The Ordinary Meaning of Insurance: Client Update on the SCC’s Decision in Sabean
The Supreme Court of Canada released its decision in Sabean v Portage La Prairie Mutual Insurance Co, 2017 SCC 7 at the end of January, finally answering an insurance policy question that had divided the lower courts. The question was: Are future CPP disability benefits deductible by the insurer under the SEF 44 Endorsement as a “policy of insurance providing disability benefits”? The SCC’s answer: No.
Nova Scotia’s SEF 44 Endorsement is similar to “Special” or “Family Protection” endorsements that exist elsewhere in Canada. These are excess insurance policies. Coverage under these policies generally makes up for the shortfall (up to limits) that arises when an insured person is injured in a motor vehicle accident and cannot recover the full amount of her damages from the tortfeasor’s insurer.
Nevertheless, the SEF 44 policy sets out certain amounts that will be deducted from what the SEF 44 insurer has to pay. Clause 4(b)(vii) of the SEF 44 was the deduction at issue in Sabean. Under this provision, “future benefits from a ‘policy of insurance providing disability benefits’ are deducted from the shortfall in determining the amount payable by the insurer.”
Justice Karakatsanis, writing for the Court, focused on the ordinary meaning of the words “policy of insurance.” In her view, an “average person” would understand “policy of insurance” to refer to a private policy that a consumer can purchase, not a statutory scheme like the Canada Pension Plan to which all working Canadians have to contribute. This “average person” would not have the same in-depth knowledge of insurance case law as the insurer.
Only if the language at issue is ambiguous does the analysis move on to other rules of insurance contract interpretation, in accordance with the three-stage approach from the Supreme Court’s decision in Ledcor Construction Ltd v Northbridge Indemnity Insurance Co, 2016 SCC 37.
The Supreme Court left it open for the insurance industry to amend the language of excess policies like the SEF 44. If the clause had explicitly referred to CPP disability benefits, “an average person would have known exactly what they applied for as insurance, and what was and was not covered by the premiums paid under the Endorsement.” But where the language is not that specific, the ordinary meaning of the words, as understood by an “average person”, will govern.
Archive
Stewart McKelvey is pleased to present Energy Watch – a review of key legislative and policy advancements in the renewable energy sector in 2023 in each of Newfoundland and Labrador, Nova Scotia and New Brunswick…
Read MoreWe are pleased to present Beyond the border: A year end immigration wrap-up. Compiled by Lawyers from our Immigration team, this 2023 update covers topics including the Government of Canada’s ambitious immigration plans for the future;…
Read MoreBy Perlene Morrison, K.C., Hilary Newman & Curtis Doyle Once again, the time has come to review the year that was and to chart the course for the year ahead. For municipalities and planning professionals…
Read MoreBy Dave Randell, John Samms & Jayna Green A recent Government of Newfoundland and Labrador (“GNL”) announcement affirms the Province’s swift and ambitious approach to offshore wind development. While it may come as a shock…
Read MoreBy Sadira Jan, Dave Randell, Graham Haynes & Tyler Callahan On November 30, 2023, the Federal Government tabled Bill C-59, entitled An Act to implement certain provisions of the fall economic statement tabled in Parliament…
Read MoreBy Brendan Sheridan The Government of Canada has continued their whirlwind year of immigration program announcements by revealing their plan to modernize and improve the country’s immigration system. This plan, known as “An Immigration System…
Read MoreBy Christine Pound, ICD.D, Rebecca Saturley, & Daniel Roth Canada’s anti-modern slavery legislation comes into force on January 1, 2024. To prepare for the first reporting deadline on May 31, 2024, organizations need to determine…
Read MoreBy Brian Johnston, K.C. and Richard Jordan On November 9, 2023, Minister of Labour, Seamus O’Regan, introduced Bill C-58 in the House of Commons to amend the Canada Labour Code to prohibit the use of…
Read MoreBy Kevin Landry & Eryka Gregory The Retail Payment Activities Regulations (“Regulations”) under the Retail Payment Activities Act (“RPAA”) were finalized and published in the Canada Gazette Part II on November 23, 2023. The RPAA was…
Read MoreBy Level Chan When proclaimed in force, the Nova Scotia Private Sector Pension Plan Transfer Act (the “Transfer Act”) enacted by Bill 339, Financial Measures (Fall 2023) Act will allow the transfer of private sector…
Read More