Court File and Parties

COURT FILE NO.: 18-75294 DATE: 2020/01/20 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

JOHN MANLEY Plaintiff – and – THE MANUFACTURERS LIFE INSURANCE COMPANY Defendant

COUNSEL: John MacDonell and Christopher Spiteri, for the Plaintiff Gordon Jermane, for the Defendant

HEARD: July 4, 2019

Reasons for Decision

on motion for summary judgment

corthorn j.

Introduction

[1] Approximately two months after writing to the defendant in this matter, Manulife, to request that it cancel his critical illness insurance, the plaintiff, Mr. Manley, was diagnosed with a form of kidney cancer. Mr. Manley has since received treatment for his cancer and is said to be doing well.

[2] Following his diagnosis, and despite the antecedent cancellation of his critical illness insurance, Mr. Manley submitted a claim to Manulife for entitlement to that insurance – in the amount of $500,000. Manulife denied the claim and maintained that denial after carrying out a review of its decision at the request of Mr. Manley. As a result, Mr. Manley brought this action (“the Action”).

[3] Now, both Mr. Manley and Manulife seek to bring this action to an expeditious conclusion on this motion for summary judgment.

Background

[4] Under the umbrella of a Master Policy issued to the Canadian Bar Insurance Association (“CBIA”), Manulife issued to Mr. Manley (a) a certificate for term life insurance, and (b) coverage for critical illness insurance. The latter coverage was provided under a Critical Illness Rider effective December 1, 2009 (“the 2009 Rider”). At that time, the 2009 Rider was attached to and formed part of the Master Policy.

[5] Effective October 1, 2016, the Master Policy was replaced. The coverage for critical illness was no longer provided in the form of a rider attached to the Master Policy. Instead, the Critical Illness Insurance Rider (“Rider”) became a dedicated section (Section 9) within the Master Policy itself.

[6] The chronology of events leading to Mr. Manley’s claim under the Rider, both in this action and on this motion, are as follows.

[7] From December 1, 2009 to and including March 1, 2017, Mr. Manley pays the premiums for $500,000 in critical illness coverage (“the Insurance”).

[8] On March 13, 2017, Mr. Manley sends a letter to Customer Service at the Ottawa office for the CBIA. In their entirety, the substantive contents of the letter are:

Please see this as adequate direction to cancel my Term Life & Critical Illness insurance, certificate # 4621870 – Account # 50-41167, effective April 1, 2017.

Thank you for your immediate attention to this matter.

[9] The March 1, 2017 premium is the final premium paid by Mr. Manley towards the Rider. It is undisputed that, effective April 1, 2017, Manulife cancels Mr. Manley’s coverage pursuant to the Rider.

[10] There is no evidence of further communication between Mr. Manley and either the CBIA or Manulife between the cancellation of the coverage pursuant to the Rider and June 13, 2017. On the latter date, Mr. Manley sends a letter to Laura Ormesher, a Manager within the Disability Claims section of Manulife. Enclosed with Mr. Manley’s letter are documents related to his diagnosis of papillary renal cell carcinoma. Those documents include the following:

• A Manulife form titled “Claimant’s Statement – Critical Illness” signed by Mr. Manley on June 6, 2017 (“the Statement”);
• A Manulife form titled “Attending Physician’s Statement” (“the APS”) signed by Mr. Manley on June 6 and by Dr. Peter Kreling on June 13, 2017; and
• Copies of five health-care records related to the cancer diagnosis.

[11] In the Statement, Mr. Manley is required to inform Manulife of the dates on which he was diagnosed with cancer and on which he was advised of that diagnosis. In answer to both questions, Mr. Manley responds “23/05/2017” (i.e. May 23, 2017).

[12] Mr. Manley is also asked to “provide any further information which you feel may be helpful to us in assuring your claim.” He provides the following additional information: “Dr. Naylor advised that this tumour has been growing for many years. The tumour is not very aggressive but has been invading tissue around it.” Mr. Manley also notes that surgical treatment is planned.

[13] The APS completed by Dr. Kreling is specifically for “Critical Illness – Life Threatening Cancer.” In the APS, Dr. Kreling provides “Medical Information”, including information as to the timing of symptoms and as to when the possibility of cancer was first considered.

[14] Question 1 on the APS is: “On what date did you [sic] patient first have symptoms of cancer?” Dr. Kreling responds, “no symptoms”. Given the lack of symptoms, Dr. Kreling is required to answer question 1c: “If your patient did not suffer symptoms, when was the possibility of cancer first considered?” To that question and a follow up question, Dr. Kreling responds with “May 1/2017” and notes that the possibility of cancer was first considered as an incidental finding on an abdominal ultrasound.

[15] The APS requires Dr. Kreling to state “the date this cancer was first diagnosed” (question 3) and the date on which Mr. Manley was first advised of the diagnosis (question 3a). Dr. Kreling answers “May 1, 2017” and “May 2, 2017” to those questions, respectively. Dr. Kreling identifies the left kidney as the site of the tumour and “Fuhrman Nuclear Stage 2” as the stage the cancer had reached when it was diagnosed.

