Eric's LTD Update - Winter 2020

This update contains a healthy number of new LTD related cases, thanks largely to counsel who sent me case law (their names appear at the end of this update).

Please keep sending me case law as this allows me to fulfill the purpose of this update: to present all decided cases and let you either pound the counsel table with cases supportive of your position, or think up ingenious ways of distinguishing cases which are unfavourable to you.

A) Adverse Costs Insurance - Stewart et al v. Wood

B) Collective Agreement Jurisdiction - Hutton v. Manulife

C) Limitation Period - Clarke v. Sun Life

D) Medical Assessments - Baker v. Blue Cross Life Insurance Company

E) Misrepresentation - Batanova v. London Life Insurance Company

F) Special Costs Award - Tanious v. The Empire Life Insurance Company

G) Punitive and Aggravated Damages, Lump Sum Award of Future LTD Benefits Not Allowed

- Gascoigne v. Desjardins

H) Punitive and Aggravated Damages, Collective Agreement Jurisdiction Greig v. Desjardins

Click here for Acknowledgements and Mediation Statistics

1. ADVERSE COSTS INSURANCE

   Stewart et al v. Wood et al. 2019 ONSC 3931 (O.S.C.J.)

   Following settlement of a personal injury lawsuit the issue of costs and disbursements was referred for assessment to the Superior Court of Justice.

   Regarding adverse costs insurance Justice Tausenfreund wrote:

   The Defendants state that it is settled law that such an insurance premium is not a recoverable disbursement. I disagree. There are conflicting opinions on this issue. Milanetti, J., Reilly, J. and Firestone, J. respectively in Markovic v. Richards, 2015 ONSC 6983, Foster v. Durkin, 2016 ONSC 684 and Valentine v. Rodrigues-Elizalde, 2016 ONSC 6395 each held that the premium for adverse costs insurance is not to be reimbursed by the Defendants as a compensable disbursement. I then turn to Armstrong v. Lakeridge Resort Ltd., 2017 ONSC 6565. Salmers, J. in that decision held that the costs insurance premiums was a compensable disbursement. Salmers, J. noted at para 21:

   "Without costs insurance, the fear of a very large adverse costs award would cause many Plaintiffs of modest means to be afraid to pursue meritorious claims. It is in the interests of justice that Plaintiffs be able to pursue meritorious claims without fear of a potentially devastating adverse costs award."

   I find adverse costs insurance to be an "access to justice": issue. For that reason, I hold it to be a compensable disbursement to be included as a costs obligation payable to the Plaintiffs. This amount is $1,458.

   For a more detailed examination of this entire issue, please refer to Eric's LTD Update Issue 5 - Summer 2019.

   In Ontario, there are now 4 Superior Court of Justice decisions which did not allow adverse costs insurance as a disbursement: Markovic v. Richards; Valentine v. Rodriguez-Elizalde; Foster v. Durkin; and Little v. Floyd; versus 2 decisions which allowed such disbursement: Armstrong v. Lakeridge Resort Ltd. and Stewart v. Wood.

   Clearly this issue cries out for an appellate decision.

2. COLLECTIVE AGREEMENT JURISDICTION

   Hutton v. Manulife 2019 ONSC 279 (O.S.C.J.)

   Manulife brought a summary judgment motion to dismiss the plaintiff's action on the basis that the court lacked jurisdiction to deal with a claim that arose out of and was governed by the terms and conditions of a collective agreement between her union OPSEU and employer, Quinte Health Care ("QHC"), a matter exclusively within the arbitral jurisdiction of the collective agreement.

   The plaintiff was a full-time employee of QHC, employed as a Laboratory Technician Ill. She was a member of OPSEU, the exclusive bargaining agent that represented all employees of the bargaining unit. QHC and OPSEU were parties to the collective agreement governing the terms and conditions of employment of all QHC employees, including the plaintiff.

   The plaintiff, as a result of having her LTD benefits terminated, initiated a grievance against QHC filed December 17, 2013 in the following terms: "I grieve that the employer has violated Article 15 of the collective agreement, by denying my claim for long-term disability benefits."

   In the OPSEU grievance form under the heading "Settlement Desired" the plaintiff stated: "Full redress, including approval for LTD benefits as well as anything else an arbitrator deems appropriate."

   On September 2, 2014 the Union requested on behalf of the plaintiff that Manulife reconsider the termination of LTD benefits. Even though the deadline for appeal had passed Manulife accepted the request to conduct a review. On November 10, 2014 Manulife advised the plaintiff that notwithstanding consideration of additional medical evidence she provided, the termination of the LTD benefits was upheld and its decision would be final.

   The plaintiff commenced her action against Manulife on August 19, 2015. Before the arbitration was scheduled to commence on September 1, 2015 the plaintiff's grievance was settled as between QHC and OPSEU on behalf of the griever. Manulife was not involved in the Minutes of Settlement.

   In the Minutes of Settlement at the outset it stated:

   Minutes of Settlement between QHC and OPSEU 480 in the matter of the grievance by Leisa Hutton ("the griever") the parties, desirous of fully and finally resolving issues arising out of the grievance and the griever's application for LTD benefits, as against QHC agree as follows, without prejudice or precedent to any other matter between QHC and OPSEU:

   The grievance is irrevocably withdrawn. The griever and OPSEU waive and release all rights to file a grievance in future in respect of the griever's eligibility for LTD benefits, regardless of the outcome of any contemplated or outstanding proceedings against Manulife.

   In paragraph 8 it states: "these Minutes of Settlement are not intended in any way to preclude the griever from pursuing her claim against Manulife's Group Policy 48524..."

   Justice O'Marra held: The defendant takes the position that under the collective agreement the employer is obligated to provide LTD benefits. The plaintiff's rights to LTD benefits arise from the collective agreement. Any grievances may go to arbitration, and all agreements reached will be final and binding. The plaintiff settled her LTD claim by electing to go through arbitration with her employer, which according to the terms of the collective agreement is final and binding.

   The plaintiff's position is that the LTD claim is inarbitrable because QHC lacks legal and financial liability for benefit entitlement under a policy issued by Manulife, and the collective agreement lacks sufficient "degree in detail" to establish QHC's obligation to provide "certain...benefits". The remedy sought by the plaintiff in her LTD claim against Manulife is not within the arbitral jurisdiction to grant and accordingly the Superior Court retains inherent jurisdiction over the action.

   The issue is whether the plaintiff's dispute about LTD benefits was within the exclusive arbitral jurisdiction under the collective agreement, or in the circumstances of this case, the inherent jurisdiction of the court.

   In Weber v. Ontario Hydro, 1995 CanLII 108 (SCC), [1995] 2 S.C.R. 929 the Supreme Court of Canada on the issue as to whether the court has jurisdiction, or strictly an arbitrable matter, can be determined by asking, "whether the dispute, in its essential character, arises from the interpretation, application, administration, or violation of the collective agreement." If so, the dispute is within the sole jurisdiction of the arbitrator to decide. (See also Regina Police Association Inc. v. Regina (City) Board of Police Commissioners (2000) SCC 14 (CanLII), 183 D.L.R. (4th) 14 at para. 25).

   In Barber v. Manufactures Life Insurance Company, 2017 ONCA 164 (CanLII) it was noted at para. 9 that arbitration jurisprudence has developed a well understood method of deciding the arbitrality of benefit entitlement claims by considering the four categories referenced in Brown and Beatty, Canadian Labour Arbitration, 3rd edition (1988), as adopted in London Life Insurance Co. v. Dubreuil Brothers Employees Assn. (2000), 2000 CanLII 5757 (ONCA)...