The Court of Appeal for Ontario has set aside a summary judgement against the Canada Life Assurance Company but has declined to dismiss the motion in a case where one of Canada Life’s predecessor companies denied a life insurance claim.
The case concerns itself with sections 180(1)(c), 183 and 184(2) of Ontario’s Insurance Act. Section 180 provides that a life insurance contract does not take effect unless no change has taken place in the insurability of the life to be insured between the time the application was completed and the policy was delivered. Section 183 discusses disclosure and misrepresentation and section 184(2), meanwhile, introduces a two-year limitation related to the disclosures required under section 183.
In Trebell v. Canada Life Assurance Company, the insurer appealed the earlier summary judgement. “The issue in this appeal is whether the ability of an insurer to rely upon s. 180(1)(c) is time limited,” the court of appeal decision states. “I am of the view that it is not.”
The decision states that, in short, the Insurance Act section in question (180(1)(c)) sets out the conditions for the formation of a life insurance contract. “Where a change in insurability occurs between application and policy delivery, no contract forms.” It goes on to say that the insurer may deny coverage on this basis, regardless of how much time has passed.
“While this may seem like a harsh result, it is the one legislature intended. The motion judge’s importation of a two-year contestability limitation is unmoored from the text of s. 180(1)(c) and divorced from its context and purpose.” The position goes on to point out that context matters when interpreting the Act, saying “the modern approach to statutory interpretation requires the meaning of a statutory provision to be determined by reference to its text, context and purpose.”
Among the considerations under review is the fact that the previous motion judge initially applied the two-year contestability limitation found in later sections of the Act, to Section 180(1)(c). They did this saying that allowing section 180(1)(c) to be used retroactively to treat a policy as never having come into effect after the delivery of the policy and payment of premiums, would leave applicants in a state of perpetual uncertainty as to whether they have insurance.
“I am persuaded that the motion judge erred in imposing a two-year contestability limitation on the operation of s. 180(1)(c),” they write. “I would caution that a gap in legislation cannot be taken as an invitation to innovate, because gaps in legislation may result from a considered policy choice, embodying the actual intentions of the legislature which courts are bound to respect.”
Instead, they say section 184(2) which introduces the two-year limitation, is specially referring to disclosures ordered in section 183. “There is not textual avenue for applying it to s. 180(1)(c),” they write. “If the motion judge concluded that s. 184(2) applies directly, he erred.”
The judge goes on to say that he would therefore allow the appeal, set aside the summary judgement and leave it to the parties to decide how they wish to litigate the insurability issue.
Although Canada Life sought an order dismissing the summary judgement motion, the court’s statement continues saying it would not grant this remedy.
“The record is far from clear that the issue of Ms. Trebell’s insurability changed between her application and the deliver of the policy is one that requires a trial,” they write.
“Given the quasi-public interest nature of this litigation, Canada Life does not seek costs of the appeal, nor does it seek to set aside the costs awarded to Mr. Trebell,” they add. “Accordingly, I would not order any costs on appeal and would leave the motion judge’s costs award undisturbed.”
