Badenhorst v. Great-West Life Assurance Co.

• Jurisdiction: Manitoba
• Court: Court of Queen's Bench of Manitoba (Canada)
• Judge: Schulman, J.
• Citation: (2011), 269 Man.R.(2d) 236 (QB),2011 MBQB 217
• Date: 27 September 2011
• Subject Matter: INSURANCE,DAMAGES,DAMAGE AWARDS

Badenhorst v. Great-West Life (2011), 269 Man.R.(2d) 236 (QB)

MLB headnote and full text

Temp. Cite: [2011] Man.R.(2d) TBEd. OC.019

Lynette Badenhorst (plaintiff) v. The Great-West Life Assurance Company (defendants)

(CI 09-01-59762; 2011 MBQB 217)

Indexed As: Badenhorst v. Great-West Life Assurance Co.

Manitoba Court of Queen's Bench

Winnipeg Centre

Schulman, J.

September 27, 2011.

Summary:

The plaintiff was seeing a psychiatrist for marriage counselling when she applied for disability insurance from the defendant insurer. To questions on the insurance application as to whether she had "ever consulted a psychiatrist, psychologist or Counsellor for any reason" and whether she had "ever had any symptoms of anxiety, depression, stress or fatigue", the plaintiff answered, "No". The policy was issued. The plaintiff filed a claim, stating that her illness was "Depression Anxiety". The claim was denied on the basis that the plaintiff had made misrepresentations on her application. The plaintiff sued the insurer for payment of the claim and sought damages of $35,000 for mental distress.

The Manitoba Court of Queen's Bench allowed the claim against the insurer, finding that no misrepresentations were made, and awarded the plaintiff damages for mental distress of $30,000.

Damage Awards - Topic 205

Injury and death - Psychological injuries - Mental distress (incl. nervous shock) - [See Damages - Topic 1532 ].

Damages - Topic 1532

General damages - Elements of general damages - Mental distress or emotional upset - The plaintiff was seeing a psychiatrist for marriage counselling when she applied for disability insurance from the defendant insurer - To questions on the insurance application as to whether she had "ever consulted a psychiatrist, psychologist or Counsellor for any reason" and whether she had "ever had any symptoms of anxiety, depression, stress or fatigue", the plaintiff answered, "No" - The policy was issued - The plaintiff filed a claim, stating that her illness was "Depression Anxiety" - The claim was denied on the basis that the plaintiff had made misrepresentations on her application - The Manitoba Court of Queen's Bench allowed the plaintiff's claim against the insurer, finding that no misrepresentations were made, and awarded the plaintiff damages for mental distress of $30,000 - This was a "peace of mind" policy designed to cover the plaintiff for the very illness for which she needed protection - The plaintiff was deprived of her peace of mind by the denial of the claim - The denial made a substantial contribution to the plaintiff's distress and prolonged her illness - It caused her stress and placed her deeper in debt - See paragraphs 33 to 37.

Insurance - Topic 2410

Applicant's duty of disclosure - General principles - Uberrima fides (perfect good faith) - The Manitoba Court of Queen's Bench stated, "A disability policy is an uberimae fidei contract, and a person who applies for a policy must answer all questions asked by the insurer truthfully, to the best of the knowledge of the applicant. Generally speaking, if there is some information of which the person is not aware, there is no responsibility to find out the answer." - See paragraph 17.

Insurance - Topic 2481

Applicant's duty of disclosure - Default in duty to disclose - Remedies of insurer - The insurer alleged that the plaintiff had made misrepresentations regarding her responses to "health and lifestyle" questions on her application for disability insurance - The Manitoba Court of Queen's Bench stated, "...  the first question is to determine what the question meant to the claimant and to a reasonable claimant. The credibility of the claimant's evidence of meaning must be assessed, but the inquiry does not end with the claimant's view of what is meant. The meaning must also meet the understanding of a reasonable person. The insurer frames the question and bears the responsibility of asking the right question. The claimant need not volunteer information. Any ambiguities are resolved against the insurer. ... When one ascertains the meaning of the question to which the insurer is to be held, one then determines whether the claimant answered the question truthfully. If the answer is truthful, a defence of non-disclosure will fail. If the answer is false, the claimant will not be excused because he believed the answer to be true or he genuinely forgot a fact or thought he was providing an accurate answer. In such a case, the policy will be voidable at the option of the insurer if the evidence establishes that a reasonable insurer would have considered the question material to the risk and would have declined coverage or charged a higher premium if it had been given the correct answer." - See paragraphs 17 to 19.

