COURT FILE NO.: 558/02

DATE: June 4, 2003.

SUPERIOR COURT OF JUSTICE - ONTARIO

(Divisional Court)

RE: ANDREW TRAYNOR (Plaintiff/Respondent) - and - UNUM LIFE INSURANCE COMPANY OF AMERICA carrying on business as UNUM PROVIDENT CANADA (Defendant/Appellant)

BEFORE: JUSTICES CUNNINGHAM A.C.J., KURISKO & MATLOW JJ.

COUNSEL: James L. Vigmond, Brian Cameron and Mark Tobernowski, for the Plaintiff/Respondent

Mark E.P. Cavanaugh, for the Defendant/Appellant

Earl A. Cherniak, Q.C., Kirk F. Stevens and Christine Snow, counsel to Lang Michener

HEARD: January 31, 2003

E N D O R S E M E N T

CUNNINGHAM, A.C.J., MATLOW J.

[1] The appeal is allowed and the order of the motions judge is set aside. Counsel may make submissions in writing regarding costs.

[2] This is an appeal, brought with leave, by the defendant,Unum Life Insurance Company of Canada, carrying on business as Unum Provident Canada (“Unum”) from an order granting a mandatory interlocutory injunction requiring it to pay periodic disability benefits to the plaintiff pursuant to the provisions of a group disability policy. The order requires Unum to pay arrears for previous payments not made as well as periodic benefits going forward to trial, all subject to the security of a mortgage on the plaintiff’s home.

[3] This appeal is of significance not only to the parties but to claimants and those engaged in the administration of disability insurance The central issue for determination on this appeal is whether the injunction ought to have been granted in the context of the evidence presented.

[4] The plaintiff, who is now 44 years of age, was formerly employed as a driver and repairman. At the time of the motion for interim relief, he had been absent from his work since May, 2001, claiming to be suffering from chronic fatigue syndrome.

[5] The plaintiff was covered at the material time by a group long-term disability policy issued by the defendant to his employer. “Disability” was defined in the policy as follows:

“You are disabled when Unum determines that you are limited from performing the material and substantial duties of your regular occupation due to your sickness or injury: and… After 24 months of payments, you are disabled when Unum determined that due to the same sickness or injury, you are unable to perform the duties of any gainful occupation for which you are reasonably fitted by education, training or experience.”

[6] In October, 2001, the plaintiff submitted a claim for benefits under the policy. In response, the defendant requested that he submit medical evidence of his disability from his treating physician.

[7] In December, 2001, after assessing the plaintiff’s claim on the basis of existing medical information, the defendant advised the plaintiff that his condition did not fit the criteria for chronic fatigue syndrome. The defendant also advised the plaintiff that he could appeal this decision and that it might reconsider its position upon receipt of further medical information. The plaintiff then submitted an additional report from his family physician which referred to a recent consultation with a rheumatologist. The defendant then sought to review a report of this consultation and any test results. As well, it requested that the plaintiff submit the results of a stress test he had undergone. However, rather than pursue this internal appeal process further, the plaintiff commenced this action and caused a statement of claim to be served on the defendant.

[8] Therefore, at the time the order in appeal was made, the alleged disability of the plaintiff, the insured event, and his entitlement to any benefits remained in issue.

[9] The evidence before the motions judge relating to the plaintiff’s financial circumstances disclosed the following;

a) the total household income of the plaintiff and his family was approximately $25,000 per year;

b) the plaintiff and his wife owned the house where they both resided. Its value was approximately $160,000-$165,000 and their equity was between $50,000-$55,000;

c) the first mortgagee had agreed to allow the plaintiff to keep his home and the second mortgagee had made no threat to evict him;

d) although the plaintiff had received UIC sick benefits for fifteen weeks after he left his employment, he had not attempted to obtain Canada Pension Plan disability benefits;

e) the plaintiff had not sought other work, even on a part-time basis;

f) the plaintiff owned a recreational trailer that he and his family used on a regular basis. He was required to pay $1200 annually for maintenance of the trailer site but he was in arrears.

