J. Q.B. A.D. 1994 No. 1531 J.C. R. IN THE QUEEN'S BENCH JUDICIAL CENTRE OF REGINA BETWEEN: GARY SEMENCHUCK and CHRISTIAN RUHR and SASKATCHEWAN GOVERNMENT INSURANCE DEFENDANTS Michael T. Megaw for the plaintiff Michele T. Klebuc-Simes for the defendants JUDGMENT DAWSON J. August 9, 1996 This is a claim for damages to the plaintiff's leasedautomobile arising out of an accident on May 11, 1993. The action has been abandoned as against the defendant Ruhr, and is continued by the plaintiff against the insurer, Saskatchewan Government Insurance. FACTS On May 11, 1993, vehicle (hereinafter referred to as the BMW) leased to Gary Semenchuck (the "plaintiff"), was struck from behind by vehicle owned and operated by the defendant, Christian Ruhr. Mr. Ruhr was solely liable for the accident. The BMW was damaged as result of the automobile accident. The BMW was leased to the plaintiff from Crestview Chrysler Dodge Ltd. ("Crestview") pursuant to standard lease agreement. Pursuant to the terms of the lease agreement, the vehicle was to be registered in the name of Crestview. The certificate of registration for the BMW was issued to Crestview. The plaintiff was listed as the "secondary name" on the registration. After the accident, the plaintiff took the BMW to Saskatchewan Government Insurance ("SGI") Claims Centre and an SGI adjuster appraised the damage to the BMW. The plaintiff then took the vehicle to Woodcrest Motors Inc. ("Woodcrest") for repairs. Woodcrest is the BMW dealership affiliated with Crestview. The vehicle was ultimately repaired by the Crestview automobile repair shop, with the parts being purchased from Woodcrest. During the course of repairing the vehicle, Crestview discovered damage to the BMW's exhaust system which had not been assessed by SGI. Crestview contacted SGI and roving SGI appraiser attended to the autobody shop and reappraised the BMW. The appraiser determined that the entire exhaust system required replacement. SGI reassessed the claim to include damages for the replacement of the exhaust system. The actual replacement cost of the exhaust system was $2,518.66. However, SGI deducted from the replacement cost, 20% for depreciation or "betterment". The 20% deduction for depreciation amounted to $503.73. After the damage to the vehicle was reassessed, the Crestview repair shop completed the repairs to the exhaust system. Neither SGI, Woodcrest nor Crestview advised the plaintiff before the repairs were undertaken that 20% was being deducted for depreciation. The plaintiff was not aware of the 20% deduction for depreciation until he attended to Woodcrest to pick up the vehicle. The repairs were complete at that time. The manager of the Crestview repair shop signed the "certification of repairs", authorizing SGI to pay the cost of repairs to the repairer. This document is normally signed by the registered owner (or owner's agent) of the vehicle. SGI paid the Crestview repair shop $2,014.93 for the repairs. This left the $503.73 (the amount deducted for depreciation) owing to the Crestview repair shop for the repairs. Crestview billed the plaintiff for this amount and the plaintiff paid the $503.73 to Crestview. The plaintiff brings this actionfor reimbursement of the $503.73 deducted for depreciation. The plaintiff argues that SGI elected to repair or replace theexhaust system under statutory condition 8(4) of s. 39 of TheAutomobile Accident Insurance Act, R.S.S. 1978, c. A-35, asam. (the "Act"). The plaintiff argues that SGI, having elected to repair, is responsible for the entire repair and is not entitled to deduction for depreciation. SGI takes the position that as Crestview was the registered owner of the vehicle the plaintiff is not entitled to bring this action as he is not the "insured" within the meaning of the Act. Further, SGI takes the position that Crestview authorized the repairs and acknowledged the 20% depreciation deduction, and that it did so as the registered owner. SGI denies that it elected to repair or replace the exhaust system within the meaning of statutory condition 8(4). SGI states that if the plaintiff paid the $503.73 to Crestview for the depreciation, he did so under his private lease contract with Crestview, for which SGI cannot be held responsible. In addition, SGI argues that it is entitled to deduct for depreciation in any event. 1. Did SGI elect to repair or replace the BMW under statutory condition 8(4) of s. 39 of the Act? 2. Is SGI estopped from claiming that the plaintiff is responsible for the depreciation? 3. Is depreciation to be deducted under Part III of the 4. Does the plaintiff, Gary Semenchuck, as the lessee of vehicle registered to Crestview have cause of action against SGI under the terms of Part III of the Act? STATUTE The relevant portions of the Act are: In this Act: (f) "comprehensive insurance" means the obligation of the insurer pursuant to Part III to pay insurance money to an insured in the event of loss of or damage to vehicle; (p) "insured" includes: (ii) person to whom insurance money is payable pursuant to Part III (q) "insurer" means Saskatchewan Government Insurance 37 In this Part "insured" means person to whom insurance money is payable in the event of loss of or damage to vehicle resulting from one of the perils mentioned in section 38. 38(1) Subject to this Act, an owner's certificate shall further insure the person named therein in the amounts hereinafter specified against direct and accidental loss of or damage to the vehicle designated therein, including its equipment, occurring in Canada, or in the United States of America, or upon vessel plying between ports thereof, from any peril. 