[16] At question 14, Dr. Kreling is given the opportunity to “provide details of any further information, which in your opinion, will assist [Manulife’s] Medical Consultant in assessing this claim.” Dr. Kreling provides the following additional information: “This cancer was certainly in existence for months to a year prior to detection on May 1, 2017.”

[17] Manulife responds by way of a letter from Ms. Ormesher dated July 14, 2017. In their response, Manulife refers Mr. Manley to his March 13, 2017 letter and the cancellation of his coverage effective April 1, 2017. Ms. Ormesher states that “[u]nfortunately, you were diagnosed with a critical illness in mid-May 2017. Since your coverage was no longer in force there is no contract from which to claim under; as such your claim under the above policy has been denied accordingly.”

[18] Ms. Ormesher’s letter directs Mr. Manley to an enclosure attached thereto. The enclosure provides Mr. Manley with information about Manulife’s “Customer Satisfaction and Complaint Resolution Process”.

[19] Mr. Manley avails himself of the Customer Satisfaction and Complaint Process. On July 20, 2017, he sends an email to the “Ombuds Office” at Manulife. Mr. Manley’s July 2017 email is approximately 1.5 pages long. In his email, Mr. Manley requests that the Ombuds Office review the denial of his claim to the Insurance; he relies on two grounds.

[20] Mr. Manley refers to the first ground as, “Basic Fairness in Interpretation of the Policy”. In the July 2017 email, he summarizes this ground as follows: “I would respectfully suggest that Manulife’s values (customer focus, trustworthiness and reliability) would indicate that this is a circumstance in which a strict reliance on the letter of the Policy rather than its intent in the circumstances is inappropriate.”

[21] Mr. Manley refers to the second ground as, “Reasonable Interpretation of the Critical Illness Rider”. Summarizing this ground, Mr. Manley states:

A reasonable interpretation of the Rider would suggest that symptoms and diagnosis are confirmation of the condition that is covered by the rider, but it is the condition, not the diagnosis that is the key. Medical evidence is clear that the tumour found in my kidney was present while the policy was in effect, thus satisfying the requirement for a valid claim.

[22] The Ombuds Office replies to the review request by letter dated August 1, 2017. Therein, Manulife maintains the denial of Mr. Manley’s claim of entitlement to the Insurance.

[23] On January 25, 2018, Mr. Manley commences this action. He claims damages in the amount of $500,000 for breach of contract or, in the alternative, relief from forfeiture.

[24] Manulife’s statement of defence is dated February 28, 2018. In its defence, Manulife relies on Mr. Manley’s deliberate decision to cancel the Insurance, effective April 1, 2017. Manulife alleges that, with the coverage having ceased to exist as of that date, no claim could thereafter be made under the Rider. With respect to the alternative claim, Manulife relies on Mr. Manley’s deliberate decision to cancel the Rider as evidence that Mr. Manley is not entitled to relief from forfeiture.

[25] Mr. Manley brings this motion for summary judgment. He relies on the alternative grounds of breach of contract and relief from forfeiture. Manulife responds by requesting that summary judgment be granted in its favour and that the Action be dismissed.

The Issues

a) Preliminary Issue

[26] There are no material facts in dispute. The affidavit evidence is minimal. The documentary evidence is restricted to the 2009 and 2016 policy wording, copies of the communication between the parties, and a summary of the events giving rise to Mr. Manley’s claim for damages. No viva voce evidence was called on the motion.

[27] The parties both submit that this matter is capable of being determined summarily. I agree. Based on the record before the court, the court is able to (a) make the necessary findings of fact, (b) apply the law to the facts, and (c) reach a fair and just determination on the merits: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49.

[28] I find that there is no genuine issue requiring a trial. A summary determination of this action is a proportionate, expeditious, and cost-effective means by which to achieve a just result.

[29] I therefore turn to the substantive issues to be determined.

b) Substantive Issues

[30] The issues to be determined are:

1. Is Manulife in breach of the contract of insurance by virtue of its denial of Mr. Manley’s claim under the Rider?
2. If the answer to Issue No. 1 is ‘no’, is Mr. Manley entitled to relief from forfeiture?

Issue No. 1 - Is Manulife in breach of the contract of insurance by virtue of its denial of Mr. Manley’s claim under the Rider?

a) Positions of the Parties

[31] The outcome on this issue turns on the interpretation of the Master Policy in effect as of October 2016.

[32] Simply put, Mr. Manley’s position is that, so long as the condition upon which he bases his claim ‘arose’ during the period wherein premiums were being paid, he is entitled to the Insurance. He submits that it does not matter that the condition was not diagnosed until after the end of the period in which he was paying premiums.

[33] Mr. Manley makes three alternative arguments with respect to the interpretation of the policy:

• First, he submits that there is no ambiguity in the wording of the Master Policy. It is clear that, because the cancer with which he was diagnosed ‘arose’ during the coverage period, he is entitled to the Insurance;
• In the alternative, Mr. Manley argues that there is ambiguity in the wording of the Master Policy, and that this ambiguity is to be resolved in his favour, meaning he is entitled to the Insurance; and
• Lastly, he argues that the doctrine of contra proferentum applies and results in his entitlement to the Insurance.

