John Philp

An employee sought long-term disability benefits from her insurer after being injured in an automobile accident.

The insurer denied her claim after two years, determining she no longer met the definition of "total disability" under the policy.

The employee filed a grievance under her union's collective agreement with her employer, which was settled.

She then commenced an action against the insurer for breach of contract and punitive damages.

The motion judge dismissed the action on the ground that the court lacked jurisdiction, as the dispute arose from the collective agreement and was subject to exclusive arbitral jurisdiction.

The Court of Appeal affirmed, holding that the employee's entitlement to long-term disability benefits fell within the exclusive grievance and arbitration provisions of the collective agreement.

This costs endorsement followed the dismissal of the plaintiff's action against the defendant insurer for long-term disability benefits, where the court found the matter fell within arbitral jurisdiction.

The defendant sought substantial indemnity costs of $17,233.80.

The plaintiff requested no costs or nominal costs, citing confusion from prior settlement minutes and ambiguity in the collective agreement and insurance policy.

The court, exercising its discretion under section 131 of the Courts of Justice Act and Rule 57 of the Rules of Civil Procedure, considered the moderate complexity of the jurisdictional issue, the importance of the matter to the defendant, and the plaintiff's circumstances.

The court awarded nominal costs of $2,500.00 to the defendant, excluding costs related to a motor vehicle accident or a companion action.

The defendant, Manulife Financial, brought a motion to dismiss the plaintiff's action for long-term disability benefits, arguing that the Superior Court lacked jurisdiction as the claim arose from a collective agreement and was exclusively within arbitral jurisdiction.

The plaintiff contended the claim was inarbitrable due to the employer's lack of direct liability and discrepancies between the collective agreement's referenced plan (HOODIP) and the Manulife policy's definition of total disability.

The court applied the Weber test and the Brown and Beatty categories for arbitrability, finding that the collective agreement obligated the employer to provide LTD benefits, placing the dispute within category 2, making it arbitrable.

The motion to dismiss was granted.