Advocates for the Rule of Law
Kassburg v. Sun Life Assurance Company of Canada, 2014 ONCA 922, is an Ontario Court of Appeal decision that was released without much fanfare due to the timing of the release (December 29, 2014, right in the middle of the holiday season).
Kassburg is worthy of comment, if only for the reason that it is one of the latest decisions where the judiciary preferred a statutory interpretation that specifically ignores the plain and obvious meaning of the words used.
The facts of the case were simple enough. The respondent, Kassburg, was an employee of the North Bay Police Association and was insured under a group policy issued by the appellant, Sun Life Assurance Company. Kassburg commenced an action claiming entitlement to the disability benefits in February 2012, but the insurer brought a motion for summary judgment, asserting that the action was out of time. The motion was dismissed, and the insurer appealed, with Kassburg cross-appealing.
Among other arguments, the insurer relied on the one year limitation period under the insurance contract, as well as section 22(5) of the Limitations Act.
Section 22(5) of the Limitations Act, 2002 provides that a limitation period under the Act may be varied or excluded by a business agreement made on or after October 19, 2006. “Business agreement” is a defined term in the Act and means “an agreement made by parties none of whom is a consumer as defined in the Consumer Protection Act…” “Consumer” is a defined in section 1 of that statute as “an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes.”
The motion judge concluded that the group insurance policy is a “business agreement” based on the fact that the insurance contract was entered into by the North Bay Police Association and the insurer Sun Life, neither of whom were individuals.
Kassburg cross-appealed, arguing that the motion judge failed to consider the purpose of the contract, which is to provide personal insurance coverage for loss of income in the event of disability. The insurer in contrast contended that the only parties to the group insurance policy were a police association and the insurer. It argued that Kassburg was simply a beneficiary of the policy and that it therefore properly fell within the business agreement exception against contracting out of the statutory two-year limitation period.
See the Court’s reasoning below, as it appears to have rejected the clear and unequivocal wording of the Limitations Act, 2002 and Consumer Protection Act in favour of an interpretation that deemed Kassburg to be a party for the purposes of the limitation period defence:
[58] The clear wording of s. 22(5) permits contracting out of the statutory limitation period, unless the parties to the contract include an individual, and the contract was for “personal, family or household purposes”. There are therefore two requirements for a business agreement to exist: the parties must not include individuals, and the contract must not have been for personal, family or household purposes.
[59] The literal reading of the “parties” aspect of the section that appears to have been accepted by the motion judge, in my view, is inconsistent with the objective of s. 22 of the Limitations Act, 2002, which is to restrict the circumstances in which the statutory limitation periods under the Act can be altered by contract. In my view, the word “parties” in s. 22(6) should be given a broader, purposive reading to accord with the objective of s. 22.
[60] In this action, the respondent is asserting a personal claim for LTD benefits provided under a group policy. She is entitled to assert the claim directly against the insurer under s. 318 of the Insurance Act, R.S.O. 1990, c. I.8. Although the group insurance contract under which she is making her claim was entered into between the NBPA and the appellant, the appellant relies on a limitation period contained in that contract to exclude her claim. The respondent is in effect deemed to be a party for the purpose of asserting her claim, and for the purpose of the appellant’s limitations defence.
Respectfully, our view is that motion judge got it right by following one of the bedrocks of our legal system – interpreting legislation by using a textual approach that focuses on the actual words that the democratically elected legislature felt were important enough to include in the statute.
Determining whether an insurance policy entered into by an association and an insurer constitutes a business agreement thereby permitting the parties to contract out of the two year limitation period is a valid an important inquiry. However, the Limitations Act, 2002 and Consumer Protection Act set out a mechanism for coming to that determination.
If the existence of a provision gives rise to a perceived injustice, the legislature can – and perhaps should – act to remedy the situation.
In our view, courts in Ontario should adopt a meaning consistent with the actual words used in a statute and the plain and ordinary meaning given to them, rather than a meaning inconsistent with what is actually written. Especially in an insurance context where executive and legislative branches of governments continually and consistently explore ways to improve the insurance scheme in Ontario, not to mention lobbyists that represent both consumers, stakeholders, ratepayers and both the plaintiff and defence bars.
