A Supreme Court of Canada decision that ruled the Canada Pension Plan is not a policy of insurance is a win for accident victims across the country, says a Toronto lawyer.
The endorsement, also known in other provinces as a family protection endorsement, is meant to cover drivers when they’re injured in a crash caused by an underinsured driver, but it allows insurance companies to deduct future payments from a “policy of insurance providing disability benefits.”
The insurer claimed this should include the CPP, but Supreme Court Justice Andromache Karakatsanis, writing for the court, said that laypeople reading the endorsement “would understand a ‘policy of insurance’ to mean an optional, private insurance contract and not a mandatory statutory scheme such as the CPP.
“Thus, future CPP disability benefits do not reduce the amount payable by the insurer under the Endorsement,” the judge added.
Deanna Gilbert, partner at Toronto personal injury firm Thomson Rogers Lawyers, says the decision has significance nationwide, since provinces with private insurance systems use virtually identical wording in excess coverage policies. That includes Ontario, where its version of the family protection endorsement is known as OPCF-44R.
“It’s not one of the Supreme Court’s more complex decisions, but it is a very important one because of its wide applicability,” Gilbert says. Ontario accident victims should be especially grateful for the decision, she says, since it bucks recent trends in the personal injury field.
“In the last few years, we’ve seen more and more barriers put in front of accident victims seeking fair compensation,” Gilbert says, pointing in particular to controversial changes to the accident benefits system enacted last year. Since June 2016, catastrophically injured victims have seen their combined attendant care and medical and rehabilitation services limited to $1 million, down from the previous cap of $2 million.
Non-catastrophically injured victims, meanwhile, also saw their maximum combined benefits significantly cut.
“There’s less and less money available to injured folks these days, so I think the Supreme Court made the right decision removing this hurdle,” Gilbert says.
The Supreme Court case dates back to a 2004 motor vehicle crash in Bridgewater, N.S. that left Andrew Sabean with injuries. Nine years later, a jury awarded him $465,000, but the at-fault driver only had enough insurance coverage to pay $382,000.
Sabean turned to his own insurer to make up the $83,000 difference, but he resorted to the courts when he was told Portage La Prairie considered CPP a policy of insurance for the purposes of its family protection endorsement and that the insurance company intended to deduct his future disability benefits payments from the total.
A Nova Scotia Supreme Court judge sided with Sabean, relying in part on a 2010 New Brunswick Court of Appeal decision that found CPP disability benefits were not deductible under that province’s version of the endorsement.
However, the appeal court in Nova Scotia reversed the ruling, putting it at odds with the approach of its Maritime neighbour’s most senior judges.
Scott Campbell, a partner at Stewart McKelvey in Halifax, who acted for Portage La Prairie before the Supreme Court, says the ruling resolves the conflicting authorities, although he admits he was hoping the justices of the top court would go the other way.
“I obviously respect the Supreme Court decision, but I was disappointed with the result,” he says.
Still, the judgment offers insurers one possible option for insurers to get their way, according to Campbell: explicitly stating that legislated CPP benefits are deductible from excess payments.
“Had the contract done so, 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,” Karakatsanis wrote in her decision.
“It is open to the industry to take the steps it needs to in order to add that degree of clarity to the policy, but I don’t know if it’s something that’s being pursued,” Campbell says.
Ben Irantalab, a lawyer with Oatley Vigmond Personal Injury Lawyers in Barrie, Ont., says the decision could offer further joy to accident victims further down the road because of the justices’ approach to contract interpretation in cases involving industry-standard terms.
Because individual drivers cannot realistically negotiate with an insurer, they are left with a “take-it-or-leave-it” proposition when presented with an endorsement such as the one in Sabean, the judgment explains.
“Insurance companies have an advantage because they know all the legislation and jurisprudence much better than the average consumer,” Irantalab says.
To level the playing field in such cases, “the overriding principle is that where the language of the disputed clause is unambiguous, reading the contract as a whole, effect should be given to that clear language,” according to the Supreme Court.