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
Christopher Marr, TEP and David Slipp Effective March 1, 2021 in all provinces of Canada, other than Ontario and Quebec (to be effective there on July 1, 2021), securities laws related to the distribution of…
Read MoreKevin Landry and Emily Murray On March 8, 2021, Health Canada released draft guidance on personal production of cannabis for medical purposes (“Guidance Document”). At present, the Guidance Document is being circulated for public comment for…
Read MoreJennifer Taylor The Supreme Court of Nova Scotia has finally provided clarity on the limitation period for third party claims, in Sears v Top O’ the Mountain Apartments Limited, 2021 NSSC 80. This is…
Read MoreBrendan Sheridan Canada has continually claimed to be one of the countries with the toughest COVID-19 related travel and quarantine requirements. In response to the new COVID-19 variants emerging in the UK and South Africa,…
Read MoreDante Manna As of today, Newfoundland and Labrador has joined several other jurisdictions with financial hardship unlocking provisions. While the new provisions do not allow direct unlocking from pension plans, and unlocking is not available…
Read MoreNancy Rubin, QC Nova Scotia has taken a big step forward in recognizing the tort of publication of private facts. The case, Racki v Racki, 2021 NSSC 46 comes hot on the heels of Ontario’s…
Read MoreKathleen Leighton Canada is committed to developing Francophone minority communities in the country (outside of Quebec). In furtherance of this goal, there are a number of immigration initiatives in place to attract French speakers. By…
Read MoreAndrew Burke and Divya Subramanian The year 2020 was nothing short of unusual. With COVID-19 impacting every aspect of business and life, shareholder meetings also transitioned to a virtual medium. For more on how the…
Read MoreChad Sullivan and Kathleen Nash Overview The issue of hateful and harassing social media communication has garnered much attention in both the media and, more recently, in the courtroom. In Caplan v Atas,¹ Justice Corbett…
Read MoreDaniel MacKenzie and James Galsworthy On January 15, 2021, the United Kingdom’s Supreme Court (“Court”) issued a decision which is likely to be viewed as good news for policy holders who have endured business interruption…
Read More