Atchison v. Manufacturers Life Insurance Co. et al., 2002 ABQB 1121

• Judge: Bielby, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: November 25, 2003
• Citations: 2002 ABQB 1121;(2002), 332 A.R. 72 (QB)

Atchison v. Manufacturers Life (2002), 332 A.R. 72 (QB)

MLB headnote and full text

Temp. Cite: [2003] A.R. TBEd. JA.035

Katheryn Atchison (plaintiff) v. The Manufacturers Life Insurance Company, The Adams Financial Group Inc. and Jim L. Adams (defendants)

(Action No. 9903 02398; 2002 ABQB 1121)

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

Alberta Court of Queen's Bench

Judicial District of Edmonton

Bielby, J.

December 23, 2002.

Summary:

An insured under a new contract of group life insurance died. At the date of death, the policy had not yet been provided to the group by the insurer and the insurer had not yet ordered and received medical information relating to the deceased's insurability. The policy that was ultimately issued provided that excess insurance would come into force only upon the insurer approving same after receipt of any required evidence of insurability. The application stated that all benefits would come into force when the application was accepted, an effective date approved and the first month's premium paid. At issue was whether excess insurance was in place at the date of death. Also at issue was whether the action, commenced more than six years after the date of death, was statute barred.

The Alberta Court of Queen's Bench held that the excess insurance was in place where the three events prescribed in the application had occurred by the date of death. There was ambiguity respecting the commencement date for the excess insurance between the application and the policy that should be resolved in favour of the insured. The action was not statute barred because the insurer fraudulently concealed the existence of the excess insurance until eight months prior to the issuance of the statement of claim.

Damages - Topic 531

Limits of compensatory damages - Remoteness - Torts - Recoverable damages - Purely economic loss - An insured under a new contract of group life insurance died - His wife was the beneficiary under the policy - The wife sued the insurer and insurance agent in contract and tort - At issue, inter alia, was whether the wife's claim in negligence was a claim for pure economic loss and therefore doomed because of lack of reliance by her on the defendants' actions or inaction prior to her husband's death - Section 264 of the Insurance Act stated that: "A beneficiary may enforce for his own benefit, ..., the payment of insurance money made payable to him in the contract ..." - The Alberta Court of Queen's Bench held that if this section applied to an action in negligence, it was a complete answer to the defendants' argument - See paragraphs 52 to 56.

Damages - Topic 1305.1

Exemplary or punitive damages - Insurance claim denial - A beneficiary under a group life insurance policy sued the insurer and the insurance agent - The Alberta Court of Queen's Bench held that the insurer fraudulently concealed the existence of excess insurance under the policy, but declined to award punitive damages - The contract was ambiguous - While the insurer's employees stonewalled the plaintiff's efforts to obtain policy information, and failed to engage in even the minimum amount of investigation needed to provide the requested information until well after the plaintiff retained legal counsel, the evidence did not show that the insurer knew or believed that the plaintiff would be able to advance a successful claim if the information were provided, and was attempting to hide it to prevent further payout - The agent was entitled to rely on the insurer's representations to him about the interpretation and effect of its contractual documents - However, the court awarded solicitor-client costs against the insurer where it was the sole cause of the litigation - See paragraphs 61 to 69 and 98 to 99.

Insurance - Topic 730

Insurers - Duties - Duty of good faith - The Alberta Court of Queen's Bench stated that "... an insurance contract creates a relationship of utmost good faith. I would extend that relationship beyond the insured to include his beneficiary because that was the person both parties to the insurance contract contemplated eventually benefiting through its creation. While a beneficiary is not privy to the insurance contract, and thus cannot be equated to an insured for all purposes, she may be more vulnerable than an insured under a policy of life insurance as she may, as here, possess little information about the policy and limited means of obtaining the information in light of the death of the insured, which death triggers her rights under the insurance contract." - See paragraph 82.

Insurance - Topic 1128

The insurance contract - The policy period - Time when policy takes effect - An insured under a new contract of group life insurance died - At the date of death, the policy had not yet been provided to the group by the insurer and the insurer had not yet ordered and received medical information relating to the deceased's insurability - The policy that was ultimately issued provided that excess insurance would come into force only upon the insurer approving same after receipt of any required evidence of insurability - The application stated that all benefits would come into force when the application was accepted, an effective date approved and the first month's premium paid - The Alberta Court of Queen's Bench held that the excess insurance was in place where the three events prescribed in the application had occurred by the date of death - There was ambiguity respecting the commencement date for the excess insurance between the application and the policy that should be resolved in favour of the insured - See paragraphs 20 to 40.

