Case Summary: Portage LaPrairie Mutual Insurance Company v. Sabean
Defence + Indemnity
Future CPP benefits fall under the definition of “any policy of insurance” and are therefore deductible from amounts payable by SEF 44 insurers.
Portage LaPrairie Mutual Insurance Company v. Sabean, 2015 NSCA 53, per Scanlan, J.
I. FACTS AND ISSUES
The respondent was involved in a motor vehicle collision and commenced an action under the SEF 44 endorsement in his insurance policy for actual damages that exceeded the amount of payment by the tortfeasor in the settled claim. The parties disagreed as to whether the amount paid by the insurer should be reduced by deducting CPP disability benefits the respondent would receive, based on the meaning of the phrase “any policy of insurance” in the Endorsement.
The trial judge determined that the CPP disability benefits were not to be deducted. The insurer appealed.
II. HELD: Future CPP disability benefits are deductible from amounts payable by SEF 44 insurers
1. Is this term “any policy of insurance” ambiguous and therefore contra proferentum applies?
(a) The trial judge cited a New Brunswick Court of Appeal case that found CPP disability benefits are not deductible from SEF 44 due to ambiguity.
(b) The Court found that there is no ambiguity based on general principles of contract interpretation, including the plain, ordinary and proper meaning of the words, the law in Canada at the time the SEF 44 became available, and its history
(i) The purpose of the SEF 44 is an indemnity policy of “excess insurance”, limiting an insurer’s liability to actual loss.
(ii) At the time the SEF 44 became available, the SCC had established that benefits payable pursuant to the CPP were paid pursuant to “any contract of insurance” based on another act (Pacific Railway v. Gill)
(iii) After Gill, SEF 42 was drafted which made no attempt to prevent double recovery. The SEF 42 was later withdrawn by the insurance industry because of the expanded coverage this resulted in, and was replaced with the more restrictive SEF 44
(c) The Court held that there is no real difference between the phrase “any contract of insurance” as considered in Gill, and the phrase “any policy of insurance” in this SEF 44.
(i) The Ontario Court of Appeal had relied on Gill to find that CPP disability benefits are money paid under a “valid policy of insurance”
(ii) In Nova Scotia, the definitions of “contract” and “policy” suggest that there is no real difference in these words (“policy” is defined as “the instrument evidencing a contract”)
(d) Because CPP benefits were found previous to the SEF 44 to be “of the same nature as contracts of insurance”; the wording is clear in the SEF 44 that it is excess insurance, not allowing for double recovery; and there is no importance to the use of the word “policy” rather than “contract”, there is no ambiguity in this clause.
(i) Therefore the trial judge erred in adopting the reasoning from the NBCA case
(e) The appeal was allowed and the matter was remitted to the trial judge to determine the value of the respondent’s future CPP disability benefits that are to be deducted from the amount payable to him by the insurer.