Recently,1 Justice Isabelle Germain of Quebec’s Superior Court ruled on a case involving insurance fraud in the matter of Paul-Hus v. Sun Life Canada, compagnie d’assurance-vie2. This ruling illustrates that applicants must answer the insurer’s questions honestly; should an applicant try to mislead the insurer, he will have to face the consequences. In this case, the plaintiff Daniel Paul-Hus (Paul-Hus) claimed an amount of $150,000 from Sun Life Canada by way of benefits as set out in the serious illness insurance policy taken out by his company (of which he was the sole shareholder and director) in 2015, along with $50,000 for the trouble and inconvenience caused by Sun Life’s refusal to honour its contractual undertakings. Paul-Hus claimed that he suffered from amyotrophic lateral sclerosis (ALS) diagnosed on February 1, 2018. The claim form was submitted by him on August 16, 2018. Sun Life refused his claim since an assessment of his medical records revealed that his prior medical history was inconsistent with the information he had provided during a telephone interview on March 17, 2015. Sun Life considered the contract null and void due to Paul-Hus’s false declarations while filling out the questionnaire he was required to complete when taking out the policy. Essentially, it was Sun Life’s position that Paul-Hus had not answered certain questions correctly in the questionnaire and that, if he had, the insurer would not have issued the serious illness policy. It was brought into evidence that, during the telephone interview of March 17, 2015, Paul-Hus had to answer questions on his lifestyle habits, his current health condition and his prior medical history. Some of the questions in Sun Life’s medical questionnaire sought to ascertain whether Paul-Hus felt weakness in his arm and whether a doctor had ever recommended any tests or if he was awaiting any test results. These questions were answered in the negative by Paul-Hus. However, a review of the file reveals that these answers were inaccurate. The insurance policy was issued on March 17, 2015, while the evidence indicated that Paul-Hus had consulted his neurologist a few weeks before, on February 24, 2015, due to weakness in his left hand, the symptoms having appeared progressively since August 2013. At that time, additional tests were prescribed (cervical and brain imaging, magnetic resonance imaging and numerous blood tests). Nonetheless, in his Originating Application, Paul-Hus asserts that, at the time the policy was issued, he had not noticed or suspected any symptoms of disease and contends that, according to the doctors, the disease had developed suddenly. In her judgment, Justice Germain reiterated the principles governing declarations of risk in the insurance sector, pointing out that false declarations can result in the nullification of the contract.3 However, in this case, the policy had been in force for over two years at the time of the claim for indemnification, so that the insurer was required to prove fraud in order to nullify the contract4 (Paul-Hus’s intention to hide his true health condition). Justice Germain found that Sun Life had discharged the burden of demonstrating Paul-Hus’s fraudulent dealings. In addition to his medical records, Sun Life produced a recording of the telephone interview held on March 17, 2015, as well as a transcription of the interview. In the Court’s view, it was clear that Paul-Hus was under neurological investigation due to weakness in his left arm at the time he was completing the questionnaire. Although in his testimony at trial,5 he claimed not to know that this information could have had an impact on the insurer’s decision, Justice Germain did not side with this version. For Justice Germain, the evidence presented by the insurer demonstrated that it had been Paul-Hus’s intention to deceive Sun Life. This being said, in accordance with the requirements of article 2408 C.C.Q., Sun Life had to demonstrate not only that it would not have covered this risk had it been aware of the new information resulting from the claim, based on its own underwriting standards, but that any reasonable insurer would have refused to issue the serious illness insurance policy under the circumstances. Sun Life also discharged this burden and completed this “evidence of materiality” by presenting the testimony of an underwriting expert. Finally, and in addition to the above, Paul-Hus claimed that he had been diagnosed with amyotrophic lateral sclerosis (ALS), which he was unable to support with evidence. Under cross-examination, Paul-Hus admitted that he had never received any such diagnosis. Instead, he suffered from a lower motoneuron disease, which did not qualify as a “serious illness” under the policy. In conclusion, in the Court’s opinion, the policyholder knowingly misled the insurer and falsified his risk assessment in order to obtain coverage. Moreover, given that Paul-Hus was not insurable for serious illness coverage in the eyes of a reasonable insurer, the Court concluded that the contract should be nullified ab initio and terminated. This decision reminds us of how important it is for policyholders to answer insurers’ questionnaires honestly when making their initial declaration of risk : [TRANSLATION] [55] In the Court’s opinion, Paul-Hus failed to answer the questionnaire sincerely. He did not act as would have a reasonable insured. He was aware of the importance of giving honest answers to the questions asked during the telephone interview. An insurance contract is one requiring the utmost good faith, particularly as far as the assessment of risk is concerned. It is of interest that in this matter, Paul-Hus gave his testimony at the hearing by way of videoconference, which Justice Germain comments as follows: [TRANSLATION] [49] One notes that, while giving his testimony via videoconference at the hearing, Paul-Hus referred to a document, which would be obtained and filed by Sun Life. The document is Sun Life’s letter of refusal of December 28, 2018, which he annotated with the words “good faith” and “answered no in all good faith I was not awaiting anything no results”. It seems odd, to say the least, that he should make the effort to write down these words as a reminder and should feel the need to repeat them several times during his testimony and when cross-examined.   [50] However, it is not enough to repeat that one acted in good faith to justify such omissions. Paul-Hus appealed Justice Germain’s decision. Sun Life filed a Motion to Dismiss the appeal, which was dismissed on January 15th, 20246. We will therefore have to wait and see what happens before the Court of appeal.  To sum up… Insurance contracts are essentially characterized by the risks they cover and by what risks the insurer is willing to tolerate for a given premium. The Civil Code of Québec recognizes two specific instances in which the actual declaration of risk is fundamental: the initial declaration of risk before the contract is drawn up7 and any increase in the risk level during the term of the contract.8 The declaration of risk is essential to the insurer when it comes to accurately determining the extent of the risk and the premium that will be charged if the insurer agrees to provide coverage. As a general rule, the policyholder’s utmost good faith should be in evidence during the initial declaration stage given that this declaration paves the way for the prospective contractual relationship and its various terms and conditions. A policyholder will be deemed to have properly met their obligation “if the representations are such as a normally provident insured would make, if they were made without material concealment and if the facts are substantially as represented.”9 Since Policyholders are responsible for informing the insurer about any relevant factors that might change its risk assessment, i.e., a positive disclosure requirement, it stands to reason that the Civil Code sets out consequences in the event that this requirement is not fulfilled by the policyholder. A policyholder who makes false statements can therefore see his insurance contract nullified ab initio.10 In other words, the contract would be deemed to have never existed because the basis on which it rests, the initial declaration of risk, was flawed. It should also be noted that nullification will only be relative and that the insurer may elect not to assert it. Consequently, the Court, after having heard the evidence, cannot rule ex officio that the contract is null and void. The insurer has two (2) years after the effective date of the contract to request nullification ab initio based on false statements or unwillingness to fully disclose risk.11 Set against that backdrop, the insurer’s burden of proof amounts to demonstrating that the policyholder made false statements or concealed relevant facts. Insurance fraud Once the two (2) year window of opportunity has closed, the insurer faces an additional burden of proof: it must also demonstrate that the policyholder committed fraud.12 Fraud is distinguished from false declarations or concealment. Among other things, it results from the misrepresentation or omission of a fact in the knowledge that, if the truth were disclosed, the insurer would not issue the policy under the negotiated conditions. Therefore, the policyholder must have intentionally deceived the insurer in order to obtain an advantage that would not have otherwise been obtained. Insurers, therefore, have a heavy burden of proof if the two-year threshold has been crossed. This is because fraud cannot be presumed; it must be established on the balance of probabilities. Burden of proof Whether or not the two (2) year period is still running, the insurer must (1) demonstrate that it would not have entered into the contract based on its own underwriting criteria; and (2) that a reasonable insurer in the same circumstances (i.e., dealing with false declarations, concealment or fraud) would have also declined to issue coverage.13 To recap, before the expiry of the two (2) year period, insurers seeking a contract’s nullification ab initio must prove that: The policyholder made false declarations or concealed information when making the initial declaration of risk. The insurer would not have entered into the contract based on its own underwriting criteria if it had been apprised of the concealed information. A reasonable insurer in the same circumstances would have also declined to take on the risk. After the expiry of the two (2) year period following the effective date of the policy, insurers requesting the contract’s nullification ab initio must prove that: The policyholder made false declarations or concealed information when making the initial declaration of risk AND intended to deceive the insurer. The insurer would not have entered into the contract based on its own underwriting criteria if it had been apprised of the concealed information. A reasonable insurer in the same circumstances would have also declined to take on the risk. Judgment handed down on October 3, 2023; the hearing was held on May 25 and 26, 2023. 2023 QCCS 3890; this ruling was appealed from (200-09-010693-239). A motion to dismiss the appeal was filed by the insurer and arguments were heard on January 15, 2024. That same day, the Court of Appeal dismissed the insurer’s motion to dismiss the appeal. The matter therefore continues before the Court of Appeal. Art. 2410 C.C.Q. Art. 2424 C.C.Q. Via videoconference.  Paul-Hus v. Sun Life Canada, compagnie d'assurance-vie, 2024 QCCA 46 Arts. 2408 and 2409 C.C.Q. Arts. 2466 et seq. C.C.Q. Art. 2409 C.C.Q. If the false statement deals exclusively with the policyholder’s age, the contract cannot be declared null and void (art. 2410 C.C.Q.) unless the policyholder’s actual age is outside the insurable range established by the insurer (art. 2411 C.C.Q.). Art. 2424 C.C.Q. Civil Code, art. 2424, para. 1 C.C.Q. CGU compagnie d’assurance du Canada v. Paul, 2005 QCCA 315, para. 2 and art. 2408 C.C.Q.

