The concept of the "reasonable expectations of the
parties" is often alluded to in the insurance law context. Can
this concept serve as the basis for granting insurance coverage to
an insured? What if the reasonable expectation of the parties
conflicts with the actual wording of the insurance policy? A recent
British Columbia Court of Appeal decision provides insight into
The pertinent facts of the decision in Turpin v. The
Manufacturers Life Insurance Company, 2013 BCCA 282, are
as follows. The plaintiff had experienced abdominal pain for which
she received medical treatment in British Columbia. Her abdominal
pain subsided. She then purchased travel insurance before
travelling to California. She did not read the insurance
Upon arriving in California, her abdominal pain flared up again
and she had to be hospitalized. Ultimately, she returned to British
Columbia and underwent an appendectomy. She submitted a claim to
her insurer to cover her medical expenses that were incurred during
her trip to California. The insurer denied her claim. She then
commenced a proceeding against her insurer, alleging a breach of
the insurance policy.
The wording of the insurance policy excluded "pre-existing
conditions" or "medical conditions" which were not
"stable and controlled" during a defined period prior to
the insured's travel. The insured's circumstances were
caught by this policy language, given how these terms were defined
in the policy. The trial judge nevertheless invoked the concept of
the "reasonable expectations of the parties" in ruling
that the insured was covered under the policy. The trial judge
reasoned that failure to do so would nullify the coverage for which
the insured had paid a premium and would not be consistent with the
reasonable expectations of the parties.
The B.C. Court of Appeal reversed the trial judge's ruling.
The appeal court ruled that the "preponderance of
authority" indicates that the concept of the "reasonable
expectations of the parties" applies only in the face of an
ambiguity (at para. 42):
"The Supreme Court of Canada has repeatedly and
consistently confirmed that the reasonable expectations of the
parties only become relevant if the provisions of an insurance
policy are ambiguous."
The B.C. Court of Appeal went on to rule that, in any event, the
concept of the reasonable expectations of the parties could not
apply on the facts of the case because the insured had not read the
policy, and because the objective test of reasonableness was not
met (at para. 46).
The principle of nullification of coverage also did not apply,
according the B.C. Court of Appeal, as the policy covered
"other medical risks" and "emergencies"
encountered during travel.
As the B.C. Court of Appeal noted, the decision in the
Turpin case adopted a different approach from the approach
taken by the Ontario Court of Appeal in Cabell v.
Personal Insurance Co., 2011 ONCA 105. In Cabell,
the Ontario Court of Appeal invoked the principle of the reasonable
expectations of the parties and the spectre of the nullification of
coverage without finding that the policy was ambiguous. However, in
decided just four days before the Turpin judgment was
released, the Ontario Court of Appeal adopted an approach
consistent with the B.C. Court of Appeal's ruling in
Under B.C.'s former and current Limitation Act, the limitation period for a Plaintiff's claim can be extended on the basis of a Defendant having acknowledged in writing some liability for the cause of action.
Automobile drivers, like fine wine, tend to get better with age. Older drivers can draw on a wealth of experience from their years on the road to assist them when faced by a variety of dangerous conditions.
The insurance industry will be interested in Ledcor Construction Ltd v. Northbridge Indemnity Insurance Co because of principles the Supreme Court of Canada applied to the "faulty workmanship" exclusion in a Builders' Risk policy.
For the first time in BC, a Court has decided that an insured is entitled to special costs, rather than the lower tariff costs, solely because they were successful in a coverage action against their insurer.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).