[34] Manulife’s position is that the Master Policy is straightforward: the triggering event for entitlement to the Insurance is the occurrence of a diagnosis. Manulife argues that the diagnosis of the condition upon which a claim is based must be made during the period in which premiums are being paid.

[35] Manulife highlights that the diagnosis of Mr. Manley’s condition was not made until approximately five weeks after the period during which Mr. Manley was paying premiums. As a result, Mr. Manley is not entitled to the Insurance.

[36] Manulife submits that this interpretation is reasonable and reflects the purpose of critical illness insurance: to assist an insured who is diagnosed with a critical illness.

b) The Law

[37] The approach to be taken when interpreting an insurance contract is well-established via several decisions of the Supreme Court of Canada. At para. 12 of their decision in Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7, [2017] 1 S.C.R. 121, the Court states:

The overriding principle is that where the language of the disputed clause is unambiguous, reading the contract as a whole, effect should be given to that clear language… Only where the disputed language in the policy is found to be ambiguous, should general rules of contract construction be employed to resolve that ambiguity… Finally, if these general rules of construction fail to resolve the ambiguity, courts will construe the contract contra proferentem, and interpret coverage provisions broadly and exclusions clauses narrowly.

[38] Applying the normal rules of construction, the court must search for an interpretation which, on the whole of the contract, appears to promote or advance the intent of the parties at the time they entered into the contract: Consolidated Bathurst Export Ltd., v. Mutual Boiler & Machinery Insurance Co., [1980] 1 S.C.R. 888, at p. 901.

[39] The court must also avoid an interpretation that gives rise to an unrealistic result, or one that would not have been in the contemplation of the parties when they entered into the contract: Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, [2010] 2 S.C.R. 245, at para. 23.

[40] When considering the wording of contractual provisions, “the words must be given their ordinary meaning, as they would be understood by the average person applying for insurance, not as they might be perceived by persons versed in the niceties of insurance law”: Sabean at para. 13 (citation omitted).

[41] The purpose of the insurance policy is significant to the determination of the parties’ reasonable expectations as to the meaning of the specific clause in dispute: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at para. 66.

[42] Certainty and predictability are important in the interpretation of insurance policies: Ledcor, at para. 40; Co-operators Life Insurance Co. v. Gibbens, 2009 SCC 59, [2009] 3 S.C.R. 605, at para. 27.

c) The Master Policy

▪ Group Policy

[43] Mr. Manley’s rights as an insured individual under the group policy issued by Manulife to the CBIA are governed by statute. Section 201 of the Insurance Act, R.S.O. 1990, c. I.8 provides that, “[a] group life insured may in his or her own name enforce a right given to him or her under a contract, subject to any defence available to the insurer against him or her or against the insured.”

[44] Manulife does not dispute that Mr. Manley has the right, as an individual insured under the Master Policy, to bring this action.

[45] In support of their denial of the claim and of their request for summary judgment dismissing the Action, Manulife relies on the wording of the Master Policy, including the Rider.

▪ Policy Wording

[46] Section 9 of the Master Policy is titled “Critical Illness Insurance Rider”. It comprises seven pages of the Master Policy. Part I of Section 9 sets out the relevant terms, and Part II the covered conditions.

[47] The specific “Terms of Coverage” are set out in Section 9.04. This section provides that, “[s]ubject to satisfactory proof of claim and any exclusions and limitation, the Company will pay the Amount Of Insurance for Critical Illness to the beneficiary of this Rider if the Insured Person suffers a Diagnosis and is alive after the Survival Period ends.”

[48] Section 9.01 sets out the definitions of a “Covered Condition”, “Diagnosis or Diagnosed”, and “Survival Period”. It is undisputed that the cancer with which Mr. Manley was diagnosed falls within the definition of a Covered Condition: see Part I, Section 9.01 and Part II, Section 2, item 4.

[49] The definition of the “Survival Period” is not relevant to the outcome in this matter: see Section 9.01 – Definitions (“the 30-day period that begins on the day of Diagnosis”).

[50] The dispute between the parties centres on the definition of “Diagnosis”. In Part I, Section 9.01, “Diagnosis or Diagnosed” is defined as follows:

[T]he certified confirmation by a Physician of the existence of a Covered Condition that meets all the requirements contained in the description of the Covered Condition, subject to any exclusions and limitations in this Rider. For some Covered Conditions, the Diagnosis must be made in Canada and must be made by a specific type of Physician, as the Company may specify.

[51] Part I, Section 9.16 prescribes how coverage under the Rider is terminated. It is terminated on the earliest of

a) the first day of the month coinciding with or immediately following the date on which the Company receives written notice from the Owner requesting this Rider be terminated;

b) the Policy Anniversary the Insured Person is Age 75;

c) any Premium Due Date if the premium due for this Rider on that date is not paid in full by the end of the Grace Period (Section 3.04);

d) the date the Certificate of Insurance to which this Rider is attached is terminated;

e) the date the Amount of Insurance for Critical Illness is paid;

f) the date this Rider is terminated by the Company or the policyholder; and

g) the date this Master Policy terminates.

