RBC Life Insurance Company v. Janson Janson v. RBC Life Insurance Company

[Indexed as: RBC Life Insurance Co. v. Janson]

Ontario Reports

Ontario Superior Court of Justice,

Grace J.

May 30, 2013

116 O.R. (3d) 264 | 2013 ONSC 3154

Case Summary

Insurance — Disability insurance — Deductions — Disability insurance policy providing for deduction of 100 per cent of amounts received or receivable under workers' compensation legislation and requiring reimbursement in full of any overpayment — Insurer continuing to pay insured full amount of disability benefits while he appealed refusal of his claim for workers' compensation benefits — Insurer seeking reimbursement when insured's appeal was successful — Insurer entitled to gross amount of workers' compensation benefits paid or payable on account of loss of earnings without deduction for insured's legal fees incurred in workers' compensation proceedings — Policy not one of indemnity — Insurer not unjustly enriched by deduction of gross amount of workers' compensation benefits. [page265]

The respondent was injured in the course of his employment. He was insured under a long-term disability insurance policy issued by the applicant. The policy provided for the deduction of 100 per cent of "direct deductible sources of income", which was defined as including an amount payable by the Workplace Safety and Insurance Board ("WSIB") on account of a loss of earnings. The applicant paid the respondent the full amount of disability benefits while he appealed the refusal of his claim for workers' compensation benefits. When the appeal was successful, the applicant sought reimbursement. The policy provided that the applicant had the right to recover any overpayments due to the respondents' receipt of deductible sources of income and stated"You must reimburse us in full." The applicant brought an application for a determination that it was entitled to recover the entire amount paid or payable by the WSIB without deduction of the legal costs incurred by the respondent in appealing the refusal of workers' compensation benefits.

Held, the application should be granted.

The language of the policy was unambiguous. The applicant was clearly entitled to the gross amount paid by the WSIB on account of lost earnings. In the face of a clear intention to preclude a deduction for legal costs, it would not be appropriate to imply into the policy an entitlement to deduct legal costs. The policy was not one of indemnity, and the applicant's rights were not akin to subrogation. The applicant would not be unjustly enriched if allowed to reap the benefit of the successful appeal without bearing the burden of the costs that were incurred along the way. Assuming that the applicant would receive an "enrichment" if paid the gross rather than the net sum and that there would be a corresponding deprivation if the respondent was required to bear the legal costs incurred in pursuing the appeal, there the policy constituted a juristic reason for the enrichment.

Anand v. Belanger, [2010] O.J. No. 4064, 2010 ONSC 5356, [2010] I.L.R. I-5047, 90 C.C.L.I. (4th) 138 (S.C.J.); Green v. State Farm Mutual Automobile Insurance Co., 2009 33049 (ON SC), [2009] O.J. No. 2713, 75 C.C.L.I. (4th) 141 (S.C.J.); Kobzey v. Sun Life of Canada, [2001] B.C.J. No. 1840, 2001 BCCA 517, 33 C.C.L.I. (3d) 191, 107 A.C.W.S. (3d) 1081; Ruffolo v. Sun Life Assurance Co. of Canada, 2007 50284 (ON SC), [2007] O.J. No. 4541, 56 C.C.L.I. (4th) 116, 64 C.C.P.B. 277 (S.C.J.), consd

