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Supreme Court of Canada Rules Future CPP Benefits Not Deductible Under an SEF 44 Claim
Sabean v Portage LaPrairie Mutual Insurance Company, 2017 SCC 7
This case dealt with the narrow issue of whether the value of future CPP benefits are deductible under an SEF 44 claim. Sabean was injured in a motor vehicle accident and awarded damages. Due to a shortfall in the amount he received from the other driver’s insurer, Sabean claimed the excess amount from his own insurer, Portage LaPrairie Mutual Insurance Company (“Portage”), under his SEF 44 Family Protection Endorsement. Portage argued that the value of Sabean’s future CPP disability benefits were deductible under the provisions of the Endorsement on the basis that the CPP disability benefits fell within clause 4(b)(vii) as “any policy of insurance providing disability benefits or loss of income benefits or medical expense or rehabilitation benefits”. Sabean argued that, on the plain reading of the Endorsement, future CPP benefits do not fit into any of the enumerated sources listed, including clause 4(b)(vii).
The trial judge relied upon case law from New Brunswick in finding that the amount for future CPP benefits should not be deducted from the amount payable to Sabean under his SEF 44 endorsement. In particular, the court cited Lapalme v Economical, 2010 NBCA 87, where the New Brunswick Court of Appeal concluded that although CPP can be viewed as a substitute for a private disability insurance policy, it is not a “policy of insurance” for the purposes of the excess insurance contract. It is important to note that the wording of the SEF endorsements in both Nova Scotia and New Brunswick is identical.
Portage successfully appealed the trial judge’s ruling, and the Nova Scotia Court of Appeal found that CPP was indeed a “policy of insurance” as contemplated by the Endorsement, creating a difference in the law between Nova Scotia and New Brunswick. Sabean appealed this ruling to the Supreme Court of Canada.
In a unanimous decision from the Court, Justice Karakatsanis allowed the appeal, finding that the trial judge was correct and that Sabean’s future CPP disability benefits should not be deducted from his damage award. Justice Karakatsanis held that the language of the policy should be given its ordinary meaning as it would be understood by the general public, and not by insurers and those others well versed in the law:
An average person applying for this additional insurance coverage 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.
As a result of the Supreme Court of Canada’s ruling, the law in Nova Scotia and New Brunswick is once again aligned on the issue of deductibility of CPP disability benefits in relation to SEF 44 claims.