[52] Part II, Section 1, item 4 excludes coverage for life-threatening cancer that falls within the “Moratorium Period”. Pursuant to that exclusion, no critical illness insurance will be paid if

a) the date of Diagnosis; or

b) the date of the symptoms and/or medical consultations or test that led to Diagnosis,

occurs within the first 90 days following the Effective Dave of Insurance for the Critical Illness Rider, or 90 days from the date of last reinstatement of Critical Illness Insurance under Section 6.02 (Reinstatement), hereinafter the “Moratorium Period.”

No Amount of Insurance will be paid for a subsequent Diagnosis of any cancer or other Covered Condition directly resulting from any cancer, or its treatment, described by the Moratorium Period.

[53] The question at hand is whether a reasonable interpretation of these Master Policy provisions supports Mr. Manley’s claim of entitlement to the Insurance.

d) Analysis

▪ Mr. Manley’s Understanding of the Policy Wording

[54] On a motion for summary judgment, the parties are required to put their best foot forward. Fulfilling that obligation requires that a party provide the court with the best evidence available in support of the party’s position.

[55] The evidence upon which Mr. Manley relies is a three-paragraph affidavit, to which five exhibits are attached (“the Manley Affidavit”). That affidavit was sworn in June 2018, approximately six months after the statement of claim in this action was issued.

[56] It appears from the copy of the statement of defence included in the record that, on February 28, 2018, the statement of defence was sent by fax to the lawyers for Mr. Manley. I find that the statement of defence was served on that date. I also draw an inference and find that Mr. Manley was aware of the contents of the statement of defence for approximately five months before he swore his affidavit in support of this motion.

[57] The first and third paragraphs of the Manley Affidavit are boilerplate introductory and conclusory paragraphs. The second paragraph simply states that true copies of the five documents listed there are attached as exhibits. The Manley Affidavit includes nothing in the nature of substantive evidence.

[58] Upon review, there is no direct evidence from Mr. Manley as to his understanding, while paying premiums, of the terms of the Rider and Master Policy.

[59] During oral argument, counsel for Mr. Manley contrasted the definition of “Moratorium”, as it appears in the 2009 Rider, with the definition of “Moratorium Period” in the Rider (see para. 51, above). In the 2009 Rider, “Moratorium” is defined as “the period of time, following the effective date, which must expire prior to the occurrence of a compensable covered condition.”

[60] Mr. Manley submits that the use of the word “occurrence” as opposed to the term “diagnosis” in the 2009 Rider is a factor to be considered when determining how a reasonable person would interpret the Rider. Mr. Manley argues that the use of the word “occurrence” means that a reasonable person would interpret the Rider as providing coverage based on a condition that ‘arose’ during the period in which premiums were being paid – even if the condition was not diagnosed until after the end of that period.

[61] I reject that submission for two reasons.

[62] First, there is no direct evidence from Mr. Manley that he (a) relied on the use of the word “occurrence” in the 2009 Rider, and/or (b) understood that the terms of coverage for the Insurance were anything other than those set out in Section 9 of the Rider and in the Master Policy.

[63] Second, the submission overlooks the contents of Mr. Manley’s July 2017 email to Manulife.

[64] In that email, Mr. Manley requests that the Ombuds Office review the denial of his claim. A copy of that email is before the court as an exhibit to the affidavit of Laura Ormesher (“Ormesher Affidavit”), upon which Manulife relies on the motion. It is notable that a copy of the July 2017 email is not an exhibit to the Manley Affidavit.

[65] In his July 2017 email, Mr. Manley does not rely on the definition of “Moratorium Period” from the 2009 Rider. Instead, he refers to the definition of “Moratorium Period” from the Rider. The latter definition says that the Moratorium Period “recognizes that the insurer will not be responsible for a condition that already existed at the time the contract comes into effect if detected within 90 days.”

[66] Based on the contents of the July 2017 email, I find that Mr. Manley fully understood that his claim is governed by the terms of the Rider (and Master Policy), and not by the terms of the 2009 Rider.

[67] The contents of Mr. Manley’s July 2017 email are also telling in terms of his understanding of the significance of the date on which he was diagnosed with cancer. In the fourth paragraph of the email, he says that there is not

any issue with respect to the relevant facts. I was diagnosed with a critical illness in mid-May 2017 (Renal Carcinoma). However, the policy had been cancelled at my initiative effective April 1, 2017. My request in May 2017 to revoke the cancellation was denied (emphasis added).

[68] In the penultimate paragraph of his July 2017 email, Mr. Manley attempts to convince Manulife that, because the tumour found in his kidney was present during the policy period, he is entitled to coverage under the Rider. He states that “[a] reasonable interpretation of the Rider would suggest that symptoms and diagnosis are confirmation of the condition that is covered by the rider, but it is the condition, not the diagnosis, that is key.”

