Dempster et al. v. Mutual Life of Canada [Indexed as: Dempster v. Mutual Life of Canada]
55 O.R. (3d) 409
[2001] O.J. No. 3336
Docket Nos. 99-2178-DV (Hamilton) and 41736/99 (St. Catharines)
Ontario Superior Court of Justice Divisional Court MacFarland, Lane and Chapnik JJ. August 15, 2001
Civil procedure -- Motions -- Order made in wrong venue without leave should not be set aside for that reason alone unless it is necessary to do so in interest of justice.
Insurance -- Disability insurance -- Insurer terminated insured's disability benefits after two years -- Insured brought action for specific performance and motion for interlocutory injunction requiring insurer to reinstate payments pending trial -- Insurer sought adjournment of hearing of motion -- Motions judge did not err in ordering insurer to continue paying disability benefits for three months without prejudice as term of adjournment -- Order did not amount to imposition of mandatory injunction.
The plaintiff received disability benefits from the defendant for two years on the basis that he was totally disabled. The defendant terminated the benefits when the policy definition of total disability changed. The plaintiff brought an action claiming specific performance of the long-term disability protection accorded to him as part of the benefits package attached to his employment. He also brought a motion for an interlocutory injunction requiring the defendant to reinstate the payments pending the trial. The statement of claim and notice of motion were served on the defendant at its head office in Waterloo. The motion was made returnable at St. Catharines. The defendant sought an adjournment to allow more time to prepare responding materials. The motions judge granted an adjournment on terms, ordering the defendant to continue its payments to the plaintiff for three months, without prejudice. The motions judge specifically stated that he had not heard arguments on the merits of the request for injunctive relief and was not ruling on that issue. The defendant appealed, arguing that the motion was made in the wrong venue and that the motions judge erred in imposing, as a term of the adjournment, what amounted to a mandatory injunction.
Held, the appeal should be dismissed.
An order made in the wrong venue without leave is not to be set aside for that reason alone unless the court finds that it is necessary to do so in the interest of justice. There was nothing in this case to suggest that there was any actual prejudice to the defendant in having to travel to St. Catharines from Waterloo. If the venue was wrong and the motions judge should not have proceeded without determining the venue issue, there was, nevertheless, no basis for setting aside the order imposing terms because of that procedural irregularity.
The term that the defendant continue paying disability benefits to the plaintiff for three months did not amount to a mandatory injunction restoring the policy to full force, and the motions judge did not err in imposing it. The term was for a limited and certain duration, made against the party responsible for the delay and upon evidence that the delay would seriously compromise the plaintiff. In addition, the funds were refundable if the plaintiff did not succeed. The term merely responded to the impact of the adjournment.
APPEAL from terms imposed on the granting of an adjournment.
Kanda Tsushin Kogyo Co. Ltd. v. Coveley, [1997] O.J. No. 56 (Div. Ct.); Sawa v. Imperial Life Assurance Co. of Canada, [1994] S.J. No. 43 (Q.B.), consd Other cases referred to Bright v. Clanahan (1987), 24 C.P.C. (2d) 268 (Ont. H.C.J.); Cox v. Cox, [1996] O.J. No. 1338 (Gen. Div.); Milkovich v. Milkovich, [1990] O.J. No. 476 (Dist. Ct.); Murray v. Murray (1988), 36 C.P.C. (2d) 53 (Ont. H.C.J.), affg (1988), 30 C.P.C. (2d) 78 (Ont. H.C.J.); National Trust Co. v. Maxwell (1989), 34 C.P.C. (2d) 211, 3 R.P.R. (2d) 263 (Ont. H.C.J.); Poersch v. Aetna (2000), 49 C.C.E.L. (2d) 94, [2000] I.L.R. 1-3816, 19 C.C.L.I. (3d) 92 (Ont. S.C.J.); Rogan v. Magnus Aerospace Corporation (1985), 7 C.P.R. (3d) 405, 50 C.P.C. 217 (Ont. H.C.J.) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 2.01(1), 16.02(1)(c), 37.03(2), (4), 37.13(1)
Peter A. Daley, for appellant. W. E. Heelis, for respondents.
