Case information

<br>Legislation — Interpretation — Insurance — Universal life insurance policies (ULPs) — Contracts — Interpretation — When do regulations apply so as to undo previously made contracts and interfere with the vested rights of private parties in the insurance and consumer context — What context must be considered in the interpretation of a standard form contract — What context, if any, should be ignored — Is the context for interpretation limited to the standard form words at issue without consideration of the purpose of the contract or the industry in which it operates — Do consumer standard form contracts require a different approach to contractual interpretation — If so, what approach should be applied and when — Is it appropriate to subdivide a contract to isolate an issue of standard form contract interpretation from the purpose of a standard form contract as a whole and apply principles of contractual interpretation only to that isolated issue — Can different approaches to contractual interpretation apply within the same contract — The Insurance Act, SS 2015, c I 9.11 — The Saskatchewan Insurance (Licence Condition) Amendment Regulation, 2018, Sask Reg 75/2018, s. 3.1(2)(a) (2018 Regulation) — The Insurance Regulations, RRS c I 9.11 Reg 1, s. 2 5.1 (2020 Regulation) — Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633 — Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23.<br>

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

In 2002, an insurer (now BMO Life) issued two identical ULPs recording a numbered company as the applicant, insured and beneficiary and insuring the lives of its principal and each of his two daughters. The numbered company later assigned its interests under the ULPs to the applicant (“Atwater”), at which time Atwater added one of its principals as a life insured. An ULP is a contract for life insurance that allows the insured to take advantage of accrual tax exemption provisions under tax legislation. The ULP provides a tax advantage on investment income held in an exempt account (provided the sums in the account do not exceed certain limits) and sets up a non exempt side account through which the insurer may receive, hold and invest additional sums on behalf of the insured. Issues arose between Atwater and BMO Life when the latter refused to accept payments made by Atwater under the two policies to be credited to its side accounts. Atwater brought two originating applications, seeking declarations that it is entitled to invest unlimited amounts into the guaranteed-interest options within the side accounts and other declarations with respect to the tax exempt status of the policies and the premiums that could be paid into the investment accounts. The 2018 Regulation and later the 2020 Regulation subsequently came into effect prohibiting insurers from receiving payments for deposit in excess of the amounts required to pay the life insurance premiums for these policies.

The Saskatchewan Court of Queen’s Bench held, based upon the meaning it ascribed to the term premiums that the ULPs did not provide for unlimited stand alone investment opportunities within the side accounts. It also held that the 2018 Regulation did not apply to ULPs entered into prior to its enactment. The Saskatchewan Court of Appeal allowed Atwater’s appeal and held that properly interpreted, the ULPs permitted unlimited stand-alone investments within side accounts. However, the court also allowed BMO Life’s cross-appeal and held that both the 2018 Regulation and successor 2020 Regulation prohibited insurers as of the date of their enactment from receiving or accepting for deposit funds or payments in excess of amounts required to pay the life insurance premiums. Atwater applies for leave to appeal that decision, and BMO Life applies for leave to cross-appeal the decision on the issue of contract interpretation.