Skip to content

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.

SHARE

Archive

Search Archive


 
 

Hiring the “Right” Employee

February 24, 2016

By Lisa Gallivan Employees can be your biggest asset, if you hire the right people. This can often be one of the biggest decisions that you make as a business owner or employer. The “right” employee…

Read More

Bye, Bye Canadian P.I.?: What Apple’s fight against the FBI means for the protection of Personal Information in Canada

February 23, 2016

By Burtley Francis and Kathleen Leighton Order Up: Apple, P.I. Recently, the public safety versus personal privacy debate has been brought to main headlines. Apple is facing a court order (available here) requiring the company to assist the FBI in the investigation of…

Read More

Client Update: Outlook for the 2016 Proxy Season

February 12, 2016

In preparing for the 2016 proxy season, you should be aware of some regulatory changes and institutional investor guidance that may impact disclosure to and interactions with your shareholders. This update highlights what is new…

Read More

Left Sharks and Copy Cats: The Super Bowl’s Impact on Protecting a Brand

February 5, 2016

By Burtley Francis and Michael MacIsaac You remember Left Shark… The Super Bowl is a lot of things to a lot of people and is arguably the most anticipated event of the year that is not a holiday…

Read More

The Labour Relations of First Nations’ Fisheries: Who gets to decide?

February 2, 2016

By Jennifer Taylor Summary The Canada Industrial Relations Board recently held that it had no jurisdiction as a federal board to certify a bargaining unit comprised of fisheries employees of the Waycobah First Nation. The decision…

Read More

Can an employer prohibit tattoos and piercings?

January 21, 2016

By Peter McLellan, QC In the 1970s the issue for employers was long hair and sideburns. In the 1980’s it was earrings for men. Today the employer’s concerns are with tattoos and facial piercings. What are…

Read More

Settling for it: Two new NS decisions on settlement agreements and releases

January 15, 2016

By Jennifer Taylor Introduction It sounds simple: Two disputing parties, hoping to resolve their disagreement without drawn-out court proceedings, will mutually agree to a settlement on clear terms; release each other from all claims; and move…

Read More

Labour and Employment Legislative Update 2015

December 23, 2015

2015 ends with changes in workplace laws that our region’s employers will want to be aware of moving into 2016. Some legislation has been proclaimed and is in force, some has passed and will be…

Read More

Client Update: Make Your List and Check it Twice: IRAC Sends a Holiday Reminder to Municipalities

December 23, 2015

The Island Regulatory and Appeals Commission (the “Commission”) has issued a holiday reminder to municipalities in Prince Edward Island about the importance of preparation, accuracy, and transparency when making decisions related to land use and…

Read More

Nova Scotia Government Introduces Public Services Sustainability (2015) Act

December 16, 2015

By Brian G. Johnston, QC On the same day that the Nova Scotia government announced its projected deficit had ballooned to $241 million, it also introduced Bill 148, the Public Services Sustainability (2015) Act (“Act”). The stated purposes…

Read More

Search Archive


Scroll To Top