Dube v. RBC Life Insurance Co., 2015 ONSC 77

COURT FILE NO.: 6943/12

DATE: 2015/01/07

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Gregory Russell Dube (Plaintiff)

AND:

RBC Life Insurance Company (Defendant)

BEFORE: Justice M. A. Garson

COUNSEL: Ryan Steiner, for the Plaintiff/Responding Party

Donna M. Kraft, for the Defendant/Moving Party

HEARD: December 15, 2014

ENDORSEMENT

Introduction

[1] RBC brings a motion for summary judgment pursuant to Rule 20 of the Rules of Civil Procedure.

[2] RBC provided long term disability coverage to employees of Windsor Essex Community Housing Corporation (“the Corporation”) pursuant to the terms of policy 048659 0001 effective January 2, 2009 (“the Policy”).

[3] Gregory Dube, the plaintiff, was an employee of the Corporation and was involved in a motor vehicle accident on May 24, 2010 (“the accident”) just over a year after becoming covered under the Policy.

[4] However, Mr. Dube did not notify RBC of his potential disability claim until March 9, 2012, and did not submit a claim for long-term disability (“LTD”) benefits to RBC until June 5, 2013.

[5] According to the Policy, notice of claim should have been given 30 days after Mr. Dube’s disability began, must have been given 90 days after the disability began, and was absolutely required no later than 90 days plus one year after the disability began.

[6] RBC denied the claim on the basis of late proof of claim.

[7] For the reasons that follow, I am satisfied that the motion for summary judgment must be dismissed.

Background

[8] Mr. Dube became a full-time employee of the Corporation effective November 13, 2008. He also became a member of the union on that date.

[9] Although a different policy was in place at the time that Mr. Dube commenced employment, his coverage became effective under the Policy as of February 11, 2009.

[10] The Policy contains the following provisions pertaining to notice of a LTD claim:

We encourage you to notify us of your claim as soon as possible, so that a claim decision can be made in a timely manner. Written notice of a claim should be sent within 30 days after the date your disability begins. However, you must send RBC Insurance written proof of your claim no later than 90 days after the date your disability begins. If it is not possible to give proof within 90 days, it must be given no later than 1 year after the time proof is otherwise required except in the absence of legal incapacity. [Emphasis added.]

The claim form is available from your Employer, or you can request a claim forms from us. If you do not receive the form from RBC Insurance within 15 days of your request, send RBC Insurance written proof of claim without waiting for the form.

[Emphasis added.]

[11] The Policy also indicates that RBC will “deny your claim, or stop sending you payments, if the appropriate information is not submitted”.

[12] Booklets containing the contractual provisions referred to above were delivered to the Corporation on February 2, 2009.

[13] Mr. Dube acknowledges receipt of an envelope in or around the time he became insured under the Policy. He did not open this envelope.

[14] Just over a year after becoming covered under the Policy, Dube was involved in the accident which he claims rendered him unable to work since the date of the accident, May 24, 2010.

[15] On May 27, 2010, Mr. Dube was asked to complete forms for his automobile insurer, State Farm, including an OCF-1 form where he indicated that he did not have coverage under any other benefit plan.

[16] Around this same time, Mr. Dube provided the Corporation with an Employer’s Confirmation Form from State Farm which the Corporation completed and indicated that he was not eligible to receive any income continuation benefits, including long-term disability.

[17] Additionally, Mr. Dube had a telephone conversation with Darlene French, Manager of Human Resources for the Corporation, who advised Mr. Dube that he was not eligible to receive long-term disability benefits.

[18] Between May 27, 2010 and August 23, 2011, numerous exchanges took place between Mr. Dube and the Corporation and his physician, Dr. Lisa Jensen. Dr. Jensen completed a series of Functional Abilities Forms, opining that a complete recovery was expected and indicating areas of injury and limitations that arose therefrom.

[19] The Corporation was unable to accommodate the restrictions recommended by Dr. Jensen and Mr. Dube remained off work.

[20] Throughout this time period, Mr. Dube attended all recommended appointments and adhered to all recommended treatments. The proposed work restrictions included no heavy lifting, no repetitive bending and twisting of the lumbar spine, and no prolonged standing or walking.

