Insured failed to inform the insurance broker of all equine activities he engaged in when he purchased the policy. In particular, the insured failed to inform the broker that he may engage in the activity of providing horseback riding lessons, which was not found to be a "farm activity" under the policy. The Alberta Court of Appeal upheld the trial judge’s decision that the action as against the insurer was dismissed.

[2015] A.J. No. 735

2015 ABCA 229

Alberta Court of Appeal

E.I. Picard, P.A . Rowbotham and B.K. O'Ferrall JJ.A.

July 3, 2015

The insured was a full time farmer and horse breeder in Alberta who purchased an insurance policy from the insurer. When the insured met with his broker to discuss purchasing insurance for his farm, he did not notify the broker of any non-farming business activities. Rather, the insured stated he was a full time farmer and his farm activities as a horse breeder included raising and caring for livestock and associated operations. The insured claimed he did not engage in any other business that would be non-farming in nature.

After purchasing the policy, the insured sold an untrained horse to the plaintiff, a novice rider. The insured agreed to train the horse for 90 days and provide the plaintiff with 30 riding and handling lessons as part of the sale. While the plaintiff was attending a lesson with the insured, the plaintiff was thrown from the horse and injured. The insured died later that year. The plaintiff contacted the insured’s insurer to advise of the potential claim. The insurer advised the plaintiff that there was no insurance coverage under the insured’s policy. The plaintiff and her husband then decided to sue the insured’s estate. They served the administrator of the estate with their statement of claim, who inquired with the insurer and learned that the policy was void from its inception. The insurer returned the premiums. Damages against the estate were assessed at approximately $200,000.

The plaintiff and the insured’s estate sought direct recourse against the insurer. The trial judge held that by providing riding lessons, the insured was engaged in a “business pursuit” undertaken for financial gain. This did not involve “farming”, one of the exceptions to the exclusion of coverage for business pursuits, and the trial judge found the direct recourse action was bound to fail and dismissed the action. The plaintiff and the insured argued that the broker knew the insured’s business included farming operations related to the breeding and selling of horses and that this included training riders. The Court of Appeal held that the insurer's position was supported by the trial judge’s findings that the broker did not know that the insured was involved in giving riding lessons and the evidence that showed the broker would have provided the insured with a different policy of insurance if she had known.

The Court of Appeal also considered whether the lessons to the plaintiff could be construed as a farming activity. The trial judge had relied on the affidavit evidence of two individuals with horse breeding experience who provided evidence that rider training is not part of horse breeding. The Court of Appeal agreed with this interpretation of the policy. The appeal was dismissed.