Other cases referred to

Abdulrahim v. Manufacturers Life Insurance Co. (2003), 2003 48161 (ON SC), 65 O.R. (3d) 543, [2003] O.J. No. 2592, [2003] O.T.C. 606, 44 M.V.R. (4th) 285, 124 A.C.W.S. (3d) 174 (S.C.J.); Brissette Estate v. Westbury Life Insurance Co., 1992 32 (SCC), [1992] 3 S.C.R. 87, [1992] S.C.J. No. 86, 96 D.L.R. (4th) 609, 142 N.R. 104, J.E. 92-1622, 58 O.A.C. 10, 13 C.C.L.I. (2d) 1, 47 E.T.R. 109, [1992] I.L.R. Â1-2888 at 2051, 36 A.C.W.S. (3d) 449; Confederation Life Insurance Co. v. Waselenak, 1997 14916 (AB KB), [1997] A.J. No. 1204, [1998] 5 W.W.R. 712, 57 Alta. L.R. (3d) 38, 210 A.R. 241, 49 C.C.L.I. (2d) 215, [1998] I.L.R. I-3526, 75 A.C.W.S. (3d) 1121 (Q.B.); Continental Western Insurance Co. v. Swartzendruber, 570 N.W. 2d 708, 253 Neb. 365 (Sup. Ct. 1997); Crown Bank v. London Guarantee and Accident Co. (1908), 17 O.L.R. 95, [1908] O.J. No. 35 (C.A.); Dunn v. Chubb Insurance Co. of Canada (2009), 97 O.R. (3d) 701, [2009] O.J. No. 2726, 2009 ONCA 538, 266 O.A.C. 1, 75 C.C.L.I. (4th) 29; Garland v. Consumers' Gas Co., [2004] 1 S.C.R. 629, [2004] S.C.J. No. 21, 2004 SCC 25, 237 D.L.R. (4th) 385, 319 N.R. 38, J.E. 2004-931, 186 O.A.C. 128, 43 B.L.R. (3d) 163, 9 E.T.R. (3d) 163, 130 A.C.W.S. (3d) 32; Gibson v. Sun Life Assurance Co. of Canada (1984), 1984 2072 (ON SC), 45 O.R. (2d) 326, [1984] O.J. No. 3110, 6 D.L.R. (4th) 746, 7 C.C.L.I. 65, [1984] I.L.R. Â1-1754 at 6758, 24 A.C.W.S. (2d) 301 (H.C.J.); Mahn v. Canada Life Assurance Co., [1999] O.J. No. 4834, [2000] I.L.R. I-3789, 93 A.C.W.S. (3d) 901 (S.C.J.); [page266] McCracken v. Canadian National Railway Co., [2010] O.J. No. 3466, 2010 ONSC 4520, [2010] CLLC Â210-044, 3 C.P.C. (7th) 81 (S.C.J.); Morris v. Ford Motor Co., [1973] Q.B. 792 (C.A.); Morrison v. Canadian Surety Co., 1954 238 (MB CA), [1954] M.J. No. 49, 12 W.W.R. (N.S.) 57, [1954] 4 D.L.R. 736 (C.A.); Perreault v. Manufacturers Life Insurance Co., 2006 21789 (ON SC), [2006] O.J. No. 2613, 39 C.C.L.I. (4th) 285, [2006] I.L.R. 4525, [2006] O.T.C. 587, 149 A.C.W.S. (3d) 689 (S.C.J.); Pettkus v. Becker, 1980 22 (SCC), [1980] 2 S.C.R. 834, [1980] S.C.J. No. 103, 117 D.L.R. (3d) 257, 34 N.R. 384, 8 E.T.R. 143, 19 R.F.L. (2d) 165, 6 A.C.W.S. (2d) 263; Re*Collections Inc. v. Toronto-Dominion Bank, [2010] O.J. No. 5686, 2010 ONSC 6560, 5 C.P.C. (7th) 214, 195 A.C.W.S. (3d) 101 (S.C.J.); Richer v. Manulife Financial (2007), 85 O.R. (3d) 598, [2007] O.J. No. 1110, 2007 ONCA 214, 223 O.A.C. 97, 47 C.C.L.I. (4th) 16, 156 A.C.W.S. (3d) 201; Somersall v. Friedman, [2002] 3 S.C.R. 109, [2002] S.C.J. No. 60, 2002 SCC 59, 215 D.L.R. (4th) 577, 292 N.R. 1, J.E. 2002-1464, 163 O.A.C. 201, [2002] R.R.A. 679, 39 C.C.L.I. (3d) 1, [2002] I.L.R. I-4114, 25 M.V.R. (4th) 1, 115 A.C.W.S. (3d) 695; Swanson v. Hartford Insurance Co. of the Midest, 309 Mont. 269, 2002 MT 81 (Sup. Ct.)

Statutes referred to

Health Insurance Act, R.S.O. 1990, c. H.6, s. 30 [as am.]

Insurance Act, R.S.O. 1990, c. I.8, ss. 152 [as am.], 265(6), 267.8(1), para. 1, 278 [as am.]

Mercantile Law Amendment Act, R.S.O. 1990, c. M.10, s. 2

Ontario Disability Support Plan Act, 1997, S.O. 1997, c. 25, Sch. B, s. 52

Personal Property Security Act, R.S.O. 1990, c. P.10 s. 44(16)

Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sch. A, Part VI [as am.], s. 133(1)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 54.03, 54.04

Authorities referred to

Leverty, Vernon E."Confusion Abounds Subrogation/ Reimbursement in Health Insurance Policies and Plans"

APPLICATION by the insurer for a determination that it was entitled to deduct from disability benefits the gross amount of workers' compensation benefits received by the insured on account of the loss of earnings.

Donna M. Kraft, for RBC Life Insurance Company.

Steven R. Yormak, for Terry Janson.

GRACE J.: —

A. Background

[1] Terry Janson was injured while employed by Keddco Manufacturing Ltd. ("Keddco").[^1] [page267]

[2] Keddco had arranged long-term disability coverage for eligible employees through Provident Life and Accident Insurance Company ("Provident"). RBC Life Insurance Company ("RBC Life") is the successor of Provident.

[3] As a result of his injuries, Mr. Janson submitted claims to RBC Life, the Workplace Safety and Insurance Board ("WSIB") and the Canada Pension Plan.

[4] By letter dated June 28, 2007, RBC Life advised Mr. Janson that his claim had been accepted and that he would receive a monthly long-term disability benefit effective May 12, 2007. Concerning the amount, the letter informed Mr. Janson that

Your Group Long Term Disability plan provides you with the lesser of 70% of your basic pre-tax monthly earnings less other income benefits such as Canada Pension Plan or Workers' Compensation or 85% of your basic pre-tax monthly earnings less all other income benefits. Please refer to the monthly benefit reductions in your booklet for full details.

