Asselstine v. Manufacturers Life Insurance Co. et al., 2005 BCCA 292

• Judge: Donald, Huddart and Lowry, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: May 25, 2005
• Jurisdiction: British Columbia
• Citations: 2005 BCCA 292;(2005), 213 B.C.A.C. 102 (CA)

Asselstine v. Manufacturers Life (2005), 213 B.C.A.C. 102 (CA);

    352 W.A.C. 102

MLB headnote and full text

Temp. Cite: [2005] B.C.A.C. TBEd. MY.057

E. Penney Asselstine (respondent/plaintiff) v. The Manufacturers Life Insurance Company and The University of British Columbia (appellants/defendants)

(CA031132; 2005 BCCA 292)

Indexed As: Asselstine v. Manufacturers Life Insurance Co. et al.

British Columbia Court of Appeal

Donald, Huddart and Lowry, JJ.A.

May 25, 2005.

Summary:

In March 1997, Asselstine, a registered nurse, was diagnosed with multiple sclerosis while employed by the University of British Columbia in a research facility. She took a six week leave of absence and then returned to work but was relieved of other than sedentary tasks. In May she was notified that her position was to be terminated effective the end of July due to a lack of funding. She negotiated a paid leave in lieu of working notice. In mid August she obtained employment as a doctor's receptionist. By the end of the year her health had deteriorated to the point that she was no longer able to work. Asselstine, with the assistance of the University's Department of Human Resources, made a claim under the University's long term disability plan. The plan's administrator (Manulife) rejected the claim on the basis that she was not totally disabled prior to the end of her employment with the University. Two appeals were dismissed. Asselstine sued the University and Manulife, asserting bad faith and claiming specific performance of the insurance contract or damages for breach of contract.

The British Columbia Supreme Court, in a decision reported at [2003] B.C.T.C. 1119, granted Asselstine judgment against the University and Manulife on the insurance policy and awarded her $35,000 for aggravated damages and $150,000 for punitive damages. The parties made submissions on costs.

The British Columbia Supreme Court, in a decision reported at [2004] B.C.T.C. 725, awarded Asselstine increased costs. Manulife and the University appealed. Asselstine cross-appealed, seeking an increase in the award of punitive damages.

The British Columbia Court of Appeal dismissed the action against Manulife, affirmed the award of aggravated damages against the University and substituted the costs award with an award of costs at scale 4. The court, Lowry, J.A., dissenting, upheld the punitive damage award.

Agency - Topic 5028

Relations between agent and third parties - Contracts - Personal liability of agent - General - Asselstine made a claim for long term benefits under her former employer's disability insurance plan - The plan's administrator denied the claim - Asselstine obtained judgment against the administrator and the employer - The British Columbia Court of Appeal allowed the administrator's appeal - The administrator was the employer's agent - There was no privity of contract between the administrator and Asselstine - The plaintiff did not plead a tort against the administrator - Accordingly, there was no basis for the judgment against the administrator - See paragraphs 14 to 17, 51 and 57.

Contracts - Topic 9000

Rights and liabilities of strangers to contract - General - Privity of contract - [See Agency - Topic 5028 ].

Damage Awards - Topic 2021.2

Exemplary or punitive damages - Insurers - Asselstine claimed long term disability benefits under her former employer's insurance policy - The plan's administrator denied the claim - A second level appeal was dismissed - The British Columbia Court of Appeal dismissed Asselstine's action against the administrator, but affirmed a decision granting her judgment against the employer, including an award of $150,000 for punitive damages - The purpose of awarding punitive damages was to deter decision making that departed to a marked degree from the standards an ordinary person would anticipate in obtaining disability insurance and to educate the insurer in that regard - Lowry, J.A., dissented on the issue where the award related to the administrator's conduct - Lowry, J.A., stated that punitive damages should not be awarded against a principal on a purely vicarious basis - Punitive damages were intended to punish misconduct and serve as a deterrent - Circumstances warranting punitive damages in contract cases were rare - Punishing a litigant when it was guilty of no misconduct that could be deterred was not justified - The majority of the court was of the view that there could be no meaningful separation dividing the conduct between principal and agent because of how the defendants pleaded and conducted their defences - In essence, the employer accepted the administrator's actions and had to live with that position - Accordingly, the record did not provide a basis for Lowry, J.A.'s analysis - See paragraphs 21 to 45 and 51 to 65.

Damage Awards - Topic 2412

Aggravated damages - Insurers - In March 1997, Asselstine was diagnosed with multiple sclerosis while employed by the University of British Columbia - She took a six week leave of absence and then returned to work but was relieved of other than sedentary tasks - In May she was notified that her position was to be terminated effective the end of July due to a lack of funding - She negotiated a paid leave in lieu of working notice - In mid August she obtained other employment - By the end of the year her health had deteriorated to the point that she was no longer able to work - Asselstine's claim for long term disability benefits under the University's insurance plan was denied on the basis that she was not totally disabled prior to the end of her employment with the University - A second level appeal was dismissed - The British Columbia Court of Appeal affirmed a decision granting Asselstine judgment on the insurance policy, including an award of $35,000 for aggravated damages - Although the award for aggravated damages was 75% greater than that which had been awarded in similar cases, the amount of $15,000 beyond what appeared to be the upper end was not so great as to warrant interference - See paragraphs 18 to 20 and 51.

