COURT FILE NO.: CV-00650392-0000
DATE: 20211101
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DUANE SMITH
Plaintiff
- and -
SUN LIFE ASSURANCE COMPANY OF CANADA
Defendant
Alison Gilmour, lawyer for the Plaintiff
Stephen H. Shantz and Naila A. Ruba, lawyers for the Defendant
HEARD: October 18, 2021
ENDORSEMENT
DIAMOND J.:
Overview
[1] In this proceeding, the plaintiff seeks payment of all Long Term Disability (“LTD”) disability benefits allegedly due and owing under an insurance policy issued by the defendant, and in particular LTD benefits from June 13, 2020 until such time as the plaintiff attains the maximum benefit period provided for under the defendant’s policy.
[2] There is no dispute that the plaintiff did not submit a formal application for LTD benefits. The defendant relied on this fact in its Statement of Defence, and in response the plaintiff made a claim for relief from forfeiture in his Reply. As causes of action cannot be raised or pursued in a Reply, at this Court’s suggestion the plaintiff subsequently amended his Statement of Claim to properly advance a claim for relief for forfeiture.
[3] As the plaintiff has still not submitted a formal claim for LTD benefits to the defendant, the defendant brings a motion seeking summary judgment dismissing the plaintiff’s claim.
[4] The plaintiff submits that his failure to submit a formal claim for LTD benefits is imperfect compliance with the terms of the policy, and relief of forfeiture is both available and warranted. The defendant submits that this proceeding ought to be dismissed due to the plaintiff’s non-compliance with the terms of the policy. The defendant further takes the position that even if relief from forfeiture were available to the plaintiff, it cannot and should not be granted on the facts of this case.
[5] At the conclusion of argument of the defendant’s motion, I took my decision under reserve.
Chronology of Key Events
[6] At all material times, the plaintiff was employed as a gardener with the City of Kitchener (“the City”). He was insured for both Short Term Disability (“STD”) benefits and LTD benefits under Plan No. 100599 (“the Plan”) and Group Insurance Policy No. 100599 (“the policy”) respectively issued by the defendant to the City.
[7] The plaintiff submits that he became disabled (as that term is defined under both the Plan and the policy) in or around mid-December 2019. Of note, the plaintiff had previously applied for STD benefits in April 2019 due to suffering from depression. The defendant adjudicated and administered the plaintiff’s prior STD claim, which was approved. The defendant received STD benefits from early April to late May 2019, as he participated in an approved graduated return to work plan.
[8] When the plaintiff was unable to continue working commencing in mid-December 2019 (due to another depressive episode), he submitted another formal claim for STD benefits in late April 2020.
[9] The following is a summary of the key events which have occurred since that time.
Date Event
April 28, 2020 Plaintiff submits his STD claim to the defendant.
May 4, 2020 Attending Physician Statement for plaintiff’s STD claim is submitted.
May 6, 2020 Plan Member Statement submitted.
June 2020 Two internal psychiatric reviews of the plaintiff conducted by a doctor retained by the defendant
June 12, 2020 The date the plaintiff would be eligible to receive LTD benefits if he was found to be disabled under the terms of the policy.
July 16, 2020 Defendant’s medical consultant psychiatric review released, finding that there was insufficient information to conclude that the plaintiff was prevented from working. The defendant’s case manager recommends that STD benefits be declined.
July 22, 2020 Defendant’s letter sent to the plaintiff notifying him of the above decision.
July 28, 2020 Letter from plaintiff’s counsel sent to defendant advising of the plaintiff retaining the firm “with respect to his disability claim”.
August 13, 2020 Plaintiff’s doctor provides the defendant with his additional clinical notes and records up to August 2020, together with a completed medical questionnaire requested by the defendant.
August 25, 2020 Defendant dismisses plaintiff’s appeal and confirms its decision to decline STD benefits after reviewing the additional records and information provided by the plaintiff’s doctor.
September 10, 2020 Deadline for the plaintiff to submit a formal claim for LTD benefits.
September 28, 2020 Plaintiff provides the defendant with a copy of his doctor’s Attending Physician Questionnaire Claim noting a primary diagnosis of a major depressive episode, and a secondary diagnosis of osteochondral defect right knee medial femoral condyle.
