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Insurance - Life. Trebell v. Canada Life Assurance Company
In Trebell v. Canada Life Assurance Company (Ont CA, 2026) the Ontario Court of Appeal allowed an insurer's appeal, here where "the motion judge granted Mr. Trebell summary judgment against Canada Life for the full amount of the Policy, plus interest, after concluding that “s. 180(1)(c) does not permit Canada Life to reach back into [Ms. Trebell’s] medical records” and raise insurability issues beyond a two-year period specified in s. 184(2) of the Act.".
Here the court summarizes this interesting life insurance case:[1] Section 180(1)(c) of the Insurance Act, R.S.O. 1990, c. I.8 (the “Act”)[2] provides that a life insurance contract “does not take effect unless ... no change has taken place in the insurability of the life to be insured between the time the application was completed and the time the policy was delivered.” Almost four years after selling Elizabeth Trebell a life insurance policy (the “Policy”), the London Life Insurance Company relied upon this provision to deny a claim for insurance proceeds arising from her death. It took the position that the insurance contract relating to the Policy did not take effect pursuant to s. 180(1)(c), notwithstanding that Ms. Trebell had faithfully paid the premiums, since there had been a change in her insurability between the time her application was completed and the delivery of the Policy.
[2] As a result of the denial of his claim, the Policy’s designated beneficiary, the respondent Scott Robert Wesley Trebell sued London Life’s successor corporation, the appellant The Canada Life Assurance Company,[3] and Ms. Trebell’s insurance agent, the respondent Darrell Kemp. On May 14, 2025, the motion judge granted Mr. Trebell summary judgment against Canada Life for the full amount of the Policy, plus interest, after concluding that “s. 180(1)(c) does not permit Canada Life to reach back into [Ms. Trebell’s] medical records” and raise insurability issues beyond a two-year period specified in s. 184(2) of the Act.
[3] Canada Life appeals that decision. The issue in this appeal is whether the ability of an insurer to rely upon s. 180(1)(c) is time limited. For reasons that I elaborate below, I am of the view that it is not.
[4] In short, s. 180(1)(c) sets out a condition precedent for the formation of a life insurance contract. Where a change in insurability occurs between application and policy delivery, no contract forms and the insurer may deny coverage on this basis, regardless of the amount of time that has passed. While this may seem like a harsh result, it is the one the legislature intended. The motion judge’s importation of a two-year contestability limitation is unmoored from the text of s. 180(1)(c) and divorced from its context and purpose. The parties also did not contract out of s. 180(1)(c), as there is no provision in the Policy that can oust its application.
[5] I would therefore allow the appeal and set aside the summary judgment and leave it to the parties to decide how they wish to litigate the insurability issue.
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CONCLUSION
[92] The motion judge erred in concluding that there is a statutory incontestability provision that prevents Canada Life from relying on s. 180(1)(c). Properly interpreted, this section is subject to no contestability limitation. Further, there is no provision of the Policy that ousts its application in this case. I would therefore allow the appeal and set aside the summary judgment. . Trebell v. Canada Life Assurance Company
In Trebell v. Canada Life Assurance Company (Ont CA, 2026) the Ontario Court of Appeal allowed an insurer's appeal, here where "the motion judge granted Mr. Trebell summary judgment against Canada Life for the full amount of the Policy, plus interest, after concluding that “s. 180(1)(c) does not permit Canada Life to reach back into [Ms. Trebell’s] medical records” and raise insurability issues beyond a two-year period specified in s. 184(2) of the Act.".
Here the court considers the interaction (if any) between IA s.180(1) ['Contract taking effect'], which prevents a life insurance contract from taking effect where there has been a change in 'insurability' in the time between application and delivery - and IA s.184(2) ['Incontestability, general'], which bars a contract that "has been in effect for two years during the lifetime of the person whose life is insured", from being held voidable in the case of a "failure to disclose or a misrepresentation of a fact" (except for fraud):1. Did the motion judge err in imposing a limited two-year contestability limitation on the operation of s. 180(1)(c)?
