Badenhorst v. Great-West Life Assurance Co., (2013) 288 Man.R.(2d) 160 (CA)

• Judge: Scott, C.J.M., Monnin and Hamilton, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: January 23, 2013
• Jurisdiction: Manitoba
• Citations: (2013), 288 Man.R.(2d) 160 (CA);2013 MBCA 5

Badenhorst v. Great-West Life (2013), 288 Man.R.(2d) 160 (CA);

      564 W.A.C. 160

MLB headnote and full text

Temp. Cite: [2013] Man.R.(2d) TBEd. FE.002

Lynette Badenhorst (plaintiff/respondent) v. The Great-West Life Assurance Company (defendant/appellant)

(AI 12-30-07722; 2013 MBCA 5)

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

Manitoba Court of Appeal

Scott, C.J.M., Monnin and Hamilton, JJ.A.

January 23, 2013.

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, in a judgment reported at (2011), 269 Man.R.(2d) 236, allowed the claim against the insurer, finding that no misrepresentations were made, and awarded the plaintiff damages for mental distress of $30,000. The insurer appealed.

The Manitoba Court of Appeal allowed the appeal. The trial judge erred in failing to find that the incorrect answers to the questions constituted material non-disclosure which resulted in the policy being void.

Insurance - Topic 2490

Applicant's duty of disclosure - Default in duty to disclose - Misrepresentation - What constitutes - The plaintiff was seeing two psychiatrists for marriage counselling - She applied for disability insurance - The application form asked 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 - Subsequently, the plaintiff filed a claim for disability benefits for depression and anxiety - The insurer took the position that the insurance policy was void for material non-disclosure - The trial judge allowed the plaintiff's claim against the insurer, because the plaintiff's understanding of the questions, which were objectively reasonable, was that she had to disclose a psychiatric visit only if it was related to her health - The insurer never unambiguously asked about psychiatric visits for marriage counselling - Accordingly, the answers were truthful - The trial judge agreed that if the questions were read literally, the plaintiff's answers were incorrect - The Manitoba Court of Appeal allowed the insurer's appeal - The insurance policy was voided by the plaintiff's material misrepresentations - A question was material if the answer would influence a reasonable insurer to decline the risk - The plaintiff's belief or opinion was irrelevant - The court held that "the trial judge applied the wrong test by considering the subjective opinion of the [plaintiff] as to the interpretation of the questions, thereby ignoring the issue of their materiality. ... Furthermore, the trial judge improperly considered irrelevant evidence in reaching his decision ... In any event, there is overwhelming evidence ... that the critical questions were clear, unambiguous and material. ... the [plaintiff] incorrectly answered relevant questions on her application(s) for disability insurance. Materiality has been proven on the evidence and as a matter of law".

Insurance - Topic 3307

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

Cases Noticed:

Henwood v. Prudential Insurance Co. of America, [1967] S.C.R. 720, refd to. [para. 22].

McLean v. Paul Revere Life Insurance Co. (1990), 43 C.C.L.I. 273 (B.C.S.C.), refd to. [para. 22].

Mutual Life Insurance Co. of New York v. Ontario Metal Products Co., [1925] A.C. 344 (P.C.), refd to. [para. 22].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 26].

Knock v. Dumontier et al. (2006), 208 Man.R.(2d) 121; 383 W.A.C. 121; 2006 MBCA 99, refd to. [para. 26].

Taylor v. National Life Assurance Co. of Canada (1990), 7 C.C.L.I.(2d) 146 (B.C.C.A.), refd to. [para. 28].

Faryna v. Chorny, [1952] 2 D.L.R. 354 (B.C.C.A.), refd to. [para. 30].

Fernandes v. RBC Life Insurance Co., [2009] O.A.C. Uned. 589; 99 O.R.(3d) 627; 2009 ONCA 864, refd to. [para. 31].

Lumsden v. Manitoba (2009), 236 Man.R.(2d) 130; 448 W.A.C. 130; 2009 MBCA 18, refd to. [para. 33].

