



COURT OF APPEAL
    FOR ONTARIO

CITATION: Mohammad v. The Manufacturers Life Insurance
    Company, 2020 ONCA 57

DATE: 20200129

DOCKET: C67151

Simmons, Lauwers and Nordheimer JJ.A.

BETWEEN

Fadia Khalil Mohammad

Plaintiff (Respondent)

and

The Manufacturers Life
    Insurance Company

Defendant (Appellant)

Gordon Jermane, for the appellant

Michael K. Walter, for the respondent

Heard: January 23, 2020

On appeal from the judgment of Justice Shaun OBrien of
    the Superior Court of Justice dated May 31, 2019, with reasons reported at 2019
    ONSC 3386.

REASONS FOR DECISION

A.

Overview

[1]

The defendant appeals from the summary judgment granted by the motion
    judge that
determined that the plaintiff was
    entitled to payment of the death benefit for her husband, pursuant to a life
    insurance policy. For the following reasons, we allow the appeal, set aside the
    judgment below, and substitute judgment dismissing the action.

B.

Background

[2]

On April 10, 1987, the respondents husband (the deceased) completed
    an application for life insurance with a predecessor to the appellant. He
    required the life insurance in order to obtain a mortgage. On the application, the
    deceased provided a social insurance number. He also stated that he had [j]ust
    moved to Canada from Spain.

[3]

Unbeknownst to the appellant, the deceased had been convicted in Greece
    many years earlier of various offences, including manslaughter. At the time,
    the deceased was a member of a terrorist entity known as the Popular Front for
    the Liberation of Palestine (PFLP). Along with a fellow terrorist, he stormed
    an El Al civilian aircraft in 1968, throwing grenades and firing live rounds at
    the occupants. At least one person was killed.

[4]

Not long after he was convicted, the deceased was released as the result
    of a hostage negotiation that arose when other members of the PFLP stormed another
    plane and demanded his release. The deceased then moved to Lebanon. Eventually,
    in 1987, the deceased came to Canada. He did so fraudulently by using an alias.
    That is also how he obtained his social insurance number. Eventually, the
    deceaseds past activities were discovered by Canadian authorities. In 2013, the
    deceased was deported to Lebanon from Canada. He died from lung cancer in 2015.

[5]

None of the information respecting his involvement with the PFLP was
    provided by the deceased when he applied for the life insurance policy (the policy).
    The policy was issued insuring the life of the deceased. The respondent was the
    spouse of the deceased and is the sole beneficiary of the policy. The policy
    insured the deceaseds life for $75,000.

[6]

The application for the policy did not contain any questions concerning the
    deceaseds status as a citizen or permanent resident of Canada, nor did it
    contain any questions asking whether he had been convicted of any crimes. The application
    did, however, contain the following warning:

The Owner and insured agree that the meaning and importance of
    the questions in the Application have been explained and each question is fully
    understood. They declare that the statements recorded in the Application are
    true and complete to the best of their knowledge and belief, and form the basis
    of any policy which is issued. They understand that the Company requires
    complete and accurate answers in order to provide insurance and that THE
    COMPANY MAY CANCEL THE POLICY OR ANY RIDER OR DENY A CLAIM IF ANY ANSWERS ARE
    INCORRECT. [Emphasis in original.]

C.

decision below

[7]

The motion judge granted summary judgment in favour of the respondent
    awarding her payment under the policy. She found that, in providing his social
    insurance number, the deceased did not misrepresent his immigration status. The
    motion judge noted that the application form did not contain any questions that
    asked anything about the deceaseds immigration status or citizenship. She also
    concluded that the deceased had not failed to disclose all material facts in
    his application. In so concluding, the motion judge found that the appellants
    failure to ask any questions relating to immigration status or criminal history
    signaled that these issues were not material.

D.

Analysis

[8]

In our view, the motion judge made a palpable and overriding error in finding
    that the deceaseds failure to reveal his past activities did not constitute a
    failure to reveal material facts that vitiated the policy. We begin with s. 183(1)
    of the
Insurance Act
, R.S.O. 1990, c. I.8, which reads:

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 the persons knowledge that is material
    to the insurance and is not so disclosed by the other.

[9]

The past actions of the deceased were material to the risk that he posed
    for the purpose of having his life insured. On this point, the motion judges
    reliance on the decision in
Sagl v. Chubb Insurance Company of Canada,
2009 ONCA 388, 249 O.A.C. 234, leave to appeal refused, [2009] S.C.C.A. No.
    303, is misplaced. The materiality of the unrevealed information in
Sagl
,
    a fire insurance case, is of an entirely different kind than is the case here.
    There the insurer made no inquiries about information related to the ownership
    of the property, which it knew or should have known existed, such that the
    trial judge was entitled to infer that this information was not material. Here
    there is no suggestion that the appellant ought to have known that the
    information related to the deceaseds past existed, and therefore cannot be
    faulted for not having inquired into it.

[10]

The motion judge also erred in relying on the absence of questions in
    the application form as disposing of the deceaseds obligation to reveal
    material facts. It is a principle of long standing that an applicant for
    insurance has an obligation to reveal to the insurer any information that is
    material to the application:
Carter v. Boehm
(1766), 3 Burr. 1905 (Eng.
    K.B.). This principle was stated by Morden A.C.J.O. in
Vrbancic v. London
    Life Insurance Co.
(1995), 25 O.R. (3d) 710 (C.A.), at p. 727:

The trial judge also appears to have held that simply giving
    full answers to the questions of the insurer's agent amounted to full
    disclosure. This is not necessarily so. As a general rule the fact that
    particular questions relating to the risk are put to the proposer does not
per
    se
relieve him of his independent obligation to disclose all material
    facts. [Citations omitted.]

[11]

The deceased knew that his past activities were relevant to his application
    for life insurance. Indeed, shortly after he applied for the life insurance,
    the deceased filed an affidavit in his immigration proceedings in which he said
    that his life would be in danger if he were to be deported to Israel. He was
    well aware that his past activities, coupled with his illegal entry into
    Canada, put him at serious risk of physical harm. It is clear to us that the
    deceased intentionally hid his past activities from the appellant, just as he
    hid them from the Government of Canada when he sought entry to this country.

[12]

Having concluded that there was a failure to reveal a material fact by
    the deceased, the issue is then whether that withholding was fraudulent.
    Section 184(2) of the
Insurance Act
provides that:

[W]here a contract, or an addition, increase or change referred
    to in subsection 183 (3) has been in effect for two years during the lifetime
    of the person whose life is insured, a failure to disclose or a
    misrepresentation of a fact required to be disclosed by section 183 does not,
    in the absence of fraud, render the contract voidable.

[13]

Our conclusion that the deceased intentionally withheld this information
    is sufficient to establish fraud.

E.

Conclusion

[14]

The appeal is allowed, the judgment below is set aside, and in its place,
    judgment is granted allowing the appellants motion for summary judgment and
    dismissing the action. The appellant is entitled to its costs of the appeal
    fixed in the agreed amount of $5,000 inclusive of disbursements and HST. As
    also agreed, there will not be any order as to costs of the action, including
    the motion below.

Janet Simmons J.A.

P. Lauwers J.A.

I.V.B. Nordheimer
    J.A.