[69] I find that the first part of this statement is another example of Mr. Manley’s understanding of the importance of the date of diagnosis to his entitlement to coverage under the Rider. The second part of the statement is nothing more than argument.

[70] In summary, the court finds that Mr. Manley understood the significance of the date of the diagnosis to his entitlement to the Insurance.

[71] In light of this understanding, is interpretation of the Rider and the Master Policy upon which Mr. Manley relies reasonable?

▪ The Policy Wording

[72] The triggering event for entitlement to critical illness insurance is “if the Insured Person suffers a Diagnosis” (emphasis added).

o A Clearly Defined Triggering Event

[73] Mr. Manley submits that “suffers a Diagnosis” is an “odd expression”. He argues that a reasonable person considering that expression in light of the wording of the Rider and of the Master Policy as a whole could conclude that the triggering event for coverage is not the making of a “Diagnosis”, but rather a “sickness or disability”. Mr. Manley’s position is that this interpretation is based on the ordinary meaning of the words used. It must, therefore, carry the day.

[74] Mr. Manley submits that, by denying the claim for the Insurance, Manulife is in breach of the terms of the Insurance.

[75] In support of this interpretation, Mr. Manley relies on Sections 3.08, 9.05, 9.10, and 9.12 of the Master Policy. Those sections address matters of process such as

• the potential for extension of the notice period within which a claim for critical illness insurance must be made (Section 9.10);
• when the requirement to pay premiums will be waived (Sections 3.08 and 9.05); and
• the period within which the critical illness insurance must be paid once a claim is accepted (Section 9.12).

[76] For the reasons that follow, I find that the interpretation of the policy wording upon which Mr. Manley relies is not supported by the wording of the Master Policy.

[77] I turn first to the notice period. Mr. Manley submits that the wording of Section 9.10 (“Failure to Give Notice Or Proof of Claim”) supports the interpretation that something other than “suffers a Diagnosis” of a Critical Condition is the triggering event for an entitlement to critical illness insurance. Section 9.10 says:

Failure to give notice or furnish proof of claim within the time period prescribed does not invalidate the claim if the notice or proof is given or furnished as soon as reasonably possible, and it is shown that it was not reasonably possible to give notice or proof within the time otherwise prescribed, but in no case later than 1 year from the date of the accident, sickness or disability.

[78] The wording of the ‘notice’ provision in the Rider is different from the wording of the notice provision in the 2009 Rider. However, the latter provision also refers to “accident, sickness or disability”. Mr. Manley submits that a reasonable person could interpret the use of the phrase “accident, sickness or disability” to mean that any one or more of those occurrences could be a triggering event for entitlement to critical illness insurance.

[79] I disagree. Section 9.10 is remedial in that it entitles the insured, in limited circumstances, to advance a claim for critical illness insurance outside the 30-day notice period otherwise prescribed by Section 9.08. The potential availability of that remedy does not give rise to the alternative interpretation of the triggering event suggested by Mr. Manley; nor does it detract from the significance of “suffers a Diagnosis” as the triggering event.

[80] I turn next to the “Waiver of Premiums on Disability” (Sections 3.08 and 9.05). Section 9.05 says that “[p]remiums for this Rider will be waived while premiums are being waived under Section 3.08 (Waiver of Premiums on Disability)”. Section 3 deals with the payment of premiums. Section 3.08 provides that, in the event of total disability, and if certain criteria are met, Manulife will waive the requirement to pay premiums or refund premiums paid, both with respect to premiums for the life insurance coverage.

[81] The Waiver of Premiums sections are, as with Section 9.10, remedial. Providing the insured with the remedy of a premium waiver during periods of total disability does not give rise to the alternative interpretation of the triggering event suggested by Mr. Manley; nor does it detract from the significance of “suffers a Diagnosis” as the triggering event.

[82] Mr. Manley also relies on the “When Claims Are Payable” (Section 9.12) provision in support of his alternative interpretation of the triggering event. That section says that “[t]he Amount Of Insurance for Critical Illness will be paid within 60 days after receipt of proof of claim deemed satisfactory by the Company.”

[83] Section 9.12 deals solely with the timing of the critical illness insurance payment, assuming the claim for entitlement to that coverage is accepted by Manulife. This section does not give rise to the alternative interpretation of the triggering event suggested by Mr. Manley; nor does it detract from the significance of “suffers a Diagnosis” as the triggering event.

[84] In summary, the court finds that the wording of the Rider and of the Master Policy does not support a conclusion that “sickness or disability” is the triggering event for entitlement to critical illness insurance.

[85] Having disposed of this argument, I next consider Mr. Manley’s alternative argument: that there is ambiguity in the wording of the policy which supports a finding in his favour on this motion.

o No Ambiguity in the Policy Wording

[86] Mr. Manley argues in the alternative that, when the Rider and the Master Policy are read in their entirety, the wording gives rise to ambiguity with respect to the triggering event for entitlement to critical illness coverage. In support of this argument, he once again relies on the wording of Sections 3.08, 9.05, 9.10, and 9.12 of the Master Policy.