October 29, 2020 Plaintiff issues Statement of Claim in this proceeding.
Summary Judgment
[10] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that the Court shall grant a summary judgment if the Court is satisfied that “there is no genuine issue requiring a trial with respect to a claim or defence.” As a result of the amendments to Rule 20 introduced in 2010, the powers of the Court to grant summary judgment have been enhanced to include, inter alia, weighing the evidence, evaluating the credibility of a deponent and drawing any reasonable inference from the evidence.
[11] In Hryniak v. Mauldin 2014 SCC 7, the Supreme Court of Canada held that on a motion for summary judgment, the Court must first determine whether there is a genuine issue requiring a trial based only upon the record before the Court, without using the fact-finding powers set out in the 2010 amendments. The Court may only grant summary judgment if there is sufficient evidence to justly and fairly adjudicate the dispute, and if summary judgment would be an affordable, timely and proportionate procedure.
[12] The overarching principle is proportionality. Summary judgment ought to be granted unless the added expense and delay of a trial is necessary for a fair and just adjudication of the case.
[13] As held in Sanzone v. Schechter 2 016 ONCA 566, only after the moving party discharges its evidentiary burden of proving that there is no genuine issue requiring a trial for resolution does the burden then shift to the responding party to prove that its claim has a real chance of success. The Court must address the threshold question of whether the moving party discharges its evidentiary obligation to put its best foot forward by adducing evidence on the merits.
[14] Nothing in Hyrniak or the subsequent jurisprudence displaces the onus upon a party responding to a motion for summary judgment to “lead trump or risk losing.” The Court must assume that the parties have put their best foot forward and placed all relevant evidence in the record. If the Court determines that there is a genuine issue requiring a trial, the inquiry does not end there and the analysis proceeds to whether a Court can determine if the need for a trial may be avoided by use of its expanded fact-finding powers.
[15] As recently held by the Court of Appeal for Ontario in Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, when hearing a motion for summary judgment, the Court must follow the analytical process set out in Hryniak and carefully analyze all the evidence relied upon by a responding party in his/her efforts to show the presence of a serious issue requiring a trial. First, the Court must consider whether there is a genuine issue requiring a trial based on the record alone and without utilizing the enhanced fact-finding powers in Rule 20.04 (2.1) of the Rules of Civil Procedure.
[16] If the Court finds the presence of a genuine issue requiring a trial on the record alone, then the second question is whether the need for a trial can be avoided by using the said fact-finding powers. In his recent decision Oxygen Working Capital Corp. v Mouzakitis 2021 ONSC 1907, Justice Myers posed the following (non-exhaustive) questions for the Court to consider at the second stage:
a) Will making findings of fact on the evidence before the court provide a fair and just result as compared to a mini-trial or a trial?
b) Does the material before the court illuminate the factual issue sufficiently to allow the judge to make findings of fact and credibility?
c) Is there something missing that is needed for basic fairness despite the fact that the parties chose not to put that evidence forward?
d) Do considerations of the litigation as a whole mandate some further process before making factual or credibility findings?
[17] Based upon my review of the evidentiary records submitted by the parties, the following issues require this Court’s determination:
Does this Court have jurisdiction to hear this proceeding?
Is the plaintiff’s failure to submit a formal claim for LTD benefits non-compliance, or imperfect compliance, with the policy requirements?
If the answer to Issue #2 is “imperfect compliance”, should relief from forfeiture be granted in favor of the plaintiff?
[18] I shall now address each issue in turn.
Issue #1: Does this Court have jurisdiction to hear this proceeding?
[19] Very little time was spent on this issue during argument of the defendant’s motion, and with good reason. The defendant argues that as the plaintiff’s dispute is with his employer, the City, section 48(1) of the Labour Relations Act S.O. 1995 c. 1 thus confers exclusive jurisdiction of this dispute to a Labour Arbitration Tribunal.
[20] In my view, the essential character of this dispute does not arise, directly or indirectly, from the terms of the collective bargaining agreement between the City and its employees. The City plays no role in the decision to approve or deny any STD or LTD benefits sought by the plaintiff. This dispute relates entirely to the plaintiff’s claimed entitlement to LTD benefits.
[21] This Court therefore has jurisdiction over this dispute.
