossly inadequate "value"
    for "by-laws", and now comes, the tank having been lost, claiming
    a right to invoke the replacement cost provision to its full extent.

[29]

To put it another way, the appellant
    is saying to the insurers, "It is true that we only paid a premium for
    $250,000 of insurance although we knew the risk far exceeded that, but you
    must pay the $1.3 million because you did not put into the policy any express
    provision requiring us to tell the truth in the Statement of Values."

[30]

The word which best describes this
    approach of the appellant is a word with no precise equivalent in English
    - the Yiddish word "chutzpah".

[31]

Many authorities were cited to us in
    argument but none, in my opinion, is directly in point.

Having confidence that Mr. Gouge and Mr. Kirkham
    will have left no stone unturned in the search for authority, I conclude this
    is a case of first impression to be addressed upon first principles.

[32]

It has been said that it is a principle
    of universal application to all types of insurance contracts that such contracts
    are based on the utmost good faith of both parties.

See
Halsbury's
    Laws of England
, 4th ed., vol.25,
para
. 349.

[33]

It is unnecessary in the case at bar
    to examine the exact limits of that proposition or what the remedy for a breach
    of that duty may be in any given case.

[34]

So far as this case is concerned, it
    is my opinion that the act of the appellant in deliberately understating the
    "by-law" risk was a breach of its duty of good faith to the insurers.

But it does not follow that the breach should disentitle the appellant
    to recover anything under the by-law coverage.

The insurers took the appellant's money, they are better off than if
    the appellant had paid a premium for by-law coverage of $1,000,000.00 and
    it ill-becomes them to resist paying the $250,000.00.

[35]

In coming to this conclusion, I have
    in mind also what I consider a fundamental principle of the common law - one
    is only entitled to that which one has paid for.

The common law has never looked kindly upon
    windfalls.

[36]

A word must be said about the insurers'
    plea of Standard Condition 3.

[37]

As to this, the learned judge began:

[46]
I
will assume, without deciding, that the attribution
    of an amount to by-laws in the statement of values can be considered a "description
    of property" and that the effect of the statement of values as it pertained
    to by-law coverage was prejudicial to the insurers.

[47]
The
insurers do not allege that Bell was fraudulent
    in attributing the amount of $250,000 to by-laws in the statement of values.

Nor do they allege that by stating that amount in respect of by-laws,
    Bell has fraudulently misrepresented or fraudulently omitted to communicate
    any material circumstance to the insurers.

[48]
The
insurers say that the standard condition does
    not require fraudulent intent where descriptions of property are involved.

They say the phrase "intentionally given ... a false description
    of the property to be insured" should be construed to apply when an insured
    states a value in respect of property with knowledge of its inaccuracy regardless
    of the purpose for doing so.

[38]

In my opinion, the attribution of an
    amount to "by-laws" in a statement of values cannot be considered
    a "description of property".

Furthermore, the clause begins, "When applying
    for insurance hereunder" and those words are inapt to the statement of
    values system of this policy and its predecessor policies.

[39]

On the question then of the $250,000.00
    award for by-law risk, I would dismiss both the appeal and the cross-appeal,
    albeit for reasons slightly different from those of the learned trial judge.

[40]

The "extra expense" issue
    arises on these provisions of the policy:

POLICY
    SECTION B3

BUSINESS
    INTERRUPTION

EXTRA
    EXPENSE

1.

INSURING AGREEMENT

If
    any property (of the Insured or of others) be lost, damaged or destroyed during
    the term of this policy by a peril not excluded in the policy section insuring
    the class of property sustaining the damage, this policy is extended to cover
    necessary Extra Expense incurred by the Insured in order to continue as nearly
    as practicable the normal conduct of the Insured's business following the
    occurrence of such loss or damage.

*
    * *

2.

DEFINITION

(a)

"Extra Expense" - The term "Extra
    Expense" shall mean the amount by which the cost incurred during the
    period of indemnity for the purpose of continuing the Insured's operations
    in order to meet production and/or service commitments or projections, exceeds
    the cost that would normally have been incurred to conduct the operations
    during the same period had no loss occurred.

