C.A. Says Its 2001 Decision in McNaughton v. Dominion Was Wrong

In David Polowin Real Estate Co. v. Dominion of Canada, released today, the Court of Appeal took the unusual step of reversing one of its own decisions. Not only that, the judge who wrote today’s decision (Justice John Laskin) was a member of the panel that had made the earlier ruling. The previous case (decided in 2001) was McNaughton v. Dominion of Canada. It involved an interpretation of statutory condition 6(7) in a standard automobile policy. The question before that Court was: “where a car is damaged beyond repair and the insurer elects to take title to the salvage, is the insurer entitled to reduce its payment to its insured by the amount of the deductible in the policy?” The answer in 2001 was “No”.

Today, a five-member panel of the Court of Appeal held that the answer should have been, “Yes”.The McNaughton ruling received a lot of publicity when it was released. Based on the Court of Appeal’s interpretation of statutory condition 6(7) in its 2001 decision (from which leave to appeal to the Supreme Court of Canada was refused), a number of class actions were brought against Ontario insurance companies, alleging breach of statutory condition 6(7). Polowin was one of those proceedings (although today’s decision also applies to the other class actions).

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