Issue #2: Is the plaintiff’s failure to submit a formal claim for LTD benefits non-compliance, or imperfect compliance, with the policy requirements?
[22] The defendant argues that the plaintiff has no cause of action due to his failure to file a formal claim for LTD benefits as required by the terms of the policy. In support of its position, the defendant relies upon the decision in Wiles v. Sun Life 2018 ONSC 1090, appeal dismissed 2018 ONCA 766. In that case, Ms. Wiles failed to file a formal claim for LTD benefits before issuing her legal proceeding. While Ms. Wiles subsequently filed a formal claim for LTD benefits after Sun Life brought a motion for summary judgment, the Court held as follows:
“I therefore conclude that at the time of the issuance of the Statement of Claim the plaintiff’s action was doomed to fail. Sun Life had no liability to the plaintiff for Salary Continuance Services. Despite the vague references in the Statement of Claim to a ‘Policy of Insurance’ and a ‘group Disability Policy of Insurance’, these can only have been in relation to Salary Continuance Services. However, the Statement of Claim has now been amended.”
[23] Is the plaintiff’s claim “doomed to fail” due to his failure to file a formal claim for LTD benefits prior to commencing this proceeding? It is important to appreciate the difference between non-compliance and imperfect compliance. In Falk Bros Industries Ltd. v Elance Steel Fabricating Co. 1989 CanLII 38 (SCC), the Supreme Court of Canada stated as follows:
“The case law has generally treated failure to give notice of claim in a timely fashion as imperfect compliance whereas failure to institute an action within the prescribed time period has been viewed as non-compliance, or breach of a condition precedent. Thus, courts have generally been willing to consider granting relief from forfeiture where notice of claim has been delayed.
On the other hand, cases in which failure to meet a time requirement has been held to be non-compliance rather than imperfect compliance have largely been cases in which the time period was for the commencement of an action rather than for the giving of notice.”
[24] There is no dispute that if this Court concludes there has been non-compliance, summary judgment dismissing this action ought to be granted, and a consideration of the availability of relief from forfeiture is not warranted.
[25] In my view, there has been imperfect compliance with the terms of the defendant’s policy. To begin, the defendant was already well aware of the nature of the plaintiff’s alleged disability, having previously received, reviewed and adjudicated upon the plaintiff’s claim for STD benefits. The defendant’s own doctor was able to conduct two psychiatric reviews prior to recommending to the defendant that the plaintiff’s claim for STD benefits be denied.
[26] While the defendant argues that the plaintiff has still not filed a formal claim for LTD benefits at this stage, there are two factors that respond to that submission. First, if the defendant has already denied STD benefits based upon the medical evidence submitted to date, and thus concluded that the plaintiff is not disabled as that term is defined under the policy, would the defendant have taken any different position if a formal claim for LTD benefits had been submitted? There is no evidence in the record to conclude that it would have, therefore rendering its argument quite technical and crossing over into the world of “gotcha litigation”.
[27] Second, and more importantly, the Attending Physician’s Questionnaire Claim submitted by the plaintiff’s doctor on September 28, 2020 is a pre-printed form prepared by the defendant which specifically provides that the claim is for LTD benefits, as opposed to the questionnaire completed by the plaintiff’s doctor for his prior STD claim. The former blank questionnaire was provided by the defendant to the plaintiff for the purpose of the plaintiff submitting a formal claim for LTD benefits. While the claim itself was never completed and/or submitted, the questionnaire for LTD benefits was completed by the plaintiff’s attending physician, and thus the defendant has had (albeit imperfect) notice that the plaintiff was pursuing a claim for LTD benefits.
[28] Accordingly, I find that the plaintiff’s failure to submit a formal proof of claim for LTD benefits amounts to imperfect compliance, and as a result his claims could be subject to relief from forfeiture.
Issue #3: If the answer to Issue #2 is “imperfect compliance”, should relief from forfeiture be granted in favor of the plaintiff?
[29] Both parties made fulsome submissions on the issue of whether relief from forfeiture was appropriate in the circumstances. While I am obviously not deciding the merits of the plaintiff’s claim for LTD benefits, as part and parcel of the defendant’s motion for summary judgment both parties agreed that I could, and should, determine the issue of whether the plaintiff ought to be granted relief from forfeiture in the event the defendant’s primary argument was rejected.
