In W.H Stuart Mutuals Ltd. v. London Guarantee Insurance Co. the Ontario Court of Appeal held that a fidelity insurance policy covering theft by employees through electronic transfer was void for misrepresentation in the insurance application.
The insured had stated that the principals of the company signed each cheque. The company had in fact changed to a computerized cheque generating system which created a computerized facsimile of the principals signature. The Court held this was a material misrepresentation.
The Court also commented that the trial judge was in error in applying a subjective test to the issue of the insured's duty to disclose. The Court stated that there must be an objective element to the test.
The material misrepresentation voided the policy and the insured was not entitled to indemnity under the policy.
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