Insurance - Topic 1861

The insurance contract - Interpretation of contract - Contra proferentem rule - Ambiguity construed against insurer - [See Insurance - Topic 1128 ].

Insurance - Topic 3357

Payment of insurance proceeds - Limitation of actions - When limitation period commences - The Alberta Court of Queen's Bench stated that "fraudulent concealment is available to allow a Plaintiff to meet a limitations defence even where the statute does not expressly codify that right, as in the case of the Insurance Act." - See paragraph 77.

Insurance - Topic 3357

Payment of insurance proceeds - Limitation of actions - When limitation period commences - A beneficiary under a group life insurance policy sued the insurer and the insurance agent more than six years after the insured's death - The Alberta Court of Queen's Bench held that the action was not statute barred - The insurer acted unconscionably toward the plaintiff, thereby breaching its duty of fairness and good faith toward her, which conduct resulted in the fraudulent concealment of her cause of action both at common law and under ss. 6 and 57 of the Limitation of Actions Act - The unconscionable conduct included not advising the plaintiff that the insured had completed an application for excess insurance and provided all information related to his insurability requested prior to his death - The court also discussed whether the defendants were estopped from raising the limitation defence - See paragraphs 78 to 96.

Insurance - Topic 7501

Group life insurance - General - When insurer liable for the proceeds - At issue was whether excess insurance under a group policy was in place at the time of an insured's death - The insurer sought to distinguish cases that applied contractual principles to a determination of liability where an insured died before the insurer's internal processing was completed, on the basis that they were all related to individual rather than group insurance - The Alberta Court of Queen's Bench rejected the distinction - Nothing in the law or the insurance contract made that a relevant distinction - The contract was formed by the words used, both for group and for individual insurance, and the insurer took its rights and drew its responsibilities from those words in both cases - See paragraph 38.

Insurance - Topic 7501

Group life insurance - General - When insurer liable for the proceeds - [See Insurance - Topic 1128 ].

Limitation of Actions - Topic 1524

Estoppel - Conduct - Fraudulent concealment - [See second Insurance - Topic 3357 ].

Limitation of Actions - Topic 2025

Actions in contract - Actions for breach of contract - Fraudulent concealment - Effect of - [See second Insurance - Topic 3357 ].

Limitation of Actions - Topic 9324

Postponement or suspension of statute - Fraud - Fraudulent or wilful concealment -[See both Insurance - Topic 3357 ].

Limitation of Actions - Topic 9428

Bars - Disallowance of defence - Considerations - Fraudulent concealment - [See second Insurance - Topic 3357 ].

Practice - Topic 7454

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - Improper, irresponsible or unconscionable conduct - [See Damages - Topic 1305.1 ].

Cases Noticed:

Rainer v. Primerica Life Insurance Co. of Canada (2003), 299 A.R. 306; 266 W.A.C. 306 (C.A.), refd to. [para. 21].

Blanchette v. C.I.S. Ltd., [1973] S.C.R. 833; 36 D.L.R.(3d) 561; [1973] 5 W.W.R. 547, refd to. [para. 29].

Duplisea v. Eaton (T.) Life Assurance Co., [1980] 1 S.C.R. 144; 27 N.R. 369; 26 N.B.R.(2d) 319; 55 A.P.R. 319, refd to. [para. 29].

Davies v. Zurich Life Insurance Co. of Canada, [1981] 2 S.C.R. 670; 39 N.R. 457, refd to. [para. 31].

Allen v. Metropolitan Life Insurance Co. (1965), 208 A.2d 638, refd to. [para. 31].

Matchett et al. v. London Life Insurance Co. (1986), 42 Sask.R. 200; 14 C.C.L.I. 89 (C.A.), refd to. [para. 36].

Newbury v. Prudential Insurance Co. of Canada et al. (1996), 35 C.C.L.I.(2d) 61; 60 A.C.W.S.(3d) 451 (S.C.), affd. (1997), 94 B.C.A.C. 11; 152 W.A.C. 11; 148 D.L.R.(4th) 765 (C.A.), refd to. [para. 50].