In no event shall the Insurers be liable under
    this policy section for loss of income, nor for extra expense in excess of
    that necessary to continue as nearly as practicable the normal conduct of
    the Insured's business, nor for the cost of repairing or replacing any of
    the described property that has been damaged or destroyed by the perils insured
    against, except cost in excess of the normal cost of such repairs or replacements
    necessarily incurred for the purpose of reducing the total amount of extra
    expense; liability for such excess cost, however, shall not exceed the amount
    by which the total extra expense otherwise payable under this policy is reduced.

The Insurers shall also be liable for extra expense incurred in obtaining
    property for temporary use during the period of restoration necessarily required
    for the conduct of the Insured's business; any salvage value of such property
    remaining after resumption of normal operations shall be taken into consideration
    in the adjustment of loss hereunder.

The
    term shall also include expenses reasonably incurred by the Insured to transport
    employees from the location of the damaged property and return thereto to
    resume operations after restoration thereof.

(b)

"Normal" shall mean the condition which
    would have existed had no loss occurred.

3.

RESUMPTION OF OPERATIONS

As
    soon as practicable after any loss, the Insured shall resume complete or partial
    business operations and, insofar as practicable, reduce or dispense with such
    extra expenses as are being incurred.

* * *

6.

ADDITIONAL CONDITION

In
    the event that loss recoverable under this policy section is increased due
    to the operation of any law(s) and/or ordinance(s) regulating the demolition,
    replacement, repair, reconstruction or use of the property, the Insurers shall
    be liable for such increase in loss, but only to the extent of conformity
    with the minimum standards of such laws or ordinances as are in force at the
    time of demolition, replacement, repair or reconstruction.

[41]

As the learned judge put the issues:

[185]
The
insurers have paid Bell the sum of $757,682.57
    on account of this claim.

The sum represents
    the agreed amount of extra expense for the period from the date of the fire
    to November 30, 1995.

Bell claims indemnity to July 1996 when the
    pressure facility became operational.

[186]  The
    insurers claim that the maximum term of extra expense recovery is 12 months
    as stipulated in clause 1 of Section B3 of the Master 10 policy.

Bell says the term may be increased beyond 12
    months where the increase results from the operation of any law regulating
    replacement or reconstruction.

[42]

The learned judge, as I read his reasons
    for judgment, did not accept either proposition.

He did note an alternative argument of the insurers
    thus:

[196]  The
    insurers say as an alternative that the upgrade committee concluded that one
    possible form of replacement was an above ground pressure facility on the
    site of the old full-length tank with a completion date of December 1995.

They say that should be the maximum term for
    extra expense coverage as a result.

[197]
The
alternative ignored the fact that replacement
    would have been delayed by the requirement to remediate the site of the old
    full-length tank before any new construction could proceed.

There was no evidence of the time that would
    be required to remediate had that course been chosen.

[43]

He then concluded:

[198]
The
policy section specified that Bell's obligation
    in relation to extra expense coverage was to proceed as soon as practicable
    to curtail such expenses.

On all of
    the evidence I conclude that the reasonable period in which that could have
    been done, had Bell not chosen to build the sophisticated state of the art
    kind of facility it did, would have extended beyond November 30,1995 to February
    29, 1996.

Bell is entitled to additional
    extra expense compensation of $193,668.34. My award in that regard reflects
    the parties' agreement with respect to the monthly amount of extra expense.

[44]

In this Court, the appellant does not
    assert, as it did below, extra expense to July 1996.

It is content to rest on the award made by the
    learned judge below.

[45]

The insurers' position is set out in
    its factum thus:

Issue 2 - Did the trial judge
    err in awarding extra expense for January and February 29, 1996
?

51.

The parties agree that the Insurers have already
    indemnified Bell Pole for extra expense for the time necessary to construct
    a direct replacement of the full length tank.

