By Gabriel Poliquin
In a unanimous decision rendered on January 27, 2017, the Supreme Court of Canada stated that CPP disability benefits do not constitute disability benefits within the meaning of “disability benefits from a policy of insurance” pursuant to SEF 44 Endorsement.
The purpose of the Endorsement is to prove excess coverage when an underinsured motorist is unable to pay the full amount of a court judgment. The Endorsement specifies nine sources that give rise to deductions from the amount payable by the insurer to the injured party, one of which are disability benefits from a policy of insurance.
The insurer, Portage La Prairie Mutual Insurance Co. argued that such benefits included CPP disability benefits. The Court disagreed. Though the Court had stated in Gill ( S.C.R. 654]) that CPP disability benefits were “so much the same nature as contracts of insurance” that they should be deducted from a damages award. The Court distinguished Gill from the facts of Sabean. In Gill, the Court determined that CPP benefits were to be deducted from survivor death benefits from a damages award that arose from a statutory action under the Families’ Compensation Act of BC. In Sabean, the Court reiterated and applied the contract interpretation principles of Ledcor to the Endorsement, i.e. deductions listed therein should be interpreted narrowly. The Court opined that, for the purposes of the Endorsement, the damages award was already determined by the Court and thus was a starting point to calculate the amount payable to the injured party. Since the damages award had already been calculated, there was no risk of overcompensation, which was the concern in Gill.
The Court reaffirmed that the words of an insurance policy should be interpreted as the “average person” would; for the average person a “policy of insurance” does not include a mandatory, statutory scheme such as the CPP. Conversely, insurers may not rely on their “specialized knowledge of the jurisprudence to advance an interpretation that goes beyond the clear words of the policy.”