[5] Mr. Janson's statutory claims were rejected. He retained counsel and appealed. These applications relate to Mr. Janson's claim to the WSIB for loss of income.[^2]

[6] The appeal was outstanding for some time. On September 15, 2009, RBC Life wrote to Mr. Janson. Its position with respect to the pending WSIB appeal was set forth in these terms:

. . . if your Appeal is accepted by [WSIB], you will be required to repay RBC Insurance for the monthly benefit amount you have been receiving since May 12, 2007, as [WSIB] are first payors [sic] of benefits and your Long Term Disability benefit is an offset from [WSIB] benefits. Please have your lawyer contact us with any decisions and provide us with all correspondence including details of the amount of back payment and the monthly amount if the Appeal is accepted.[^3]

[7] By letter dated October 2, 2009, Mr. Janson's lawyer, Steven Yormak, advised that he would keep Royal Life "apprised of the WSIB appeal as requested".

[8] More time passed. Ultimately, the appeal to the Workplace Safety and Insurance Appeals Tribunal (the "tribunal") was successful. Mr. Janson was awarded two things: a non-economic loss benefit and both a retroactive and prospective loss of earnings benefit. In a December 15, 2010 letter concerning the tribunal's decision, the WSIB advised Mr. Janson as follows: [page268]

. . . the Tribunal left to the discretion of the Board the determination of the extent, duration and nature of the benefits.

. . . The medical reporting in your case confirms that you were not totally disabled from working in any capacity as a result of . . . injury but rather partially disabled with restrictions appropriate to a low back condition . . . As such I would consider you able to perform a sedentary job, likely within the minimum wage range.

Therefore, your loss of earnings benefits have been calculated to reflect 85% of the net difference between your pre-injury average earnings and average earnings based on minimum wage at the time ($8.00 per hour in February 2007). Your weekly benefit rate is therefore approximately $340.53 and represents a partial loss of earnings benefits of about 59%.

As well it appears that your low back condition is permanent. You are therefore entitled to a non-economic award (NEL) to reflect this. You will hear directly from this department concerning the processing of this award over the next several weeks.[^4]

[9] On January 7, 2011, Mr. Yormak advised RBC Life that

WSIB will now be paying Mr. Janson partial Loss of Earnings (L.O.E.) of $681.06 bi-weekly, being approximately $1,500 monthly until age 65. He was paid retroactively, the amount of $64,459.29 for past partial L.O.E.

[10] The letter then turned to the issue of fees. Mr. Yormak added:

As you are aware my firm's practice is limited to disability claims exclusively. In Mr. Janson's case we acted for him through three appeal levels (Claims, Appeals, Tribunal) and continue to do so.

As is our usual practice in the case of any reimbursement pursuant to an insurance policy . . . legal fees and expenses are deducted prior to reimbursement to any party as costs of recovery. We render accounts based on the results being 10% of retroactive and future benefits.

As a result of the successful result, RBC may now deduct from its monthly payments to Mr. Janson what WSIB will be paying, as well as being entitled to reimbursement . . .

Total Benefits of $298,459.29 to RBC 10% of which for fees is $29,845.00 plus HST.

[11] An account addressed to RBC Life was attached. It claimed fees of $31,405 plus HST based on a total recovery of $314,059 rather than the $298,459.29 figure set forth in the cover letter. [page269]

[12] Correspondence passed back and forth. Relying on the terms of the policy Provident issued, RBC Life asked Mr. Janson and his lawyer to remit the entire loss of earnings benefit. Nonetheless, RBC Life offered to contribute $6,500 on account of the fees incurred with respect to the WSIB appeal.

[13] That offer was rejected. Instead, the parties sorted out the discrepancy in numbers and Mr. Yormak retained $32,210.33 on account of legal fees, disbursements and harmonized sales tax pending the outcome of these proceedings. Both parties claim entitlement to that sum and any interest accruing on it.

B. The Parties' Positions

[14] Mr. Yormak argues that RBC Life is only entitled to the net amount paid or payable by the WSIB. He maintains that the Provident policy is a contract of adhesion that should be narrowly construed. He argues that the policy is ambiguous and that any ambiguity should be interpreted contrary to the interest of RBC Life. He relies on the maxim contra proferentem.

[15] Alternatively, Mr. Yormak submits that the policy in question is a contract of indemnity. He maintains that in those circumstances, RBC Life's claim is akin to subrogation and is therefore limited to the amount remaining after payment of the costs of recovery. Finally, Mr. Yormak submits that RBC Life would be unjustly enriched if it was not obligated to honour the costs that were incurred in successfully pursuing the WSIB appeal.

[16] On the other hand, Royal Life relies on the wording of the policy accepted by its insured Keddco. Its lawyer, Ms. Kraft, submits the wording clearly and unambiguously entitles RBC Life to recover the entire amount paid or payable by the WSIB without deduction of legal costs incurred by Mr. Janson.

