On May 14, 2008, the plaintiff’s building was completely destroyed by fire. His insurer refused to indemnify him and insisted that the policy be cancelled because it would never have been issued had it known that the plaintiff was dealing drugs in addition to permitting their consumption on the premises. The evidence also revealed that the plaintiff had been arrested and charged with drug possession with intent to traffic and possession of stolen property in 2006, charges he pled guilty to after the fire. The evidence further revealed that the plaintiff had pled guilty to similar charges in 1984, but that he had subsequently obtained a pardon, which was revoked further to his second guilty plea.

The plaintiff argued that his drug dealings were publicly known, that he had not withheld any information equating to bad faith. He also blamed the broker for not asking him if he had a criminal background.

Judge Claude-Henri Gendreau dismissed all of the plaintiff’s arguments. He reiterated that the insurance contract requires the greatest good faith and that the insurer needs to know every fact that could affect its risk, that this duty to inform lies on the insured, and that failure to satisfy it entails the invalidity of the contract pursuant to Article2410 C.C.Q.

According to the judge, the plaintiff could not maintain that his drug dealing was publicly known, having offered no proof that his insurer could know of his illegal activities, all the more so since he admitted that his business had to be kept secret.

As for the blaming of the broker, the judge noted that the broker did not have an obligation to ask the plaintiff about his criminal background. In any event, when the insurance policy was taken out, the plaintiff had obtained a pardon for his 1984 conviction.

After reviewing the applicable jurisprudence and recalling that it was up to the plaintiff to disclose his prior convictions and declare his illegal activities, the judge held that the plaintiff had breached his duty of disclosure, thus entailing the invalidity of the insurance policy.

Finally, the judge held that the plaintiff could not argue that he had not received a full copy of the insurance policy, since he was bound by the provisions of the Civil Code of Québec and, moreover, his insurance contract contained the relevant Code articles.