[87] Mr. Manley submits that the use of different phrases from one section to another of the Rider and Master Policy creates ambiguity as to the triggering event for entitlement to the Insurance. Once again, he refers to “suffers a Diagnosis” versus “sickness and disability” or “Critical Illness”.

[88] I reject the submission that, when read as a whole, the Master Policy, including the Rider, gives rise to ambiguity with respect to the triggering event for entitlement to critical illness insurance. Rather, I find Mr. Manley’s approach to be something in the nature of ‘cherry-picking’: select phrases are identified without consideration for the purpose of the section of the Master Policy within which the phrases are found.

[89] Using clear language, Section 9.04 (Terms Of Coverage) identifies the Diagnosis of a condition covered by the Rider as the triggering event for the payment of critical illness insurance. Both the “Survival Period” and the “Moratorium Period Exclusion” highlight the significance of the Diagnosis as the triggering event for entitlement to that insurance.

[90] The “Survival Period” (Section 9.04) is defined as “the 30-day period that begins on the day of the Diagnosis” (Section 9.01). The insured must remain alive after the Survival Period ends to be entitled to payment of critical illness insurance.

[91] Part II, Section 1, item 4 excludes coverage for life-threatening cancers that are diagnosed within the first 90 days of the policy period or the reinstatement of Critical Illness. The “Moratorium Period Exclusion” provides that

[no] Amount of Insurance under this condition will be paid if:

a) The date of Diagnosis; or

b) The date of symptoms and/or medical consultations or test that led to Diagnosis,

occurs within the first 90 days following the Effective Date Of Insurance for the Critical Illness Rider, or 90 days from the date of last reinstatement of Critical Illness Insurance under Section 6.02 (Reinstatement), hereinafter the “Moratorium Period.”

[no] Amount of Insurance will be paid for a subsequent Diagnosis of any cancer or other Covered Condition directly resulting from any cancer, or its treatment, described by the Moratorium Period.

[92] In summary, the Diagnosis is the organizing principle for entitlement to critical illness insurance. Rooting the entitlement to coverage, the survival period, and the moratorium period around the date of Diagnosis provides certainty and predictability for both the insured and Manulife. The making of a diagnosis by a physician – and the receiving of a diagnosis by the insured person – is a clear, undisputable event which validates the existence of a Covered Condition.

[93] I agree with Manulife that “suffers a Diagnosis” is intended to emphasize the experiential nature of receiving a diagnosis. As such, it is not an “odd phrase” as is submitted by Mr. Manley.

[94] To rely, as Mr. Manley argues in his July 2017 email, on the onset of the “condition” rather than the date of diagnosis would give rise to uncertainty and unpredictability. Reliance on the date on which the Covered Condition ‘arose’ would lead to (a) disputes between the insured person and Manulife as to when the condition arose, and (b) uncertainty in many cases. Uncertainty detracts from the purpose of critical illness insurance: to assist a person who has been diagnosed with a Covered Condition.

[95] Consider, for example, the additional information provided by Dr. Kreling in the APS. He said that “[t]his cancer was certainly in existence for months to a year prior to detection on May 1, 2017.” That statement provides minimal certainty – if any – as to when Mr. Manley’s cancer arose.

[96] Both Mr. Manley and Dr. Kreling identify May 2017 as the month during which the diagnosis of cancer was made and given to Mr. Manley. It was not until May 2017, after the diagnosis was made, that Dr. Kreling was in a position to provide the requisite “certified confirmation by a Physician” of the existence of the cancer (Section 9.01). That element of the definition of “Diagnosis or Diagnosed” serves to emphasize the importance of the objective validation, by a physician, of the existence of the Covered Condition.

[97] In summary, the language of the Rider and of the Master Policy is clear. There is no ambiguity. The date on which the Diagnosis of a Covered Condition is made is the triggering event for entitlement to payment of critical illness insurance.

[98] In the absence of ambiguity, it is not necessary to consider Mr. Manley’s submission that the doctrine of contra proferentem should be applied when interpreting the Rider and the Master Policy.

[99] In light of the foregoing, what, then, is the impact of the May 2017 cancer diagnosis on Mr. Manley’s claim for entitlement to the Insurance?

e) Application to Mr. Manley’s Claim

[100] There is a discrepancy in Mr. Manley and Dr. Kreling’s respective accounts as to the precise date in May on which the diagnosis of papillary renal cell cancer was made:

• In the Statement, Mr. Manley identifies May 23, 2017 as the date on which the diagnosis was both made and given to him.
• In his July 2017 email to Manulife, Mr. Manley says, “I was diagnosed with a critical illness in mid-May 2017”.
• In the APS, Dr. Kreling identifies May 1, 2017 as the date of the diagnosis, and May 2, 2017 as the date on which the diagnosis was given to Mr. Manley.