[17] Royal Life denies that the policy is a contract of indemnity and that subrogation has any application to this fact situation. It further submits that Mr. Janson cannot satisfy any of the required elements of a claim based on unjust enrichment.

C. Analysis and Decision

[18] I start with the language of the Provident policy.

[19] Mr. Janson's entitlement under the policy was to be calculated by application of a formula. It was expressed in these words:

HOW MUCH WILL UNUMPROVIDENT PAY YOU IF YOU ARE DISABLED?

We will follow this process to figure your payment:

1. Multiply your pretax monthly earnings by 70%

2. The maximum monthly benefit is $4,000. [page270]

3. Compare the answer from Item 1 with the maximum monthly benefit. The lesser amount is your gross disability payment.

4. Subtract 100% of direct deductible sources of income from the answer in question 1[.]

[20] The phrase "direct deductible sources of income" was defined elsewhere in the policy. The definition includes an amount payable by the WSIB on account of a loss of earnings. The language used is reproduced, in part, below:

WHAT ARE DIRECT DEDUCTIBLE SOURCES OF INCOME?

UnumProvident may subtract from your gross disability payment the following deductible sources of income:

1. The amount that you receive or are entitled to receive under any Workers' Compensation Act or similar legislation.

2. The amount that you receive or are entitled to receive as disability payments or the amount you receive as retirement payments under:

-- the Canada Pension Plan[.]

[21] However, as noted, initially Mr. Janson's claim to the WSIB was rejected. The policy addressed that eventuality in these terms:

When we determine that you may qualify for benefits under Item(s) 1) and 2) in the direct deductible sources of income section . . . we will estimate your entitlement to these benefits . . .

Your Long Term Disability payment will NOT be reduced by the estimated amount if you:

apply for the disability payments under Item(s) 1) and 2) in the direct deductible sources of income section . . . and appeal your denial to all administrative levels UnumProvident feels are necessary; and

sign UnumProvident's payment option form. This form states that you promise to pay us any overpayment caused by an award.

[22] It does not appear as though Mr. Janson was asked to sign a payment option form. Nonetheless, RBC Life did not estimate or deduct any amount on account of workers' compensation while the appeal was outstanding. It awaited the appeal's outcome.

[23] Once Mr. Janson's claim for compensation under the Workplace Safety and Insurance Act, 1997^5 was finally determined, another portion of the policy was engaged. It provided that

UnumProvident has the right to recover any overpayments due to:

. . . . . [page271]

-- your receipt of deductible sources of income.

You must reimburse us in full. We will determine the method by which the repayment is to be made.

[24] Based only on the language of the policy, is RBC Life entitled to the gross amount paid by the WSIB on account of lost earnings?

[25] In my view, it is.[^6]

[26] As noted, RBC Life was entitled to "[s]ubtract 100% of direct deductible sources of income" in calculating the amount payable to Mr. Janson. Specifically identified were amounts that Mr. Janson received or was "entitled to receive under any Workers' Compensation Act or similar legislation". Ontario's Workplace Safety and Insurance Act is the successor to the Workers' Compensation Act.

[27] As noted, RBC Life paid Mr. Janson without deducting anything on account of the WSIB claim.

[28] Once the WSIB implemented the tribunal's decision, the extent of Mr. Janson's entitlement to a payment from the WSIB on account of a loss of earnings was known. RBC Life was then in a position to do that which the policy contemplated occurring at the outset: subtract "100%" of the amount the WSIB should have awarded Mr. Janson at first instance. However, practicality had intervened. Nothing had been estimated or subtracted.

[29] That fact engaged the language concerning "overpayment". RBC Life had, indeed, paid more than the formula required. Pursuant to the policy, RBC Life was entitled to recover "any overpayments" and to require that Mr. Janson "reimburse us in full".

[30] What of the legal costs Mr. Janson incurred?

[31] Mr. Yormak submitted that the policy contemplated their deduction. He referred to the fact that the overpayment provision used the words "your receipt of deductible sources of income".

[32] Mr. Yormak maintains that the word "receipt" means the amount remaining after deduction of the legal costs Mr. Janson incurred in appealing the WSIB decision to the tribunal. He relies on the decision of Stinson J. in Anand v. Belanger, [2010] O.J. No. 4064, 2010 ONSC 5356 (S.C.J.). [page272]

[33] Anand v. Belanger involved a tort action which was commenced following a motor vehicle accident. The issue was the extent of the credit due to an insurer pursuant to s. 267.8(1), para. 1 of the Insurance Act, R.S.O. 1990, c. I.8 on account of collateral benefits received by the plaintiff.

[34] Stinson J. concluded, at para. 33:

The reality is that the plaintiff incurred legal expenses to recover funds; in my view, it would be completely inequitable and contrary to principles that underlie s. 267.8(1) to require the plaintiff alone to bear the costs of recovery, while allowing the tortfeasor's insurer to receive the credit for the gross amount of any recovery. Instead, I hold that only the net proceeds after deduction of legal expenses qualify as "payments received" by a plaintiff.

