Agents’ and Brokers’ Liability: The Continuing Legacy of Fine’s Flowers’

Author: Neo Tuytel

Published: May, 1995

This paper is an attempt to summarize developments in the law of agents’ and brokers’ liability in the decade and a half that has now passed since the trial judgment in Fine’s Flowers Ltd. v. General Accident Assurance Co. of Canada was affirmed by the Ontario Court of Appeal. Some suggestions will also be made as to how agents, brokers and insurers can avoid liability to insureds and to one another.

This paper will first consider the various theories of liability, including similarities and differences between contract and negligence cases. Some agency issues will be considered, as well as by whom and to whom obligations are owed. The next section will canvass the role of instructions and representations in determining the nature of these obligations. The longest section of the paper will consider the types of conduct by agents and insurers which will create liability. Out of this discussion a number of basic principles will emerge. The next sections will deal with the defences which are available, including contributory negligence. Damages will also be considered, as will evidentiary matters and procedural issues. The paper will conclude with some practical recommendations for avoiding liability.

The paper only considers reported Canadian cases, and will deal almost exclusively with decisions since Fine’s Flowers Ltd. v. General Accident Assurance Co. of Canada (supra). It will quickly become apparent that there have been an increasing number of cases in this area, all of which have turned on their own particular facts. It will be suggested that the trend has been to broaden the categories of agents’, brokers’ and, indeed, insurers’ liability, and to make the successful defence of claims by insureds increasingly difficult.

By way of example, should an agent be held liable for failing to obtain a given type of coverage, in the absence of clear evidence that it was available in the market? How quickly do you think an agent should be required to place coverage in response to a telephone request from an existing commercial client? What do you think might happen if an agent sues for unpaid premiums? Should an agent advise an insured not to cancel underinsured motorist coverage, when the insured has already made a tentative decision to do so? Is an agent obliged to assist an insured in making a claim under his policy? What if an insured suffers serious but uninsured consequential business or even personal financial losses between the date of a fire and ultimate recovery against his agent for failing to place fire coverage? To find out, read on.

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