39 Comprehensive insurance in respect of any vehicle shall be subject to the following statutory conditions: 8(1) The insurer is not liable beyond the lesser of: (a) the actual cash value of the vehicle or any part or item of equipment of the vehicle, as the case may be, at the time of the loss or damage, with proper deduction for depreciation; and (b) the maximum value of the vehicle or any part or item of equipment of the vehicle, as the case may be, fixed by the regulations. (2) The actual cash value shall in no event exceed what it would cost to repair or replace the vehicle or any part or item of equipment of the vehicle, as the case may be, with material of like kind and quality. (4) Instead of making payment in accordance with subsection (1), the insurer may, within reasonable time after receipt of the proofs of loss, elect to: (a) repair or rebuild; or (b) replace with other property of like kind and quality; the property damaged or lost. (5) Subsection (4) of this statutory condition does not apply where there has been an appraisal in accordance with statutory condition 9. 10 Neither the insurer nor the insured shall be deemed to have waived any term or condition of this Part by any act relating to the appraisal or to the delivery and completion of proofs of loss, or to the investigation or adjustment of the 77 No term or condition of this Act shall be deemed to be waived by the insurer in whole or in part unless the waiver is stated in writing and signed by an officer of the insurer. 1. Did SGI elect to repair or replace the BMW under statutory condition 8(4) of s. 39 of the Act? Statutory condition 8(1) of s. 39 of the Act outlines the extent of SGI's liability. Statutory condition 8(1) provides that SGI is not liable beyond the lesser of the actual cash value of the exhaust system before the accident (with proper deduction for depreciation) and the maximum value of the exhaust system as fixed by regulations. By statutory condition 8(2), the actual cash value of the exhaust system is not to exceed the cost to repair or replace the exhaust system. To this point, the statutory scheme is quite clear. MacLeod J., in Niefer v. Saskatchewan Government Insurance and Magnuson (1983), 1983 CanLII 2032 (SK QB), 22 Sask. R. 246 (Q.B.), concluded at p. 249 that statutory condition 8(1): [I]dentifies the limit of the insurer's liability for the damage. It is measurement of the plaintiff's benefit and the defendant's obligation. However, the clarity of this scheme is clouded by statutory condition 8(4) which adds an additional element to the statutory limits placed on the liability of the insurer. Statutory condition 8(4) states that SGI, instead of making payment under 8(1), (that is payment for the cash value of the exhaust system) may elect to repair or replace the vehicle with property of like kind and quality. The plaintiff herein argues that an election under statutory condition 8(4) amounts to an irrevocable decision to repair the vehicle, regardless of the cost of repairs. The plaintiff further argues that SGI has elected to repair the BMW, and is therefore liable for the entire cost of the repair, even if it exceeds the limit under statutory condition A. Election in General An examination of the definition of "election" indicates that an election is, at minimum, unfettered choosing between two or more alternative and mutually exclusive things or courses of action. For instance, Canadian Law Dictionary (Toronto: Barron's, 1983) defines election at p. 73, in part, as follows: Election The exercise of choice by an unrestrained will to take or do one thing or another. The obligation conferred upon person to choose between two inconsistent or alternative rights or claims. Cooper v. Canadian Northern Ontario Ry. Co. (1924), 55 O.L.R. 256 (S.C.). In case law, the legal definition or explanation of an election often relates to specific topic such as an accused's right to elect the mode of trial or plaintiff's right to elect remedy. For example, Lord Blackburn in Scarf v. Jardine (1882), App. Cas. 345 (H.L.) explained the principle of election with regard to remedies as follows at pp. 360 and 361: The principle, take it, running through all the cases as to what is an election is this, that where party in his own mind has thought that he would choose one of two remedies, even though he has written it down on memorandum or has indicated it in some other way, that alone will not bind him; but so soon as he has not only determined to follow one of his remedies but has communicated it to the other side in such way as to lead the opposite party to believe that he has made that choice, he has completed his election and can go no further; and whether he intended it or not, if he has done an unequivocal act mean an act which would be justifiable if he had elected one way and would not be justifiable if he had elected the other way the fact of his having done that unequivocal act to the knowledge of the persons concerned is an election. [Emphasis added] Lord Blackburn's words were adopted by Martin L.J. Adm. in the Canadian case Dagsland v. SS. "Catala", 1927 CanLII 377 (FC), [1927] D.L.R. 426 at 430 (Ex. Ct.). Also see North West Electric Company Limited and Rosen v. Switzerland General Insurance Company, Saskatchewan Mutual Insurance Company and Zurich Insurance Company, 1976 CanLII 927 (SK QB), [1976] W.W.R. 446 at 454 (Sask. Q.B.). In insurance law, the definition of an "election" has received its own treatment. B. Election under Insurance Law i. Election to Reinstate In the instant case, the plaintiff argues that the insurer has elected to repair the damaged motor vehicle pursuant to statutory condition 8(4) of s. 39 of the Act. In the language of insurance law, the plaintiff is arguing that the insurer has "elected to reinstate". E.R.H. Ivamy in General Principles of Insurance Law, 4th ed. (London: Butterworths, 1979), comments as follows on reinstatement under an insurance contract at pp. 486 and 487: The policy, however, usually contains in the appropriate branches of insurance, e.g. fire, burglary, plate glass, steam boilers and motor vehicle insurance, "reinstatement clause", which confers upon the