[10] Before granting the order in appeal, the motions judge considered the tests for injunctive relief set out in RJR-MacDonald Inc v Canada (Attorney General)1994 117 (SCC), [1994] 1 S.C.R. 311. He stated that where a mandatory interlocutory order is sought, a plaintiff must meet a higher test than the “serious issue to be tried” test, namely, he must demonstrate that it is more probable than not that he will achieve success at trial and he held that the plaintiff had satisfied this test. He also stated that he was satisfied that the plaintiff would suffer irreparable harm if the order sought were not granted and that the balance of convenience favoured the plaintiff.

[11] This appeal raises the issues of whether the motions judge was correct in his conclusion regarding proof of irreparable harm and, by implication, in his conclusion regarding the extent of the defendant’s obligations under the policy. We have concluded, with respect, that he was not and that his reasons reflect palpable error which now requires us to interfere with the order made.

[12] We observe at the outset that the granting of a mandatory interlocutory injunction is exceptional relief to be granted only in exceptional circumstances. It is also trite law that injunctive relief is not an appropriate remedy if an award of damages can afford adequate relief.

[13] As well, we note that irreparable harm cannot be established by mere speculation but must be proven by the person seeking relief.

[14] In coming to his conclusion on the issue of irreparable harm, the motions judge stated as follows;

On the question of whether the plaintiff will suffer irreparable harm if the payments are not made, I accept that the social stigma and loss of dignity associated with the inability to meet one’s obligations, the harm from living with substantially reduced income with a potential for the loss of one’s residence are matters which cannot be compensated in damages.

[15] One of the intended results of the order made was to require the defendant to pay to the plaintiff the total amount of the benefits payable under the policy for the period up to the time of the making of the order. However, notwithstanding the motions judge’s above-quoted conclusion to which further reference is made below, the evidence clearly showed that no irreparable harm to the plaintiff had already occurred as at the time of the order was made. Nor did it show that there was a substantial likelihood that the defendant’s failure to pay those benefits would result in any future irreparable harm. Accordingly, without such proof of irreparable harm, there was no sufficient reason for the court to intervene by ordering the payment of those benefits.

[16] The second of the intended results of the order made was to require the defendant to continue paying the benefits payable under the policy for the period extending into the future up to the time of trial. To that extent the order on its face reveals that the motions court judge failed to recognize that the policy did not provide for the payment of ongoing benefits that would extend into the future under any circumstances. Rather, it provided only that the defendant was required to make payments from time to time in arrears for past disability after the provision of sufficient proof of continuing disability. Accordingly, at the time the order was made, the plaintiff could not conceivably have been entitled to the payment of benefits for any period in the future beyond the day when the order was made and the defendant could not reasonably have been required to confer a benefit on the plaintiff that was not provided for in the policy. Therefore, with respect to this part of the order, we conclude that the motions judge could not reasonably have found that there was any possible failure of the defendant to comply with the provisions of the policy that could have resulted in any future irreparable harm.

[17] In addition to the above reasons for interfering with the order made, we observe that the motions judge did not explicitly find that the plaintiff would suffer the “social stigma and loss of dignity” or the “harm” referred to in paragraph 11 above. However, even if his statement was intended to reflect a finding that the plaintiff would likely suffer the “social stigma and loss of dignity”, it is our respectful view that such an occurrence could not reasonably constitute irreparable harm in the context of this case. If it could, similar results might be held to constitute irreparable harm in a broad variety of breach of contract cases even outside the scope of insurance policies, a result which is not supportable by the present state of the law.

[18] Nor did the motions judge explicitly find that the plaintiff’s substantially reduced income created any potential that he would consequently lose his residence. However, if his statement was intended to reflect a finding that there would be a realistic potential that the plaintiff could actually lose his residence, it is our respectful view that such a finding would be contrary to the evidence and clearly wrong.

CUNNINGHAM A.C.J.

MATLOW J