Earl v. Wilhelm et al. (2000), 189 Sask.R. 71; 216 W.A.C. 71 (C.A.), refd to. [para. 54].

Wilhelm v. Hickson - see Earl v. Wilhelm et al.

Whiten v. Pilot Insurance Co. et al. (2002), 283 N.R. 1; 156 O.A.C. 201; 209 D.L.R.(4th) 257 (S.C.C.), refd to. [para. 66].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1; 10 D.L.R.(4th) 641, refd to. [para. 73].

98956 Investments Ltd. (Receivership) v. Fidelity Trust Co. (1988), 89 A.R. 151 (C.A.), leave to appeal denied [1995] S.C.C.A. No. 6, refd to. [para. 73].

Luscar Ltd. v. Pembina Resources Ltd. (1995), 162 A.R. 35; 83 W.A.C. 35 (C.A.), leave to appeal denied (1995), 193 N.R. 398; 184 A.R. 159; 122 W.A.C. 159 (S.C.C.), refd to. [para. 73].

K.M. v. H.M., [1992] 2 S.C.R. 6; 142 N.R. 321; 57 O.A.C. 321; 96 D.L.R.(4th) 289, refd to. [para. 76].

Photinopoulos v. Photinopoulos et al. (1988), 92 A.R. 122; 63 Alta. L.R.(2d) 193 (C.A.), refd to. [para. 79].

Luscar Ltd. and Norcen Energy Resources Ltd. v. Pembina Resources Ltd. (1992), 122 A.R. 83 (Q.B.), refd to. [para. 79].

Kitchen v. Royal Airforces Association, [1958] 2 All E.R. 241 (C.A.), refd to. [para. 79].

Calmont Leasing Ltd. v. Kredl et al. (1993), 142 A.R. 81 (Q.B.), refd to. [para. 81].

V.A.H. v. Lynch et al. (2000), 255 A.R. 359; 220 W.A.C. 359 (C.A.), refd to. [para. 81].

1126389 Ontario Ltd. v. Dalton et al. (2000), 106 O.T.C. 333 (Sup. Ct.), refd to. [para. 93].

32262 B.C. Ltd. v. McDonell, [1998] B.C.T.C. Uned. 910 (S.C.), refd to. [para. 94].

Sneath v. Bank of Montreal, [1971] 5 W.W.R. 715 (Alta. C.A.), affd. [1973] 2 W.W.R. 186 (S.C.C.), refd to. [para. 94].

Rio Alto Exploration v. White (1990), 104 A.R. 84 (Q.B.), refd to. [para. 94].

Milano's Dining Room & Lounge (1989) Ltd. v. CTDC #1 Alberta Ltd. et al. (1994), 153 A.R. 347 (Q.B.), refd to. [para. 94].

Stony Plain District Savings & Credit Union Ltd. v. Crosswinds Travel Ltd. and Wallace (1989), 97 A.R. 248 (Q.B.), refd to. [para. 94].

Northwestern Utilities Ltd. v. Peyto Oils Ltd. (1983), 49 A.R. 1 (Q.B.), refd to. [para. 95].

Cardinal and Cowpar v. Canada (Minister of Forestry, Lands and Wildlife) et al. (1988), 93 A.R. 38 (Q.B.), refd to. [para. 96].

Macdonald v. Macdonald Estate (1996), 21 B.C.L.R.(3d) 379 (S.C.), refd to. [para. 96].

Greenwood v. Workers' Compensation Board (Alta.) (2000), 275 A.R. 1 (Q.B.), refd to. [para. 96].

Authors and Works Noticed:

Driedger, Elmer A., Construction of Statutes (2nd Ed. 1983), pp. 235, 236 [para. 35].

Turner, A.K., The Law Relating to Estoppel by Representation (1977), p. 4 [para. 90].

Counsel:

Patrick D. Kirwin, for the plaintiff;

Dane C. Wintermute and Blair Anderson, for the defendant, The Manufacturers Life Insurance Co.;

Shauna C. Miller and Adrian C. Elmslie, for the defendants, The Adams Financial Group Ltd. and Jim L. Adams.

This action was heard on November 25, 2003, by Bielby, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following decision on December 23, 2002.