In an important case for insurance practice in Nova Scotia, the Court of Appeal has confirmed that the value of future CPP disability benefits is deductible under the SEF 44 family protection endorsement.
Justice Scanlan wrote the unanimous reasons in Portage LaPrairie Mutual Insurance Company v Sabean, 2015 NSCA 53 ["Sabean"].
The very purpose of the SEF 44 was crucial to the result in this case. Recall that this endorsement provides additional coverage for an insured, in the case of a motor vehicle accident with an underinsured motorist. As the Court of Appeal emphasized in the earlier case ofCampbell-MacIsaac v Deveaux, 2004 NSCA 87, the SEF 44 is "excess" insurance, beyond the minimum coverage mandated by theInsurance Act. It has also been called "last ditch" and "safety net" insurance.
According to Justice Scanlan in Sabean, the nature of the SEF 44 as "an excess coverage provision" is a key part of the context when interpreting the endorsement.
The particular provision at issue here was clause 4(b)(vii):
b. The amount payable under this endorsement to any eligible claimant is excess to any amount actually recovered by the eligible claimant from any source (other than money payable on death under a policy of insurance) and is excess to any amounts the eligible claimant is entitled to recover (whether such entitlement is pursued or not) from:
g. any policy of insurance providing disability benefits or loss of income benefits or medical expense or rehabilitation benefits;
The Court of Appeal agreed that CPP disability benefits are a "policy of insurance providing disability benefits" and therefore have to be deducted under this provision. Otherwise, the insured claimant would be "double dipping", contrary to the purpose of the SEF 44 as excess insurance only.
With the release of Sabean, there is now a clear divide between the law in Nova Scotia and the law in New Brunswick on this issue. InEconomical Mutual Insurance Co v Lapalme, 2010 NBCA 87, the New Brunswick Court of Appeal reached the opposite conclusion from the Court of Appeal in Sabean, and held that future CPP disability benefits are not to be deducted under New Brunswick's version of the SEF 44. The NSCA expressly declined to follow Lapalme.