52.

Thus, if the Insurers' cross-appeal on standard
    condition 3 is allowed, so that the policy provides no bylaw coverage, judgment
    on Bell Pole's extra expense (in the amount of $193,688.64) must also be set
    aside.

If there is no bylaw coverage
    under the policy, there can be no entitlement to extra expense for the extra
    construction time to meet bylaw requirements.

53.

If the cross appeal of the Insurers is dismissed,
    the period of indemnity for extra expense should end at December 31, 1995.

The judge's award for January and February 1996 (in the amount of $126,842.11)
    should be set aside.

That is because
    the trial judge erred in including in the period of indemnity the time that
    would have been necessary to remediate the site of the full length tank had
    reconstruction proceeded there.

54.

There are two exclusions under the policy which
    apply.

Each exclusion independently
    means there is no coverage for the cost of soil remediation and, necessarily,
    for extra expense during resulting additional construction time.

55.

The policy contains
a pollution
exclusion, being standard condition 28:

[The
    insurers then quoted standard condition 28,
supra
,
    para. 10.]

56.

The Insurers argued at trial that all of the
    costs of upgrades to be incurred to meet environmental requirements were excluded
    under this provision.

The trial judge
    considered that argument at paras. 177 to 180 of his Reasons and rejected
    it.

In doing so the trial judge made
    it clear that, had Bell Pole chosen to rebuild at the original location, the
    cost of site remediation would have been excluded:

Moreover,
    none of the costs incurred by Bell and claimed from the insurers under the
    policy pertained to contamination or impairment that had been caused by the
    operation of the full-length tank.

The exclusion
    would have applied, as an example, to the cost of remediating the old location
    had reconstruction occurred there
.

(
emphasis
added)

[AB 9, 1793-4]

57.

The exclusion would have applied because the
    contamination at the site all pre-existed the fire.

58.

The trial judge overlooked his own interpretation
    of the pollution exclusion when he made his finding on extra expense.

If the pollution exclusion precludes any recovery for cost of soil
    remediation (as the trial judge correctly held) it must also exclude any extra
    expense that Bell Pole would have incurred during the time it took to accomplish
    the soil remediation.

59.

Had the learned judge directed his mind to the
    pollution exclusion when he considered the extra expense claim he could not
    have allowed Bell Pole an extra two months indemnity, for January and February,
    1996.

The award for those months must
    be set aside.

60.

Further, there is a separate exclusion which
    also applies and is in itself sufficient to bar recovery of the extra expense
    claimed.

61.

The policy provides no coverage for loss or damage
    to land.

Clause 2(a) provides:

Excluded
    property

This
    section of the policy does not insure

(a)

land
and/or water;

62.

The pre-fire contamination that Bell Pole would
    have had to remediate was damage to land and thus excluded from coverage.

63.

If either exclusion applies, the trial judge's
    award of extra expense, for January and February 1996, in the amount of $126,842.11,
    must be set aside.

This would limit
    recoverable extra expense to December, in the amount of $66,836.23.

Obviously this amount can be upheld only if the Insurers' cross appeal
    on misrepresentation fails.

[46]

To this, the appellant replies thus:

46.

At paragraphs 53-63 of the Insurers' cross-appeal
    factum, they argue that the extra expense incurred in January-February, 1996
    is not recoverable because it was caused by the delay necessary to remediate
    the soil surrounding the old full-length treatment tank.

The flaw in the Insurers' argument is soil was not remediated, and
    so cannot have extended the time required for construction of the new treatment
    facility.

Bell Pole was not required
    to remediate the soil, and has not done so.

We refer to paragraphs 135 and 196-197 of the
    reasons of the learned trial Judge: Appeal Book, Vol 9, pages 1780, 1798-1799.

Construction cannot have been delayed by something which was not done,
    and was not required to be done.

47.

There was no agreement among counsel as to the
    length of time which would have been necessary to construct a replacement
    facility in conformity with current regulatory requirements.

