Barber v. The Manufacturers Life Insurance Company, Carrying on Business as Manulife Financial

[Indexed as: Barber v. Manufacturers Life Insurance Co.]

Ontario Reports

Court of Appeal for Ontario

LaForme, Pepall and Pardu JJ.A.

February 27, 2017

136 O.R. (3d) 198 | 2017 ONCA 164

Case Summary

Employment — Jurisdiction — Collective agreement requiring employer to offer disability insurance coverage to employees — Employee suing insurer when insurer terminated her long-term disability benefits under group insurance policy — Motion judge correctly dismissing claim on ground that language of collective agreement made issue of entitlement to long-term disability benefits arbitrable.

The collective agreement which governed the plaintiff's employment required the employer to offer disability insurance coverage to employees. The plaintiff was receiving long-term disability ("LTD") benefits under a group insurance policy issued by the defendant. When the defendant terminated the LTD benefits, the plaintiff brought an action claiming payment of the benefits. The motion judge granted the defendant's motion under rule 21.01(3)(a) of the Rules of Civil Procedure to strike the claim on the basis that the collective agreement granted exclusive jurisdiction over the matter to the labour arbitration process. The plaintiff appealed.

Held: The appeal should be dismissed.

The collective agreement did more than merely oblige the employer to pay insurance premiums. It covered terms, the amount of the disability benefits and even the definition of total disability; also, it made specific reference to the insurance policy. The fact that the LTD benefits were paid under the policy did not change the fact that the plaintiff's entitlement to LTD benefits was provided by the collective agreement. The motion judge correctly ruled that jurisdiction over this dispute belonged to an arbitrator.

Cases Referred To

• Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37
• London Life Insurance Co. v. Dubreuil Brothers Employees Assn.
• Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53
• Weber v. Ontario Hydro

Rules and Regulations Referred To

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21, 21.01(3)(a)

Authorities Referred To

Brown, Donald J.M., and David M. Beatty, Canadian Labour Arbitration, 3rd ed. (Aurora, Ont.: Canada Law Book, 1988)

Appeal

APPEAL from the order of Belobaba J., [2016] O.J. No. 4006 (S.C.J.) striking a claim.

David Share and Samantha Share, for appellant.

Gordon Jermane, for respondent.

Endorsement

BY THE COURT:

Introduction

[1] Adrian Barber appeals from the dismissal of her action against the Manufacturers Life Insurance Company ("Manulife") by the Superior Court of Justice. The motion judge granted Manulife's motion to strike Barber's claim, pursuant to rule 21.01(3), because Barber's collective agreement (the "CA") granted exclusive jurisdiction over her matter to the labour arbitration process.

[2] Barber became disabled from her employment as a Port Hope police constable in July 2009. She applied for long-term disability ("LTD") benefits under a group policy of insurance, insured by Manulife. Manulife paid these benefits until January 2013, then terminated the benefits. The collective agreement between the Port Hope Police Services Board (the "board") and the Port Hope Police Association (the "association"), which governed Barber's employment, requires the board to offer disability insurance coverage to the association's members.

[3] Barber commenced an action against Manulife asserting that LTD benefits were paid to January 31, 2013 and terminated effective February 1, 2013. She claimed they ought to have continued. As a remedy, Barber claimed payment of disability benefits. She alleged she has a contract for insurance with Manulife "through her employer, Port Hope Police Service, and was issued Group Policy Number 572397".

[4] Manulife brought a motion under rule 21.01(3)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to have Barber's claim dismissed because the Superior Court had "no jurisdiction over the subject matter of the action". In a brief endorsement, the motion judge agreed with Manulife that the Superior Court lacked jurisdiction.

[5] The motion judge concluded that the language of arts. 18.01 and 18.02 of the collective agreement made Barber's matter "arbitrable" because the matter fell "within category 2 of the Brown & Beatty categories and possibly category 4". The motion judge dismissed Barber's claim and awarded $1,500 in costs to Manulife.

[6] There is only one issue on appeal: did the motion judge err in holding that the Superior Court does not have jurisdiction over Barber's matter?

Analysis

[7] Although this case concerns jurisdiction, its resolution turns on the interpretation and application of a collective agreement. It is a negotiated contract and not a standard form contract. The issue determined by the motion judge, therefore, is a question of mixed law and fact to which the "palpable and overriding error" standard of review applies: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, at paras. 50-55; Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, at para. 24.

[8] Neither party denied that the essential character of the dispute concerned LTD benefits. Therefore, the motion judge moved directly to the question of whether the claim's essential character arose from the interpretation application, administration or violation of the CA. If so, an arbitrator, not a court, had exclusive jurisdiction to decide the issue: Weber v. Ontario Hydro, at paras. 11, 52, 54.

[9] Arbitration jurisprudence has developed a well-understood method of deciding the arbitrability of benefit entitlement claims, which is to consider the four Brown and Beatty categories considered by the motion judge: see London Life Insurance Co. v. Dubreuil Brothers Employees Assn., at para. 10. The four categories are:

1. where the collective agreement does not set out the benefit sought to be enforced, the claim is inarbitrable;

2. where the collective agreement stipulates that the employer is obliged to provide certain medical or sick-pay benefits, but does not incorporate the plan into the agreement or make specific reference to it, the claim is arbitrable;

3. where the collective agreement only obliges the employer to pay the premiums associated with an insurance plan, the claim is inarbitrable; and

4. where the insurance policy is incorporated into the collective agreement, the claim is arbitrable.

[10] This court's decision in London Life advanced the Weber analysis in the context of benefit disputes by adopting the four categories from Brown and Beatty.

[11] Barber submits that the dispute falls within category 3 and is not arbitrable. The board's only obligations, she says, are to offer long-term disability coverage and remit premiums. The board fulfilled its obligations under the CA. Therefore, there is no dispute arising out of the CA.

[12] Manulife, Barber points out, assessed, paid and then terminated her long-term disability claim, pursuant to the terms and conditions of the policy. Therefore, the dispute arises out of the policy, not the CA, and is not arbitrable.

[13] Barber argues the dispute does not fall within category 2, as the motion judge found, because the CA does not oblige the board to pay or to provide long-term disability benefits. The board merely offers the coverage and pays premiums; Manulife provides the benefits. Furthermore, she argues, the dispute does not fall within category 4, as the motion judge suggested, because the CA does not incorporate the insurance policy; the CA merely refers to the policy number and provides a short description of the coverage.

[14] Article 18 establishes Barber's rights to LTD benefits. They do more than merely oblige the employer to pay premiums for insurance — they cover terms, the amount of the disability benefits and even the definition of total disability, and it makes specific reference to the policy. The employer may change insurers as long as the benefits defined in the CA are continued.

[15] The fact that LTD benefits are paid under the policy does not change the fact that Barber's entitlement to LTD benefits is provided by the CA. Indeed, the degree of detail art. 18 provides on the terms of the relevant insurance plan supports the correctness of the motion judge's decision. We agree with Manulife when it notes the language of art. 18 demonstrates that the CA is "the root of the contractual entitlement" to the relevant disability insurance.

[16] The decision of the motion judge is correct. Jurisdiction over this dispute belongs to an arbitrator and the motion judge correctly dismissed Barber's action under Rule 21. Accordingly, the appeal is dismissed. Manulife is awarded its costs of the appeal fixed in the amount of $2,000, inclusive of disbursements and HST.

Result

Appeal dismissed.

Notes

1 Brown and Beatty, Canadian Labour Arbitration, 3rd ed. (Aurora, Ont.: Canada Law Book, 1988).

End of Document