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SCC Rules That Future CPP Disability Benefits are not Discounted From Nova Scotia SEF 44 Claim

Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7

The Supreme Court of Canada has recently ruled on an appeal of a Nova Scotia Court of Appeal decision that we had previously covered in July 2015.

Mr. Sabean was in a motor vehicle accident in Bridgewater, Nova Scotia in October 2004. He successfully pursued an action against the at fault driver, and was awarded damages of $465,400. He was only able to recover $382,000 from the Defendant’s insurer, leaving a shortfall of $83,000. Mr. Sabean claimed the shortfall from his insurer under the SEF 44 endorsement of his motor vehicle policy.

Mr. Sabean’s insurer took the position that the Plaintiff’s future CPP disability benefits were deductible from his claim under the terms of the SEF 44.

Clause 4(b)(vii) of the SEF 44 that the insurer was entitled to deduct amounts received from “any policy of insurance providing disability benefits or loss of income benefits or medical expense or rehabilitation benefits.” The insurer took the position that CPP disability was considered a “policy of insurance.” The trial judge’s decision that future CPP benefits were not deductible was overturned by the Court of Appeal, and the Plaintiff appealed the decision to the Supreme Court.

The Supreme Court found that the first step in analyzing a standard form insurance contract was that the words must be given their ordinary meaning “as they would be understood by an average person applying for insurance, and not as they might be perceived by persons versed in the niceties of insurance law.”

Justice Karakatsanis, speaking for the Court, found that the ordinary meaning of a “policy of insurance” would be limited to a private contract between an insured and a private insurance company. The Court went on to state that an average person would not consider benefits provided under a mandatory statutory program such as CPP to be a private insurance contract.

The Court found that the provision was clear and that the ordinary meaning should be given to the policy, and the Court allowed the appeal and found that future CPP disability benefits are not deductible from SEF44 claims.  The Supreme Court decision has affirmed the position that had previously been taken by the New Brunswick Court of Appeal in Economical Mutual Insurance Co. v. Lapalme, 2010 NBCA 87.

Because the wording of the SEF 44 is fairly uniform between Provinces, a point which is alluded to in the Supreme Court’s decision, it is likely that this decision will be followed in the remainder of the Atlantic Provinces.

You can read Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7, in its entirety here.

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