insurers the option of making good the loss by reinstatement. The contract contained in the policy, nevertheless, remains contract [sic] pay sum of money, subject to the right of the insurers, if they think fit, to substitute different mode of discharging their liability. The clause is intended to benefit the insurers and to protect them from liability to pay the full pecuniary value of the loss, if the loss can be more cheaply made good otherwise. Hence, the assured cannot take advantage of the clause and insist upon reinstatement if the insurers do not elect to reinstate; nor on the other hand, can he prevent them from reinstating if they have elected to do so. [Emphasis added; footnotes omitted] Reinstatement clauses are included in insurance contracts for the benefit of the insurer. The benefit to the insurer is that reinstatement clause provides the insurer with an option to choose the least expensive means of complying with the insurance policy. The insurer's decision to either pay the insured or reinstate is the "election". Once the election is made, the insurer is bound by its election to either pay or reinstate. Indeed, Cannon J., for the majority in Maher v. Lumbermen's Mutual Casualty Company et al., 1932 CanLII 349 (SCC), [1932] D.L.R. 593 (S.C.C.), describes the effect of an election to reinstate as follows at pp. 600 and 601: The parties agreed that the insured would be indemnified, either in money or by reinstatement of the car. Respondents duly made the option to repair and the question is whether or not they have carried out this undertaking. Their sole liability would be for damages resulting from the breach of the second contract which superseded the policy. In Brown v. Royal Ins. Co., El. El. 853, 120 E.R. 1131, Lord Campbell, C.J., said (pp. 858-9):- "The case stands as if the policy had been simply to reinstate the premises in case of fire; because, where contract provides for an election, the party making the election is in the same position as if he had originally contracted to do the act which he has elected to do." The exercise of this option to repair the automobile, which the appellant was bound to accept, converted the original contract into new one on the part of the insurer to repair the car and restore it to its former condition. The contract to pay the loss was thus superseded by the contract to repair. The insured no longer had right of action under the policy; his sole remedy is upon the new or substituted contract. The court in North West Electric Company Limited came to the same conclusion wherein Disbery J. said at p. 456: The obligation of insurers to repair is not merely to lay out the insurance money in reinstatement as far as it will go, but to reinstate completely: MacGillivray, s. 1814. Thus if the gamble fails and the cost of reinstatement turns out to be greater than the actual cash value of the damage and loss, the insurers must pay the full cost without any contribution from the insured because by their election the insurance contract no longer remained contract to pay sum of money but became contract to reinstate the property insured: Ivamy, p. 407. Accordingly, the defendants having elected to repair the fire damage to the building and its contents, the monetary limitations of liability set forth in the policy for such losses, the actual cash value of the property damaged and destroyed, the co-insurance provisions and the amounts spent by the insurers have no relevance whatsoever with respect to such losses. The policy having in effect become contract to repair the defendants are liable to the plaintiff in damages for breach of contract for items of repair that have not been done or done negligently: Ivamy, p. 409; MacGillivray, ss. 1818-1820; Laverty, p. 314. Thus, the insurer's election to reinstate unilaterally creates new contract between the insurer and the insured. Once created, the insurer may not unilaterally revoke the new contract to reinstate. The issue next to be examined is how an insurer makes its election. E.R.H. Ivamy in General Principles of Insurance Law, discusses the method of election, at p. 488): The insurers may expressly notify the assured that they intend to exercise their option to reinstate the property insured, in which case no difficulty arises. At the same time, an express election is not necessary. There may be binding election by conduct, where the insurers have so conducted themselves as to mislead the assured into thinking that they intend to reinstate. Since, however, it would be unreasonable to expect that the insurers would elect to reinstate unless and until they had all the materials before them requisite for their guidence [sic] in deciding which of the two courses open to them would be more advantageous, no act by them for the purpose of ascertaining the extent of the loss or damage, or the cost of reinstatement, can fairly be considered an election under which they are bound to reinstate. It may, indeed, be made an express term of the policy that the insurers are not called upon to elect, unless and until they have obtained all such information, and all such plans and estimates as may be deemed necessary or expedient for the purpose. [Emphasis added; footnotes omitted] Similarly, MacGillivray Parkington on Insurance Law, 6th ed. (London: Sweet Maxwell, 1975), state as follows 1920. Notice of election. If the insurer wishes to reinstate he must give the assured unequivocal notice that he intends to exercise his option. If the policy does not stipulate period within which the notice must be given, it must be given within reasonable time to the assured or his agent having authority to receive such notice on his behalf. It is sometimes provided in the policy that the option to reinstate is conditional on giving notice within certain time of completion of proofs; it has been held that such clause refers to the formal preliminary proof of loss and not