MacIvor v. Pitney Bowes Inc. et al.
[Indexed as: MacIvor v. Pitney Bowes Inc.]
Ontario Reports Court of Appeal for Ontario MacFarland, Huscroft and Nordheimer JJ.A. April 19, 2018
143 O.R. (3d) 633 | 2018 ONCA 381
Case Summary
Insurance — Disability insurance — Interpretation and construction
Plaintiff suffering traumatic brain injury while covered by employer's long-term disability policy. Plaintiff not discovering seriousness and permanent nature of injury until after resignation. Policy providing that coverage ended on day that employee ceased to be actively employed. Plaintiff entitled to coverage under policy as incident giving rise to claim occurred while actively employed.
Insurance — Relief from forfeiture — Disability insurance
Plaintiff applying for long-term disability benefits and filing proof of claim some ten days after 90-day period set out in policy. Both employer and insurer aware from outset that plaintiff had suffered traumatic brain injury. Plaintiff entitled to relief from forfeiture.
Facts
The plaintiff suffered a traumatic brain injury and a severe back injury in 2005 while employed by PB Inc. He quit his job in 2008 and went to work for Samsung. He was unaware when he quit of the seriousness and permanent nature of his brain injury. After being fired by Samsung in 2009, he asked Samsung about making a long-term disability claim and was told that, because his injury occurred when he was working for PB Inc., he would have to apply under PB Inc.'s long-term disability insurance policy. He did so in September 2010. The "termination of coverage" provisions in the policy provided that coverage terminated when the employee ceased to be actively employed. The insurer denied the claim in November 2010 on the basis that the plaintiff was no longer actively employed by PB Inc. The plaintiff commenced an action against PB Inc. and the insurer in April 2011. The action was dismissed. The plaintiff appealed.
Held
The appeal should be allowed.
The language of the policy when considered as a whole was clear; it meant only that coverage did not continue when an employee began working for another employer or retired. The "termination of coverage" language related to future claims, not claims that may have arisen during the course of the employee's employment. If an employee's claim arose as the result of an occurrence that took place during employment, the policy provided coverage.
The policy required that proof of claim be filed within 90 days of the date benefits would begin. The plaintiff filed a proof of claim some ten days after that 90-day period. PB Inc. and the insurer were both aware from the outset that the plaintiff had suffered a traumatic brain injury. In all of the circumstances, the plaintiff was entitled to relief from forfeiture.
The policy provided for a one-year limitation period and also stated that "[n]o legal action for the recovery of any claim may be brought . . . until 60 days have elapsed from the date written proof of loss has been furnished. . . . Any such action must be brought within one year after filing written proof of loss." The action was commenced within the limitation period. In any event, it was unlikely that the one-year limitation period would be upheld. If the ordinary two-year limitation period applied, the action was commenced well within two years from the date the plaintiff could reasonably have appreciated that he had a cause of action.
APPEAL from the judgment of Pollak J., [2017] O.J. No. 1161, 2017 ONSC 1550 (S.C.J.) dismissing the plaintiff's action.
Jeffrey Strype and Mark De Sanctis, for appellant.
Gordon Jermane and Veronica Mohan, for respondent.
The judgment of the court was delivered by
A. Introduction
1This is an appeal from a trial judgment holding that the appellant, Lenard MacIvor, as a former employee of Pitney Bowes, had no coverage for his claim under the long-term disability policy of the Manufacturers Life Insurance Company (the "Manulife Policy").
2The appellant suffered a traumatic brain injury and a severe back injury during a company sponsored event in Costa Rica on April 16, 2005. He was unaware of the permanent and disabling nature of his brain injury until after he had resigned his employment with Pitney Bowes.
3Three issues are presented in this appeal: (1) whether the appellant, as a former employee of Pitney Bowes, is entitled to coverage under the Manulife Policy; (2) whether the appellant submitted a timely proof of claim; and (3) whether the one-year contractual limitation period in the policy bars the appellant's claim.