[30] I am persuaded that the motion judge erred in imposing a two-year contestability limitation on the operation of s. 180(1)(c). It is not entirely clear whether he found that the two-year limitation applied by deciding that s. 184(2) directly applies to s. 180(1)(c), or whether he concluded that there is an implicit two-year contestability limitation in s. 180(1)(c) that is identical to the contestability limitation created by s. 184(2). Although his decision favours the latter approach, both readings find support in what he said. In my view, neither of the interpretations are supported by a proper application of the principles of statutory interpretation.
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b. Section 184(2) does not apply directly to s. 180(1)(c)
[35] For convenience, I reproduce s. 184(2):(2) Subject to subsection (3), where a contract, or an addition, increase or change referred to in subsection 183 (3) has been in effect for two years during the lifetime of the person whose life is insured, a failure to disclose or a misrepresentation of a fact required to be disclosed by section 183 does not, in the absence of fraud, render the contract voidable. [36] This provision cannot possibly apply directly. By its plain language, s. 184(2)’s two-year contestability limitation applies to “a failure to disclose or a misrepresentation of a fact required to be disclosed by section 183”. The operation of s. 184(2) is therefore expressly directed at the voiding events identified in s. 183 alone. There is no textual avenue for applying it to s. 180(1)(c).
[37] Even disregarding the explicit reference to s. 183 in s. 184(2), s. 184(2) addresses the failure to disclose facts and misrepresentations of fact. It therefore focuses on communications by the insured relating to facts known to the insured. On a plain reading, s. 180(1)(c) is not about communications of fact, but about a state of fact, namely, whether there have been changes in insurability between the application and the delivery of the policy.[4] On this basis, in Wagner Brothers Holdings Inc. v. Laurier Life Insurance Co. (1992), 1992 CanLII 7728 (ON CA), 8 O.R. (3d) 609 (C.A.), at p. 615, leave to appeal refused, [1992] S.C.C.A. No. 455, Osborne J.A. interpreted s. 157(1)(c), currently s. 180(1)(c), as including a “change in insurability, not known to the life insured”.[5] The Court of Appeal of Newfoundland and Labrador, in Ryan v. Canada Life Assurance Co. (1999), 1999 CanLII 19034 (NL CA), 179 Nfld. & P.E.I.R. 306 (N.L. C.A.), at para. 137, leave to appeal refused, [1999] S.C.C.A. No. 548, came to the same conclusion on the same reasoning when considering a contractual provision that “essentially mirror[ed]” Newfoundland’s identical provision (s. 11(1) of the Life Insurance Act, R.S.N.L. 1990, c. L-14). Since they address different concerns, s. 184(2) cannot sensibly be applied to 180(1)(c).[6]
[38] Moreover, s. 184(2) applies only if “a contract … has been in effect for two years”. By its terms, a “contract” does not take “effect” under s. 180(1) “unless” its three requirements are satisfied. It follows that if the condition in s. 180(1)(c) is not met, the triggering circumstance described in s. 184(2) does not arise. Hence, s. 184(2) cannot apply.
[39] Finally, s. 183(2) renders a contract “voidable”, subject to the two-year limitation in s. 184(2). In this context, voidability, of course, is a mechanism for resisting an insurance claim. A finding under s. 180(1) that the insurance contract is not in effect serves the same purpose. It would be pointless to apply a voidability mechanism to contracts that are not in effect.
[40] I am therefore persuaded that s. 184(2) does not apply directly to changes in insurability during the period designated in s. 180(1)(c). If the motion judge concluded that s. 184(2) applies directly, he erred.
c. The two-year contestability limitation in s. 184(2) cannot be imported into s. 180(1)(c)
[41] Although aspects of the motion judge’s reasoning suggest that he purported to apply s. 184(2) directly, it is more probable that he imported the two-year contestability limitation into s. 180(1)(c) by analogy to s. 184(2). His conclusion appears to be that s. 180(1)(c) has an implicit two-year contestability limitation identical to the two-year contestability limitation in s. 184(2). Most tellingly, he said, after introducing his conclusion, that “[t]he rationale for this decision is not directly based on the two-year limitation, but the limitation does provide a rational outer limit to the insurer’s ability to reach back into the issue of the life insured’s insurability.” He went on to comment that the “two-year period is a practical way to resolve the textual and grammatical ambiguity of the statute.”