proof of loss before court or arbitrator. [Emphasis added; footnotes omitted] If there is not an express election to reinstate, it is often difficult to determine whether any specific conduct of the insurer constitutes an election. In MacGillivray Parkington on Insurance Law two divergent cases were noted at 1921 where the Court of Session examined an insurer's conduct to determine if it had elected: In Sutherland v. Sun Fire Office [(1852) 14 D. 775] stationer's premises and stock were insured and damaged by fire. Before any formal claim was made the defendant insurance company sent an expert to examine the premises and report on the damage. After formal claim was made the company made an offer of cash payment which was refused and subsequently an offer to refer the amount of damage to arbitration which was also declined by the assured. The company then said it would exercise its option to reinstate but the assured brought an action for money indemnity. It was held by the Court of Session that it was still open to the office to elect to reinstate. The Court of Session arrived at different conclusion, however, in Scottish Amicable Heritable Securities Association v. Northern Assurance Co. [(1883) 11 R. 287], where different incumbrancers (mortgagees) were insured with different insurance companies. After fire had occurred on August 1, 1881, there were prolonged negotiations for settlement. The prior incumbrancers claimed certain sum or reinstatement. The insurers took no notice of the alternative claim for reinstatement, but disputed the amount claimed, and they prepared minute of reference to arbitration on the question of damage; this minute was not, however, signed as the insurers insisted upon all the other insurers being made parties to the reference. On February 5, 1883, the assured raised their action for payment and for the first time the insurers offered to reinstate in their defence. It was held that the offer was too late since it was clear from the terms of the correspondence that the insurers had elected to settle in money for the loss covered by the policy and that the only difference between the parties was the amount payable which would be fixed by arbitration. [footnotes omitted] MacGillivray Parkington on Insurance Law go on to state 1922. In the light of these authorities it is not easy to lay down any general principles as to what conduct constitutes an election, since in each case it is question of fact. But court would be reluctant to hold that an insurer had exercised an election by conduct unless it was satisfied that the insurer had all the available information before him on which to decide which of the two courses was more advantageous to him. In particular, mere offer to settle by payment of certain sum of money will probably not of itself be an election to pay if that offer is refused; insurers would however be wise to state that any such offer was made without prejudice to their right to reinstate. [Footnotes omitted] Hutcheon J. in Lepin v. Unigard Mutual Insurance Company, [1976-1978] I.L.R. 265 (B.C.S.C.) also addressed the issue of whether an insurer's conduct constituted to an election to reinstate. In that case, building owned by the insured suffered fire and water damage. In order to prevent further damage from the elements, the insurer approved the construction of "temporary permanent roof". Hutcheon J. examined the facts to determine whether the insurer's conduct constituted an election to reinstate and stated at p. 269: The conclusion have reached on the evidence is that Lepin [the insured] was misled by the conduct of Unigard [the insurer] through its agents into thinking that Unigard intended to reinstate. However, earlier in the judgment, Hutcheon J. placed significant emphasis on the fact that "the work was carried out on the instructions of Unigard." In Lepin, the basis for finding an election to repair was the insurer's conduct as manifested by the insurer's control over the repairs and repairers. The conduct of an insurer may bind the insurer to specific course of action. In other words, where an insurer has conducted itself so as to mislead the insured to believe that the insurer intends to reinstate, the insurer is deemed to have elected to reinstate. In each case, whether or not the insured has elected is question of fact. However, two qualifications are placed on when an insurer's conduct will constitute an election to reinstate. First, reasonable insurer would not elect to reinstate unless it had all the information and materials necessary to choose the most advantageous course of action. Therefore, an insurer is not deemed to have elected until it has the necessary materials to make an informed decision. Second, where an insurer acts for the purpose of ascertaining the extent of loss or damage, or the cost of reinstatement, such acts are not considered an election under which the insurer is bound to reinstate. Herein, an election under statutory condition 8(4) of the Act amounts to an irrevocable decision to repair the vehicle, regardless of the cost of repairs. The effect of such provision is the same as reinstatement clause. C. Brown and J. Menezes, Insurance Law in Canada (Toronto: Carswell, 1982), support this contention wherein they state at 13:2:22. For automobile insurance, the Uniform Act provides in its statutory conditions that the insurer shall not be liable for more than "the actual cash value" at the time of loss. Further, proper deduction is to be made for depreciation. If the actual cash value exceeds the amount it would cost to repair or replace the automobile, then whichever of these latter amounts is appropriate in the circumstances is payable. Except where an appraisal has been made, the insurer may opt to repair, rebuild or replace the property damaged or lost although there is requirement that written notice of this intention be given within seven days of receipt