Estate of known drug dealer not entitled to proceeds of mortgage life insurance

Insurance law – Mortgage life insurance – Exclusions – Criminal offences – Evidence of parties – Practice – Appeals – Summary judgments

Valentyne Estate v. Canada Life Assurance Co., [2018] B.C.J. No. 6984, 2018 BCCA 484, British Columbia Court of Appeal, December 27, 2018, E.A. Bennett, S. Stromberg-Stein and J.E.D. Savage JJ.A.

The British Columbia Court of Appeal heard an appeal from a summary trial application in which the plaintiff insured, the administrator of her son’s estate, sought judgment against the insurer for payment on a mortgage life insurance policy. The insurer defended the application on the basis that the insured’s death fell within an exclusion clause that excluded payout where the insured’s death was “a result of or while [he was] committing a criminal offence”.

On the summary trial, the evidence was that the insured was an illicit drug dealer associated with an organized crime group. On January 7, 2013, he was driving in downtown Vancouver with his girlfriend when he received a call from two known lower level drug dealers. He drove to a house associated with the drug dealers. He entered the house with the car still running. He told his girlfriend he would be right back. He never returned to the car and he has not been seen or heard from since. His body has never been found but some of his blood was found in the drug dealer’s house. The summary trial judge agreed with the insurer that the only rational conclusion in considering all of the evidence and circumstances was that the insured was murdered as a result of his involvement in drug trafficking and, accordingly, she dismissed the summary trial application.

The Court of Appeal found that the trial judge erred in relying on certain evidence and not dealing with an objection to the admissibility of other evidence. However, the Court of Appeal did not order a new trial because, taking into account the evidence that was not contested and the admissions made, the inescapable inference was that the insured died while committing the criminal offence of possession, trafficking or possession for the purpose of trafficking illicit drugs, all of which are indictable offences. He was a known drug dealer, he went to a known drug reload house, he was affiliated with a criminal gang, and his intention was to go into the house and quickly return. The only logical inference from this circumstantial evidence is that he bought or sold drugs at that location, was murdered, and therefore died while committing a criminal offence, invoking the exclusion clause. As a result, the appeal was dismissed.

This case was digested by Cameron B. Elder, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Cameron B. Elder at celder@harpergrey.com.

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