Such an agreement could not be made because
    there was no agreement as to the design constraints imposed by Alberta Environment
    under the
Environmental Protection &
    Enhancement Act
and by the Alberta Labour under the
Building Code
and the
Fire Code
.

Much of the evidence at trial was devoted to
    the identification of those design constraints.

The learned trial Judge was obliged to consider all of that evidence
    and form a conclusion as to what design elements Bell Pole was required to
    include to conform to regulatory requirements and how long it ought to have
    taken to construct a replacement facility in conformity with those requirements....

48.

At paragraph 198 of his reasons for judgment,
    the learned trial Judge found as a fact that, by proceeding with all proper
    diligence, Bell Pole could not have completed the replacement facility before
    February 29, 1996:

Appeal Book, Vol
    9, page 1799.

That finding had nothing
    to do with soil remediation - it was, as the learned trial Judge said, a conclusion
    on all of the evidence.

As the learned
    trial Judge noted at paragraph 197 of his reasons, the time required to remediate
    the soil played no part in his consideration of the issue.

The Insurers have not shown the conclusion of
    the learned trial Judge to be clearly wrong.

49.

At paragraph 58 of the Insurers' cross-appeal
    factum, they argue that the duration of the extra expense coverage is limited
    by the pollution exclusion.

Those provisions
    are found at Appeal Book, Vol 1, pages 170, 182.

The learned trial Judge rejected that argument
    at paragraphs 178-179 of his reasons for judgment: Appeal Book, Vol 9,
pages
1793-1794.

The learned trial Judge
    found as a fact that no loss or damage in this case was caused by the discharge,
    seepage or spill of any pollutant.

The Insurers do not challenge that finding of
    fact on this appeal.

In view of that
    finding of fact, the pollution exclusion (by its terms) cannot apply.

The extra expense coverage requires only that:

As
    soon as practicable after any loss, the Insured shall resume complete or partial
    business
operations ...

The
    only limit on the period of indemnity applicable in the case at bar is that
    the time required to recommence normal operations, which the learned trial
    Judge found to be the end of February, 1996:

reasons, paragraph 198, Appeal Book, Vol 9, page 1799.

[47]

In my opinion, the insurers' argument
    on standard condition 28 is off the mark.

[48]

The loss or damage here did not result
    from the spill of any contaminant or pollutant.

It resulted from the fire and, indeed, fire,
    as a peril not otherwise excluded, is itself an exception from the exclusion.

[49]

By the extra expense provisions the
    insurer is to reimburse the insured for those expenses which are incurred
    "in order to continue as nearly as practicable the normal conduct of
    the Insured's business" such as the cost to an insured of obtaining stock
    in trade from another manufacturer in order to fulfil orders already on the
    insured's books.

[50]

For its part, the obligation of the
    insured is this:

3.

RESUMPTION OF OPERATIONS

As
    soon as practicable after any loss, the Insured shall resume complete or partial
    business operations and, insofar as practicable, reduce or dispense with such
    extra expenses as are being incurred.

[51]

On the evidence here, it was not "practicable"
    for the appellant to resume treating poles, and therefore supplying his customers,
    until a new full-length treatment tank was constructed.

[52]

The learned judge found that such a
    tank could have been constructed by 29th February, 1996, had the appellant
    not chosen to build the sophisticated state of the art facility which it did
    build.

[53]

Nothing said to us during argument
    persuaded me that the learned judge erred in so holding.

[54]

I would therefore dismiss the insurers'
    cross appeal on this point.

[55]

I now turn to the appellant's appeal
    against the dismissal of its claim against its broker.

[56]

As against the insurers, the appellant
    pleaded:

17.

In the alternative, if the Plaintiff's entitlement
    to recovery under the Policy with respect to its losses flowing from the destruction,
    by fire, of the Full-Length Facility at the Carseland Plant is limited by
    amounts stated in the document entitled "Statement of Values, Bell Pole
    Co. Limited, January 1995", which limitation is not admitted but is specifically
    denied, the Plaintiff says that its inability to fully recover those losses
    was caused or contributed to by the negligence, or breach of contract, or
    both, of the insurance agency Reed Stenhouse and/or its predecessors.