Damages - Topic 1296

Exemplary or punitive damages - General - The British Columbia Court of Appeal stated that "Because punitive damages, unlike compensatory damages, have no natural limit, determining what amount is necessary to rationally accomplish their purpose will always involve an element of informed judgment on the part of the trier of fact." - See paragraph 62.

Damages - Topic 1296

Exemplary or punitive damages - General - The British Columbia Court of Appeal stated that punitive damages should not be used to cure perceived deficiencies in the scheme of costs - See paragraph 65.

Damages - Topic 1305

Exemplary or punitive damages - Breach of contract - [See Damage Awards - Topic 2021.2 ].

Damages - Topic 1305.1

Exemplary or punitive damages - Insurance claim denial - [See Damage Awards - Topic 2021.2 ].

Damages - Topic 1332

Exemplary or punitive damages - Vicarious liability - [See Damage Awards - Topic 2021.2 ].

Practice - Topic 7109.1

Costs - Party and party costs - Special orders - Increased costs (based on solicitor and client or special costs) - Asselstine claimed long term disability benefits under her former employer's insurance policy - The plan's administrator denied the claim - Asselstine sued the employer and the administrator - The trial judge allowed the action and awarded Asselstine increased costs - The British Columbia Court of Appeal affirmed the decision with respect to the employer and dismissed the action against the administrator - Subject to one possible exception which had no application here, the Rules of Court were amended to prohibit an award of increased costs after July 1, 2002 - The court awarded costs at Scale 4 - See paragraphs 46, 47 and 66.

Cases Noticed:

Sucharov v. Revere (Paul) Life Insurance Co., [1983] 2 S.C.R. 541; 50 N.R. 144; 26 Man.R.(2d) 161, refd to. [para. 13].

Warrington v. Great-West Life Assurance Co. (1996), 81 B.C.A.C. 164; 132 W.A.C. 164; 139 D.L.R.(4th) 18 (C.A.), refd to. [para. 18].

Eddie v. Unum Life Insurance Co. of America (1999), 128 B.C.A.C. 257; 208 W.A.C. 257; 66 B.C.L.R.(3d) 1; 1999 BCCA 507, refd to. [para. 18].

Evans v. Crown Life Insurance Co. et al. (1996), 25 B.C.L.R.(3d) 234 (S.C.), refd to. [para. 18].

Fidler v. Sun Life Assurance Co. of Canada (2004), 196 B.C.A.C. 130; 322 W.A.C. 130; 239 D.L.R.(4th) 547; 2004 BCCA 273, leave to appeal granted (2005), 336 N.R. 394 (S.C.C.), refd to. [para. 18].

Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085; 94 N.R. 321, refd to. [para. 22].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 209 D.L.R.(4th) 257; 2002 SCC 18, refd to. [para. 22].

702535 Ontario Inc. et al. v. Non-Marine Underwriters, Lloyd's, London et al. (2000), 130 O.A.C. 373; 184 D.L.R.(4th) 687 (C.A.), refd to. [para. 23].

Norberg v. Wynrib, [1992] 2 S.C.R. 226; 138 N.R. 81; 9 B.C.A.C. 1; 19 W.A.C. 1, refd to. [para. 32].

Blackwater et al. v. Plint et al., [2004] 3 W.W.R. 217; 192 B.C.A.C. 1; 315 W.A.C. 1; 235 D.L.R.(4th) 60; 2003 BCCA 671, refd to. [para. 36].

Peeters v. Canada (1993), 163 N.R. 209; 108 D.L.R.(4th) 471 (F.C.A.), refd to. [para. 37].

Roose v. Hollett et al. (1996), 154 N.S.R.(2d) 161; 452 A.P.R. 161; 139 D.L.R.(4th) 260 (C.A.), refd to. [para. 39].

M.A. and T.A. v. Canada (Attorney General) et al., [2002] 5 W.W.R. 686; 212 Sask.R. 241; 2001 SKQB 504, refd to. [para. 41].

Trans North Turbo Air Ltd. et al. v. North 60 Petro Ltd. et al. (2004), 200 B.C.A.C. 126; 327 W.A.C. 126; 2004 YKCA 9, refd to. [para. 47].

Authors and Works Noticed:

American Law Institute, Restatement of the Law (Second), Torts (2nd Ed. 1979), generally [para. 37].

Waddams, Stephen M., The Law of Damages (Rev. 2nd Ed. 1991) (2004 Looseleaf Update), pp. 11-25 [para. 34]; 11-26 [para. 39].

Counsel:

N.P. Kent and J.A. Fishman, for the appellants;

F.R.C. Dorchester and E.G. Dorchester, for the respondent.

This appeal was heard on April 18 and 19, 2005, at Vancouver, British Columbia, by Donald, Huddart and Lowry, JJ.A., of the British Columbia Court of Appeal. The decision of the court was released on May 25, 2005, with the following opinions:

Lowry, J.A., dissenting in part - see paragraphs 1 to 49;

Donald and Huddart, JJ.A. - see paragraphs 50 to 66.