What happened: A New Brunswick appeals court ruled that a class action against 14 auto insurers is not dead just because the original plaintiff lives out of province.
Who's involved: Desjardins Insurance and The Personal Insurance Company, plus 13 other New Brunswick-registered insurers, facing a proposed class of policyholders.
What's at stake: Loss-of-income benefits reduced from a $250-per-week maximum to as little as $96.34 per week - across every insurer writing the standard NB auto policy.
Why it matters: Insurers cannot rely on a plaintiff's residency to kill a class action at the starting gate; the court says these defects are fixable, not fatal.
Where it stands: The appeal was dismissed; a separate order on limitation periods was set aside and sent back to the lower court.
A woman injured in an ATV crash was entitled to $250 a week in loss-of-income benefits under her New Brunswick auto policy. Her insurer, Desjardins, paid her $96.34.
The difference came down to offsets. Desjardins interpreted Section B of the standard New Brunswick auto policy as allowing it to deduct Canada Pension Plan and Employment Insurance disability benefits from the amount owed. That reading appears to be shared by every other insurer writing the standard policy in the province.
In May 2022, the policyholder filed a class action against Desjardins and 13 other insurers registered to do business in New Brunswick, alleging breach of contract on her own behalf and on behalf of every policyholder whose benefits were similarly reduced. The proposed class action challenged the industry-wide practice head on.
There was a catch. New Brunswick's Class Proceeding Act says whoever starts a class action must live in the province. The original plaintiff lives in Prince Edward Island.
In 2024, a New Brunswick resident who had been injured in a separate motor vehicle accident in Grand Falls was added as a co-plaintiff to fix the residency gap. The insurers did not appeal that decision at the time. Instead, Desjardins came back months later with a different argument: the entire class proceeding had been void from the start, because the original filing did not meet the residency rule.
The Court of King's Bench disagreed, finding the residency requirement was "a procedural requirement capable of correction" - not a barrier that kills the class action outright. The lower court also made a second order: it treated the replacement plaintiff as having been the representative since the original May 2022 filing date. That mattered because under the Act, the clock on filing deadlines for all class members stops running the moment a class proceeding is commenced.
The New Brunswick Court of Appeal, in a unanimous decision released October 29, 2026, dismissed Desjardins' appeal on the central question. The residency requirement is not a threshold barrier that takes the entire statute off the table if it is not met, the court held.
The Act itself defines a "class proceeding" broadly - it includes a proceeding brought under the Act "even if a motion for certification of the proceeding as a class proceeding has not yet been determined by the court." And the Act gives judges wide discretion to manage class proceedings from the outset. That authority kicks in "from the moment the proposed class action begins," as the Supreme Court of Canada put it in Sanis Health Inc. v. British Columbia (2024).
The court drew on a recent line of authority from British Columbia, where a nearly identical residency fight played out. In the Roy decisions, the BC courts held that a non-resident plaintiff's filing was not a nullity and could be cured by adding a local plaintiff. The reasoning was "persuasive and consistent" with the New Brunswick lower court's interpretation, the appeal court found.
But the appeal did not end there. The court set aside the lower court's order treating the replacement plaintiff as having been the representative since May 2022. The reason was simple: neither party had asked for that order, and neither had made submissions on it. The court sent the filing-deadline question back to the Court of King's Bench for a proper hearing.
That question is where the real money sits. If the filing deadlines for all proposed class members were frozen from May 2022, every policyholder whose benefits were reduced over the preceding year - and potentially longer - falls within the class. If the clock only stopped later, when the New Brunswick plaintiff was added in 2024, some claims may have expired. For 14 insurers writing the same policy in the same province, the difference could be significant.
The class action itself has not yet been certified. The underlying question - whether insurers are entitled to deduct CPP and EI disability benefits from the $250-per-week maximum under Section B - remains unresolved.
For auto insurers in New Brunswick, the decision confirms that procedural defects at the class action starting gate are not necessarily fatal, and that the courts will read the Class Proceeding Act with a bias toward keeping claims alive. The residency technicality did not work. The filing-deadline fight is next.