Technology is now a part of our day-to-day lives, and we’ve learned how to use it. But what about our judicial institutions? What impact does technology have on the administration of proof and the practice of law? The Court of Appeal provides us with some solutions (and grounds for discussion) in its recent case of Benisty v. Kloda 1 Charles Benisty (hereinafter “the appellant”) initiated an appeal in June 2009 against Samuel Kloda (hereinafter “the respondent”) as well as CIBC Wood Gundy (hereinafter “CIBC”). The appellant is claiming that the respondent committed errors in fulfilling the mandate that he had entrusted to him with regard to certain financial transactions completed between November 2004 and September 2008. The respondent was a financial consultant and Executive Vice-President of the Montréal branch of the CIBC. Prior to the initiation of legal proceedings, the appellant recorded some of their telephone conversations, as part of discussions that took place between the respondent and himself, without the knowledge of the respondent. He states that he acted in this manner because he was convinced that the appellant was lying to him and was conducting unauthorized transactions in his accounts. In total, 60 conversations were recorded between April and October 2008. In first instance, judge Benoît Emery overturned the appellant’s recourse. He allowed the respondent’s objection with the introduction into evidence of a series of audio recordings of telephone conversations between the respondent and the appellant.  Judge Emery considers that the recordings are not a technological document, but rather a material element that must be subject to separate proof to establish its authenticity and legal value.  In fact, Judge Emery states: “It is clear from listening to the recordings, that they are fraught with interruptions, cut-offs, or voluntary or non-voluntary deletions”, and therefore they are not authentic. He goes on to say: “[...] these incomplete and sometimes incoherent excerpts that, at times support the appellant’s cause, and at times, the respondent’s, seem to reveal everything and its opposite – wherein lies the need for evidence that is independent from its reliability and authenticity.2” The appellant is appealing the Superior Court judgement. He purports namely that the judge erred by declaring the audio recordings inadmissible as evidence. He reiterates the argument to the effect that the cassettes, on which audio recordings of the telephone conversations he had with the respondent were made, constitute technological documents within the meaning of the Act to Establish a Legal Framework for Information Technology3 (hereinafter “LFIT Act”).  He says that the cassettes benefit from the presumption of authenticity stipulated in article 2855 QCC and, consequently, it is the respondent’s responsibility to establish that this technological support does not ensure the integrity of the document and its authenticity. For his part, the respondent is rather of the opinion that the audio recordings on a magnetic medium do not fall within the scope of the LFIT Act. He therefore considers that it is the appellant’s responsibility to establish authenticity. The Court of Appeal says that the application and interpretation of the LFIT Act, which came into force in 2001, was never actually subject to the decisions of the courts and, therefore, it feels that it is useful to analyze the matter brought before it by the parties. The Court of Appeal was, in connection with this matter, facing a specific situation: in fact, in the first instance, the appellant had presented six (6) audio cassettes on which were recorded his conversations with the respondent, for a total recording duration of about six (6) hours. However, in appeal, the appellant had selected 50 excerpts of these conversations that he had transferred onto a CD for a listening duration of roughly one (1) hour. In other words, the appellant chose to substitute a CD for the cassettes produced in the Superior Court, under the same evidence docket (P-60). First off, judge Lévesque, who drafted the motives to which judges Dufresne and Healy subscribe to, qualifies these audio recordings in this matter as “material elements of proof”. He explains that when “a person is recorded without his knowledge during a telephone conversations or interview, this is considered a material element of proof, whereas a person who records himself and recites a dictation attempts instead to establish a testimony”4. Consequently, judge Lévesque reiterates that for a recording to be admitted as evidence, its authenticity must be proven 5. Consequently, the Court of Appeal asked the question as to whether the audio recording is a “technological document” within the meaning of the LFIT Act.  