DATE: Draft September 14, 2006

DOCKET: C42960

COURT OF APPEAL FOR ONTARIO

RE:

KEVIN LUE, by his Litigation Guardian GLEN LUE (Plaintiff/Respondent) - and - MANULIFE FINANCIAL (Defendant/Appellant)

BEFORE:

O’CONNOR A.C.J.O., CRONK AND LANG, JJ.A.

COUNSEL:

Giulia F. Ahmadi and Craig R. Anderson

for the appellant

Wayne Paul Cipollone

for the respondent

HEARD & RELEASED ORALLY:

September 14, 2006

On appeal from the judgment of Justice Nancy L. Backhouse of the Superior Court of Justice dated December 24, 2004.

E N D O R S E M E N T

[1] The preliminary issue before the trial judge was whether the respondent was eligible for disability benefits under a group policy of insurance issued to Jet Express Canada Inc. Under the policy, only employees of Jet Express Canada Inc. were eligible for coverage. The evidence indicated that in 2000, the year he made his claim for disability benefits the respondent was not employed by Jet Express Canada Inc. Instead, he was employed by a separate and distinct company named Jet Express Canada (2000) Inc.

[2] On this basis, the appellant argued that the respondent failed to establish that he was an employee of the policy holder. The trial judge made no express finding as to whether the respondent was an employee of the policy holder, both at the time that he applied for insurance and at the time that he made a claim for disability benefits. Instead she found that “there was only one policy holder, it was Jet Express whether properly described as Jet Express Canada Inc. or Jet Express Canada (2000) Inc.”

[3] In our view, she erred in this regard. There was no evidence to support this finding. Specifically, there was no evidence that the two companies were in any way related. Significantly, under the policy, Jet Express Canada (2000) Inc. was not shown either as the insured policy holder or as a participating employer as it could have been.

[4] Accordingly, the judgment cannot stand. The respondent failed to establish that he was eligible for coverage under the policy.

[5] The appellant counterclaimed for reimbursement of benefits paid to the respondent. We are told that the total amount of that claim is $56,000.00. Given that we found that the respondent was not eligible for benefits under the policy, the appellant is entitled to succeed on this counterclaim.

[6] However, the circumstances of this case are unfortunate viewed from the respondent’s perspective, leaving aside the merits of the respondent’s conduct in his dealings with the appellant. In our view, the evidence at trial supported the trial judge’s conclusion that the respondent was totally disabled. In all the circumstances, this may well be a case where the appellant may wish to consider foregoing enforcement of its counterclaim.

[7] In the result, the appeal is allowed. The judgment below is set aside. The respondent’s action is dismissed. The counterclaim is allowed in the amount of $50,600.00. It follows for the reasons above that the respondent’s cross-appeal is dismissed.

[8] The respondent shall pay the appellant’s costs of the trial, to be assessed, if such costs are sought. The respondent shall pay the appellant’s costs of the appeal and cross-appeal, fixed in the amount of $10,000.00, inclusive of disbursements and G.S.T., again if such costs are sought.

“D. O’Connor A.C.J.O.”

“E.A. Cronk J.A.”

“S.E. Lang J.A.”