of the proof of loss. This is only rarely done because of practical difficulties in satisfying the insured as to the quality of the replacement. When the insurer does elect to replace, new contract is established and the policy limits do not apply, making the insurer liable for the increased costs involved. [Footnotes omitted] Therefore, if SGI elected to repair the vehicle, it will be liable for the entire cost of the repair, whether it exceeds the limits in statutory condition 8(1) or 8(2). As stated, reinstatement clause is for the benefit of the insurer and if SGI wished to take advantage of the reinstatement it must give the insured unequivocal notice that it intended to exercise its option. On the evidence before me it cannot be said that SGI has expressly elected to reinstate. SGI did not expressly notify the plaintiff, nor Crestview that they intend to exercise their option to reinstate the BMW. However as stated earlier, an express election is not necessary. An insurer by its conduct may be deemed to have made an election to reinstate. The test, as used in Lepin, concentrates on whether or not the insurer's conduct "misled" the insured into thinking that the insurer would reinstate. Consequently, if SGI's actions in this matter can be said to have misled the plaintiff to believe that SGI had elected to repair the exhaust system, then SGI is deemed to have elected as such. The plaintiff says that SGI elected to repair when it issued the second appraisal and authorized Crestview to replace the exhaust system without the knowledge or involvement of the plaintiff. SGI on the other hand states it did not authorize Crestview to replace the exhaust system, but simply paid out to the repair shop cash payment under statutory condition 8(1). SGI did send out roving appraiser to determine the damage to the exhaust system, upon being notified by Crestview that there was damage which was not previously ascertained. Those acts are the acts which the plaintiff relies upon to substantiate the claim that SGI has elected to reinstate. Those acts, however, relate to ascertaining the extent of loss or damage to the vehicle. They do not constitute an election under which the insurer is bound to reinstate. As noted, where an insurer acts for the purpose of ascertaining the extent of loss or damage, or the cost of reinstatement, such acts are not considered an election. Further, the plaintiff suggests that SGI authorized Crestview to repair the exhaust system. However, there was no evidence of such authorization. It cannot be said that the work was carried out on the instructions of SGI. Crestview appears to have proceeded with the repairs on their own. In the Lepin case, one of the basis for finding an election to repair was the insurer's conduct as manifested by the insurer's control over the repairs and repairers. Again, here there is no evidence that SGI exercised any control over the repairs or the repairer. The roving appraiser appraisedthe damage, provided an appraisal which included the deductionfor depreciation and advised Crestview. Thereafter, Crestview repaired the vehicle without advising the plaintiff. Consequently, on the facts of this case, the insurer has neither expressly elected to reinstate, nor elected to reinstate by its conduct. 2. Is SGI estopped from claiming that the plaintiff is responsible for the depreciation? The plaintiff claims that SGI is estopped from claiming the depreciation, or has waived its right to claim that the plaintiff is responsible for the depreciation. The plaintiff argues that SGI, by it's conduct, has waived its right to limit its liability under statutory condition 8(1). i. Waiver and Estoppel Waiver and estoppel usually arise in insurance law in the context of disputes over coverage. That is, the insured alleges that the insurer has waived any deficiencies in the insured's claim or that the insurer is estopped from denying coverage to the insured. Although the case here does not involve total denial of liability, the reasoning remains applicable since an election under statutory condition 8(4) effectively increases the liability of SGI beyond the liability limits found in statutory condition 8(1). Therefore, the same principles that apply where an insurer seeks to avoid liability would apply where an insurer seeks to avoid additional liability. So, if the plaintiff can establish that SGI waived its right to limit its liability or estopped from doing so, SGI may be responsible for the total cost of replacement of the exhaust system. There is some confusion in insurance law as to whether "waiver" and "estoppel" are synonymous terms. C. Brown and J. Menezes in their treatise Insurance Law in Canada explain the confusion surrounding "waiver" and "estoppel" in insurance law as follows at pp. 282 and 283: 14:1:2. Several essentially different concepts have been indiscriminately referred to under the rubric "waiver and estoppel". There is in fact distinct lack of consensus in the courts and among the writers as to whether waiver and estoppel are merely different aspects of single concept, or whether they relate to completely separate theories. The term "estoppel" is used rather freely and not always accurately in many areas of the law but particularly in insurance law. It is, however, relatively uncomplicated matter to establish the principles that make up the various estoppel doctrines. The same is not true for waiver. The identification of substantive doctrine of waiver in relation to insurance contracts is illusive. The wide use of the term makes sense only if "waiver" is considered to merely describe an effect that the operation of some clearly identifiable principle may have. Thus to say: "the insurer has waived his right to terminate the policy" means simply that circumstances have arisen whereby the insurer is prevented from denying claim by the insured notwithstanding some term in the policy