COURT FILE NO.: 13-0440
DATE: 2019/11/22
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MAUREEN YVONNE HILL
Plaintiff
– and –
TRANSAMERICA LIFE CANADA
Defendant
– and –
ERIC JOHNSON and TURN OF THE CENTURY CONSULTING INC.
Defendants
Colin Wright, for the Plaintiff
A. Charles Gluek, for the Defendant Transamerica Life Canada
Anna Markiewicz, for the Defendants Eric Johnson and Turn of the Century Consulting Inc.
HEARD: September 25, 2019
Endorsement
LABROSSE J.
BACKGROUND
[1] In or about June 2000, Robert Hill subscribed to a ten (10) year, renewable term life insurance policy with a face value of $200,000.00 (“First Policy”) with the Defendant, Transamerica Life Canada (“Transamerica”). The First Policy was to renew automatically without proof of insurability on August 10, 2010. Upon renewal, the annual premium was to increase from $396.00 to $1,868.00.
[2] On August 23, 2010, Mr. Hill applied to Transamerica for a replacement policy with a face value of $200,000.00 (the “Application”). The premium for the second policy was $708.00 per year but required evidence of insurability. (“Second Policy”)
[3] On September 26, 2010, Mr. Hill underwent a paramedical examination. In both the Application and in the paramedical examination report, Mr. Hill reported that he had never had a seizure.
[4] In or about November 2010, Transamerica’s underwriting process was not complete as the insurer sought additional information from Mr. Hill’s family doctor. A letter was sent to Mr. Hill on November 24, 2010, confirming that his Application could not proceed until such additional information was obtained. Once the information was obtained, the Application could be reopened and processed.
[5] On November 28, 2010, Mr. Hill suffered a seizure for which he was transported to a hospital, various tests were performed, and he lost his driver’s licence.
[6] On November 30, 2010, the evidence suggests that the Transamerica’s underwriting department would have spoken with Mr. Hill’s family doctor, Dr. Best, and received the additional information it required to proceed with the Application. The Application for the Second Policy was approved on December 30, 2010.
[7] On or about February 3, 2010, Mr. Hill received the Second Policy subject to Mr. Hill signing a Delivery Receipt and an Amendment to Application. The Plaintiff, Ms. Hill, was the named beneficiary of the Second Policy, as she had been for the First Policy.
[8] On or about February 3, 2011, Mr. Hill signed the Delivery Receipt and the Amendment to Application. The Delivery Receipt included an acknowledgement that (i) all answers in the application continued to be true and complete as of today’s date and, (ii) that anyone insured under the Policy has had no change in their health or insurability that would require a change in any answer or statement previously made in the Application and any other declaration made in connection with the application.
[9] As for the Amendment of the Application, it included a representation that Mr. Hill had not had a change in health due to injury or sickness. Mr. Hill signed both the Delivery Receipt and the Amendment to the Application without disclosing any information about his recent seizure.
[10] Mr. Hill died on May 2, 2012. After his death, the Plaintiff made a claim to Transamerica under the Second Policy.
[11] On January 22, 2013, Transamerica wrote to the Plaintiff advising that it was denying the Plaintiff’s claim under the Second Policy due to the material change in insurability of Mr. Hill between the time of the initial Application on August 23, 2010, and the date of when the policy was delivered to Mr. Hill on February 3, 2011.
[12] On April 10, 2013, the Plaintiff filed a Notice of Application solely against Transamerica seeking a declaration that the First Policy was in full force and effect as of the date of his death. No claim was advanced under the Second Policy. In addition, the Notice of Application acknowledges that Mr. Hill had failed to update his medical information to include details of the seizure he had on or about November 28, 2010.
[13] On November 28, 2013, the Plaintiff issued a Statement of Claim against all the Defendants seeking, once again, to recover solely pursuant to the First Policy. In July 2017, the Plaintiff moved to amend her Statement of Claim to claim relief under the Second Policy. It is this amendment that is now opposed by Transamerica.
[14] There is no dispute that the action did not proceed in a timely fashion. Ultimately, the Johnson Defendants, Eric Johnson and Turn of the Century Inc., provided their Affidavit of Documents on October 25, 2016, almost three years after the issuance of the Statement of Claim. The other parties provided their Affidavits of Documents shortly thereafter.
[15] The Plaintiff states that it was not until she received the Affidavit of Documents of the Johnson Defendants that she became aware of the communications between Transamerica’s underwriting department and Dr. Best on or about November 30, 2010. It became apparent that underwriting had been in contact with Dr. Best as one of the doctor’s consulted by Mr. Hill after his seizure. There is no evidence of what information Dr. Best provided to the underwriting department in or about November 30, 2010. In addition, underwriting received additional information as late as December 30, 2010. Underwriting approved Mr. Hill’s Application on December 30, 2010.