[21] On July 9, 2011, Mr. Dube suffered a myocardial infarction. He required hospitalization and was further disabled for a period of time thereafter.

[22] Mr. Dube consulted with a lawyer for the first time since the accident on September 22, 2011.

[23] After consulting with counsel and speaking to Ms. French from the Corporation, Mr. Dube sent a letter requesting the reasons in writing from Ms. French as to why he did not qualify for LTD benefits.

[24] On December 6, 2011, Mr. Dube was advised by the Corporation that as he was no longer able to satisfy the terms of his contract of employment, he was now considered terminated.

[25] It was around this time that Mr. Dube’s wife found the envelope with the Policy in a pile of documents.

[26] On March 9, 2012, then counsel for Mr. Dube wrote to RBC indicating that Dube had yet to be provided with appropriate application forms and advising that this letter should be considered:

“notice of Mr. Dube’s intention to apply for LTD benefits in connection with the motor vehicle accident of May 24, 2010.”

[27] A follow-up letter was sent to RBC by counsel for Mr. Dube on May 14, 2012 asking that the requested information of March 9, 2012 be provided immediately.

[28] On May 18, 2012, RBC replied but failed to include the requested application.

[29] The statement of claim naming RBC was filed on May 23, 2012, within two years of the accident.

[30] A further letter of October 4, 2012 was sent to RBC again requesting the application form for LTD benefits.

[31] On March 19, 2013, counsel for RBC left a voicemail that proposed Mr. Dube complete an application.

[32] On April 19, 2013, counsel for RBC e-mailed a claim form for LTD benefits to counsel for Mr. Dube.

[33] Mr. Dube has endured numerous delays and challenges obtaining information and documents from both the Corporation and the union.

Positions of the Parties

RBC

[34] RBC argues that in the absence of evidence of a lack of legal capacity on the part of Mr. Dube, the absolute deadline required by the Policy was missed and the claim was properly denied.

[35] RBC pleads that Mr. Dube cannot take the benefit of the Policy without also taking its burden.

[36] RBC pleads that it complied with the duty of notice imposed upon group disability insurers under Part VII of the Insurance Act[1] and that compliance with these sections binds employees to the terms of the Policy.

[37] RBC argues that any relief from forfeiture that may be available to Mr. Dube is restricted to section 98 of the Courts of Justice Act[2] (“CJA”) and that Mr. Dube does not meet the conditions for the three-prong test for such relief.

[38] More specifically, RBC argues that it has suffered substantial prejudice from not being able to evaluate the claim at an early stage, including a loss of opportunity to assess and assist Mr. Dube with treatment.

Mr. Dube

[39] Mr. Dube argues that the last day to submit the claim would be one year and 90 days from the date of the accident, or August 23, 2011.

[40] He pleads that the letter of March 9, 2012 putting RBC on notice of his intent to apply is sufficient proof of claim and as such, the time by which the deadline is exceeded (assuming the disability begins on the date of the accident) is only six months and 17 days.

[41] Mr. Dube argues that the summary judgment motion is premature and that further evidence is needed to achieve a fair and just determination of this matter on the merits.

[42] Mr. Dube argues that he should be entitled to relief from forfeiture and that there is no actual or real prejudice to the insurer since there exists an abundance of medical information about Mr. Dube throughout the time period of the disability.

Issues

[43] The following issues need to be determined in this motion:

(i) Is there a genuine issue for trial with regard to the decision by RBC to deny coverage to Mr. Dube for failing to meet the contractually imposed deadline for submitting a claim for LTD benefits?

(ii) Is Mr. Dube entitled to relief from forfeiture as a result of his failure to comply with the timelines?

Analysis

[44] There is no evidence before me that Mr. Dube was suffering from an absence of legal capacity between May 24, 2010 and August 23, 2011.

[45] The evidence shows that the Policy wording booklet was properly sent[3] and received by Mr. Dube who simply chose to ignore it.

[46] Mr. Dube acknowledges that the extent of his knowledge of LTD benefits through the Corporation was:

(a) information from a single informal conversation with a co-worker prior to the date of the accident (about November 2008) that his employment included LTD coverage (yet he was not sure what this meant and had almost forgotten about it at the time of the accident);

(b) a Notice of Change, dated February 2, 2009, that he received from his initial benefits provider (Manulife) indicating that LTD benefits had been terminated from his Group Benefit Program; and

(c) a telephone conversation with Ms. French stating he was not eligible for LTD benefits through the Corporation, coupled with an Employer’s Confirmation Form completed by the Corporation indicating he was not eligible for such benefits.