[1] Endorsement BY THE COURT: -- The appellant, now known as Clarica Life Insurance Company, appeals from the order of Marshall J. dated August 5, 1999, pursuant to leave granted by Forestell J.
[2] Beginning in June 1997, the plaintiff Alan Dempster, a teacher with the Niagara District School Board, had been receiving disability benefits from the defendant on the basis that he was totally disabled. In June 1999, on the second anniversary of the disability, the policy definition of total disability changed from requiring the insured to be unable to perform his own job, to requiring him to be unable to perform any job for which he was qualified. The defendant terminated his benefits alleging that he no longer qualified as totally disabled. The plaintiffs then began this action claiming specific performance of the long-term disability protection accorded to the plaintiff as part of the benefits package attached to his employment. The plaintiffs also sought an interlocutory injunction requiring the defendant to reinstate the payments pending the trial. Their Statement of Claim and Notice of Motion were issued on July 28, 1999 and served on the defendant at its head office in Waterloo on July 29, 1999.
[3] The motion was made returnable on August 5, 1999, at St. Catharines. On receipt of the material, in-house counsel for the defendant called plaintiffs' counsel and sought consent for an adjournment to allow more time to prepare responding materials, but the consent was not forthcoming.
[4] On August 5, 1999, counsel appeared for the defendant and asked for the adjournment, which was contested. Marshall J. endorsed the record:
Aug. 5/99
Adjourned till Sept. 2/99
I have not heard arguments on the merits of the request for injunctive relief & so I have made no determination in regards to the test for injunctive relief. The terms of the adjournment are that Mutual continue its payments till Sept. 2/99 (June, July, Aug) (without prejudice). Mutual's materials to be served on the plaintiffs by Aug. 25/99.
[5] Following the adjournment, the defendant complied with the terms and paid the plaintiff Alan Dempster the three monthly payments of $3,671 each. When the motion for the interlocutory injunction until trial was heard on September 2, 1999, it was dismissed. When this appeal was heard May 28 and 29, 2001, the trial had not yet taken place.
[6] The appellant asks that the order of Marshall J. be set aside on two grounds:
(a) the motion before Marshall J. was made in the wrong venue; and
(b) Marshall J. erred in imposing, as a term of the adjournment, what amounted to a mandatory injunction.
Venue
[7] Rule 37.03(2) [Rules of Civil Procedure, R.R.O. 1990, Reg. 194] requires a motion on notice to be made in the county where the responding parties' solicitor has his office or where an unrepresented party resides. At the time this motion was served, there was no solicitor on the record for the defendant. The head office was in Waterloo, but there was also an office in St. Catharines which had actually issued the policy in question. Subsequent to service, in-house counsel, whose office is in Waterloo, went on the record.
[8] In Cox v. Cox, [1996] O.J. No. 1338 (Gen. Div.), J. Wright J. of this court ruled that where no solicitor was on the record at the time of service, the motion was properly brought where the responding party resided. Campbell J. ruled to the same effect in Murray v. Murray (1988), 36 C.P.C. (2d) 53 (Ont. H.C.J.), where it was held that a motion is "made" when it is served. In that case, Campbell J. changed the venue because the solicitor who was ultimately retained had been involved in negotiations prior to the service and was known by the applicant to be the respondent's solicitor. What is noteworthy is that the venue did not change automatically just because the responding party, after service, appointed a solicitor in a county other than the county of his residence. To the same effect is Milkovich v. Milkovich, [1990] O.J. No. 476 (Dist. Ct.) where both parties resided in Thunder Bay. After service on him personally in Thunder Bay, the husband engaged counsel from Toronto who sought to have the motion heard there. The court stated that the motion complied with the rules when served and the respondent had not shown a reason for transfer to Toronto.
[9] In the present case, the motion appears to have been regular when served: it was stated to the court, and not contradicted, that the defendant had an office in St. Catharines, although not its head office, so that it was returnable at one of the places that the company resided, that is, carried on business. It was submitted that only the head office would do, but no authority was cited for that proposition. Service of the motion could have been at the St. Catharines office under rule 16.02(1)(c), so by analogy why would it be improper to make it returnable there? However, in the absence of authority on the point, we will consider the matter on the basis that the motion was not properly returnable in St. Catharines, and that Marshall J. did not give leave.
