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
Giles Ayers and Joe Thorne Introduction Balancing a municipal budget has always been a challenging task in Newfoundland and Labrador, and this is particularly true in a year of extreme weather events and a global…
Read MoreWe are pleased to present the third installment of Beyond the border, a publication aimed at providing the latest information to clients about new programs and other immigration-related information that may be pertinent to employers of…
Read MoreHarold M. Smith, QC and G. John Samms Effective Monday, August 24, 2020, an order directing the mandatory wearing of masks, pursuant to the Public Health and Protection Act and the Special Measures Orders made…
Read MoreGerald McMackin, QC and Christopher Marr, TEP New Brunswick joined the rest of Canada in enacting legislation that deals solely with powers of attorney when the Enduring Powers of Attorney Act (“Act”) came into force…
Read MoreMurray Murphy, QC, CPHR and Kate Jurgens Three new bills have been introduced in the most recent sitting of the Prince Edward Island legislature. In the employment setting Bill 38 aims to address the prevalence…
Read MoreJennifer Taylor The Supreme Court of Canada has finally put an end to the “waiver of tort” debate. After years of uncertainty, a majority of the Court confirmed in Atlantic Lottery Corp Inc…
Read MoreStephen Penney and Justin Hewitt As municipalities begin opening up recreational facilities in Alert Level 2 of the COVID-19 public health emergency implemented by the Provincial Government, Municipalities Newfoundland and Labrador has been receiving inquiries…
Read MoreThere is no obligation upon a municipality to reduce a business tax due to limited operations secondary to the COVID-19 pandemic. A municipality does, however, have the discretion to offer business tax relief. If a…
Read MoreRuth Trask and John Samms Newfoundland and Labrador employers who continued operations this spring during Alert Levels 4 and 5 of the COVID-19 pandemic should take note of a new program offered by the provincial…
Read MoreChristopher Marr, TEP & Lauren Henderson As defined benefit pension plans (“DB Plans”) throughout Canada continue to face funding challenges due to mounting solvency deficits, the New Brunswick Financial and Consumer Services Commission (“FCNB”) is…
Read More