[42] In my view, even if the motion judge imported the two-year contestability limitation into s. 180(1)(c) by analogy rather than by directly applying s. 184(2), he erred. When properly applied, the principles of statutory interpretation are incapable of supporting this outcome. With respect, the motion judge’s decision to impose what he perceived to be a rational outer limit to the insurer’s ability to reach back into the issue of the life insured’s insurability exceeds the judicial role in interpretation and constitutes impermissible judicial re-drafting: see e.g., Beattie v. National Frontier Insurance Co. (2003), 2003 CanLII 2715 (ON CA), 68 O.R. (3d) 60 (C.A.), at paras. 16-17.
[43] To be sure, where a provision is ambiguous, judges are to select a plausible interpretation that best suits the purpose and context of the legislation: Placer Dome Canada Ltd. v. Ontario (Minister of Finance), 2006 SCC 20, [2006] 1 S.C.R. 715, at para. 23. However, even where ambiguity exists, this greater emphasis on legislative purpose does not authorize judges to impose a meaning on a provision that its text does not support: Placer Dome, at para. 23; R. v. Shearing, 2002 SCC 58, [2002] 3 S.C.R. 33, at para. 95.
[44] In my view, the text of s. 180(1)(c) is not ambiguous, but even if it were, it cannot be interpreted as supporting a contestability limitation. The motion judge recognized this. Indeed, he found this to be a gap in the provision. In my view, he led himself astray by believing that the absence of a contestability limitation in s. 180(1)(c) empowered him to impose such a mechanism by analogy to another provision in the same legislation. I would caution that a gap in legislation cannot be taken as an invitation to innovate, because gaps in legislation may result from “a considered policy choice” embodying “the actual intentions of the legislature, which courts are bound to respect”: Beattie, at para. 18, citing Ruth Sullivan, Sullivan and Driedger on the Construction of Statutes, 4th ed. (Markham: Butterworths, 2002), at p. 136. As I explain below, the gap identified by the motion judge was the result of the actual intention of the legislature.
[45] In the absence of language in s. 180(1)(c) supporting a two-year contestability limitation, the motion judge relied on the proximity between ss. 180, 183 and 184 to fill the gap he perceived. Although the legislative scheme or structure is an important contextual consideration, the proximity of ss. 180(1)(c) to 184(2) cannot provide a basis for importing the statutory mechanism in s. 184(2) into s. 180(1)(c), once again, because the text does not support doing so. The fact that the legislature expressly enacted a two-year contestability limitation in s. 184(2) that applies to s. 183 alone is a strong indication that it did not intend a two-year contestability limitation to apply to or be adapted for s. 180(1)(c).
[46] Moreover, s. 184(2) contains a precisely worded, closed list of subjects to which it applies – misrepresentations and non-disclosures covered by s. 183. This creates a strong expectation that if changes in insurability were also subject to a two-year contestability limitation, this would have been expressed in the statute: see Kosicki v. Toronto (City), 2025 SCC 28, 507 D.L.R. (4th) 1, at paras. 37-41. The absence of any language expressly limiting s. 180(1)(c)'s application does not provide a basis for importing such a limit. Instead, it supports the inference that the legislature intended no such limitation: Kosicki, at para. 39; Beattie, at para. 19. In my view, the proximity between s. 184(2) and s. 180(1)(c) cannot overcome the textual impediments to treating the limitation expressed in s. 184(2) as applying by implication to s. 180(1)(c).
[47] The motion judge also relied on his understanding of the purpose of s. 180(1) to support his interpretation. In my view, his reasoning relating to the purpose of s. 180(1)(c) is problematic. He concluded that its purpose was to provide certainty to the parties as to when a contract takes effect. An examination of the history of s. 180(1) shows that this is not correct. As described by Marshall J.A. in addressing the enactment of the Newfoundland equivalent to s. 180(1)(c), the no change requirement was enacted “to provide a scope for [life insurers] to avoid liability for risk, the full extent of which was unknown to the company when it issued the policy”: Ryan, at paras. 145, 136-37. Put otherwise, the legislative purpose behind s. 180(1)(c) is to preserve the meeting of the minds relating to the essential terms that were agreed to.