[47] Simply put, I must decide whether equitable relief is available to someone who received, yet chooses to ignore, the information booklet on available insurance coverage outlining the steps required to engage consideration by the insurer for such coverage.

[48] RBC relies on a series of cases dealing with the failure of a group insured to make a claim within the timelines prescribed for LTD policies.

[49] These cases suggest that the insured is bound by the notice provisions of the policies, and the claim is invalidated for failure to comply with those provisions unless the plaintiff can prove entitlement on the basis of waiver, promissory estoppel or relief from forfeiture.

[50] On the facts before me, relief from forfeiture is the only claim that is advanced.

[51] I agree with RBC that there is no common law duty on them as group disability insurers to inform Mr. Dube of each individual potential claim for benefits in these circumstances.[4]

Relief from Forfeiture

[52] The statutory authority for granting relief from forfeiture in accident and sickness insurance policies is found in section 328 of the Insurance Act and states:

328. Where there has been imperfect compliance with a statutory condition as to any matter or thing to be done or omitted by the insured, person insured or claimant with respect to the loss insured against and a consequent forfeiture or avoidance of the insurance in whole or in part, and any court before which a question relating thereto is tried deems it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against the forfeiture or avoidance on such terms as it deems just.[5]

[53] The starting point in the analysis of relief from forfeiture under the Insurance Act is to determine whether the breach is one of “imperfect compliance” or “non-compliance with a condition precedent”.

[54] Only breaches relating to “imperfect compliance” are subject to relief under section 328 of the Insurance Act.[6]

[55] Imperfect compliance occurs when the breach is incidental (and not fundamental) to the insurance contract.

[56] Relief from forfeiture is also available under section 98 of the CJA, which requires the court to apply a three-part test which examines:

(a) the conduct of the applicant;

(b) the gravity of the breach; and

(c) the disparity between the value of the property forfeited and the damage caused by the breach.[7]

[57] In insurance cases, the purpose of the section 98 of the CJA remedy is to prevent hardship to beneficiaries where there has been a failure to comply with a condition for receipt of insurance proceeds and where leniency in respect of strict compliance with the condition will not result in prejudice to the insurer.

(a) Was the conduct of Mr. Dube reasonable?

[58] This factor requires an examination of the conduct of Mr. Dube as it relates to all facets of the contractual relationship between Mr. Dube and RBC.[8]

[59] In that regard, I consider:

(a) the correspondence and telephone calls between Mr. Dube and the Corporation specifically advising him that he did not have LTD coverage through the RBC policy;

(b) the uncertainty or confusion in the mind of Mr. Dube as to whether such coverage was in place with RBC; and

(c) the fact that he was compliant with numerous requests from his employer for medical information.

[60] Although I do not wish to send a message that encourages insureds to not open or review envelopes containing insurance booklets, I am satisfied on all of the evidence before me that his conduct was not unreasonable. Although not the model of perfect diligence, his actions were a far cry from unreasonable in light of all the circumstances.

(b) The gravity of the breach

[61] As earlier noted, the length of the breach (if the disability began on the date of the accident) was 6 months and 17 days.

[62] RBC had provided me with decisions where the delay in issuing the statement of claim after the date of a loss was 10 years[9] and 21 years,[10] both well outside the statutory limitation period. These cases are easily distinguishable on the facts before me.

[63] RBC also relies on the decision of Cervo v. State Farm[11] which had facts that are somewhat similar to those before me.

[64] In Cervo, the insured made a claim for statutory accident benefits. Although the policy required notice within 30 days, the plaintiff in that case did not provide any notice of claim until two days prior to the two year mark from the date of the accident (thus just getting the claim in under the wire for the statutory limitation period).

[65] In Cervo, the plaintiff retained a lawyer immediately after the accident who was aware of the entitlement to accident benefits. The matter was heard together with the plaintiff’s claim against his solicitor for negligence as there was no other reasonable explanation for the delay. There was no evidence of hardship and no indication of any medical evidence in the two years prior to giving notice.