appearing to give it that right. Clearly, to establish whether such proposition is supportable, it is necessary to determine whether the circumstances alleged fit some theory that the law clearly recognizes as having such an effect. In the result, it is essential to abandon the use of the term "waiver" as referring to some substantive doctrine. [Footnotes omitted] As stated in MacGillivray Parkington on Insurance Law at 911. The classic doctrine of estoppel requires (i) an unequivocal representation by word or conduct of present fact, which is (ii) made to someone expected to rely on it, who (iii) does rely upon it to his detriment. It is clear that in many cases where plea of waiver has succeeded, the court has not applied these strict conditions, and it is submitted that the doctrine of waiver of breach is really an application of the doctrine of election, namely that, once party has manifested his intention to forgo contractual right, either by express statement or by inference from conduct inconsistent with exercise of that right, he may not revoke that election later. [Footnotes omitted] The doctrine of waiver on the other hand is really the application of the doctrine of election. waiver of right or benefit is the opposite of an election of right or benefit. waiver is choice to relinquish whereas an election is choice to retain. Therefore, whether party has waived right or elected another right is matter of characterization. Usually the term "waiver" is used to refer to the insurer's waiver of an insured's default. But clearly, the concept of "waiver" in insurance law encompasses an election to pay or to reinstate. Hyndman J. for the court in Crump et al. v. McNeill et al., 1918 CanLII 696 (AB CA), [1919] W.W.R. 52 (Alta. S.C.), pronounced this definition of waiver at p. 57: Waiver is defined as the act of waiving, or not insisting on some right, claim or privilege; foregoing or giving up of some advantage, which but for such waiver, the party would have enjoyed; an election to dispense with something of value, the giving up, relinquishing, or surrendering some known right; an intentional relinquishment of known right, or such conduct as warrants an inference of the relinquishment or waiver of such right; waiver involves both knowledge and intention. It is distinguishable from estoppel inasmuch as estoppel may arise where there is no intent to mislead; it depends upon what one himself intends to do; estoppel depends rather upon what he caused his adversary to do; waiver involves the act and conduct of only one of the parties; estoppel involves the conduct of both. waiver does not necessarily imply that one has been misled to his prejudice or into an altered position; an estoppel always involves this element. [Emphasis added] Lamont J.A. in Western Canada Investment Company, Limited v. McDiarmid, 1922 CanLII 171 (SK CA), [1922] W.W.R. 257 (Sask. C.A.), defined "waiver" in comparable terms at p. 261: Waiver implies the abandonment of some right that can be exercised, or renouncement of some benefit or advantage which, but for such waiver, the party relinquishing would have enjoyed. To constitute waiver, two essential prerequisites are in general necessary. There must be knowledge of the existence of the right or privilege relinquished and of the possessor's right to enjoy it, and there must be clear intention of foregoing the exercise of such right. Martin C.J.S. defined waiver in identical terms in Canadian Acceptance Corp. Ltd. v. Fisher (1957), 10 D.L.R. (2d) 247 at 254 (Sask. C.A.). To constitute waiver of the right to elect, there must be the abandonment of some right that can be exercised, and the insurer must know of the existence of its right to elect, and the insurer must give clear intention of foregoing the exercise of the right. As stated in MacGillivray Parkinson on Insurance Law at 912: 912. Confusion has arisen, however, through the application of species of estoppel to achieve the same effect as waiver in cases of breach of contract. In recent years doctrine of "estoppel by conduct" has been developed, whereby party who has so conducted himself as to convey the impression to another that given state of affairs exists, cannot change his stance later. As applied to breaches of contract, it means that when one party represents to another who has committed breach of contract that the breach will be overlooked, he cannot later rely on it where that would be unjust to the other party. This principle is premised upon the desirability of fostering fair and consistent dealings between parties in contractual relationship. It is obvious that it is distinct from the notion of waiver, since in an appropriate case it would be right to allow the representor to change his mind, perhaps after notice, whereas an election is not revocable in that way. Estoppel by conduct is in truth very much closer to the modern doctrine of "equitable estoppel," which in turn has much wider application than waiver of breaches of contract, and requires different facts to be established. It is submitted that the uncertainty attaching to the use of the word "waiver", in this context is the result of mistaken attempts to define it as species of estoppel, whereas it is in fact distinct doctrine. [Footnotes omitted] In treating estoppel and waiver as distinct doctrines, the first issue is whether SGI is estopped from claiming the depreciation. Here, the plaintiff argues that even though SGI made no representation to the plaintiff, it authorized the repairs without the plaintiff's consent and as such it is estopped from arguing the plaintiff is responsible for any portion of the repairs. However, it cannot be said herein that SGI authorized the repairs as the evidence does not support this assertion. Nor can it be said that SGI represented to the plaintiff by word or conduct that it did not intend to deduct depreciation. It cannot be said that SGI conducted