Trebell v. Canada Life Assurance Company, 2026 ONCA 481 (CanLII)
Overview
In Trebell v. Canada Life Assurance Company, the Ontario Court of Appeal addressed whether a life insurer can rely on s. 180(1)(c) of the Insurance Act to deny coverage years after a policy was issued because of a change in the insured’s insurability between the application and delivery of the policy. The court held that it can. Section 180(1)(c) is not subject to the two-year incontestability period found in s. 184(2). Instead, it is a condition precedent to the formation of a life insurance contract.
Background
Elizabeth Trebell applied to Canada Life in July 2014 for a $500,000 life insurance policy after cancelling an existing policy. While awaiting delivery of the new policy, she attended her family physician for rectal bleeding and related symptoms, underwent diagnostic investigations and was referred for a colonoscopy. The policy was delivered on September 24, 2014, and Ms. Trebell signed a declaration stating that there had been no change in her health or insurability since the application.
In December 2014, a colonoscopy revealed anal canal cancer. Ms. Trebell died from the disease in March 2018.
When Ms. Trebell’s former husband and designated beneficiary, Scott Trebell, claimed the policy proceeds, Canada Life denied the claim. It asserted that Ms. Trebell’s medical condition and ongoing investigations before delivery constituted a change in insurability that prevented the contract from ever taking effect under s. 180(1)(c). Canada Life’s underwriting evidence was that, had it known of the symptoms and investigations, delivery of the policy would have been postponed pending further medical information.
Section 180 of the Insurance Act reads:
Contract taking effect
180 (1) Subject to any provision to the contrary in the application or the policy, a contract does not take effect unless:
(a) the policy is delivered to an insured, the insured’s assign or agent, or to a beneficiary;
(b) payment of the initial premium is made to the insurer or its authorized agent; and
(c) 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.
Decision Below
The motion judge granted summary judgment in favour of Mr. Trebell. He concluded that Canada Life could not rely on s. 180(1)(c) more than two years after the policy was issued, despite Ms. Trebell paying premiums all that time. In his view, allowing insurers to challenge coverage indefinitely would create uncertainty for insureds and beneficiaries and would undermine the purpose of insurance. He interpreted s. 180(1)(c) as being effectively limited by the two-year contestability period found in s. 184(2) of the Insurance Act.
Section 184(2) of the Insurance Act reads:
184 (1) This section does not apply to:
(a) A misstatement of age of a person whose life is insured; or
(b) Insurance undertaken by an insurer as part of a contract of life insurance whereby the insurer undertakes to pay insurance money or to provide other benefits in the event that the person whose life is insured becomes disabled as a result of bodily injury or disease.
Incontestability, general
(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.
Issues on Appeal
- Whether the motion judge erred in imposing a two-year contestability limitation on s. 180(1)(c);
- Whether s. 180(1)(c) should be interpreted as operating only prospectively, such that it could not be relied upon after a policy had been delivered; and
- Whether the wording of the policy displaced the operation of s. 180(1)(c).
Held
The appeal was allowed. The Ontario Court of Appeal set aside the summary judgment in favour of Mr. Trebell and held that the insurer was not legally barred from relying on s. 180(1)(c). However, the court did not determine whether there had in fact been a change in insurability. That issue was left for further litigation if the parties chose to pursue it.
Reasons
The Court of Appeal found that the motion judge’s interpretation was inconsistent with the language, context and purpose of the legislation. Section 184(2) expressly applies to failures to disclose and misrepresentations under s. 183. It does not refer to changes in insurability under s. 180(1)(c). The court held that there was no textual basis for importing the two-year limitation from one provision into the other.
The Court of Appeal emphasized that s. 180(1) states that a life insurance contract “does not take effect unless” three requirements are met: delivery of the policy, payment of the initial premium and no change in insurability between application and delivery. These requirements are cumulative. If any one of them is not satisfied, the contract never comes into force.
Reviewing the legislative history of the provision, the court concluded that s. 180(1)(c) was intended to protect insurers from being bound to a materially different risk than the one they agreed to insure. The provision preserves the meeting of the minds necessary for contract formation by ensuring that the risk undertaken by the insurer has not materially changed before the contract is completed.
The Court of Appeal also rejected the argument that s. 180(1)(c) operates only before delivery of the policy. Because the provision concerns whether a contract ever came into existence, there is no need for a separate mechanism to void the policy retroactively. If a qualifying change in insurability occurred before delivery, the contract never took effect in the first place. Accordingly, an insurer may rely on s. 180(1)(c) when defending a claim, even years later.
Finally, the court found that the policy’s incontestability clause did not displace the statute. The policy expressly contemplated that its effective date would be determined by governing law, which included s. 180(1) of the Insurance Act. As a result, the contractual wording did not prevent Canada Life from relying on the statutory provision.