LTD Case Law Update - Summer 2019

1. RELEASE - ENFORCEABILITY

   Swampillai v. Royal & Sun Alliance and Sun Life Assurance Company (2018) ONSC 4023; 2019 ONCA 201

   The decision in Swampillai v. Royal & Sun Alliance and Sun Life Assurance Company (2018) ONSC 4023 (motions judge decision listed in the Fall 2018 LTD update) was overturned by the Ontario Court of Appeal 2019 ONCA 201.

   In Swampillai, the motions judge had granted the employer's summary judgment motion that a Release releasing any and all claims in exchange for 43 weeks of severance for a roughly 6 year blue collar mail room employee was binding and also released the potential LTD claim (which was in the appeal process with Sun Life). The Court of Appeal ruled that the issue of whether the Release was unconscionable and therefore unenforceable was a genuine issue requiring a trial since the record before the motion judge was insufficient to permit him to determine that the severance transaction for which the Release was signed reached the high threshold of grossly unfair and “improvident” because it included the release of the respondent's LTD claim.

   The Court of Appeal wrote:

   It is not disputed that the amount of severance based on years of service was more than fair. It is also not disputed that there was no specific amount designated to compensate for the potential success of the respondent's appeal of his LTD denial (value of LTD benefits to age 65 was estimated at $300,000). The absence of any...