[66] On the facts before me, Mr. Dube was, at best, confused about the need to provide notice and such confusion was exacerbated by the actions of his employer and the inactions of his union.

[67] Further, there exists an abundance of medical information available to RBC since the date of the accident. The Cervo decision is distinguishable on the facts before me.

[68] RBC further relies on Cervo to argue that it is prejudiced in its ability to respond to the claim because it has lost the opportunity to revaluate the claim at an early stage and assist Mr. Dube with possible early treatments.[12]

[69] In Cervo, the court found that there was no reasonable excuse advanced for the failure to apply for benefits in a timely fashion. Mr. Dube offers several reasons for his delay, all of which appear reasonable and provide an explanation. Unlike Cervo, Mr. Dube was not aware of his obligation and did not choose to intentionally ignore the obligation.

[70] I am mindful that RBC failed to take any steps to request any medical examinations or assessments or conduct any surveillance from the time they were placed on notice of the claim on March 9, 2012.

[71] I do not agree that there is evidence of actual or real prejudice. Mr. Dube filed an extensive medical brief which includes reports from:

(a) a physiatrist retained by the accident benefits provider dated November 20, 2013 (an independent medical assessment);

(b) a physiatrist who saw Mr. Dube on referral from his family doctor and provided reports dated March 5, 2012 and April 10, 2012; and

(c) an occupational therapist dated November 25, 2011 regarding occupational therapy services provided to Mr. Dube since October 20, 2011.

[72] Mr. Dube also included a comprehensive and extensive list of the many medical files and reports obtained to date in this matter all of which are available for examination and review by RBC.

[73] It is not uncommon in personal injury insurance claims for the insurer to not receive notice or knowledge of the claim until sometime approaching the two-year limitation period. Simply put, Mr. Dube has satisfied the onus to show that the insurer has suffered minimal or no actual prejudice as a result of the breach.

[74] In Nguyen v. SSO Life Insurance Co.,[13] the defendant’s insurance company brought a motion for summary judgment on the basis of the failure of the plaintiff to comply with the contractual limitation period. The plaintiff relied on the discoverability principle and argued that the limitation period did not begin to run because he had not discovered his entitlement to LTD benefits.

[75] In dismissing the summary judgment motion, Perell J. found that section 129 of the Insurance Act relief from forfeiture was available on the basis that caselaw has treated failure to give notice of a claim for insurance benefits as “imperfect compliance”.[14]

[76] More particularly, in finding the conduct of the plaintiff reasonable, Perell J. found that the plaintiff could not be faulted for his employer’s failure to assist him in applying for LTD benefits.[15] I agree that Mr. Dube should not be faulted for the misleading information he received from the Corporation and the further delays in waiting for the Corporation to complete its section of the proof of claim form.

(c) The disparity between the value forfeited and the damage

[77] Mr. Dube was 43 at the time of the accident. LTD benefits under the policy are payable to age 65.

[78] The benefit amount payable as per May 28, 2012 correspondence from RBC is $2497 per month.

[79] Mr. Dube previously earned $42,932.53 per year. His income replacement benefits from his accident benefit insurer are less than half his income, at $20,800 per year. He and his family are struggling at this substantially reduced level of income.

[80] LTD benefits would provide a further $897 per month, which is a considerable top-up on his current income, which may be reduced or stopped in the future.[16]

Application of Rule 20.04

[81] Rule 20.04 states that:

The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment

(2.1) In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent.

3. Drawing any reasonable inferences from the evidence.

[82] The Supreme Court of Canada has recently considered when summary judgment can be granted in Hryniak v. Mauldin 2014 SCC 7 where Karakatsanis J. at para. 49 states:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[83] This court must determine whether it can find the necessary facts, and apply the relevant legal principles to reach a just determination at this stage of the proceedings.

[84] In my opinion, based on the evidence before me in the motion records and supporting materials, I am satisfied that a genuine issue for trial exists regarding the decision by RBC to deny coverage to Mr. Dube for failing to meet the contractually imposed deadline for submitting a claim for LTD benefits.

[85] Having made this determination, I must further consider whether I can rely on the enhanced powers in Rule 20.04(2.1) to determine if the need for a trial can be avoided by using these powers.