* * *

24.

At all material times, Reed Stenhouse and Bell
    Pole were parties to a contract of agency (the "Agency Agreement")
    in which Bell Pole was principal and Reed Stenhouse served agent.

Bell Pole engaged Reed Stenhouse to act as its
    agent for the purpose of securing insurance coverage over Bell Pole's Carseland
    Plant, in consideration of which Bell Pole purchased that insurance coverage
    from the Defendant Insurers such that Reed Stenhouse earned commissions on
    the insurance policies, including the Policy, placed in that regard.

25.

Under the terms of the Agency Agreement, Reed
    Stenhouse expressly, or in the alternative impliedly, agreed to:

(a)

develop
an understanding
    of Bell Pole's business and operations at the Carseland Plant;

(b)

assess
the foreseeable,
    insurable risks to Bell Pole's Carseland Plant;

(c)

identify
the coverage
    available in the marketplace to insure against those risks, and the cost of
    that coverage;

(d)

advise
and inform Bell
    Pole concerning the nature, scope, limitations and cost of the various forms
    of insurance coverage available in the marketplace to insure against the foreseeable,
    insurable risks to Bell Pole's Carseland Plant;

(e)

complete
correctly,
    fully and competently, all forms and documents associated with the insurance
    coverage ultimately obtained for Bell Pole's Carseland Plant;

(f)

advise and inform Bell Pole concerning the nature,
    scope, limitations, oblitations [sic] and cost of the insurance coverage over
    Bell Pole's Carseland Plant actually conferred by the Policy; and

(g)

ensure
that insurance
    coverage consistent with Bell Pole's needs and requirements was put in place,
    either under the Policy or otherwise.

26.

In breach of the terms, express or implied, of
    the Agency Agreement, Reed Stenhouse:

(a)

failed
to inform itself
    adequately about Bell Pole's business and operations at the Carseland Plant
    in order to:

(
i
)

assess the foreseeable, insurable risks to the
    Carseland Plant;

(ii)

advise
and inform Bell
    Pole with respect to those foreseeable, insurable risks; and

(iii)

secure, under the Policy or otherwise, coverage
    for the Carseland Plant that was in conformity with Bell Pole's insurance
    needs and requirements;

(b)

failed to advise and inform Bell Pole in a full
    and adequate manner of the nature, scope, limitations, obligations and costs
    generally of the insurance coverage available, and actually placed, with respect
    to Bell Pole's Carseland Plant, both under the Policy and otherwise;

(c)

failed to advise and inform Bell Pole in a full
    and adequate manner of the information requirements associated with the "Statement
    of Values" forms completed in connection with insurance coverage over
    Bell Pole's Carseland Plant, both under the Policy and otherwise;

(d)

failed to advise and inform Bell Pole in a full
    and adequate manner of the information requirements associated with the "Questionnaire
    (for Master 10)" forms completed in connection with insurance coverage
    over Bell Pole's Carseland Plant, both under the Policy and otherwise;

(e)

completed or participated in the completion of
    "Statement of Values" forms incorrectly in connection with insurance
    coverage over Bell Pole's Carseland Plant, both under the Policy and otherwise,
    without any, or in the alternative without adequate, prior consultation with
    Bell Pole;

(f)

completed or participated in the completion of
    "Questionnaire (for Master 10)" forms incorrectly in connection
    with insurance coverage over Bell Pole's Carseland Plant, both under the Policy
    and otherwise, without any, or in the alternative without adequate, prior
    consultation with Bell Pole;

(g)

failed to advise and inform Bell Pole in a full
    and adequate manner of the limiting effect of the manner of completion of
    the "Statement of Values" and "Questionnaire (for Master 10)"
    forms upon the coverage over Bell Pole's Carseland Plant available under the
    Policy; and

(h)

arranged
on Bell Pole's
    behalf for the placement, by the Defendant Insurers, of insurance coverage
    for Bell Pole over its Carseland Plant that by,
inter alia
, failing to confer full indemnity for all losses associated
    with the destruction by fire of the Full Length Facility, did not conform
    with Bell Pole's insurance needs and requirements.

