Case information

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Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

The following statement of facts is taken from the Court of Appeal’s judgment. The Appellants, Theresa Marche and Gary Fitzgerald, owned two properties which were insured with the Respondent, the Halifax Insurance Company. One was their residence and the second was the Property in North Sydney, which they rented as two flats. When the insurance policy was last renewed before the fire, both those flats were rented.

In late summer 1998, Mr. Fitzgerald went to British Columbia to find work. Ms. Marche left to join him at the end of September 1998. That month, they listed the Property for sale with a real estate agency. Before leaving, Ms. Marche told their insurance agent that they were turning their residence into a rental property, but did not inform the agent that the Property was vacant and that the Appellants were looking for tenants for both its flats.

Before the new tenants who had been found for the Property could take possession at the beginning of December 1998, Danny Fitzgerald (Danny) and his spouse had moved in and had the power hooked up. Ms. Marche sought his departure, but her efforts were unsuccessful. Ms. Marche then made a rental agreement with Danny for the upstairs flat and about a week later, agreed to rent the lower flat to the daughter of Danny’s spouse.

Nothing in the trial record established that the water to the Property was disconnected at any time between September 1998 and December 1998. This can be inferred, from Ms. Marche’s evidence that Danny had the power hooked up when he moved in. Danny’s rent was quickly in arrears and Ms. Marche again tried to make him leave. Around the middle of January 1999 she had the water to the Property disconnected and at the end of that month, she had the power company remove the power boxes from the two flats.

The fire happened on February 7, 1999. Halifax Insurance denied liability under the fire insurance policy, on the basis that the Appellants had failed to notify it of a material change in the risk. Ms. Marche testified at trial that she was not aware that she had to notify Halifax Insurance or the insurance agent that the Property was vacant, and acknowledged that she had not done so. Neither had she notified either the insurer or the agent of her difficulties with Danny or her efforts to make him leave. A unit manager of Halifax Insurance testified that the insurance policy covering the Property showed it as occupied as a rental dwelling and having two units. A property that was vacant and without electricity would not be accepted because it was not ready for occupancy. The contract of insurance, the fact that the fire was incendiary in nature, the fact that the authors of the fire were unknown and irrelevant, and the amount of the damages were all admitted at the commencement of the trial. The trial judge granted judgment to the Appellants. The Court of Appeal allowed the Respondent’s appeal and set aside the trial judge’s decision and order.