itself so as to convey that it would not claim depreciation as it deducted for betterment as soon as the second appraisal was complete. Estoppel is not applicable. The issue is then has SGI waived their right to elect to pay the cash value of the exhaust system under statutory condition 8(1). That is, did it by its actions waive its right to elect to choose the less expensive means of fulfilling its obligation. In Saskatchewan, two provisions of the Act provide that SGI, in certain situations, is not deemed to have waived provisions of the Act. First, statutory condition 10 of s. 39 reads as follows: 10 Neither the insurer nor the insured shall be deemed to have waived any term or condition of this Part by any act relating to the appraisal or to the delivery and completion of proofs of loss, or to the investigation or adjustment of the claim. Second, s. 77 of the Act states: 77 No term or condition of this Act shall be deemed to be waived by the insurer in whole or in part unless the waiver is stated in writing and signed by an officer of the insurer. The term "waiver" in statutory condition 10 and s. 77 also applies to an election to reinstate. Under automobile insurance legislation, this conclusion is supported by the decision of the court in Roberts v. Insurance Corp. of British Columbia (1990), 45 C.C.L.I. 55 (B.C. Co. Ct.), wherein the court considered the effect the Insurance Act, R.S.B.C. 1979, c. 200, which contains provisions similar in effect to statutory condition 10 and section 77 of our Act. In 1990, s. 13 of the British Columbia Act read: 13.(1) No term or condition of contract shall be deemed to be waived by the insurer in whole or in part unless the waiver is stated in writing and signed by person authorized for that purpose by the insurer. (2) Neither the insurer nor the insured shall be deemed to have waived any term or condition of contract by any act relating to the appraisal of the amount of loss or to the delivery and completion of proofs or to the investigation or adjustment of any claim under the contract. In Roberts, the British Columbia state insurer had agreed to replace the plaintiff's motor vehicle following its theft. However, the plaintiff's vehicle was recovered by police one day before the plaintiff signed contract to purchase new replacement vehicle. The insurer withdrew its agreement to replace the vehicle and re-elected to repair the stolen vehicle. The court found that the insurer had made an election where Catliff J. stated at p. 57: Nevertheless, I.C.B.C. clearly elected to finance the purchase of new car for the plaintiff before it learned his stolen car had been found. At common law, once an election is made the insurer is bound by it: "where contract provides for an election, the party making the election is in the same position as if he had originally contracted to do the act which he elected to do." per Lord Campbell, C.J., Brown and others v. The Royal Insurance Company (1859), E.L. and E.L. per Lord Campbell, C.J., p. 859. `The defendants are bound by their election; and; if the performance has become impossible, or (which is all they have shewn) more expensive than they had anticipated, still they must either perform their contract or pay damages for not performing it.' per Crompton, J. at p. 860 op cit." The court noted the insurer's position that it was not bound by this election when it stated at p. 57: In spite of the election made, I.C.B.C. claims it should be deemed not to have waived its choice of paying the lesser cost of repairing or replacing the plaintiff's car. Catliff J. went on to state at p. 59: [T]he effect of s. 13(2) of the Insurance Act is that I.C.B.C.'s acts "relating to the adjustment of [the] claim" do not deprive it of its statutory option [to elect]. In my view, the offer of I.C.B.C. to pay for replacement car for the plaintiff was clearly an "act relating to the adjustment" of the claim. Clearly, the basis for Catliff J.'s decision is an unstated finding that the "statutory option", or election to pay or reinstate, fell under the definition of "waiver" as found in s. 13(2) (which is the equivalent of statutory condition 10 in Saskatchewan). As such, as the conditions of the "waiver" under s. 13(2) had not been met, the insurer was not bound by the waiver. similar situation arises herein. As stated, reinstatement clauses are included in insurance contracts for the sole benefit of the insurer. The inclusion of reinstatement clause in the Act provides the same benefit to SGI, i.e., the option to choose the least expensive means of complying with its obligation to the insured. Therefore, only SGI, as the insurer, has the option to choose or elect the least expensive means of repairing the vehicle. In other words, only SGI can waive its right under statutory condition 8(1) by opting to repair under statutory condition 8(4). The plaintiff argues that SGI has waived their right to elect to payout under statutory condition 8(1) by their actions. However as noted, waiver is not to be presumed from the mere fact that an insurer has taken steps in conjunction with the assured to ascertain the amount of the loss, since, until this has been done, they are not in position to decide whether to make good the loss by payment or reinstatement. Herein, after the initial appraisal, roving appraiser attended at the repair shop and reviewed the extended damage to the exhaust system. The roving appraiser reassessed the claim and included damages for the new exhaust system. Under statutory condition 10, these acts relate tothe appraisal of the claim and, therefore, cannot constitute awaiver of statutory condition 8(1), i.e., they do notconstitute an election under statutory condition 8(4). Thereafter, SGI took no steps to have the vehicle repaired. Crestview took the steps to repair the vehicle. Further and finally, s. 77 indicates that, unless and until the insurer has provided written and signed waiver to the insured, the insurer remains entitled to re-elect the manner in which it will fulfil its obligations and complete the insurance contract. Therefore, as the plaintiff did notreceive a written waiver of statutory condition 8(1), theinsurer cannot be deemed to have waived its option to enforcestatutory condition 8(1). 