27.

By reason of the breaches, by Reed Stenhouse,
    of its obligations under the Agency Agreement, the Plaintiff has suffered,
    and continues to suffer, damages, loss and expense.

[57]

It pleaded an essentially similar claim
    in tort.

[58]

Before us, the appellant focussed its
    case on the questionnaire referred to in subparagraph 26(d) to (g):

[The
    respondent Aon] breached its duty of care to Bell Pole by failing to advise
    Bell Pole of the opportunity to receive $1 million of by-laws coverage, at
    no cost, by answering "no" to question #6 on the questionnaire and
    omitting any reference to by-laws on the statement of values.

[59]

The questionnaire was a document which
    the respondent completed each year on behalf of the insured for one of the
    insurers, the Commonwealth Insurance Company, which was on the risk for 45%.

[60]

The question and the answer was this:

11.

Question #6 on the questionnaire is material
    to this case.

It reads:

By-laws:

Do the values submitted include additional costs?

(If no or not known, a sub-limit will be imposed).

[61]

There was some evidence that if the
    question had been answered "no" the sub-limit, as far as Commonwealth
    Insurance Company was concerned, would have been $1,000,000.00.

[62]

On this footing, the appellant says
    the respondent
Aon
ought to pay as damages 45% of
    the loss which it has been unable to recover from the insurers.

[63]

This point was either not put to the
    learned judge below or put to him in a way that he thought did not require
    an answer.

[64]

What the learned judge said about the
    claim against the broker was this:

[181]  Bell's
    claim against Aon is based, in part, on the allegation that Aon negligently
    facilitated the supply of an intentionally false description of property to
    Commonwealth through a questionnaire to which Aon responded on behalf of Bell
    without having consulted with Bell about an answer given in relation to by-law
    exposure.

I have rejected the so-called
    misrepresentation defence.

Bell's claim
    against Aon, to the extent it is based on Aon's role in a misrepresentation,
    therefore cannot succeed.

[182]
Bell
also claims against Aon on the basis that
    Aon was negligent in not consulting with Bell about the adequacy of by-law
    coverage in the period from the fall of 1985 when the limit was increased
    to $250,000 to the fire in 1995.

Bell
    says that if it had known that more by-law coverage was
available,
it would have obtained and paid for it so as not
    to be affected by a sub-limit of $250,000.

[183]
I
have found as fact that Bell wanted to limit
    its by-law coverage to $250,000 and intended that result when it completed
    the statement of values in each year from 1985 through 1995.

In so finding, I have rejected Stewart's evidence
    and, consequentially, Bell's alternative claim against Aon.

No act of Aon, negligent or otherwise, caused any loss to the extent
    Bell was under-insured in relation to its by-law exposure.

[184]

Bell's
action against Aon is dismissed.

[65]

The respondent broker did not cause
    or contribute to the appellant's loss.

The
    fundamental cause of that loss is the appellant's deliberate decision to keep
    down its premiums by not giving a true assessment of its by-law exposure on
    its statements of value.

The appellant
    was taking a chance and it is in no position to complain that the respondent
    broker did not somehow or other
rescue
it from its
    course of conduct.

[66]

I would therefore dismiss the appeal
    as against the respondent Aon Reed Stenhouse Inc.

[67]

To sum up, therefore, I would dismiss
    both appeals and the cross-appeal with costs upon each proceeding to the successful
    party.

THE HONOURABLE MADAM JUSTICE SOUTHIN

I AGREE:
THE HONOURABLE MADAM JUSTICE ROWLES

I AGREE:
THE HONOURABLE MADAM JUSTICE RYAN