The Court of Appeal recently released reasons on McLean v. Canadian Premier Life Insurance
2013 BCCA 264, the trial decision of which was the subject of a
previous post. In a unanimous decision authored by Madam
Justice Neilson the Court of Appeal allowed the appeal and held
that the insured was entitled to the $1 million benefit provided by
The McLean appeal decision is an interesting example of
how one judge's clarity is another's ambiguity. The trial
judge found that "the words of the contract are clear and
unambiguous" and held that the loss did not come within the
policy terms. Specifically, holding that at the time of the loss
the deceased insured was not a passenger of a "common
carrier" as defined in the policy as:
COMMON CARRIER means a public conveyance which
licensed to transport passengers for hire; and
provided and operated (a) for regular passenger service by
land, water or air, and (b) on a regular passenger route with a
definite regular schedule of departures and arrivals between
established and recognized points of departure and arrival;
provided and operated under a Common Carrier license at the
time of Loss.
As stated by Madam Justice Neilson, one critical question on
appeal was "whether the aircraft had to be flying on a
regularly scheduled flight between established locations when it
crashed to meet the definition of a Common Carrier." The
appellant's argument was that the trial judge had improperly
applied by implication a temporal element into all of the
definitional components of "common carrier".
At the outset of her reasons, Madam Justice Neilson reiterated
the tenets of contractual construction in the insurance context and
noted that "(a)n 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".
Madam Justice Neilson closely examined each conjunctive element
of the definition of "common carrier" and held that, as
phrased, the temporal requirement contained in one of these
elements did not apply to them all. As such, there was an absence
of any temporal requirement within the definition the aircraft be
operating on a regular passenger route at the time of the
loss. This gave rise to an ambiguity between whether an
aircraft must, at the time of the loss, actually be flying on a
regular passenger route to meet the definition of a Common Carrier,
or whether it was sufficient that it be licensed to fly on such
Madam Justice Neilson also held that there was a temporal
ambiguity as to whether the term "public conveyance" in
the definition of "common carrier" required the aircraft
to be operating as a mode of transport available to the general
public (i.e. not a charter flight) at the time of the loss, or
merely licensed and able to do so.
While confirming that the principle of contra
proferentem may not be used to create or magnify an ambiguity,
Madam Justice Neilson ultimately found ambiguities in the
"temporal" requirements in the policy's definition of
"common carrier". Accordingly, this ambiguity was to be
resolved against the insurer and in favour of the appellant to find
coverage for the loss.
Madam Justice Neilson noted that the insurer could easily have
either created a clear temporal requirement for each of the
required definitional elements of "common carrier" or
created a clear exclusion for charter flights and that it must
"bear the consequences of its failure to do so".
While this decision does not break new ground regarding the
interpretation of insurance policies, Madam Justice Neilson's
detailed focus on the policy wording and reluctance to imply terms
highlights the importance for insurers of careful policy
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