4For the reasons that follow, I would allow the appeal.
B. Background and Facts
5Briefly stated, the material facts are as follows.
6Following his accident, the appellant was off work for nearly four months and returned to work in August 2005. It is clear from the history and chronology set out in an agreed statement of facts that his work performance deteriorated dramatically from what it had been. Paragraph 2 of the agreed statement of facts set out the appellant's employment history for the years preceding the accident where, between 1996 and 2005, he rose through the ranks, from junior sales representative to division sales vice president, managing over 130 sales representatives.
7He was a different man when he returned to his employment following the accident. Paragraph 5 of the agreed statement of facts sets out the difficulties he encountered in resuming his employment. His responsibilities were continuously reduced and in frustration he quit his job at Pitney Bowes on August 11, 2008. Within days he took up employment with Samsung to perform a role similar to the one he held at Pitney Bowes before his accident.
8The difficulties he'd experienced in job performance before leaving Pitney Bowes soon became apparent and he was fired from Samsung in August 2009. He asked Samsung about making a long-term disability claim and was told that, because his injury occurred when he was working for Pitney Bowes, he would have to apply under that policy. He tried to train as a real estate agent, but his efforts resulted in overall failure.
9It is apparent from the medical evidence summarized in the agreed statement of facts, at paras. 13-14, that the appellant was, for a long time, unaware of the seriousness of his brain injury and in particular the permanent nature of that disability. As Dr. Lad recorded in his notes, "Mr. MacIvor thought that he would recover from the effects of his brain injury".
10On September 9, 2010, the appellant applied for long term disability benefits and provided proof of claim. On November 1, 2010, the respondent denied his claim. On April 11, 2011, he commenced this proceeding.
11The parties agree the appellant is
unable to perform the essential and material duties of his regular occupation and for any occupation for which he was reasonably fitted, or could so become, by education, training or experience under the terms of the Manulife policy, and has been since the date of his injury in Costa Rica on April 16, 2005.
They further agree that, as such, he meets the qualification for disability benefits as set out in the Manulife Policy. The respondent agrees that it received sufficient notice of the claim in April 2005.
12There is no issue that the appellant had coverage while he was employed. The respondent argues however, that "[h]e had access to [long-term disability] benefits if he applied while he was employed and, therefore, covered. Once he was outside of this coverage and/or failed to meet the Policy's terms, he no longer had entitlement to claim"; and that "[t]he policy indicates that coverage ends when employment ends".
13The trial judge accepted this argument. She concluded, at para. 16, that the policy "states in clear terms that there is no coverage for persons who are not employed by Pitney Bowes".
C. Analysis
(1) Issue #1: Is the appellant, as a former employee of Pitney Bowes, entitled to coverage under the Manulife Policy?
14The trial judge's conclusion that the policy provided no coverage for former employees raises a question of law reviewable on a standard of correctness. It arises in the context of the interpretation of a standard form group policy insurance: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., [2016] 2 S.C.R. 23, [2016] S.C.J. No. 37, 2016 SCC 37.
15The respondent's position quite simply is that the Manulife Policy provides for coverage only during employment and that coverage ended when the appellant resigned from his position on August 11, 2008.
16The language of the policy upon which the respondent relies to deny the appellant's claim is found at p. 9 of the policy:
TERMINATION OF COVERAGE
Your coverage will terminate on the earliest of the following dates unless continuation of coverage is provided under the Extension of Coverage provision:
-- the day on which you cease to be Actively Employed[.]
17"Actively Employed" is a defined term. There is no issue that the appellant ceased to be actively employed at Pitney Bowes on the date he quit, August 11, 2008.
18In Ledcor, the Supreme Court summarized the governing principles of interpretation applicable to insurance policies. The "primary interpretive principle is that where the language of the insurance policy is unambiguous, effect should be given to that clear language, reading the contract as a whole": Ledcor, at para. 49.