[101] Regardless of this discrepancy, and based on the evidence before the court, I find that the diagnosis was both made and given to Mr. Manley in May 2017. To make this finding, it is not necessary for me to exercise the additional powers set out in r. 20.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[102] It is undisputed that Mr. Manley ceased paying premiums for the Insurance as of March 31, 2017. In his July 2017 email to Manulife, Mr. Manley acknowledges that the coverage for the Insurance was in effect until the end of March 2017.

[103] Ongoing premium payment is important and integral to the existence of the insurance for which the premiums are paid. In Pluzak v. Gerling Global Life Insurance Company, (2001), 52 O.R. (3d) 520, the Ontario Court of Appeal addressed the importance of such payments to the existence of coverage in the context of a life insurance policy. At para. 18, the Court states that “[t]he premium is the payment for coverage for the next term. Subject to the grace provision, there is no coverage for that term when a payment is not made and the insurer arranges its commercial affairs accordingly … the contract terminates on its own and not by a breach.”

[104] The importance of the payment of premiums to the existence of coverage is highlighted in the introductory paragraphs of the Master Policy. The second such paragraph states that Manulife

will provide insurance on Insured Persons, subject to the exceptions, limitations and provisions contained in this Master Policy, and, in consideration of the premiums received and statements contained in the individual applications of Insured Persons, will pay benefits to those persons entitled to receive them.

[105] Mr. Manley requested that the Rider be cancelled effective March 31, 2017. He paid no premiums for the Insurance beyond that date. The Rider does not include a framework that provides coverage for diagnoses made beyond the end of the coverage period.

[106] Furthermore, even if Mr. Manley’s argument were accepted, and the existence of the Covered Condition as of March 31, 2017 (when he ceased paying premiums) was sufficient to entitle him to the Insurance, the period within which Mr. Manley was required to submit a claim had expired by June 2017 when he notified Manulife of his claim. Pursuant to the policy, Mr. Manley had, at most, 30 days from March 31, 2017 to provide his Notice of Claim to Manulife (i.e., by April 30, 2017). The evidence upon which Mr. Manley relies supports a finding that it was not until June 13, 2017 that he sent his Notice of Claim to Manulife. Therefore, even pursuant to Mr. Manley’s argument (which I reject), his claim was out of time and he is not entitled to the Insurance.

[107] Having found that Mr. Manley is not entitled to the Insurance, based on a reasonable interpretation of the policy wording, I turn to whether he is entitled to relief from forfeiture.

Issue No. 2 - If the answer to Issue No. 1 is ‘no’, is Mr. Manley entitled to relief from forfeiture?

a) Positions of the Parties

[108] Mr. Manley argues that he “perfectly” complied with the requirements of the Rider: see Manley factum, at para. 42. Regardless, his request for relief from forfeiture is contingent on the court concluding that his conduct (i.e. giving notice of his claim outside the 30-day period prescribed in Section 9) amounts, at the very least, to ‘imperfect compliance’.

[109] Mr. Manley argues that he has satisfied the three common law criteria for entitlement to relief from forfeiture: (a) his conduct was reasonable; (b) the submission of his claim beyond the coverage period is minor and inconsequential; and (c) the loss suffered by Mr. Manley by reason of the denial of his claim far outweighs any prejudice suffered by Manulife because of the timing of the submission of Mr. Manley’s claim.

[110] In addition to relying on the common law test for entitlement to relief from forfeiture, Mr. Manley relies on both s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“Relief against penalties”) and s. 129 of the Insurance Act, R.S.O. 1990, c. I.8 (“Relief from forfeiture”).

[111] Manulife argues that neither statutory provision is applicable in the circumstances. With respect to relief from forfeiture at common law, Manulife submits that Mr. Manley is not entitled to that remedy because there is no coverage available to him under the Rider.

[112] If, however, the court determines that relief from forfeiture may be available to Mr. Manley, Manulife argues, for the reasons that follow, that Mr. Manley is unable to satisfy the three criteria for entitlement to that remedy:

a) Mr. Manley unilaterally and voluntarily chose to stop paying premiums for coverage under the Rider effective March 31, 2017;

b) As a lawyer, Mr. Manley appreciated the impact of cancellation of coverage under the Rider;

c) There is no evidence that Mr. Manley made any attempt, subsequent to March 31, 2017, to pay premiums for coverage under the Rider;

d) There is no evidence that Mr. Manley asked Manulife to maintain coverage under the Rider for any period subsequent to March 31, 2017; and

e) There is no evidence that Mr. Manley was told by Manulife or anyone else, or that he otherwise understood that he had coverage under the Rider, subsequent to March 31, 2017.

b) The Law

▪ Statutory Provisions

[113] Section 98 of the Courts of Justice Act gives the court broad discretion to “grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just.”

[114] Section 129 of the Insurance Act deals specifically with entitlement to relief from forfeiture in circumstances of imperfect compliance:

Where there has been imperfect compliance with a statutory condition as to the 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.

▪ Common Law

[115] The failure to give notice of a claim within the period prescribed by the applicable policy has been held to constitute imperfect compliance: Kozel v. The Personal Insurance Company, 2014 ONCA 130, 119 O.R. (3d) 55, at paras. 30-31, 50.