[48] The place to begin explaining the legislative purpose of Insurance Act provisions is the common law, because the Insurance Act does not codify the whole law of insurance: Saskatchewan River Bungalows v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490, at p. 505. Instead, the Insurance Act relies heavily on the common law, codifying it and modifying it as necessary: Barbara Billingsley, General Principles of Canadian Insurance Law, 4th ed. (Toronto: LexisNexis, 2026) (online), at §1.01[2].
[49] At common law, an insurance contract was not formed until the insurer had accepted the application, delivered the policy, and the first premium was paid: Canning v. Farquhar (1886), 16 Q.B.D. 727 (Eng. C.A.), at pp. 731-32, per Lord Esher M.R.; The Provident Savings Life Assurance Society of New York v. Mowat (1902), 1902 CanLII 2 (SCC), 32 S.C.R. 147, at p. 156, per Taschereau J. But insurers were free to add additional conditions to the formation of the contract in the contract itself: see e.g., Donovan v. Excelsior Life Insurance Co. (1916), 1916 CanLII 61 (SCC), 53 S.C.R. 539. Apparently, insurers were quite ready to do so, creating the perception that they were abusing this entitlement to delay the formation of the contract to reduce their exposure: see Patterson v. Gallant, 1994 CanLII 45 (SCC), [1994] 3 S.C.R. 1080, at p. 1094.[7] This perception led to the enactment in 1914 of legislation which provided that insurance contracts were binding on delivery of the policy, even if the premium had not been paid and even if the policy was delivered by an agent who lacked authority to do so: Insurance Act, R.S.O. 1914, c. 183, s. 159.[8]
[50] This remedial legislative change was viewed by life insurers as “particularly obnoxious”, given their view that they “should not be bound where the health of the applicant has become impaired or he had engaged in a more hazardous occupation between the time of making the application for insurance and the time when the contract is completed by delivery and payment”: Superintendent of Insurance (Ontario), Detailed Report of the Superintendent of Insurance and Registrar of Friendly Societies (Toronto: Clarkson W. James, 1924), Appendix A, at p.10., laid before the Legislative Assembly in 1924 (see Ontario, Legislative Assembly, Journals, 16-1 (1924), Vol. LVIII, at p. xlvii). Life insurers were also aggrieved that they would be bound without premium payments: H.J. Sims, The Uniform Life Insurance Act of Canada, 2nd ed. (The Life Underwriters Association of Canada, 1937), at p. 18.
[51] As a result of these concerns, the Conference of Commissioners on Uniformity of Legislation in 1923 recommended legislative change. Its recommendation led in 1927 to the enactment of the precursor to s. 180(1), which provided, in effect, that a life insurance contract would not take effect until “the policy is delivered to the insured … and payment of the first premium is made”, and “no change [has] taken place in the insurability of the life about to be insured subsequent to the completion of the application”: Insurance Act, R.S.O. 1927, c. 222, s. 129(1).
[52] This accommodation to the interests of insurers survived opposition until 1962, when the provision was amended to clarify that the no change requirement is limited to changes in insurability that occur “between the time the application was completed and the time the policy was delivered”: An Act to amend The Insurance Act, S.O. 1961-62, c. 63, s. 4. This provision remains in the current legislation: Insurance Act, R.S.O. 1990, c. I.8, s. 180(1)(c).
[53] This legislative history demonstrates that the amendments in 1927 and 1962 both codified and modified common law rules of contract formation in the life insurance context. Sections 180(1)(a)-(c) of the Ontario Insurance Act mirror the common law requirements for acceptance, consideration, and meeting of the minds on essential terms, respectively. But some of the specifics of the common law offer/acceptance (delivery) requirement have been ousted, and the 1962 amendments clarify the 1927 codification of the principle from Donovan that an insurer should not be bound to a risk that changes between the time of application and the time the policy is delivered: see Superintendent’s 1924 Report, at Appendix A, p. 10; Donovan, at p. 548, per Davies J. (dissenting, but not on the general principle), pp. 550-51, per Idington J., and pp. 552-53, per Anglin J.
