The recent decision of McLean v. Canadian Premier Life Insurance Company 2012 BCSC 163 affirms the importance of well defined policy terms. That action arose out of a claim under a life insurance policy issued by Canadian Premier Life Insurance Company through Sears Canada Inc. (the “Policy”). The Plaintiff’s husband, Mark McLean, was tragically killed in a plane crash and a claim was made for accidental death benefits of $1,000,000.00 under the Policy. The Insurer denied coverage stating that the circumstances of Mr. McLean’s death did not fall within coverage available under the accidental death benefit rider.
The accidental death benefit rider provided coverage if:
.. a Covered Person suffers a Loss as a direct result of a collision, crash or sinking of a duly licensed Common Carrier while riding as a fare paying passenger inside such Common Carrier, we will pay the applicable benefit stated on the Summary of Coverage page.
The issue to be determined at trial was whether Mr. McLean was indeed a passenger of a “common carrier” at the time of the accident. The Policy defined “common carrier” as follows:
COMMON CARRIER means a public conveyance which is:
1. licensed to transport passengers for hire; and
2. provided and operated (a) for regular passenger service by land, water or air, and (b) on a regular passenger route with a definite regular schedule of departures and arrivals between established and recognized points of departure and arrival; and
3. provided and operated under a Common Carrier license at the time of the Loss.
At the time of the accident Mr. McLean was on a Pacific Coastal Airlines (“Pacific Coastal”) plane which had been chartered by his employer to transport 6 employees to a remote logging location. The flight had been arranged for and paid for by Mr. McLean’s employer, it was only carrying employees and was not available to any member of the public. The employer had given instructions to Pacific Coastal as to the destination, the departure time and the names of the employees who were to travel on the flight. The flight’s destination was not a regular destination of Pacific Coastal and they would only fly there when specifically chartered to do so.
Pacific Coastal was licensed to operate aircraft as “a domestic air carrier” under the Canada Transportation Act and the Aeronautics Act. In addition all of its aircrafts were registered and had been assigned identification numbers under the Aeronautics Act.
The Plaintiff argued that the license to operate as a “domestic air carrier” under the Canada Transportation Act and the Aeronautics Act had essentially the same meaning as the phrase “common carrier” as the phrase is defined in the Policy. The Plaintiff also argued that:
- The language in the Policy was ambiguous. In particular, the use of the term “common carrier” in the Policy was confusing as it applied to both the operating company and the aircraft itself;
- The words “common carrier” as defined in the accidental death benefit rider must refer to the Pacific Coastal as the company providing the carriage and not to the aircraft itself;
- Further, Pacific Coastal itself by virtue of operating regularly scheduled passenger services met the definition of “common carrier” under the Policy as it was a commercial enterprise holding itself out of the public as willing to transport goods or passengers for a fee.
- The words “fare paying passenger” in the coverage provisions must be taken to mean that the Plaintiff’s fare was paid even though he did not pay for it himself.
The Defendant argued that a proper interpretation of the Policy did not reveal any ambiguity and that the terms of the Policy clearly provide that the meaning of the words “common carrier” to be a public conveyance rather than a business entity of some type. The Defendant argued that this interpretation was supported by reviewing the coverage terms as a whole. For instance:
- The Policy provides for a benefit to be paid if a loss is suffered “… while riding as a fare paying passenger inside a common carrier”. The Defendant argued that in this provisions that the words “common carrier” clearly refer to a means of conveyance in this case, the aircraft.
- The Policy also referred to the “collision, crash or sinking” of a duly licensed common carrier which again would suggest the common carrier was a means of conveyance.
The Court accepted the Defendants argument holding that:
[37] In my view, the definition of “common carrier” under the accidental death benefit rider means the aircraft utilized for the charter flight. And even though that aircraft was available at times should Pacific Coastal so direct, to operate within the definition of “common carrier” and to be within terms of the accidental death benefit rider, it was not operating within that definition at the time of the accident.
[38] In the result, I find that the words of the contract are clear and unambiguous. By the terms of the accidental death benefit rider the words “common carrier” mean a public conveyance such as an aircraft, provided at the time of the accident it was operating on a regular scheduled passenger service between defined points and available to members of the public.
[39] In this case, the aircraft was not operating as a regularly scheduled airline and was instead under a charter restricted to employees or contractors of Seaspan. It was a flight where Seaspan determined who the passengers were, the time of the flight and its destination. Thus, it did not fit within the definition of “common carrier” under the accidental death benefit rider.
Ultimately the Court dismissed the action in its entirety finding the death of Mr. McLean did not occur within the terms of the accidental death benefit rider.
This case is a good example about how clearly worded definitions can affect the outcome of a coverage dispute. Where the Court does not have to resort to unnecessary interpretations and stretching the meaning of words they are able to reach a common sense interpretation of the policy involved.
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