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Facts[]

In 1978, Maritime Life issued an insurance policy on the life of MF to Saskatchewan River Bungalows (SRB). In 1984, ownership of the policy was transferred to Fikowski, who became the beneficiary, with SRB remaining responsible for paying the annual premiums. On July 24, SRB mailed a cheque to pay the annual premium due on July 26, but the cheque was never received by Maritime Life, nor was it deducted from SRB's bank account. After expiry of the grace period on Aug. 26, Maritime Life sent a late payment offer to SRB agreeing to accept payment of the July premium if it was postmarked or received by September 8, but SRB did not respond to the offer. In November, Maritime Life wrote a letter advising Fikowski that the premium due on July 26 remained unpaid and stating that "this policy is now technically out of force, and we will require immediate payment of $1,361.00 to pay the July 1984 premium". Finally, in February 1985, Maritime Life sent a notice of policy lapse to SRB and Fikowski, with an application for reinstatement appended to the notice requiring evidence of insurability. Since Saskatchewan River Bungalows closed its hotel business and picked up the corporate mail infrequently during the winter season, it did not become aware of the late payment offer, the November letter or the lapse notice until April. It then began to search for the lost premium cheque. It was not until July 1985 that Saskatchewan River Bungalows sent a replacement cheque to Maritime Life, and a cheque for the 1985 premium. Both cheques were refused. MF was by then terminally ill and uninsurable. He died in August. Maritime Life rejected Saskatchewan River Bungalows' claim for benefits under the policy on the ground that it was no longer in force.

At trial the judge dismissed the respondents' claim for benefits under the policy and refused to grant them relief against forfeiture, but this was overturned by the Court of Appeal.

Issue[]

  1. Was Maritime Life estopped from strictly enforcing the lapse due to their conduct in the November letter?

Decision[]

Maritime's waiver was no longer in effect when respondents sought to make payment in July. Appeal allowed and respondents not entitled to any benefits under the policy.

Reasons[]

Major, writing for the court, held that the demand for payment in the November letter was a clear and unequivocal expression of Maritime Life's intentions to continue coverage upon payment of the July premium and, as such, constituted a waiver of the time requirements under the policy. However, the waiver was not still in effect when SRB tendered payment of the missing premium in July. Waiver could be retracted if reasonable notice was given to the party in whose favour it operated. In the case at bar, the respondents were not aware of Maritime Life's waiver until they received the November letter in April 1985 and therefore they did not rely on it. The statement that "this policy has lapsed" contained in the February lapse notice therefore took effect on its terms. In any event, once SRB opened their mail in April, they clearly became aware of Maritime Life's intention to retract its waiver. Even if a reasonable notice requirement were imposed, it would thus be adequately met by SRB's failure to tender a replacement cheque until July, three months later. As a result, Maritime Life was only required to reinstate coverage if the respondents provided evidence of insurability, which was not possible in this case.

Ratio[]

  • To waive rights there must be full knowledge of rights and an unequivocal and conscious intention to waive them.
  • A waiver can be retracted (explicitly or impliedly) through reasonable notice in reasonable time.
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