[54] In my view, the motion judge did not have a complete appreciation of this legislative history when he found that interpreting s. 180(1)(c) literally is inconsistent with its purpose.
[55] His conclusion that it would be arbitrary to interpret s. 180(1)(c) as a condition precedent to an insurance contract arising is also incorrect. As I have explained, this interpretation preserves the meeting of the minds relating to the risk the insurer agreed to assume, a non-arbitrary goal. When Marshall J.A. addressed the reason for the enactment of the Newfoundland equivalent to s. 180(1)(c) in Ryan, he provided further explanation. He noted that “[p]remiums are set on the basis of [the] assessment of risk in providing the coverage applied for”: Ryan, at para. 136. Although he did not say so explicitly, he was no doubt alluding to the unfairness of making an insurer bear a greater risk than the one they are being paid to assume. Whatever one may think of the legislative policy choice to prefer these interests to the subjective certainty of the parties relating to when a life insurance contract comes into force, the history of the legislation makes clear that this is the legislative choice that has been made, and that the choice is not an arbitrary one.
[56] The motion judge also rejected Canada Life’s time-unlimited interpretation on the basis that it would lead to absurd consequences and unreasonable results. This conclusion is itself problematic for three reasons.
[57] First, the motion judge reasoned that a literal interpretation would put the burden on the beneficiary who is making a claim to prove that an event unknown to them, a change in the insurability of the insured, did not happen, even though such a burden would be impossible to meet. This concern was misplaced. It is the insurer, as the party asserting a change in insurability within the meaning of s. 180(1)(c), who bears the burden of invoking this section and proving that the risk it assumed was higher than that which it agreed to: Ryan, at paras. 162-63; Nuraney v. MBA Insurance Brokers Inc. (1989), 1989 CanLII 10447 (ON HCJ), 38 C.C.L.I. 243 (Ont. H.C.J.), at p. 254.
[58] Second, the motion judge found that it would be absurd for s. 180(1)(c) not to provide a limited contestability period for relying on changes in insurability unknown to the insured, given that s. 184(2) provides a limited two-year contestability period for the “more culpable” non-disclosures and misrepresentations identified in s. 183. These disparate outcomes are not absurd, but, as I have explained, arise from the different roles these sections play, with s. 183 being concerned with ensuring full material disclosure and s. 180(1)(c) with changes that alter the risk agreed to, thereby undermining the essence of the contract.
[59] Finally, the motion judge made the overarching point that interpreting s. 180(1)(c) in a time-unlimited way leads to absurd consequences because it defeats the purpose of buying insurance by introducing indeterminate uncertainty into the bargain. In the motion judge’s view, this required him to avoid the textual, literal reading of the provision: see Rizzo, at para. 27. But as noted above, the legislature made a clear and unambiguous policy choice in enacting s. 180(1)(c). In my view, the literal interpretation advanced by Canada Life is correct and admits of no ambiguity, in that no other meanings may be discerned after a consideration of text, context, and purpose. Thus, the motion judge was bound to give the provision the effect the legislature intended, regardless of how absurd he found the consequences to be: McIntosh, at para. 34.
[60] For the foregoing reasons, I am persuaded that if the motion judge imposed a two-year contestability limitation on s. 180(1)(c) by implication, he erred in doing so.
d. Conclusion on Issue 1
[61] I am persuaded that the motion judge erred in finding that a two-year contestability limitation applies to s. 180(1)(c). Neither of the interpretations that could yield that result can be sustained. I would find that on the plain language of s. 180(1)(c), read in context and consistent with the balancing of interests the legislature intended, there is no contestability limitation that applies.
