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Tag: McLean v. Canadian Premier Life Insurance Company

Contra Proferentem To The Rescue

Contra Proferentem is a legal principle that is used to interpret ambiguous clauses in a contract against the party responsible for drafting the clause.  Reasons for judgement were released this week by the BC Court of Appeal using this principle to reinstate an insurance death benefit following a fatal plane crash.  (note of disclosure- my firm, MacIsaac & Company was involved in the prosecution of this case)
In this week’s case (McLean v. Canadian Premier Life Insurance Company) the Plaintiff’s spouse was killed when a chartered aircraft in which he was travelling crashed.
He had a $1 million Common Carrier Accidental Death Benefit Rider through the Defendant.  When the Plaintiff applied for payment the Defendant refused to pay arguing that the insurance did not cover crashes while on a Chartered flight.  The BC Court of Appeal disagreed and ordered that the Defendant pay the $1 million insurance benefit.  In finding that this flight was not excluded from coverage the BC Court of Appeal invoked the contra proferentem principle and provided the following reasons:
[14]         The court should give effect to the clear language of the contract, interpreted in the context of the agreement as a whole. It should also endeavour to interpret similar insurance contracts consistently. Where the language of the agreement reveals two possible interpretations, the court should seek to resolve this ambiguity by searching for an interpretation that reflects the true intent and reasonable expectations of the parties when they entered the contract, and achieves a result consistent with commercial reality and good sense. Considerations of reasonableness and fairness inform this exercise. An implied term should not be added to the contract unless it “goes without saying”, or is necessary to provide business efficacy. Nor should the court imply terms that render the express words of the contract meaningless, or contradict them. The onus to establish an implied term rests on the party seeking to rely on it: Perrin at para. 27; Wingtat Game Bird Packers (1993) Ltd. v. Aviva Insurance Company of Canada, 2009 BCCA 343 at para. 23, 96 B.C.L.R. (4th) 109.
[15]         If these principles do not resolve the ambiguity, the principle of contra proferentem will operate to favour construction against the insurer. This principle may not be used, however, to create or magnify an ambiguity…
[35]         I am satisfied it is therefore necessary and appropriate to invoke the doctrine of contra proferentem. While the coverage provision clearly requires that the insured be riding in a Common Carrier at the time of the crash, the words used to define a Common Carrier fall short of creating a clear temporal requirement for each of the definitional elements. Nor does the Rider create a clear exclusion for charter flights.
[36]         I agree with the appellant that the respondent could have easily remedied these deficiencies with clear language if it intended to exclude coverage for charter flights. It must bear the consequences of its failure to do so, and the temporal ambiguity must be resolved in favour of the appellant.
[37]         I conclude the trial judge erred in finding that, to be a Common Carrier, the aircraft had to be operating on a regular scheduled passenger service between defined points at the time of the accident.