Insurance - Topic 2490

Applicant's duty of disclosure - Default in duty to disclose - Misrepresentation - What constitutes - The plaintiff was seeing a psychiatrist for marriage counselling when she applied for disability insurance from the defendant insurer - To questions on the insurance application as to whether she had "ever consulted a psychiatrist, psychologist or Counsellor for any reason" and whether she had "ever had any symptoms of anxiety, depression, stress or fatigue", the plaintiff answered, "No" - The policy was issued - The plaintiff filed a claim, stating that her illness was "Depression Anxiety" - The claim was denied on the basis that the plaintiff had made misrepresentations on her application - The Manitoba Court of Queen's Bench allowed the plaintiff's claim against the insurer - The issue was not whether marriage counselling was a "health issue", but whether the plaintiff and a reasonable applicant for insurance would recognize that the questions sought to find out whether the applicant had received marriage counselling - If the insurer wanted to know whether an applicant was in marriage counselling, the insurer could ask that question - Here, the insurer did not - The plaintiff had not consulted the psychiatrist for any reason related to her health, but for marriage counselling which was perhaps related to her lifestyle, but not, on a reasonable interpretation, related to her health - There was no misrepresentation - The insurer was bound to pay the claim - See paragraphs 20 to 32.

Insurance - Topic 3307

Payment of insurance proceeds - Actions - Defences - Misrepresentation in application - [See Insurance - Topic 2481 and Insurance - Topic 2490 ].

Cases Noticed:

Henwood v. Prudential Insurance Co. of America, [1967] S.C.R. 720, refd to. [para. 20].

McLean v. Paul Revere Life Insurance Co., 1990 CarswellBC 581 (S.C.), refd to. [para. 20].

Fernandes v. RBC Life Insurance Co., [2009] O.A.C. Uned. 589; 2009 ONCA 864, affing. [2008] O.T.C. Uned. D73; 2009 CarswellOnt 3998 (Sup. Ct.), additional reasons [2008] O.T.C. Uned. G33; 2008 CarswellOnt 4818 (Sup. Ct.), refd to. [para. 20].

Quinn v. Canada Life Assurance Co. (2006), 234 B.C.A.C. 108; 387 W.A.C. 108; 2006 BCCA 585, refd to. [para. 20].

Ontario Metal Products Co. v. Mutual Life Insurance Co. of New York, [1924] S.C.R. 35; 1923 CarswellOnt 105, refd to. [para. 21].

Taylor v. National Life Assurance Co. of Canada, 1990 CanLII 935 (B.C.C.A.), refd to. [para. 21].

Forrester Estate v. Life Investors Insurance Co. of America (1998), 166 Sask.R. 72; 1998 CanLII 13537 (Q.B.), refd to. [para. 21].

Kong v. Manulife Financial Services Inc., [2008] B.C.T.C. Uned. A06; 2008 CarswellBC 79; 2008 BCSC 65, refd to. [para. 21].

Caverhill Estate v. Bank of Montreal (1994), 153 N.B.R.(2d) 195; 392 A.P.R. 195; 1994 CarswellNB 122 (T.D.), affd. (1995), 161 N.B.R.(2d) 78; 414 A.P.R. 78; 1995 CarswellNB 385 (C.A.), refd to. [para. 21].

Katrichak v. National Life Assurance Co. of Canada, [1992] B.C.T.C. Uned. 58; 726 CarswellBC 726 (S.C.), refd to. [para. 21].

Counsel:

Norman A. Cuddy and Ryan M. Caithness, for the plaintiff;

E. Beth Eva and Tessa J. Gilmor, for the defendant.

This action was heard by Schulman, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following judgment on September 27, 2011.