Case information

Legislation — Interpretation — Insurance — Universal life insurance policies (ULPs) — Contracts — Interpretation — What is the proper interplay between the modern approach to statutory interpretation providing that the words of an Act are to be read in their entire context, and established legal norms like presumed intent and the presumptions governing the temporal application of the law — Did the appellate court err in concluding that contracting parties in any industry subject to regulation in the public interest will not benefit from the presumption that the legislature intends to respect vested contractual rights unless clearly indicated — What weight should be given to Saskatchewan being the only province of several adopting rules governing limits on premium payments under ULPs, not to give clear indication of the temporal effect of the rules — What type of factual matrix evidence is relevant and what is its role in the interpretation of standard form contracts — What distinctions, if any, should be drawn in the interpretation of standard form contracts that are consumer instead of commercial — What role does the standard of review play in determining the relevance of factual matrix evidence to issues of standard form contract interpretation — 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.

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 1997, an insurer issued an ULP recording Dr. B as the applicant, insured and beneficiary. In 2004, the respondent (“Manulife”) acquired the insurer’s rights, liabilities and obligations under Dr. B’s ULP and in 2010, the applicant (“Mosten”) acquired Dr. B’s interests under the ULP and added one of its principals as an insured life. 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 (a Carrier Fund under in this policy) through which the insurer may receive, hold and invest additional sums on behalf of the insured. Issues arose between Mosten and Manulife when Manulife took the position that the Carrier Fund was not intended to accept payments that had no prospect of being transferred back into the life insurance policy. Mosten brought two originating applications, seeking declarations that it is entitled to invest unlimited amounts into the guaranteed interest options within the Carrier Fund 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 ULP did not provide for unlimited stand-alone investment opportunities within the Carrier Fund and that the 2018 Regulation did not apply to ULPs entered into prior to its enactment. The Saskatchewan Court of Appeal allowed Mosten’s appeal and held that properly interpreted, the ULP permitted unlimited stand alone investments within the Carrier Fund. However, the court also allowed Manulife’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. Mosten applies for leave to appeal that decision, and Manulife filed a conditional application for leave to cross-appeal the decision on the issue of contract interpretation.