In this respect, judge Lévesque points to the existence of a doctrinal controversy that qualifies an audio recording on magnetic tape differently, more commonly referred to as a cassette, from a recording on a USB key or on CD. According to author Mark Philips, on whom the respondent is basing his argument, a cassette is not a “technological document” since the technology relative to the cassette is “analog”, whereas the most recent technologies are digital (such as magnetic hard drive, USB key, CD, etc.). According to this author, the definition given by the LFIT Act of a “technological document” therefore excludes analog documents. The Court of Appeal does not uphold the theory posited by author Mark Phillips.  It prefers the interpretation under which a recording on magnetic tape is considered a technological document. Despite the noted discrepancies in the text of article 2874 CCQ in comparison with those of the provisions in the LFIT Act, judge Lévesque considers it necessary to retain the interpretation that most closely complies with the purpose of the Act and the lawmaker’s intention.  He notes that the LFIT Act came into force in 2001, whereas the Civil Code of Québec was cam into effect ten (10) years before that.  Thus, on the one hand, this specific Act must take precedence over the provisions of the Civil Code, whose scope is more general in nature.  Moreover, judge Lévesque refers to two (2) case study maxims that make it possible to deduce the lawmaker’s intention: [77] Two case study maxims make it possible to deduce the lawmaker’s intention. Under the first, “precedence must be given to the most recent legislation, the legislative standard that is subsequent to the other standard in conflict”. In fact, when a new law is passed, the lawmaker is deemed to be aware of those laws that already exist. We could, therefore, presume that he wanted to implicitly repeal those standards that were not compatible with the new ones. The second principle stipulates that precedence must be given to the specific statute as compared with the statute of general application. The Court of Appeal therefore arrived at the conclusion that a recording on magnetic tape, such as a cassette, is a technological document.  More generally, it retains that a “technological document” must be considered a document whose medium uses information technologies, whether this medium is analog or digital6; Subsequently, the Court of Appeal examined articles 2855 and 2874 of the Civil Code, along with articles 5, 6 and 7 of the LFIT Act, in order to outline the principles applicable to the legal value to be assigned to a technological document. When is there presumption of authenticity? When is there presumption of integrity? When is there exemption of proof for a party when a technological document is introduced as proof? After analyzing various theories supported by different authors, the Court of Appeal retained the following regarding the procedure to follow when introducing a technological document as evidence: [99] […] articles 2855 and 2874 CCQ require the demonstration of distinct or separate proof of authenticity of a document presented as evidence. Thus, a technological document generally includes an inherent documentation, such as metadata, making it possible to identify an author, the date of creation, or even whether modifications were made to the document. Since such metadata constitute inherent proof of a technological document — and not a distinct or separate proof, as is required by the first part of articles 2855 and 2874 CCQ — and that they fulfill the same role as a traditional proof of authenticity, the lawmaker exempts that party from additionally establishing a separate proof. [100] Thus, article 7 LFIT Act does not create presumption of integrity of a document, but only a presumption that the technology used by its medium makes it possible to ensure its integrity, which I refer to as technological reliability. The nuance arises from the fact that an attack on the document’s integrity may come from various sources; for example, we can mention that the information may be altered or manipulated by an individual without technology being at fault. [101] Articles 2855 and 2874 CCQ indicate that a separate proof of authenticity is required in the case indicated in the third paragraph of article 5 EFIT., i.e., in the case where the medium or technology does not make it possible to either confirm or deny whether the document’s integrity is ensured. [102] Hence, the idea that a technological medium is deemed reliable (article 7 LFIT Act.) differs from the notion that such a medium may effectively ensure the document’s integrity (article 5 al. 3 LFIT Act.). It is a subtle distinction. A technology may, therefore, be reliable (7 LFIT Act.) without making it possible to affirm that we may conclude that the integrity of the document is ensured: this added insurance is provided by the technological documents that include an inherent documentation, or metadata, that prove the integrity of the document. [103] In other words, the exemption of proving the document’s authenticity applies where the medium or technology used make it possible to ensure the integrity of the document. This is not a case of presumed technological reliability under article 7 LFIT Act., but of the specific case of technological documents that include metadata and that, consequently, prove their own integrity. [104] However, in the absence of intrinsic documentation making it possible to ensure the document’s integrity, which is the case set out by article 5, al. 3 LFIT Act., the party that wants to produce such a document must establish this distinct traditional proof of its authenticity: […] [105] Thus, when an audio recording is accompanied by metadata and this documentation satisfies, in the court’s opinion, the authenticity requirement of the document, the party that produces this recording will be exempt from proving its authenticity. […] To summarize, the party seeking to present as evidence the audio recording must prove its authenticity7, but will not be required to prove the reliability of the technological medium used by virtue of the presumption established by article 7 LFIT Act. This article establishes a “presumption of reliability” of the technological medium by virtue of which the technology used makes it possible to ensure the document’s integrity.  