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