[10] Rule 37.03(4) provides that a motion for leave to hear a motion elsewhere than in accordance with Rule 37.03(2) may be heard in any county. There are many instances in the books of courts adjourning motions to be heard in the proper county. Further, there is but one Superior Court of Justice which sits in many places, so the motion before Marshall J. was not in the "wrong court". Accordingly, the mere fact of breach of the venue rules does not mean that the judge before whom the motion is initially returnable in the "wrong" place is without authority to deal with it. Nor, in our view, is that authority confined simply to deciding whether to change the venue to the place required by the rule, or to grant the necessary leave. Rule 37.13(1) gives the court the power to adjourn any motion with or without terms. In addition, the court's inherent authority to control its own process would permit the judge to exercise his or her authority to impose terms. We conclude that Marshall J. had the authority to impose terms as a condition of the granting of the adjournment.
[11] It was submitted that, as Marshall J. did not grant leave to hear the motion in St. Catharines, therefore his order imposing the terms must be set aside on the authority of Bright v. Clanahan (1987), 24 C.P.C. (2d) 268 (Ont. H.C.J.) and National Trust Co. v. Maxwell (1989), 34 C.P.C. (2d) 211, 3 R.P.R. (2d) 263 (Ont. H.C.J.). In Bright, Potts J. set aside an order of the Master at Toronto who had heard a motion although the responding party's solicitor practised in London. The Master had made no finding of special circumstances nor any actual order granting leave, but heard and decided the issue and gave the responding party solicitor and client costs. Potts J. held that there was no authority to substitute a costs order for the right to have the motion heard in the proper venue. In Maxwell, the motions judge followed Bright and held that he must vacate the order made.
[12] In Rogan v Magnus Aerospace Corp. (1985), 1985 6410 (ON SC), 50 C.P.C. 217, 7 C.P.R. (3d) 405) (Ont. H.C.J.), Rosenberg J. took a different approach. Sitting in Toronto, he was satisfied that the motion ought to have been brought in Ottawa where the responding party's solicitor practised. Nevertheless, he heard the motion on the ground that to refuse to do so would waste the time of counsel and the court alike. To vindicate the rule, he refused costs. This approach was criticized by Potts J. in Bright on the basis that it would encourage people to disregard the rule if the only penalty was costs which might not cover the actual cost of the time lost in travelling to the wrong county.
[13] None of these cases appears to have considered the impact of rule 2.01(1):
2.01(1) A failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court,
(b) only where and as necessary in the interest of justice, may set aside the proceeding or a step, document or order in the proceeding in whole or in part.
[14] It follows from this rule that an order made in the wrong venue without leave being granted is not to be set aside for that reason alone unless the court finds that it is necessary to do so in the interest of justice. To the extent that they may be thought to hold otherwise, Bright and Maxwell were wrongly decided. In the present case, there is nothing in the record to suggest that there was any actual prejudice to the responding party in having to travel to St. Catharines from Waterloo. If the venue was wrong and the motions judge should not have proceeded without determining the venue issue, there is, nevertheless, no basis for setting aside the order imposing terms because of that procedural irregularity.
The Terms
[15] In the alternative, it was submitted that the motions judge ought not to have placed the defendant on terms which amounted to a mandatory injunction. Further he had failed to consider the mandatory nature of the order.
[16] It is somewhat incongruous that a party who asked the court for an adjournment for a month, on the basis that it needed time to prepare the material to argue the issues in the case, now appeals because the motions judge did not hear and decide on those very issues in connection with the imposition of terms for the adjournment.
[17] It is important to note that, while the motion was for an injunction, the motions judge did not, as appears from his endorsement, impose the terms on the merits of that claim. Rather, he used the authority set out in rule 37.13(1):
37.13(1) On the hearing of a motion, the presiding judge or officer may grant the relief sought or dismiss or adjourn the motion, in whole or in part and with or without terms, . . .