This integrity itself is not presumed8. Applying these principles in the case under analysis, the Court of Appeal arrives at the conclusion that the judge of first instance erred by deciding that the cassettes did not constitute a technological document. It maintains, however, that the first judge was correct in affirming that the authenticity of the audio recordings must be proven for them to be accepted as evidence.  Therefore, in appeal, the appellant did not provide the same technological medium as that which was presented during the first instance. Six (6) cassettes were presented in the Superior Court, whereas one CD representing a summary of these recordings was presented instead in the Court of Appeal. Thus, it was not sufficient in the Court of Appeal to compare the technology and the different mediums of the proof presented, since it was impossible to distinguish the content of the cassettes from those of the CD in order to determine whether they presented the same information. By virtue of the rules of proof, the reproduction of an original may be made by a copy or a transfer9.  The copy shall be made on the same medium, whereas the transfer will be made on a technological medium that is different from the original.  Since the Court had no way to determine with certainty that the content of the CD was the same as that of the cassettes, it concluded that it simply did not have the same legal value. Lastly, the Court concluded that the appellant did not discharge his burden of demonstrating that the first instance judge had made an error that could justify their involvement. This ground of appeal was therefore rejected10. Overall, the Court of Appeal rejected in any case all of the other claims put forth by the appellant, noting that the latter faces a critical challenge: he was not persuasive. Our takeaway from this case is that the administration of a piece of evidence on a technological medium is no simple matter, and it must not be taken lightly. It is not easy to navigate the various provisions set out in both the Civil Code and the LFIT Act in order to extract the principles applicable to matters of proof. The Court of Appeal retains that the presumption of integrity set out in article 7 of the LFIT Act applies exclusively to the technological medium and not its content. It emphasizes that there should not be confusion between the integrity of a document and the capacity of a technology to ensure it.  Also, it suggests referring to the presumption set out in article 7 of the LFIT Act as a “presumption of technological reliability” instead of a “presumption of integrity of medium”. Lastly, it specifies that establishing the authenticity of an audio recording comprises two (2) components: 1)    The qualities related to the methods of creation; and, 2)    The qualities related to the information itself contained on the technological medium. A party seeking to dispute the reliability of a technological medium must, by virtue of article 89 of the CCQ, produce an affidavit “indicating in specific detail the facts and motives that make an attack on the integrity of the document likely”. An example of the administration of such technological proof may be found in the matter of Forest v. Industrial Alliance11. In this matter, photographs taken from the appellant’s Facebook account were submitted as an element of material proof. Attached was an affidavit, proclaiming the authenticity of the document, from the intern who took the screen capture. Regarding the identity of the informants, the appellant’s spouse confirmed, during the hearing, that it was in fact he himself who had taken the photographs in question. Since the opposing party did not offer any objection, the authenticity was established. While the Civil Code of Québec and its related laws strive to cover every situation that may arise in connection with presenting evidence on a technological medium, it is undeniable that technology is progressing at a rate that is far outpacing that set by lawmakers. That being the case, it is also the responsibility of attorneys to collaborate and innovate in the administration of their proof so as not to find themselves in an endless debate when seeking to determine the authenticity of specific evidence they are attempting to present.   2018 QCCA 608. Judgement on appeal, par. 97 CQLR, c. C-1.1. Paragraph 60 Art. 2855, the CCQ. 9, par. 119 of the decision. CCQ., art. 2855 and 2874. 9, par. 120 of the decision LFIT Act, art. 12, 15, 17 and 18 and CCQ, art. 2841. We should note that the other grounds of appeal presented by the appellant were all rejected as well, and that the Court, in a written judgement rendered by the Honorable Jacques J. Lévesque, j.c.a., rejected the appeal with legal fees. 2016 QCCS 497.