Jackson v Standard Life BCSC

Jackson v Standard Life BCSC

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  Facts: about eligibility provisions. P sued D for breach of contract and sought one year of disability benefits. D denied claim since P was not eligible insured at date of eligibility. Policy required employee to be actively at work for defined period before eligible for coverage under the policy. Eligibility period applicable meant that she would be eligible for coverage “the first of the month coincident with or immediately following employment date.” P started work on Aug 15 2005, became disabled not even two weeks later, last day of work was Aug 26. P argued that her insurance coverage commenced Aug 1 and only became effective on Aug 15. D argued that coverage was effective on Sept 1.
  
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    According to plain and ordinary meaning of eligibility provision, P argued that employee beginning work in middle of month would have coverage retroactively. In alternative, P argued provisions were ambiguous.
    
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  Analysis: court began analysis with fairness
  
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    SC injected irrelevant consideration of unfairness in the role of policy interpretation.
    
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  At CA, looked at contract as a whole and compared to other similar contracts, concluded that no ambiguity and employee was covered on first of every month
  

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  Takeaway:
  
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    Pursuant to Progressive Homes, consideration of unfairness is not a factor in any steps in policy interpretation. Unfairness is not a reason to invoke ambiguity or contra proferentum
    
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      But judges often see their role as ensuring fairness between parties
      
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    Broader commercial context is a factor to be considered
    
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    Want to interpret similar policies and provisions consistently
    

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  Look at RE of parties at time they entered into insurance contract
  
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    Not supposed to allow judge to override plain language of exclusion provision
    
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    Can’t be relied on by insured that fails to read the policy
    
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  Sometimes confused with nullification of coverage issues
  
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  Turpin
  
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  Chilton v Cooperators [1997] BCCA both set out in obiter circumstances when court can apply RE in order to void an unambiguous exclusion clause. Court should ask following i) should reasonable insured expect coverage, ii) was policy difficult to understand, iii) were insurer’s marketing practices misleading to insurer which contributed to expectations of coverage
  
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    Where insured’s coverage would be nullified by enforcing an exclusion, court can use RE to overturn that
    
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  Cabell [2011] ONCA: court declined to enforce exclusion clause which would eliminate endorsement that granted the coverage
  
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  Progressive Homes: can use RE but only after finding ambiguity in policy
  

Consolidated Bathurst v Mutual Boiler [1980] SCC [contra proferentem]

Facts	- A operates a manufacturing facility for production of paper products, including paper boxes - R is insurer under a policy issued w.r.t. certain property of A, including heat exchangers, the concern of this action - A’s heat exchangers failed, R resisted A’s claim on basis that damage was caused by corrosion of tubes inside the heat exchanger and this risk was specifically excluded in the policy - TJ and CA found that breakdown due to corrosion, so damage excluded by policy
Issues	- Whether the loss is recoverable under the policy issued by the insurer
Rules	- There is no just reason for applying any different rule of construction to a contract of insurance from a contract of any other kind, onus of proof w.r.t. interpreting the contract is the same on each party - If some ambiguity is found, then apply contra proferentem doctrine Ambiguity is resolved against party who has inserted the clause in question and is relying on it Basis for this approach is that the insurer seeks to impose exceptions and limitations to coverage described, and should use language that clearly expresses the extent and scope of those exceptions and limitations Where words may bear two constructions, the more reasonable one, which produces a fair result, must be taken as the interpretation which would promote intention of parties Courts should be loath to support construction that would either enable insurer to pocket premium without risk, or the insured to achieve recovery which could neither be sensibly sought nor anticipated at the time of contract
Analysis	- There are two interpretations for “an accident caused directly or indirectly by fire” May not include an event relating to corrosion Definition may exclude only the cost of making good the corrosion itself - If court were to accept submissions of R that loss suffered by A due to wear and tear was excluded by the definition of accident, then insured would have no coverage for what was most likely a source of loss, or a risk pervasive throughout the plant - Interpreting corrosion as word employed in definition of accident as sought by R would eliminate from coverage any and all loss suffered by A Such an interpretation would result in substantial nullification of coverage under the contract - Interpretation construed against insurer in light of ambiguity Dissent - Found that the meaning of word accident in policy was meant to cover damage when it was directly caused by accident to an object – “to pay the Insured for loss or damage to property of the Insured directly caused by such accident to an object” Definition of accident did not include corrosion - Coverage was therefore limited to loss or damage to property directly caused by accident to an object, and this interpretation would not afford coverage for consequential damage whether it was due to corrosion or otherwise Definition of accident excludes coverage in this situation since damage was a result of corrosion of material - Dissent also rejected contra proferentem approach since the contract had no ambiguity in the first place
Conclusion	- Appeal allowed, appellants entitled to recover damages under the policy

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