Kang v. Sun Life Assurance Co. of Canada, 2013 ONCA 118

• Judge: Laskin, Rosenberg and Goudge, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: April 12, 2012
• Jurisdiction: Ontario
• Citations: 2013 ONCA 118;(2013), 303 O.A.C. 64 (CA)

Kang v. Sun Life (2013), 303 O.A.C. 64 (CA)

MLB headnote and full text

Temp. Cite: [2013] O.A.C. TBEd. MR.007

Joseph (Jung Yub) Kang (plaintiff/appellant) v. Sun Life Assurance Company of Canada (defendant/respondent)

(C54700; 2013 ONCA 118)

Indexed As: Kang v. Sun Life Assurance Co. of Canada

Ontario Court of Appeal

Laskin, Rosenberg and Goudge, JJ.A.

February 25, 2013.

Summary:

This proposed class proceeding concerned the sale and administration of universal life insurance policies by Metropolitan Life Insurance Co. ("MetLife"). The plaintiffs advanced five causes of action against Sun Life Assurance Co. of Canada, both directly and in its capacity as a successor corporation of MetLife: (a) misrepresentation; (b) breach of duty of good faith and fair dealing; (c) breach of contract; (d) breach of fiduciary duty; and (e) deceit and fraud. The plaintiffs also alleged that Sun Life obtained releases from some class members without disclosing to them that their policies had been sold on the basis of misrepresentations. On a motion by Sun Life, the motion judge struck numerous paragraphs of the plaintiffs' fresh as amended statement of claim because they did not disclose a reasonable cause of action under rule 21.01(1)(b) of the Rules of Civil Procedure (see [2011] O.T.C. Uned. 6335). The plaintiffs appealed, arguing that the motion judge erred in striking out the claims for breach of duty of good faith and fair dealing, breach of contract, deceit and fraud, and the claim of those class members who signed releases.

The Ontario Court of Appeal allowed the appeal. The court set aside that part of the motion judge's order in which he struck out the allegations concerning breach of the duty of good faith and fair dealing, breach of contract, and deceit and fraud, and the material facts relevant to those pleas. The motion judge was correct to strike the plaintiffs' allegation concerning the releases because they did not assert a cause of action.

Insurance - Topic 730

Insurers - Duties - Duty of good faith - [See first Practice - Topic 2230 ].

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - A proposed class proceeding concerned the sale and administration of universal life insurance policies sold by Metropolitan Life Insurance Co. ("MetLife") - The plaintiffs advanced several causes of action against Sun Life Assurance Co. of Canada, both directly and in its capacity as a successor corporation of MetLife - The motion judge struck out the plaintiffs' claim for breach of the duty of good faith as not disclosing a reasonable cause of action under rule 21.01(1)(b) of the Rules of Civil Procedure - The Ontario Court of Appeal held that the claim should not have been struck - The plaintiffs' allegation that Sun Life breached its duty of good faith by failing to administer the policies in accordance with the representations made during the sales process was one branch of a broader claim that included two other branches: Sun Life was not candid with its insureds, it did not disclose the misrepresentations made by MetLife agents when the policies were sold, or provide remedies for those misrepresentations; and Sun Life obtained releases and entered into settlements without making full disclosure, or it knowingly and systematically refused to honour legitimate claims made by its insureds - A pleading should only be struck under rule 21 when the applicable law was settled in the jurisprudence - The law governing the application of the duty of good faith and fair dealing to the relationship between an insurer and its insured was not settled - It was not plain and obvious that the claim was doomed to failure - See paragraphs 28 to 39.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - A proposed class proceeding concerned the sale and administration of universal life insurance policies sold by Metropolitan Life Insurance Co. ("MetLife") - The plaintiffs advanced several causes of action against Sun Life Assurance Co. of Canada, both directly and in its capacity as a successor corporation of MetLife - With respect to their claim for breach of contract, the plaintiffs alleged that it was an express or implied term of the Universal Plus policy that the premiums would never exceed the stipulated "Maximum Premium" - The plaintiffs alleged that Sun Life breached that term by charging premiums in excess of the Maximum Premium - The motion judge held, that "[t]here [are] no express terms of the contract as alleged by the Plaintiffs, and the expressed terms stand against any implied term" - He struck the claim for breach of contract as not disclosing a reasonable cause of action under rule 21.01(1)(b) of the Rules of Civil Procedure - The Ontario Court of Appeal held that the claim should not have been struck - The express terms of the Universal Plus policy were not as clear as the motion judge considered them to be - "Maximum Premium" was not defined in the policy - There was no express provision that Sun Life could charge a policyholder more than the "Maximum Premium" - At the very least, the meaning of the term was ambiguous - The claim therefore ought to stand - See paragraphs 40 to 42.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - A proposed class proceeding concerned the sale and administration of universal life insurance policies sold by Metropolitan Life Insurance Co. ("MetLife") - The plaintiffs advanced several causes of action against Sun Life Assurance Co. of Canada, both directly and in its capacity as a successor corporation of MetLife - The plaintiffs alleged, inter alia, that MetLife committed deceit and fraud by knowingly selling the policies on the basis of misrepresentations - They also alleged that Sun Life committed deceit and fraud by denying misrepresentations had occurred, telling class members their policies were not defective, systematically denying claims, and obtaining settlements and releases without full disclosure - The motion judge struck the claim for deceit and fraud under rule 21.01(1)(b) of the Rules of Civil Procedure on either of two bases: it was "an imperfect repetition of the already pleaded claims of negligent or fraudulent misrepresentation", or it amounted to "an allegation that Sun Life committed deceit and fraud by not admitting (i.e. by denying) that Met Life had committed deceit and fraud" - In short, he felt that it did not add a cause of action - The Ontario Court of Appeal held that the claim should not have been struck - The claim of deceit and fraud based on the administration of the policies was premised on a different set of allegations from the allegations underlying the claim of negligent and fraudulent misrepresentation - It did not simply repeat or replicate the plaintiffs' claim of negligent or fraudulent misrepresentation - It was not plain and obvious that the claim was doomed to fail - See paragraphs 43 to 47.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - A proposed class proceeding concerned the sale and administration of universal life insurance policies sold by Metropolitan Life Insurance Co. ("MetLife") - The plaintiffs advanced several causes of action against Sun Life Assurance Co. of Canada, both directly and in its capacity as a successor corporation of MetLife - The plaintiffs alleged, inter alia, that Sun Life entered into settlements with and obtained releases from class members without disclosing to them that their policies were sold on the basis of misrepresentations - They said that, in so doing, Sun Life breached its duty of good faith and fair dealing and engaged in deceitful conduct - The motion judge struck out those paragraphs of the plaintiffs' fresh as amended statement of claim under rule 21.01(1)(b) of the Rules of Civil Procedure - The Ontario Court of Appeal held that the motion judge was correct to strike the plaintiffs' allegation concerning the releases because they did not assert a cause of action - The court stated that "Although the plaintiffs incorporated the releases and settlements into both their duty of good faith claims and their deceit and fraud claims, they have failed to request any specific relief for the policyholders who entered into those agreements. They do not seek rescission, nor do they seek a declaration that the releases were null and void" - See paragraphs 48 to 53.