Rowe v. Unum Life Insurance Co. of America, [2006] O.T.C. 435; 44 C.C.L.I.(4th) 303 (Sup. Ct.), refd to. [para. 33].

Asselstine v. Manufacturers Life Insurance Co. et al. (2005), 213 B.C.A.C. 102; 352 W.A.C. 102; 2005 BCCA 292, refd to. [para. 33].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 34].

Moore (Geoffrey L.) Realty Inc. v. Manitoba Motor League (2003), 173 Man.R.(2d) 300; 293 W.A.C. 300; 2003 MBCA 71, refd to. [para. 34].

King v. Operating Engineers Training Institute of Manitoba Inc. (2011), 270 Man.R.(2d) 63; 524 W.A.C. 63; 2011 MBCA 80, refd to. [para. 34].

Kruska v. Manufacturers Life Insurance Co. (1984), 6 C.C.L.I. 299 (B.C.S.C.), refd to. [para. 35].

Sagl v. Cosburn, Griffiths & Brandham Insurance Brokers Ltd. et al. (2009), 249 O.A.C. 234; 2009 ONCA 388, refd to. [para. 36].

Kiernan v. Metropolitan Life Insurance Co., [1925] S.C.R. 600, refd to. [para. 37].

Murphy v. Sun Life Assurance Co. of Canada (1964), 44 D.L.R.(2d) 369 (Alta. Q.B.), affd. (1964), 49 D.L.R.(2d) 412 (C.A.), refd to. [para. 37].

Jessen v. CHC Helicopters International Inc. (2006), 245 N.S.R.(2d) 316; 777 A.P.R. 316; 2006 NSCA 81, refd to. [para. 43].

Nicholls v. Anderson (Emil) Maintenance Co. et al. (2011), 312 B.C.A.C. 29; 531 W.A.C. 29; 2011 BCCA 422, refd to. [para. 43].

Cunningham & Cunningham v. Security Mutual Casualty Co. (1979), 28 N.B.R.(2d) 413; 63 A.P.R. 413 (C.A.), refd to. [para. 43].

Falavena v. Falavena (2010), 258 Man.R.(2d) 255; 499 W.A.C. 255; 2010 MBCA 98, refd to. [para. 46].

Evans v. Teamsters Union Local No. 31, [2008] 1 S.C.R. 661; 374 N.R. 1; 253 B.C.A.C. 1; 425 W.A.C. 1; 2008 SCC 20, refd to. [para. 49].

Alberta Permit Pro et al. v. Booth et al. (2009), 460 A.R. 129; 462 W.A.C. 129; 2009 ABCA 146, refd to. [para. 49].

Wrzesnewskyj v. Canada (Attorney General) et al. (2012), 435 N.R. 259; 296 O.A.C. 82; 351 D.L.R.(4th) 579; 2012 SCC 55, refd to. [para. 49].

Opitz v. Wrzesnewskyj - see Wrzesnewskyj v. Canada (Attorney General) et al.

Authors and Works Noticed:

Brown, Donald J.M., Civil Appeals (2012 Looseleaf), vol. 2, ch. 14, para. 14:4212 [para. 43].

Norwood, David, and Weir, John P., Norwood on Life Insurance Law in Canada (3rd Ed. 2002), pp. 379, 380 [para. 31]; 382 [paras. 36, 37]; 383 [para. 37].

Schjerning, Eric J., and Norwood, David, Disability Insurance Law in Canada (2010), p. 30 [para. 37].

Counsel:

E.B. Eva and T.J. Gilmor, for the appellant;

N.A. Cuddy and R.M. Caithness, for the respondent.

This appeal was heard on June 19, 2012, before Scott, C.J.M., Monnin and Hamilton, JJ.A., of the Manitoba Court of Appeal.

On January 23, 2013, Scott, C.J.M., delivered the following judgment for the Court of Appeal.