[35] Stinson J. distinguished an earlier decision of Boswell J. in Green v. State Farm Mutual Automobile Insurance Co., 2009 33049 (ON SC), [2009] O.J. No. 2713, 75 C.C.L.I. (4th) 141 (S.C.J.). That case involved the interpretation of the word "received" as it appeared in Ontario policy change form Family Protection Coverage (OPCF 44R). At para. 21, Boswell J. concluded that

. . . a plain reading of the contract . . . allows the insurer to deduct all funds already obtained by the Plaintiffs in compensation for their injuries. No allowance is made for any costs incurred by insureds in pursuing recovery.

[36] In my view, neither case stands for any general proposition. Each recognizes that the task of interpreting a contract or statute requires an examination of the context in which the language appears.

[37] In this case"your receipt of deductible sources of income" -- is not a stand-alone phrase. Those words describe a precondition: an event that enabled RBC Life -- and this court -- to conclude there was an overpayment. The phrase does not address let alone establish its amount. That is determined elsewhere -- by the formula set forth earlier in these reasons.

[38] Having concluded that the words of the policy are clear and unambiguous, the maxim contra proferentem cannot apply.[^7] [page273]

[39] Mr. Yormak submitted that an entitlement to deduct legal costs should be implied even though not mentioned in the context of "direct deductible sources of income".

[40] I decline to do so for two reasons. First, terms are not readily implied. The term advocated on behalf of Mr. Janson is not required to "give business efficacy to a contract" and is not one "that the parties would say, if questioned, that they had obviously assumed".[^8]

[41] Second, the policy evidences the fact that minds did turn to the subject of legal costs when the policy was drafted. The subject was addressed in the portion of the policy relating to "indirect deductible sources of income".

[42] The indirect category included amounts received "from a third party . . . by judgment, settlement or otherwise". The payments to be made by RBC Life were determined after deduction of amounts recovered from those sources too but only "after subtracting attorney's fees". I agree with Ms. Kraft that that presence of those words in one location suggests they were intentionally excluded in the other. They cannot be implied.

[43] I turn to Mr. Yormak's next argument. He maintained that the Provident policy was a contract of indemnity. As a consequence, he submitted that Mr. Janson was entitled to be "made whole" and that therefore RBC Life was only permitted to recover the net amount of the loss of income benefits paid by the WSIB. Otherwise, Mr. Janson would be out of pocket to the extent of the legal fees incurred. He relied on a number of American authorities.

[44] For example, in Swanson v. Hartford Insurance Co. of the Midwest, 309 Mont. 269, 2002 MT 81 (Sup. Ct.), a majority of the Supreme Court of Montana concluded that [at pp. 276-77 Mont.]:

. . . it is the public policy in Montana that an insured must be totally reimbursed for all losses as well as costs, including attorney fees, involved in recovering those losses before the insurer can exercise any right of subrogation, regardless of any contract language providing to the contrary. [page274]

[45] Mr. Yormak maintains that the "made whole" doctrine is not unique to that state.[^9] Furthermore, it applies to subrogated claims and to those which "mimic subrogation" such as a right of reimbursement.^10

[46] There are similar authorities in Canada. I was referred to Crown Bank v. London Guarantee and Accident Co. (1908), 17 O.L.R. 95, [1908] O.J. No. 35 (C.A.). The defendant had issued a fidelity bond agreeing to indemnify the plaintiff against loss sustained by reason of the "dishonesty or negligence" of the plaintiff's employees. A teller stole money and absconded. After incurring substantial costs, the plaintiff was able to locate him and obtained compensation.

[47] The issue was whether the recovery was to be credited to the loss before or after deduction of legal fees and related disbursements. If the plaintiff was entitled to deduct those costs, the defendant was liable for the full amount of the bond. If not, the defendant's liability was substantially reduced.

[48] On behalf of the court, Moss C.J.O. wrote [at paras. 52 and 54]:

The contract . . . is not an undertaking to pay if another does not, but is a positive direct contract to pay a loss of the particular class. It is more in the nature of an insurance -- a contract of indemnity -- entitling the insured to payment of the loss insured against, and entitling the insurers, upon payment, to be subrogated to any rights of the insured against the person whose acts or defaults are the subject of insurance[.]

The contract placed [the plaintiff] under no obligation to take any steps or proceedings for the apprehension or punishment of the offender or, unless called upon by the defendants, to render assistance towards that end.

(Citations omitted)

[49] In light of those findings, the court concluded that the plaintiff was entitled to deduct the costs that it properly incurred in effecting recovery.

[50] From time to time, insurers are placed in the position of -- or subrogated to -- their insured. The purposes of subrogation were set forth simply and clearly in [page275] Somersall v. Friedman, supra. Writing on behalf of a majority of the Supreme Court of Canada, at p. 137 S.C.R., Iacobucci J. said:

. . . it is important to keep in mind the underlying objectives of the doctrine of subrogation which are to ensure (i) that the insured receives no more and no less than a full indemnity, and (ii) that the loss falls on the person who is legally responsible for causing it[.]

