Doctrine of Contra Proforentum Applied to Interpretation of Insurance Legislation

July 11th, 2013 by Dan Stone

This blog is written by our law summer student, Michelle Stephenson

The Superior Court of Justice held that in this case for the purposes of the respondent’s claims for accident benefits coverage and underinsurance coverage, the term “United States of America” includes the United States Virgin Islands. More significantly, in reaching this decision, it was determined that ambiguities in the Insurance Act, the Statutory Accident Benefits Schedule, the Endorsement, and the Ontario Automobile Policy, may be construed using the doctrine of contra proforentum.

This doctrine, of interpreting ambiguity in contracts and policies against the party that drafted it, is regularly applied to interpreting insurance policies and other contracts. However, it was less clear this would be the case here, as the ambiguity arose in the related legislation, not in a policy actually drafted by the insurer.

The respondent, Ms. Baughan, was seriously injured in a motor vehicle accident while in the Virgin Islands. She applied to her insurer for both statutory accident benefits and underinsurance coverage. The insurer then brought an application to deny coverage on the basis that she was outside the territorial limits set out in the Insurance Act.

Principles of statutory interpretation were unhelpful in determining what exactly constituted the “United States of America.” Though an inclusive approach was most consistent with the remedial purposes of the insurance scheme, it was ultimately “not possible to discern with any degree of certainty” what the legislature intended with regards to the territorial limits of the United States.

Ontario case-law, however, supported the finding that the doctrine of contra proforentum, usually applied to private contracts, could be applied in the circumstances. An inclusive approach was taken, finding that the United States Virgin Islands were within the territorial limits of the legislation and the insurer’s application was dismissed.

Link to full decision, TD General Insurance Company v. Baughan

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