19In my view, the language of the Manulife Policy when considered as a whole is clear; it means only that coverage does not continue when an employee begins working for another employer or after the employee has retired. The "termination of coverage" language relates to future claims, not claims that may have arisen during the course of the employee's employment. In other words, if an employee's claim arises as the result of an occurrence that takes place during their employment, the policy provides coverage. The additional words "unless continuation of coverage is provided under the Extension of Coverage provision" supports this conclusion.
20Moreover, the Manulife Policy also provides:
TOTAL DISABILITY BENEFITS
A Monthly Benefit will be paid if you become Totally Disabled while covered under the Long Term Disability Coverage and are under the continuing care of a physician.
21The language of this provision confirms the entitlement to be paid a monthly benefit if the total disability occurs during the coverage period. I note that this provision contains no language indicating that it applies only to current employees.
22Where the language of a policy is ambiguous, the general rules of contract construction must be employed to resolve that ambiguity: Ledcor, at para. 50. These principles include that the interpretation "should not give rise to results that are unrealistic or that the parties would not have contemplated in the commercial atmosphere in which the insurance policy was contracted": Ledcor, at para. 50. If ambiguity still remains after applying the general principles, then the principle that coverage provisions are to be interpreted broadly, and exclusion clauses narrowly, may be considered: Ledcor, at para. 51.
23These principles do not support the respondent's position. The Manulife Policy does not contain the type of exclusionary language that terminates coverage for undiscovered disability claims the employee had and that originated during their employment, when their employment ceases. To so conclude would leave former employees, like the appellant, in the untenable position of having no disability coverage from either their former employer or any new employer. Such a result would be contrary to the very purpose of disability insurance and the plain meaning of the coverage provision.
24Subject to the policy requirements to provide timely proof of claim and to commence the claim within the relevant limitation period, if the incident or illness occurred or arose during the currency of employment, coverage will be provided and the policy must respond: see Smith v. Empire Life Insurance Co., 1996 CanLII 8134 (ON SC), [1996] O.J. No. 1009, 19 C.C.E.L. (2d) 171 (Gen. Div.), at para. 16, leave to appeal refused, 1996 CarswellOnt 3896 (Div. Ct.), leave to appeal refused, 1996 CarswellOnt 3671 (C.A.); Smith v. Empire Life Insurance Co., [1998] O.J. No. 4981, 83 O.T.C. 140 (Gen. Div.); Spring v. A. Saley & Associates Ltd., 1998 CanLII 31620 (ON CJ), [1998] O.J. No. 669, 54 O.T.C. 149 (Gen. Div.), at para. 36, vard on other grounds 1999 CanLII 18684 (ON CA), [1999] O.J. No. 2452, 123 O.A.C. 175 (C.A.); and Tarailo v. Allied Chemical Canada Ltd. (1989), 1989 CanLII 4048 (ON SC), 68 O.R. (2d) 288, [1989] O.J. No. 489 (H.C.J.), at paras. 25 and 43.
(2) Issue #2: Did the appellant submit a timely proof of claim under the policy?
25The policy requires that proof of claim be filed "within 90 days of the date benefits would begin". Benefits would begin only when an employee is no longer receiving employment income. There is no dispute that the appellant continued to receive his salary equivalent as an employee of Samsung until he was fired in August 2009 (agreed statement of facts, at paras. 7-9). When the appellant was fired from Samsung, he also received a termination package.
26The record is anything but clear on the precise dates to which the Samsung package extended. We do not know what the pay period was and whether he was paid to the end of August 2009 or later. We know that the package represented eight months of salary. Assuming that payment began on September 1, 2009, he would have been paid through the end of April 2010, and thus became eligible to receive benefits on May 1, 2010.
27Benefits under the policy are paid monthly in arrears. Accordingly, the date that benefits "would begin" was June 1, 2010 at the earliest. The appellant's proof of claim was filed September 9, 2010. Based on the date of termination and the package that the appellant received from Samsung, the proof of claim appears to have been provided some ten days after the required 90-day contractual period.