[51] I do not quarrel with those propositions. However, and with respect, they do not apply to this case. Mr. Yormak's argument is based on the premise that the policy is one of indemnity and that RBC Life is attempting to exercise a right akin to subrogation. However, the foundation for his submissions is an unsteady one.

[52] The policy does not obligate RBC Life to make Mr. Janson whole or to fully indemnify him for the earnings which were lost in consequence of his accident. RBC Life agreed to replace a portion of Mr. Janson's income: as determined by application of a formula. One of the required deductions was the amount payable by the WSIB.[^11] In other words, RBC Life's promise was only to fill a gap remaining after Mr. Janson collected amounts to which he is statutorily entitled from the WSIB.

[53] The language of the policy is consistent with RBC Life's previously quoted letter of September 15, 2009. WSIB was, indeed, one of the "first payors of benefits". From the outset, RBC Life's obligation was always limited to the stipulated percentage of Mr. Janson's wages that the WSIB did not replace. If, as here, RBC Life paid more, it was entitled to reimbursement "in full".

[54] Furthermore, I would not describe the rights of RBC Life as akin to subrogation.

[55] Subrogation is a remedy which allows a payor to seek reimbursement from another source. In Morrison v. Canadian Surety Co., 1954 238 (MB CA), [1954] M.J. No. 49, 12 W.W.R. (N.S.) 57 (C.A.), at p. 81 W.W.R. (N.S.), Coyne J.A. described the basis for subrogation:

It was invented as a means to avoid injustice by enabling a person, not previously entitled, to sue in law or equity by giving him status to assert against a person or property a claim recognized as fair and just but not maintainable as a contractual or tortious claim. [page276]

[56] That passage simply does not apply.[^12] The amount of the WSIB payments was to come off the top in determining the extent of RBC Life's liability at first instance.

[57] I am mindful that the remedy has been expanded and codified. By way of example, a right of subrogation is given expressly by a host of provincial statutes and in a variety of situations.[^13] However, in my view none of those relate to this case.

[58] Even if subrogation has any role to play in the analysis, in Canada it "may be altered by the terms of the contract between the parties".[^14] That right has been exercised.[^15]

[59] My conclusion is in line with that reached in Kobzey v. Sun Life of Canada, 2001 BCCA 517, [2001] B.C.J. No. 1840, 33 C.C.L.I. (3d) 191 (C.A.). One of the issues that arose there was whether the long-term disability ("LTD") insurer could deduct Canada Pension Plan ("CPP") payments from the benefits otherwise payable. In upholding the trial judgment, Donald J.A. wrote, at para. 10:

I do not think that the terms of the order dealing with the CPP deduction can be questioned. The policy is crystal clear in providing that the LTD payments must be reduced by the amount of CPP disability payments. It is argued on appeal that the insurer was entitled to recover only the net amount . . . after having deducted the cost of an appeal to obtain the payments . . . The contract provides for no such [deduction]. I see no error in this aspect of the order and I would not disturb it.

[60] Ruffolo v. Sun Life Assurance Co. of Canada, 2007 50284 (ON SC), [2007] O.J. No. 4541, 56 C.C.L.I. (4th) 116 (S.C.J.) is analogous. The court was asked to determine whether an insurer could deduct CPP benefits payable to the insured's children. Perell J. found [at para. 7] that the deduction was authorized "as a matter of contract interpretation" and that the "practice is not unreasonable, [page277] unconscionable, unexpected, illegal, or contrary to public policy".[^16] I agree. The wording of the policy is determinative.

[61] That brings me to Mr. Yormak's final argument. He maintains that RBC Life would be unjustly enriched if allowed to reap the benefit of the successful appeal to the tribunal without bearing the burden of the costs that were incurred along the way.

[62] The elements of unjust enrichment are well established. They are (1) an enrichment, (2) a corresponding deprivation and (3) an absence of a juristic reason for the enrichment: Pettkus v. Becker, 1980 22 (SCC), [1980] 2 S.C.R. 834, [1980] S.C.J. No. 103; Garland v. Consumers' Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, [2004] S.C.J. No. 21.

[63] For present purposes, I will assume that RBC Life will receive "an enrichment" if paid the gross rather than the net sum. I will also assume, for now, that there will be a corresponding deprivation if Mr. Janson is required to bear the legal costs incurred in pursing the appeal to the tribunal. I turn to whether there was a juristic reason for the enrichment.

[64] That element has been well analyzed. Writing on behalf of a unanimous court in Garland v. Consumers' Gas Co., supra, at para. 44, Iacobucci J. wrote in part:

But recalling this is an equitable remedy that will necessarily involve discretion and questions of fairness, I believe that some redefinition and reformulation is required. Consequently, in my view, the proper approach to the juristic reason analysis is in two parts. First, the plaintiff must show that no juristic reason from an established category exists to deny recovery . . . The established categories that can constitute juristic reasons include a contract . . . If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis.