[62] I recognize in coming to this conclusion that the decision in Beldent c. Sun Life du Canada, compagnie d’assurance-vie, 1997 CanLII 10112 (Q.C. C.A.) appears to favour Mr. Trebell’s position. There, a majority of the Court of Appeal of Quebec held that the Code civil version of s. 184(2) does apply to its version of s. 180(1) and imposed a two-year contestability limitation on changes in insurability. This decision is distinguishable. Beldent involved the application of differently worded provisions, operating against a civil law rather than common law backdrop, and with respect, it was reached without engagement in a close interpretive analysis. In his dissenting judgment, Forget J.A. concluded that the majority decision was inconsistent with the text of the Code civil, and with the judgment of the Supreme Court of Canada in General Trust of Canada v. Artisans Coopvie, Société Coopérative d'Assurance-vie, 1990 CanLII 44 (SCC), [1990] 2 S.C.R. 1185, which considered the same provision, and where Gonthier J. said, at p. 1193:It is beyond question that a change in the insurability of the risk occurring before the application is accepted will prevent the contract from being formed, as the risk is part of the very subject-matter of the agreement and there will be no meeting of the minds if it differs from what was agreed to.[9] [63] I would not adopt the result in Beldent and would give effect to this ground of appeal. At paras 64-79 the court rejects what it describes as a 'prospective interpretation' of IA s.180(1)(c).3. Conclusion on the proper interpretation of s. 180(1)(c)
[80] For the foregoing reasons, I am persuaded that a textual, contextual, and purposive analysis of s. 180(1)(c) requires it to be construed as a condition precedent of contract formation. I would interpret this provision as requiring no change in the factual state of the risk undertaken by the insurer in insuring the insured. Where this requirement is not met, the contract of insurance does not exist. Accordingly, s. 180(1)(c) can be relied upon at any time by the insurer to resist a claim for life insurance benefits. At paras 81-91 the court further considers whether the particular terms of a policy can override s.180(1)(c).
. Fehr v. Sun Life Assurance Company of Canada
In Fehr v. Sun Life Assurance Company of Canada (Ont CA, 2024) the Ontario Court of Appeal dismissed a class action appeal, here against an order dismissing the appellant's motion to add a common issue and amend the pleadings accordingly.
Here the court describes the life insurance policies involved here, giving an idea of the manner of their administration and marketing:[2] The class proceeding concerns the sale and administration of certain universal life insurance policies known as “Universal Plus”, “Universal Flexiplus” and “Universal OptiMet”, that were sold by Metropolitan Life Insurance Company (“MetLife”) in the 1980s and 1990s. It is a feature of such policies that premiums are paid by the policyholder in variable amounts on a flexible schedule into an accumulation fund from which the insurer deducts monthly charges including cost of insurance (“COI”) and administration fees. Policyholders have the option to accumulate excess cash in the accumulation fund, thereby generating savings on a tax-deferred basis. The policy terms provide for the insurer to adjust the overall monthly COI rates and administrative fees and to vary “from time to time” the interest rates credited to the accumulation funds, subject to prescribed floor rates. . Costanza v. Desjardins Financial Security Life Assurance Company
In Costanza v. Desjardins Financial Security Life Assurance Company (Ont CA, 2023) the Court of Appeal reviews portions of the Insurance Act that bear on life insurance:[26] Part V of the Insurance Act governs life insurance. Sections 178 to 189.1 address conditions governing formation of the insurance contract. Section 183 codifies the duty of disclosure on an applicant for insurance at the time of the application (and at the time of some subsequent applications to vary an insurance contract) as well as the consequences of failure to disclose or misrepresentation. Section 183 provides as follows:Duty to disclose
183 (1) An applicant for insurance and a person whose life is to be insured shall each disclose to the insurer in the application, on a medical examination, if any, and in any written statements or answers furnished as evidence of insurability, every fact within the person’s knowledge that is material to the insurance and is not so disclosed by the other.
Failure to disclose
(2) Subject to section 184 and subsection (3) of this section, a failure to disclose, or a misrepresentation of, such a fact renders the contract voidable by the insurer.
Failure to disclose, application for change, etc., in contract
(3) A failure to disclose, or a misrepresentation of, a fact referred to in subsection (1) relating to evidence of insurability with respect to the following kinds of applications renders the contract voidable by the insurer, but only in relation to the addition, increase or change applied for:
1. For additional coverage under a contract.
2. For an increase in insurance under a contract.
3. For any other change to insurance after the policy is issued.
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