[30] Relief from forfeiture is a discretionary, equitable remedy. The test for relief of forfeiture is well known, and requires the Court to consider three factors:
a) The conduct of the insured;
b) The gravity of the insured’s breach; and,
c) The disparity between the value of the property forfeited and the damages caused by the insured’s breach.
[31] Dealing with the first factor, the plaintiff did not deliver an affidavit in response to the defendant’s motion for summary judgment. There is no “direct, active explanation” from the plaintiff, as counsel for the plaintiff filed an affidavit stating that it was simply decided that a formal claim for LTD benefits was unnecessary.
[32] Is the plaintiff’s position reasonable? While I believe this factor to be neutral at best, I do appreciate the plaintiff’s position that it was somewhat reasonable to assume that any formal claim for LTD benefits would have been denied by the defendant in any event based upon the positions it took in response to the plaintiff’s claim for STD benefits.
[33] With respect to the second factor, the Court is to assess both the nature of the insured’s breach and the impact of the insured’s breach upon the insurer. In my view, while there was imperfect compliance with the terms of the policy, the impact upon the defendant was not substantial as the defendant had already conducted its own investigation into the merits of the plaintiff’s alleged disability. While the defendant submits that its potential adjudication of the plaintiff’s claim for LTD benefits would be “complicated by delay”, the defendant already had a relatively comprehensive understanding of the merits of the plaintiff’s alleged disability (both depression and knee issues). To the extent that the defendant requires further information, medical or otherwise, same can still be obtained through documentary and oral discovery in this proceeding. As such, this factor favours the plaintiff.
[34] With respect to the third factor, there is no doubt that the total value of the plaintiff’s claim to LTD benefits, payable to age 65, is a rather high number. At this stage, it is of course unknown whether the plaintiff’s claim for LTD benefits will be successful, and if so, for how long those LTD benefits would be paid. While the value of the plaintiff’s potential damages is unknown, there is very little evidence in the record before the Court that the defendant has or will suffer any measurable damages caused by the plaintiff’s failure to submit a formal claim for LTD benefits. I have already found that the defendant did not suffer substantial prejudice due to an alleged inability to further investigate the plaintiff’s alleged disability. In my view, any alleged prejudice suffered by the defendant is outweighed by the harm to the plaintiff if he is precluded from pursuing his claim to LTD benefits. This factor also favours the plaintiff.
[35] Accordingly, I find it to be in the interests of justice to grant the plaintiff relief from forfeiture, and I permit him to pursue his claims in this proceeding for allegedly outstanding LTD benefits.
[36] For these reasons, the defendant’s motion for summary judgment is dismissed, and the plaintiff is granted relief from forfeiture as set out above.
Costs
[37] The plaintiff is the successful party on this motion, and there is no reason why costs should not follow the event. The plaintiff’s Costs Outline sets out his partial indemnity costs totalling $21,362.65. This is exclusive of the additional attendance before me on October 6, 2021, although the costs associated with that attendance should really be borne by the plaintiff as the necessity of amending the Statement of Claim was self-imposed.
[38] The defendant’s Costs Outline comprises $6,530.50 in partial indemnity costs. There is a large discrepancy between the amount sought by both parties if successful on the motion. I have reviewed the hours spent by the plaintiff’s lawyers, and in my view some of the dockets there appear excessive (over 9 hours in legal research, nearly 20 hours to prepare the factum, etc.).
[39] In addition to the factors set out in Rule 57.01 of the Rules of Civil Procedure, I remain mindful of my obligation to consider what is “fair and reasonable” in fixing costs with a view to balancing compensation of the successful party with the overall goal of fostering access to justice.
[40] Having regard to the results achieved and the reasonable expectations of and positions taken by the parties, in my view a fair and reasonable result is an order requiring the defendant to pay the plaintiff his partial indemnity costs of this motion fixed in the all-inclusive amount of $15,000.00 forthwith.
Diamond J.
Released: November 1, 2021
COURT FILE NO.: CV-00650392-0000
DATE: 20211101
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
DUANE SMITH
Plaintiff
- and -
SUN LIFE ASSURANCE COMPANY OF CANADA
Defendant
ENDORSEMENT
Mr. Justice Diamond
Released: November 1, 2021