[86] On the facts before me, I am satisfied that I may rely on these powers as doing so is in the interest of justice and will serve the ends of lost savings, proportionality and time efficiency.

[87] Relying on the expanded powers in Rule 20.04(2.1) and Rule 20.04(4), I am able to determine the issue of whether Mr. Dube is entitled to relief from forfeiture.

[88] Applying the above factors to the circumstances at bar, I conclude that Mr. Dube’s conduct was reasonable, that the gravity of the breach was on the lower end of the spectrum and that the disparity between the value forfeited and the damage caused by the breach is significant.[17]

[89] Although there exists evidence of some prejudice by way of a lost ability of RBC to conduct its own investigations and medical examinations at an early date, and to assist with therapy that may end any possible reliance on LTD benefits, the extent of such actual prejudice is unknown at this time. Further, such prejudice is outweighed by the harm that would be caused to Mr. Dube if unable to pursue the claim.

[90] I am mindful of the litany of medical records available to RBC to address any such prejudice.

[91] In light of my findings above, this is an appropriate case to grant relief from forfeiture. This result is consistent with the fundamental notions of equity.

[92] As a result of my findings, it is not necessary to determine when the contractual limitation period for Mr. Dube’s claim began to run (i.e. the date his disability begins).

Disposition

[93] For the above reasons, the motion for summary judgment is dismissed.

[94] I make a binding determination that Mr. Dube is entitled to relief from forfeiture.

Costs

[95] If the parties cannot agree on a costs disposition, I will receive typewritten submissions (not to exceed three pages exclusive of Offers to Settle and Bills of Costs) from Mr. Dube by no later than January 26, 2015 and by RBC by no later than February 17, 2015.

“Justice M. A. Garson”

Justice M. A. Garson

Released: January 07, 2015

[1] R.S.O. 1990, c. I. 8 as am

[2] R.S.O. 1990, c. 43 as am

[3] The Policy contained all of the details of coverage required under section 296 of the Insurance Act and the booklets were delivered in accordance with the requirements under s. 298 of the Insurance Act.

[4] See Reeve v. Co-operators Life, unreported decision of Taylor J. (Ont. S.C.), and Reeve v. Co-operators Life, 2013 ONCA 752 dismissing the appeal by the plaintiff from the order granting summary judgment to Co-operators and denying her claim for disability benefits.

[5] Section 129 of the Insurance Act also provides relief from forfeiture with respect to proof of loss and states: “Where there has been imperfect compliance with a statutory condition as to proof of loss to be given by the insured or other matter or thing required to be done or omitted by the insured with respect to the loss and a consequent forfeiture or avoidance of the insurance in whole or in part and the court considers it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against the forfeiture or avoidance on such terms as it considers just.”

[6] See Kozel v. Personal Insurance Co., 2014 ONCA 130, [2014], O.J. No. 753 (Ont. C.A.), which was decided under s. 98 CJA.

[7] See Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490

[8] See Kozel, supra, at para. 61

[9] See Silva v. RBC Insurance Co.

[10] See Foster v. Crown Life Insurance Co., [2003] A. J. No. 817 (Alta. Q.B.)

[11] (2006) 2006 CanLII 37119 (ON CA), 83 O.R. (3d) 205 (Ont. C.A.)

[12] See also Oberding v. Sun Life Financial Assurance Co. of Canada, [2011] O.J. No. 1031

[13] 2014 ONSC 6405, [2014] O.J. No. 5253

[14] See paras. 40 and 41

[15] See para. 46. Also see Holme Estate v. Unum Insurance Co. of America, 2000 BCCA 627 which dealt with a similar issue and granted relief from forfeiture for a delay in providing notice and proof of claim to an insurer.

[16] I am mindful of the statements of Leach J. in Gilbert v. South (2014), 2014 ONSC 3485, 120 O.R. (3d) 703 regarding the need to prevent double recovery when entitlement to collateral benefits exist. However, this factor does not dissuade me from the existence of some disparity, and existing accident benefits may cease at some future point.

[17] I am also satisfied that the relief from forfeiture may be available to Mr. Dube under either ss. 129 or 328 of the Insurance Act, as I agree with Perell J. in Nguyen that failure to give timely notice constitutes imperfect compliance. However, for the purposes of this motion, my finding is based on s. 98 CJA relief.