[16] The Plaintiff has acknowledged that she is advancing a new cause of action related to the Second Policy based on the document found in Johnson’s Affidavit of Documents.
ISSUES
[17] The parties agree that there are two (2) main issues before the Court that must be decided before the Plaintiff can obtain leave to amend her Statement of Claim to include a claim against the Second Policy:
Can the Plaintiff rely on the discoverability principle in order to raise the new cause of action beyond the presumptive two (2) year limitation period under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (“Limitations Act”);
Does the proposed amendment to the Statement of Claim raise a tenable cause of action?
ANALYSIS
Discoverability
[18] There is no dispute between the parties that the law relating to pleadings requires that a new cause of action be pleaded within the relevant limitation period. There is also no dispute that the relevant limitation period in this proceeding is two (2) years.
[19] It is by way of s. 5(1)(b) of the Limitations Act that the Plaintiff states that her claim under the Second Policy was not discoverable until she became aware of the ongoing involvement of Dr. Best. The jurisprudence on the issue has interpreted “first ought to have known” to mean would have found out had they used reasonable diligence: see Lima v. Moya and Mata v. Moya, 2015 ONSC 324, [2015] O.J. No. 171.
[20] It is also noted that the evidentiary threshold that must be met by the Plaintiff on such a motion is low: see Manceneli v. Royal Bank of Canada, 2018 ONCA 544, [2018] O.J. No. 3129, at paras. 23, 24.
[21] Transamerica relies on the fact that the expiry of a limitation period gives a presumption of prejudice: see Frohlick v. Pinkerton Canada Limited, 2008 ONCA 3, 88 O.R. (3d) 401.
[22] Transamerica takes the position that the Plaintiff failed to take the necessary steps to move the litigation forward in a timely fashion. This would have allowed the Plaintiff to obtain the Affidavit of Documents of the Johnson Defendants sooner and discover the fact that Dr. Best had been in contact with underwriting on or about November 30, 2010.
[23] However, it should be noted that the Plaintiff took steps to obtain Dr. Best’s file but it did not contain any indication that Dr. Best communicated with underwriting just prior to the approval of the policy. The underwriting file was within the control of Transamerica and I specifically reject the suggestion that there was no relevance to the underwriting file because the Plaintiff was only claiming under the First Policy. It is clear that the underwriting file had a significant temporal link to the Plaintiff’s entitlement to coverage.
[24] Also, based on the record before the Court, I must conclude that all parties played a part in the significant delays in moving this case forward either through delay or inaction. No party has filed evidence that allows me to conclude otherwise. I therefore specifically reject Transamerica’s submission that the Plaintiff alone failed to take the necessary steps to receive the Affidavit of Documents of the Johnson Defendants within two (2) years from January 23, 2013. The Rules of Civil Procedure, R.R.O. 1990, reg. 194, are clear that all parties have the same obligations to serve their Affidavit of Documents.
[25] While the Plaintiff shares in this responsibility, it is not appropriate for the Defendants to benefit from their non-compliance with the rules and then seek to place the blame on the Plaintiff for failing to advance the litigation. I conclude that the Plaintiff acted reasonably in seeking to obtain Dr. Best’s file and that she relied on the absence of information about Dr. Best’s contacts with underwriting in November 2010. Transamerica had that relevant information available to it and did not disclose it.
[26] The Plaintiff has thus met the criteria set out in s. 5(1)(b) of the Limitations Act to allow the Court to conclude that her cause of action under the Second Policy was not discoverable until October 25, 2016 when the Johnson Defendants served their Affidavit of Documents.
Cause of Action
[27] There is no dispute that the Plaintiff is seeking to plead a new cause of action as part of her claim against the Second Policy.
[28] The parties agree that an amendment should not be allowed where to do so would merely result in another proceeding to strike it as frivolous, vexatious or an abuse of the court process: see Keneber Inc. v. Midland (Town), (1994) 1994 CanLII 7221 (ON SC), 16 O.R. (3d) 753 at p. 7.
[29] The Plaintiff put its new cause of action forward by alleging that Mr. Hill was not required to disclose the seizure and subsequent treatment due to ambiguities in Transamerica’s documentation and that such ambiguities must be resolved in favour of the Plaintiff. The new cause of action relies on a convoluted analysis of the insurance documents that differentiates between the Application with a capital “A” and the application with small case “a”. My best effort to summarize the Plaintiff’s position is as follows:
− The Application for insurance defines the term “Application” with a capital “A” in the Application signed by Mr. Hill on August 23, 2010.