28It would be most unfair, in my view, to permit the imperfect compliance with the 90-day contractual period to defeat the appellant's claim in the particular circumstances of this case. The appellant was injured during his employment when he was covered by a long-term disability policy but did not appreciate the significance of his injury during his employment. The respondent has conceded the appellant's total disability as of the date of the accident and that he enjoyed coverage under its policy at the time of his injury. The appellant left his employment sometime after he was injured but before he was aware of the extent of his injury. The imperfect compliance with the requirement to file the proof of claim form may only be a matter of ten days at most. His employer and the insurer were aware that he had suffered a serious injury that included a brain injury at the outset. All of the foregoing facts have been known to the parties for years now.
29Although relief from forfeiture pursuant to the provisions of the Insurance Act, R.S.O. 1990, c. I.8, or the Courts of Justice Act, R.S.O. 1990, c. C.43, was not raised at trial, given the facts outlined above, it is in the interests of justice to grant that relief here.
(3) Issue #3: Does the one-year limitation period in the policy apply?
30The respondent alternatively relies on the one-year limitation period set out in the Manulife Policy to say that, in any event, the claim is out of time. Even on the appellant's evidence, he became aware of his ability to claim in August 2009. Accordingly, if the one-year contractual limitation period began tolling on that date, the claim issued in April 2011 is out of time.
31The policy provides:
Legal Action
No legal action for the recovery of any claim may be brought against Manulife Financial until 60 days have elapsed from the date written proof of loss has been furnished to Manulife Financial. Any such action must be brought within one year after filing written proof of loss.
32"Proof of loss" is not a defined term in the policy. I take this term to be a reference to written proof of claim which the policy requires to be received by Manulife Financial within 90 days of the date benefits would begin. The appellant filed his proof of claim on September 9, 2010 and his claim was denied by the respondent on November 1, 2010.
33It is arguably unclear whether the policy language required the appellant to commence his action within one year of November 1, 2010, the date that Manulife denied the claim, or whether the one-year period runs from September 9, 2010, the actual date the proof of claim was submitted. Because the statement of claim was issued on April 11, 2011, it is not necessary to resolve that question as regardless of how the one-year contractual period is to be calculated, it was met on the facts of this case.
34In any event, in view of this court's decision in Kassburg v. Sun Life Assurance Co. of Canada (2014), 124 O.R. (3d) 171, [2014] O.J. No. 6222, 2014 ONCA 922, it is unlikely that the one-year period of limitation would be upheld: see paras. 53-62.
35The respondent argues that the appellant knew he had a claim while he was still employed at Pitney Bowes and ought to have brought his claim much earlier. It points to the fact that his "awareness was sufficient" to apply for WSIB benefits in 2005 and that he continues to receive those benefits.
36This argument fails to take into account the fact that the appellant suffered not only a traumatic brain injury in April 2005, but that he also had a significant musculoskeletal injury and was unable to work for nearly four months after the accident. The focus of medical attention at the time the appellant suffered his injuries appears to have been on his "severe back injury". There is nothing in the agreed statement of facts that explains or details in any way what the WSIB payments relate to. What is clear, however, is that it was not until his discussion with personnel at Samsung that he became aware that the seriousness of his brain injury would prevent him from working in the future.
37The only reasonable available conclusion on this record is that the appellant could not reasonably have appreciated he had a cause of action until the end of August 2009. The claim was therefore not discovered until that time: Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, at s. 5. Even on that basis, his action was commenced well within two years of that date. I would also note that he did not receive his CPP disability pension until May 2011.
D. Conclusion and Disposition
38For these reasons, I would allow the appeal, set aside the judgment of the trial judge and in its place issue a judgment in accordance with these reasons.
39As agreed between the parties, costs to the appellant fixed in the sum of $8,000, inclusive of disbursements and HST.
Appeal allowed.
End of Document