[18] Before us, the appellant submitted that the requirement to make three months of payments amounted to a mandatory injunction restoring the policy to full effect without a hearing on the injunction issues. It relied on two cases, principally, to show that this was improper: Kanda Tsushin Kogyo Co. Ltd. v. Coveley, [1997] O.J. No. 56 (Div. Ct.) and Sawa v. Imperial Life Assurance Co. of Canada, [1994] S.J. No. 43 (Q.B.). Neither was a case of the imposition of terms upon a contested request for adjournment.
[19] In Kanda, this court considered the propriety of an interim injunction granted until the return date of the motion after argument on the issues pertinent to injunctions. It appeared to this court (para. 7) that the motions judge had adopted a relaxed standard because of the anticipated speed with which the main motion would come on, an expectation which was not fulfilled. The court observed that the effect of an interim injunction is no different from an interlocutory one: the state interferes with the activities of a citizen. The tests to be applied could be no different.
[20] In Sawa, the underlying facts were similar to our own. The insured sued for a declaration that he continued to be eligible for disability payments and sought an interlocutory order for their restoration until trial. It was refused because it would: "amount to a mandatory injunction against the insurer for the performance of the contract of insurance that is in dispute . . ." (para. 5).
[21] Both of these cases, and the many others cited to us, were decided after argument on the pertinent issues. The merits of the plaintiff's request for an injunction before trial were squarely before those courts. That was not the case before Marshall J. He had a different issue to deal with. He expressly did not grant or refuse an injunction. He put the defendant upon terms to redress the situation created by the request for the adjournment, that is, that the plaintiff would be further delayed in having a judicial determination of a matter of great importance to him: the stoppage of his income by the act of the defendant. That was a matter requiring the exercise of discretion in less than ideal circumstances. These very circumstances occur daily in our court and discretion as to adjournments is, of necessity, exercised with a less than complete appreciation of the facts and without detailed consideration of the law. In spite of this handicap, Marshall J. responded appropriately.
[22] The evidence before Marshall J. showed that the plaintiff was disabled and had been accepted as such for two years by the defendant; that the plaintiff's psychiatrist considered him permanently unemployable without even a remote possibility of functioning in any employment in the future; that despite this evidence, the defendant terminated his benefits on the basis that he could be employed; and that there were severe financial consequences to the plaintiff's family from the loss of this income including forcing the plaintiff into the position of having to elect whether to take an early but reduced pension in order to have some income. The request for the adjournment exacerbated the situation and increased the pressure to make this election. It should be noted that the term that the payments be made up to the adjourned date was "without prejudice". That term in these facts must mean that the payments are refundable should the plaintiff ultimately lose his case.
[23] The term imposed was not the equivalent of a mandatory injunction restoring the policy to full force. It was clearly an interim step to ease the problem created for the plaintiff by the request for a lengthy adjournment. In our view, it was a wholly appropriate response to the situation.
[24] In Poersch v. Aetna (2000), 2000 22613 (ON SC), 19 C.C.L.I. (3d) 92, 49 C.C.E.L. (2d) 94 (Ont. S.C.J.) at p. 118 C.C.L.I., Cameron J., in extensive reasons after full argument, stated that an insured facing a similar stoppage of her benefits after years of being accepted as disabled, even though she could not prove her entitlement to an injunction or mandatory order, was nevertheless entitled to a continuation of the payments until trial as a part of the insurer's obligation of utmost good faith. This puts the term imposed by Marshall J. into a helpful perspective as a very restricted order.
[25] We do not suggest for a moment that there is not a fine line between terms which respond to the situation created by the adjournment request and the de facto granting of the relief sought before judgment. In the latter case, even a short-term order requires some analysis (albeit restricted by the limited nature of the evidence) of the well-known conditions for injunctive relief. These terms were for very limited and certain duration, made against the party responsible for the delay and upon evidence that the delay would seriously compromise the plaintiff. In addition, the funds are refundable if the plaintiff does not succeed. These terms fall into the first category: they respond to the impact of the adjournment. It may be that a term of payment for one month would have more precisely reflected the impact of the adjournment request itself, but the matter is one of discretion. We cannot say that the motions judge was wrong in the order that he made.
[26] The appeal fails on both points and is dismissed with costs to the respondent fixed at $1,500, the figure suggested by counsel.
Appeal dismissed.