[65] As already discussed, this case fits within an established category. The policy is a contract. It entitled RBC Life to receive that which was to have been deducted at first instance: the amounts payable by the WSIB on account of Mr. Janson's loss of earnings.

[66] Mr. Yormak submits the result is unfair: that RBC Life is receiving a windfall and that Mr. Janson incurred an expense without deriving a benefit. I disagree.

[67] If RBC Life receives the sum it seeks, it will have paid what was contractually agreed. [page278]

[68] As for Mr. Janson, RBC Life's position with respect to the payments in issue was communicated on June 28, 2007 -- long before Mr. Janson retained Mr. Yormak.[^17]

[69] The current problem may have been avoided if the policy and the related correspondence had been reviewed when counsel was first retained. The topic of legal fees could have been raised with RBC Life sooner rather than later.

[70] Instead, it was raised in late 2009 with the tribunal decision in hand and on the basis that the firm Mr. Janson retained would "render accounts based on the results being 10% of retroactive and future benefits".[^18] An account addressed to RBC Life was enclosed.[^19]

[71] It should have come as no surprise that RBC Life balked at paying an account provided by a firm it did not retain and calculated on the basis of a contingency arrangement not previously disclosed to or accepted by RBC Life. No description was provided of the services rendered except the statement in the accompanying correspondence that the firm had acted for Mr. Janson "through three appeal levels (Claims, Appeals, Tribunal) and continue to do so".

[72] As noted, despite the wording of the policy, RBC Life offered to contribute $6,500 towards costs in May 2011 notwithstanding the fact that the law firm did not provide a summary of the services rendered and time expended until 15 months later.[^20]

[73] It is unfortunate that the parties did not discuss the issue earlier but, to my mind, it has no greater significance. [page279] Mr. Janson's real complaint is that the Workplace Safety and Insurance Act, 1997 does not permit the tribunal to order reimbursement of a worker's legal costs. The absence of legislative authority is not a matter that this court has the power to rectify.[^21]

[74] Furthermore, I would not have permitted the deduction of a 10 per cent contingency fee on the basis of the material filed even if one of Mr. Yormak's arguments had carried the day. I would have directed a reference to an assessment officer for the purpose of undertaking all necessary inquiries be made to determine the fair and reasonable fee due to Mr. Janson's solicitors in respect of proceedings undertaken to recover payments from the WSIB arising from their client's loss of earnings.[^22]

D. Conclusion

[75] For the reasons given, I am of the view that RBC Life is entitled to the gross amount of the amounts paid or payable by WSIB on account of Mr. Janson's loss of earnings.

[76] RBC Life's application is granted. Mr. Janson and his solicitors are hereby directed to remit to RBC Life the principal sum of $32,210.33 plus all interest accrued and accruing thereon.

[77] Mr. Janson's application is dismissed.

[78] Given the amount in issue, I encourage the parties to attempt to resolve the issue of costs. If they are unable to do so, short written submissions not exceeding five typed pages exclusive of any offer(s) to settle and authorities may be submitted as follows:

(a) those of RBC Life are to be provided by 4:30 p.m. on June 21, 2013; and

(b) those of Mr. Janson are to be provided by 4:30 p.m. on July 11, 2013.

Application granted.

[^1]: According to a December 15, 2010 letter from the Workplace Safety and Insurance Board, Mr. Janson sustained a low back injury on January 11, 2007.

[^2]: Mr. Janson's appeal with respect to a CPP disability pension was also successful. According to the decision of the review tribunal, payments were to commence February 2012. Those payments are not in issue here.

[^3]: I believe the author meant to say that the WSIB benefits were an offset from the long-term disability benefit payable by RBC Life.

[^4]: The amounts were determined in accordance with Part VI of the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sch. A. RBC Life's claim relates to amounts paid or payable on account of the loss of earnings. It does not seek any portion of the amount paid on account of Mr. Janson's non-economic loss.

[^6]: The policy is not easy to navigate. The pages are not numbered consecutively. Similarly, headings and paragraphs are not lettered or numbered. Those matters are minor inconveniences. The policy does contain a table of contents which identifies the paragraphs relating to long-term disability. All of the provisions referenced in these reasons are drawn from those sections.

[^7]: At para. 36 of Dunn v. Chubb Insurance Co. of Canada (2009), 97 O.R. (3d) 701, [2009] O.J. No. 2726, 2009 ONCA 538, a unanimous panel of the Court of Appeal wrote:

. . . if all other rules of construction are inadequate, the doctrine of contra proferentem may be applicable to resolve an ambiguity against the party who drafted the contract. Contra proferentem is a rule of last resort and will only apply "when all other rules of construction fail": Canadian National Railway Co. v. Royal and Sun Alliance Insurance Co. of Canada, [2008] 3 S.C.R. 53, at para. 33, citing Stevenson v. Reliance Petroleum Ltd., [1956 27 (SCC)](https://www.canlii.org/en/ca/scc/doc/1956/1956canlii27/1956canlii27.html), [1956] S.C.R. 936, at p. 953.