− The definition of “insurance contract” in the Application includes any medical evidence and any written statements and answers furnished as evidence of insurability. Thus, the application was not complete until all the medical information was obtained, including the final underwriting documents finally received on December 30, 2010. This was the lower case “application”.
− The underwriting documents were completed December 30, 2010 and thus the application was completed after the November 28, 2010 seizure and subsequent treatment.
− There was therefore a difference between the “Application” signed on August 23, 2010 and the “application” which included the underwriting documents, all of which was finally completed on December 30, 2010.
− The Second Policy was delivered to Mr. Hill on February 3, 2011 together with the Delivery Receipt and the Amendment to Application. Mr. Hill was therefore correct in declaring, as he did in the first part of the Delivery Receipt, “that since the date of the application, there has not been any change in the health…of any person to be covered by the policy”.
− The issuance of the Second Policy included the requirement that both the Delivery Receipt and Amendment to Application be signed. Those documents use “Application” and “application” at various times.
− It was therefore ambiguous on whether the documents required Mr. Hill to disclose the seizure, and its ambiguity should be interpreted in favour of the insured.
[30] I am of the view that the Plaintiff’s new cause of action on the Second Policy is untenable for the following reasons:
− I agree with Transamerica that there are two (2) key steps in the formation of an insurance contract: the application for insurance and the delivery receipt. The application is used by the insurer to assess the risk of providing the requested coverage and the insured has a duty to disclose all material facts about his or her health. The delivery receipt gives effect to the offer for insurance which is based on the information provided since the application was made and confirms the information in the application.
− The underwriting process relies on the disclosure and cannot proceed effectively without full and complete disclosure of the applicant’s medical history. However, the application process is not limited to the document signed at the time of the Application. It also includes the paramedical examination and includes an ongoing obligation to maintain accurate medical information to the insurer so that the underwriting process can be completed based on all available medical information. This allows the insurer to make a full assessment of the risk prior to sending out the Delivery Receipt which is the offer of insurance that gets accepted by the insurer.
− There is no merit to the suggestion that the Delivery Receipt would only apply to changes in medical condition since underwriting completed its analysis. This is in direct conflict with the principal purpose of underwriting which is to assess risk based on all the available medical information.
− I reject the suggestion that the Application, Paramedical Examination documents, Delivery Receipt and Amendment to Application which may have used “Application” and “application” at different times created ambiguity for Mr. Hill. In the context of the completion of the Delivery Receipt, I am unable to imagine a scenario where Mr. Hill would have believed that his confirmation of no change in medical condition would have only applied from the date that underwriting completed its process. Clearly, the references to application regardless of capitalization, directed Mr. Hill to his application as completed by him on August 23, 2010.
− To support the Plaintiff’s position would require the insurer in all cases to advise the applicant of the date that underwriting had completed its process before a Delivery Receipt can be signed and the offer for insurance accepted.
− I reject the Plaintiff’s suggestion that the various insurance documents intentionally referred to “Application” and “application” and that these terms had different meanings. These terms refer to the initial application and the subsequent documents that form part of the insurance contract. This can be seen in Amendment to Application that refers to the “APPLICATION SIGNED AS OF AUGUST 23, 2010” and later says “since the date of the application”.
− While I agree with the Plaintiff that the insurance documents should be consistent in referring to defined terms and in capitalizing them, I reject the suggestion that this created an ambiguity for Mr. Hill. There were not two (2) applications: one being the “Application” and the other being the “application”. I am unable to imagine that Mr. Hill did not know that the Delivery Receipt was asking him to specifically confirm that there had been no changes in his medical condition since August 23, 2010.
[31] For these reasons, the proposed new cause of action based on the Second Policy is untenable and the requested amendment to the Statement of Claim is refused.
Costs
[32] The parties are encouraged to resolve the issue of costs. If they are unable to do so, the Defendants will have 20 days from the date of this Endorsement and the Plaintiff will have 20 days thereafter to respond. Each written costs submissions shall be no longer than three (3) pages in length, excluding the attachments.
Justice Marc R. Labrosse
Released: November 22, 2019
COURT FILE NO.: 13-0440
DATE: 2019/11/22
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
MAUREEN YVONNE HILL
Plaintiff
– and –
TRASAMERICA LIFE CANADA
Defendant
– and –
ERIC JOHNSON and TURN OF THE CENTURY CONSULTING INC.
Defendants
Endorsement
Justice Marc R. Labrosse
Released: November 22, 2019