Adams v. Confederation Life Insurance Co., (1994) 152 A.R. 121 (QB)

• Judge: Mason, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: April 16, 1994
• Citations: (1994), 152 A.R. 121 (QB)

Adams v. Confederation Life (1994), 152 A.R. 121 (QB)

MLB headnote and full text

Velma L. Adams (plaintiff) v. Confederation Life Insurance Company (defendant)

(Action No. 9201-17438)

Indexed As: Adams v. Confederation Life Insurance Co.

Alberta Court of Queen's Bench

Judicial District of Calgary

Mason, J.

April 16, 1994.

Summary:

The plaintiff's long-term disability benefits under a rehabilitation agreement under an insurance policy were unilaterally terminated by the insurer, who claimed the plaintiff breached the agreement. The plaintiff brought an action for a declaration that she continued to be entitled to benefits and that the insurer breached the agreement by wrongfully terminating benefits. The plaintiff claimed damages for lost benefits, interest and punitive damages.

The Alberta Court of Queen's Bench allowed the action. The court held that the insurer breached the agreement. The plaintiff was entitled to past benefits plus interest. The court awarded $7,500 punitive damages against the insurer where the insurer breached its duty of good faith.

Damage Awards - Topic 2030.6

Exemplary or punitive damages - Breach of duty of good faith - [See Insurance - Topic 730 ].

Damages - Topic 1305

Exemplary or punitive damages - Breach of contract - Bad faith - [See Insurance - Topic 730 ].

Insurance - Topic 730

Insurers - Duties - Duty of good faith - An insurer unilaterally terminated the insured's long-term disability benefits under a rehabilitation agreement under the insurance policy - The termination fol­lowed unwarranted and inept surveillance of the insured - Two independent medical opinions, obtained by the insurer, con­­firmed the insured's continuing total dis­ability, but they were ignored by the insurer - The Alberta Court of Queen's Bench stated that the insurer/insured rela­tionship imposed a duty of good faith and fair dealing on the insurer - The insurer breached that duty in this case by unjusti­fiably terminating benefits - The court awarded $7,500 punitive damages against the insurer - See paragraphs 51 to 71.

Insurance - Topic 3570

Accident and sickness insurance - The contract - Interpretation of terms - Total disability defined - The plaintiff nurse, "totally disabled" from working as a nurse, received long-term disability benefits from September 1988 to January 1990 - When the insurer terminated benefits, the parties negotiated an agreement under the reha­bilitation provisions of the policy - Under the agreement, the plaintiff worked 16 hours/week in her bookstore and disability benefits were reduced - The insurer agreed to continue benefits until age 65, if the plaintiff remained "medically disabled from performing a full-time occupation" - The insurer unilaterally terminated bene­fits, claiming surveillance evidence showed the plaintiff worked more than 16 hours/week and breached the agreement - The Alberta Court of Queen's Bench held that the insurer breached the agreement by unilaterally terminating benefits without justification - The surveillance evidence fell short of establishing the plaintiff's breach and all medical evidence confirmed that the plaintiff remained medically dis­abled from any full-time occupation - See paragraphs 1 to 50.

Insurance - Topic 3571

Accident and sickness insurance - The contract - Interpretation of terms - Total disability - Onus of proof - The plaintiff nurse, "totally disabled" from working as a nurse, received long-term disability benefits from September 1988 to January 1990 - When the insurer terminated bene­fits, the parties negotiated an agreement under the rehabilitation provisions of the policy - Under the agreement, the plaintiff worked 16 hours/week in her bookstore and disability benefits were reduced - The insurer agreed to continue benefits until age 65, if the plaintiff remained "medically disabled from performing a full-time occupation" - The insurer unilaterally terminated benefits, claiming surveillance evidence showed the plaintiff worked more than 16 hours/week and breached the agreement - The Alberta Court of Queen's Bench held that although the general rule in disability claims was that the insured had the onus of establishing the insurer breached the policy in terminating benefits, the onus fell to be determined based on the wording of the policy or agreement in issue - In this case, the onus fell on the insurer to establish that the plaintiff breached the rehabilitation agreement before the insurer could justify termination of benefits - See paragraphs 28 to 42.

Cases Noticed:

Porter v. Metropolitan Life Insurance Co. (1985), 70 N.S.R.(2d) 248; 166 A.P.R. 248 (C.A.), refd to. [para. 29].