See, too, Somersall v. Friedman, [2002 SCC 59](https://www.canlii.org/en/ca/scc/doc/2002/2002scc59/2002scc59.html), [2002] 3 S.C.R. 109, [2002] S.C.J. No. 60, at p. 137 S.C.R.; Brissette Estate v. Westbury Life Insurance Co., [1992 32 (SCC)](https://www.canlii.org/en/ca/scc/doc/1992/1992canlii32/1992canlii32.html), [1992] 3 S.C.R. 87, [1992] S.C.J. No. 86; Mahn v. Canada Life Assurance Co., [1999] O.J. No. 4834, [2000] I.L.R. I-3789 (S.C.J.), at paras. 23-27; Confederation Life Insurance Co. v. Waselenak, [1997 14916 (AB KB)](https://www.canlii.org/en/ab/abqb/doc/1997/1997canlii14916/1997canlii14916.html), [1997] A.J. No. 1204, [1998] 5 W.W.R. 712 (Q.B.); Perreault v. Manufacturers Life Insurance Co., [2006 21789 (ON SC)](https://www.canlii.org/en/on/onsc/doc/2006/2006canlii21789/2006canlii21789.html), [2006] O.J. No. 2613, 39 C.C.L.I. (4th) 285 (S.C.J.).

[^8]: Re*Collections Inc. v. Toronto-Dominion Bank, [2010] O.J. No. 5686, 2010 ONSC 6560 (S.C.J.), at para. 125; McCracken v. Canadian National Railway Co., [2010] O.J. No. 3466, 2010 ONSC 4520 (S.C.J.), at para. 217.

[^9]: Mr. Yormak relied on an article by Vernon E. Leverty"Confusion Abounds Subrogation/Reimbursement in Health Insurance Policies and Plans", that stated the doctrine had been adopted in 29 states. See, too, Continental Western Insurance Co. v. Swartzendruber, 570 N.W. 2d 708, 253 Neb. 365 (Sup. Ct. 1997).

[^11]: In Gibson v. Sun Life Assurance Co. of Canada (1984), 1984 2072 (ON SC), 45 O.R. (2d) 326, [1984] O.J. No. 3110 (H.C.J.), Henry J. described a group disability insurance policy as a "contract of partial indemnity".

[^12]: In Richer v. Manulife Financial (2007), 2007 ONCA 214, 85 O.R. (3d) 598, [2007] O.J. No. 1110 (C.A.), the result was determined based on the court's interpretation of the long-term disability plan. The court found it "unnecessary" to consider whether the insurer had a right of subrogation.

[^13]: See, for example, the Insurance Act, ss. 152, 265(6), 278; Health Insurance Act, R.S.O. 1990, c. H.6, s. 30; Ontario Disability Support Plan Act, 1997, S.O. 1997, c. 25, Sch. B, s. 52; Mercantile Law Amendment Act, R.S.O. 1990, c. M.10, s. 2; Personal Property Security Act, R.S.O. 1990, c. P.10, s. 44(16).

[^14]: Somersall v. Friedman, supra, note 7, at p. 140 S.C.R.; Abdulrahim v. Manufacturers Life Insurance Co. (2003), 2003 48161 (ON SC), 65 O.R. (3d) 543, [2003] O.J. No. 2592 (S.C.J.); Morris v. Ford Motor Co., [1973] Q.B. 792 (C.A.).

[^15]: Morris v. Ford Motor Co., supra, note 14.

[^16]: In the body of my reasons, I referred to Green v. State Farm Mutual Automobile Insurance Co., supra, and the contrary decision of Anand v. Belanger, supra.

[^17]: According to an August 9, 2012 letter, Mr. Janson's solicitors first acted on April 3, 2008. A retainer agreement dated May 16, 2008 was signed by Mr. Janson.

[^18]: The excerpt is drawn from a previously mentioned letter dated January 7, 2011.

[^19]: The account was dated January 14, 2011. According to the August 9, 2012 letter mentioned, supra, note 17, the account was subsequently reversed. Mr. Janson was also invoiced on that date for the same amount: $35,487.65. An amended account in the amount of $35,066.16 was sent to each of RBC Insurance and Mr. Janson on August 9, 2012. $31,032 was on account of fees. That amount was stated to be 10 per cent of the loss of earnings benefits paid or payable to Mr. Janson by the WSIB.

[^20]: Details of the offer are set forth in para. 7 of the affidavit of Adele Clewlow sworn May 16, 2012, and in paras. 29, 30 and 37 of the affidavit of John Cowling sworn January 26, 2012. The time summary provided by Mr. Janson's counsel appears to have been a reconstruction. I have not seen time dockets or a computer-generated time summary.

[^21]: Section 133(1) of that Act permits the WSIB or tribunal to pay "the reasonable travel and living expenses of, and other allowances for" a list of persons, including a worker and his or her witnesses. The tribunal has held that it has no jurisdiction to make an award of costs. See, for example, 2004 ONSWIAT 916 (decision 1058/00).

[^22]: I would have made those directions pursuant to rules 54.03 and 54.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

End of Document