[116] Where there has been imperfect compliance on the claimant’s part, three factors are considered to determine whether relief from forfeiture will be granted: (a) the reasonableness of the claimant’s conduct, (b) the gravity of the claimant’s breach of contract, and (c) the disparity between the value of what would be forfeited and the damage caused by the breach: Dube v. RBC Life Insurance Co., 2015 ONCA 641, 127 O.R. (3d) 161, at para. 6.

c) Analysis

[117] For the reasons that follow, I conclude that Mr. Manley is not entitled to relief from forfeiture precisely because there is no coverage available to him under the Rider.

[118] At paras. 17-18 of Pluzak, the Ontario Court of Appeal addressed the significance of the failure to pay premiums. It held that this failure leads to the termination of the policy, and that the policy does not come to an end because of a breach by either party. The Court states that “[i]n these circumstances … There is no forfeiture in the sense of a loss of a property. To be sure the coverage has been lost, but it wasn’t paid for in the first place.”

[119] I find that Mr. Manley was unable to comply with the provisions of the Rider because the Rider was terminated by the end of March 2017. Therefore, in the circumstances, Mr. Manley has not lost the right to anything; he has forfeited nothing.

[120] The importance of Mr. Manley’s unilateral and deliberate decision to terminate the Rider, effective March 31, 2017, cannot be overstated. In making this decision, Mr. Manley took the risk that he would, subsequent to that date, receive a diagnosis of an illness that would otherwise be considered a Critical Condition, but would not be entitled to the Insurance.

[121] There is no evidence from Mr. Manley as to his understanding, during the first five months of 2017, of his medical condition. However, the contents of the documents included under cover of Mr. Manley’s June 2017 letter to Manulife provide some evidence as to what was happening during those months.

[122] In the Statement, Mr. Manley informs Manulife that the cancerous tumour was “observed as an incidental discovery during an ultrasound on May 1, 2017 … done as part of an investigation into hemochromatosis.” In the same document, Mr. Manley tells Manulife that the “hemochromatosis inquiry” began on January 9, 2017. Therefore, it can be inferred that Mr. Manley made the decision to cancel the critical illness insurance at a time when he was aware of hemochromatosis as a differential diagnosis.

[123] A definition of hemochromatosis is not included in the record. I understand that this condition can result in excess iron being stored in a person’s organs, including their liver, heart, and/or pancreas. The excess iron can, in turn, lead to life-threatening conditions such as liver disease, heart problems, and diabetes.

[124] There is no evidence as to Mr. Manley’s understanding of hemochromatosis as of January 2017, when the investigation of his symptoms began, or as it continued in the next several months. Regardless, at a time when Mr. Manley knew that investigation was being carried out, he decided to cancel the Rider effective March 31, 2017. In his July 2017 email to Manulife, Mr. Manley acknowledges the deliberate nature of that decision, stating that “the policy had been cancelled at my initiative effective April 1, 2017”.

[125] The significance of his termination of coverage under the Rider is not lost on Mr. Manley. In his July 2017 email, Mr. Manley describes his first communication with Manulife following receipt of the cancer diagnosis as a request to revoke the “cancellation” of the coverage under the Rider. At para. 56 of his factum, Mr. Manley recognizes that the “coverage period” ended on March 31, 2017.

[126] It is easy to understand why, upon receipt of the cancer diagnosis in May 2017, Mr. Manley communicated with Manulife in an effort to secure payment of the Insurance for which he previously had coverage. Unfortunately for Mr. Manley, the loss of entitlement to that Insurance is the consequence of the decision he made several months earlier to terminate the Rider effective March 31, 2017.

Summary

[127] Manulife’s denial of Mr. Manley’s claim for payment of $500,000 in critical illness insurance is upheld. Manulife is not in breach of the Master Policy. Mr. Manley’s motion for summary judgment is dismissed. Manulife’s request for summary judgment in the form of an order dismissing Mr. Manley’s claim is granted.

Costs

[128] If Manulife, as the successful party, intends to pursue its costs of the motion, then written submissions shall be made as follows:

a) The submissions shall be limited to a maximum of four pages, exclusive of a bill of costs;

b) Written submissions shall comply with Rule 4 of the Rules of Civil Procedure;

c) Hard copies of any case law or other authorities relied on shall be provided with the submissions and shall comply with Rule 4 of the Rules of Civil Procedure with respect to font size;

d) The submissions, the documents referred to therein, and case law and other authorities shall be on single-sided pages;

e) Manulife shall deliver its costs submissions by 4:00 p.m. on the twentieth business day following the date on which this ruling is released;

f) Mr. Manley shall deliver his costs submissions by 4:00 p.m. on the thirtieth business day following the date on which this ruling is released; and

g) The reply submissions, if any, of Manulife shall be delivered by 4:00 p.m. on the thirty-fifth business day following the date on which this ruling is released. Reply submissions shall comply with paragraphs (a) to (d) above.

Madam Justice Sylvia Corthorn

Released: January 20, 2020