Campbell v. Canada Life Assurance Co. (1990), 65 Man.R.(2d) 95 (C.A.), leave to appeal refused [1990] I.L.R. 1-2632; 128 N.R. 79; 72 Man.R.(2d) 80 (S.C.C.), refd to. [para. 29].

Fraser v. Maritime Life Assurance Co. (No. 1) (1974), 19 N.S.R.(2d) 412; 24 A.P.R. 412; 52 D.L.R.(3d) 204 (T.D.), refd to. [para. 30].

Lefebvre v. C.N.A. Assurance Co. (1978), 86 D.L.R.(3d) 555 (Ont. H.C.), refd to. [para. 30].

Crawford v. Citadel General Assurance Co. (1983), 54 N.S.R.(2d) 407; 112 A.P.R. 407 (T.D.), refd to. [para. 30].

Glassman v. Constellation Assurance Co., [1983] I.L.R. 1-1668 (Ont. H.C.), refd to. [para. 30].

Taaffe v. Sun Life Assurance Co., [1980] I.L.R. 1-1194 (Ont. H.C.), refd to. [para. 30].

Blackstone v. Mutual Life Insurance Co., [1945] 1 D.L.R. 165 (Ont. H.C.), refd to. [para. 31].

Mutual Life Co. of New York v. Lessard, [1943] Que. K.B. 361; 10 I.L.R. 252, refd to. [para. 32].

Walls v. Constellation Assurance Co. (1986), 17 C.C.L.I. 212 (Ont. H.C.), refd to. [para. 35].

MacDonald v. Mutual of Omaha Insurance Co. (1987), 77 N.S.R.(2d) 128; 191 A.P.R. 128; 25 C.C.L.I. 91 (C.A.), refd to. [para. 35].

Malkin v. Crown Life Insurance Co. (1989), 38 C.C.L.I. 117 (B.C.S.C.), refd to. [para. 35].

MacEachern v. Co-operative Fire and Casualty Co. (1986), 75 N.S.R.(2d) 271; 186 A.P.R. 271; 19 C.C.L.I. 189 (T.D.), refd to. [para. 35].

Stutt v. Alberta (Provincial Treasurer) (1988), 92 A.R. 275; 34 C.C.L.I. 78 (Q.B.), refd to. [para. 35].

Maschke v. Gleeson and State Farm Mutual Automobile Insurance Co. (1986), 16 O.A.C. 227; 54 O.R.(2d) 753 (Div. Ct.), refd to. [para. 54].

Fredrikson v. Insurance Corp. of British Columbia, [1990] 4 W.W.R. 637 (B.C.S.C.), refd to. [para. 55].

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161; [1985] 1 C.N.L.R. 120, refd to. [para. 56].

International Corona Resources Ltd. v. Lac Minerals, [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14; 69 O.R.(2d) 287; 35 E.T.R. 1, refd to. [para. 56].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84; 42 D.L.R.(4th) 81, refd to. [para. 56].

Burns v. Kelly Peters & Associates Ltd., [1987] 6 W.W.R. 1 (B.C.C.A.), refd to. [para. 58].

Shea v. Manitoba Public Insurance Corp. (1991), 55 B.C.L.R.(2d) 15 (S.C.), refd to. [para. 61].

Litwin Construction (1973) Ltd. v. Kiss (1988), 29 B.C.L.R.(2d) 88 (C.A.), refd to. [para. 61].

Vorvis v. Insurance Corp. of British Col­umbia, [1989] 1 S.C.R. 1085; 94 N.R. 321; 58 D.L.R.(4th) 193; [1989] 4 W.W.R. 218; 36 B.C.L.R.(2d) 273; 90 C.L.L.C. 14,035; 25 C.C.E.L. 81, refd to. [para. 71].

Authors and Works Noticed:

Balkin, Bernard L., and Keith Witten, Current Developments in Bad Faith Litigation (1993), 3 Tort & Insurance Law Journal 611, generally [para. 65].

Barker, William T., Glad, Paul E.B., and Steven M. Levy, Article (1989), 25 Tort & In­surance Law Journal 1, p. 2 [para. 63]; 8, 9 [para. 64].

Halsbury's Laws of England, vol. 25, para. 378 [para. 54].

Matthews, Paul, Uberrima Fides in Modern Insurance Law, in New Foundations for Insurance Law (F.D. Rose, ed. 1987), pp. 47, 48 [paras. 66, 67]; 49 [para. 68].

Counsel:

A.J. McConnell, for the plaintiff;

D. Anschell, for the defendant.

This action was heard before Mason, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the fol­lowing judgment on April 16, 1994.