3. Is depreciation to be deducted under Part III of the Act? Depreciation is defined in Black's Law Dictionary, 5th ed. (St. Paul: West, 1979), as: Depreciation. fall in value; reduction in worth. The deterioration, or the loss or lessening in value, arising from age, use and improvements, due to better methods. decline in value of property caused by wear or obsolescence and is usually measured by set formula which reflects these elements over given period of useful life of property. Statutory condition 8(1) of the Act, provides that SGI is not liable beyond the lesser of the actual cash value of the exhaust system, with proper deduction for depreciation, and the maximum value of the exhaust system as prescribed by regulation. Pursuant to this statutory condition, SGI is entitled to make an allowance for reasonable depreciation, before it makes payment to an insured under the Act. If the repairs made result in an increase in the value of the property repaired, there may be deduction made to offset the increase. The roving appraiser herein arrived at the 20% deduction for depreciation on the BMW exhaust system. Unfortunately, there was no evidence led as to how the appraiser arrived at the 20% depreciation deduction. The question is whether the 20% deduction is appropriate. In the case of Lepin, the court referred to Ewer v. National Employers' Mutual General Insurance Association Ltd. (1937), All E.R. 193 wherein it confirmed that court will make an allowance in favour of an insurer for the increase in value of building before and after the repairs. In Lepin, the court made an allowance for the newness of the heating and cooling system installed in the building. The court also noted that there was no set standard by which it could determine the allowance to be made for the fact that the building now contained items which were new and were therefore of longer life than those destroyed. In Lepin the court chose to reduce the damages by 30%. In the circumstances of the case herein, the warranty on the BMW exhaust system was three years or 80,000 kms. At the time of the accident, the exhaust system on the BMW was three years old and had withstood 46,000 kms. of wear. The BMW exhaust system was replaced with new exhaust system. In light of those facts, it cannot be saidthat the 20% deduction for depreciation on the exhaust systemis inappropriate, and as such the 20% for depreciation isallowed. 4. Does the plaintiff as the lessee of vehicle registered to Crestview have cause of action against SGI under the terms of Part III of the Act? SGI has argued that the plaintiff does not have cause of action against SGI as he is not the "insured" as defined under the Act. In light of the previous findings, it is not necessary for me to determine this issue. CONCLUSION The plaintiff's claim against SGI is dismissed withcosts to be taxed.
A claim for damages to the plaintiff's leased automobile arising out an accident. The action against the defendant Ruhr had been discontinued. An SGI adjuster appraised the damage but during the course of repairing the vehicle further damage was found. A roving adjuster authorized the replacement of the exhaust system but deducted 20% for depreciation. The plaintiff brought an action for reimbursement of the $503.73 arguing that SGI elected to repair or replace the exhaust system under statutory condition 8(4) of s39 of the Automobile Accident Insurance Act. SGI took the position that as Crestview was the registered owner of the vehicle the plaintiff was not entitled to bring this action as he was not the insured within the meaning of the Act. SGI also argued that Crestview authorized the repairs and acknowledged the 20% deduction as registered owner and that if the plaintiff paid the $503.73 he did so under his private lease contract with Crestview. It also argued that it is entitled to deduct for depreciation in any event. HELD: The claim against SGI was dismissed with taxed costs.  1)An election under statutory condition 8(4) amounts to an irrevocable decision to repair regardless of costs of repairs. Once an election is made the insurer is bound to pay or reinstate. An insurer by its conduct may be deemed to make an election to reinstate. The insurer's election to reinstate unilaterally creates a new contract which the insurer may not unilaterally revoke. On the facts the insurer neither expressly nor by its conduct elected to reinstate. The roving appraiser provided an appraisal to Crestview which included the depreciation deduction. Crestview repaired the vehicle without advising the plaintiff. 2)The concept of waiver in insurance law encompasses an election to pay or to reinstate. Estoppel was not applicable. Two provisions of the Saskatchewan Act provide that SGI in certain situations is not deemed to have waived provisions of the Act. The roving appraiser reassessed the claim and included the newly found damages. These acts related to the appraisal of the claim and could not constitute a waiver of statutory condition 8(1). They did not constitute an election under statutory condition 8(4). Crestview, not SGI, took the steps to repair the vehicle. As the plaintiff did not receive a written waiver of statutory condition 8(1) pursuant to s77 the insurer could not be deemed to have waived its option to enforce statutory condition 8(1).  3)The exhaust system was three years old and had 46,000 km of wear. A 20% deduction for depreciation was appropriate and therefore allowed.  4)It was not necessary to determine whether the plaintiff was the 'insured' as defined by the Act.