Practice - Topic 2250

Pleadings - Striking out pleadings - Bars - Law still evolving - [See first Practice - Topic 2230 ].

Cases Noticed:

Pennyfeather v. Timminco Ltd. et al., [2011] O.T.C. Uned. 4257; 107 O.R.(3d) 201; 2011 ONSC 4257, refd to. [para. 25].

Cloud et al. v. Canada (Attorney General) et al. (2004), 192 O.A.C. 239; 73 O.R.(3d) 401 (C.A.), refd to. [para. 26].

Attis et al. v. Canada (Minister of Health) et al. (2008), 254 O.A.C. 91; 93 O.R.(3d) 35; 2008 ONCA 660, leave to appeal refused (2009), 396 N.R. 397; 260 O.A.C. 394 (S.C.C.), refd to. [para. 26].

Ferme Gérald Laplante & Fils ltée v. Grenville Patron Mutual Fire Insurance Co. (2002), 164 O.A.C. 1; 61 O.R.(3d) 481 (C.A.), leave to appeal refused (2003), 320 N.R. 395; 191 O.A.C. 397 (S.C.C.), refd to. [para. 30].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 30].

Shelanu Inc. v. Print Three Franchising Corp. (2003), 172 O.A.C. 78; 64 O.R.(3d) 533 (C.A.), refd to. [para. 34].

Transamerica Life Canada Inc. et al. v. ING Canada Inc., [2003] O.A.C. Uned. 565; 68 O.R.(3d) 457 (C.A.), refd to. [para. 35].

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. 37].

Folland v. Ontario et al. (2003), 170 O.A.C. 17; 64 O.R.(3d) 89 (C.A.), leave to appeal refused (2003), 325 N.R. 391; 194 O.A.C. 200 (S.C.C.), refd to. [para. 39].

Western Canadian Shopping Centres Inc. et al. v. Dutton et al., [2001] 2 S.C.R. 534; 272 N.R. 135; 286 A.R. 201; 253 W.A.C. 201; 2001 SCC 46, refd to. [para. 50].

Boulanger v. Johnson & Johnson Corp. (2003), 170 O.A.C. 333; 64 O.R.(3d) 208 (Div. Ct.), revd. in part (2003), 174 O.A.C. 44 (C.A.), refd to. [para. 51].

Healey v. Lakeridge Health Corp. et al., [2006] O.T.C. 981; 38 C.P.C.(6th) 145 (Sup. Ct.), refd to. [para. 51].

Statutes Noticed:

Civil Procedure Rules (Ont.) - see Rules of Civil Procedure (Ont.).

Rules of Civil Procedure (Ont.), rule 21.01(1)(b) [para. 1].

Counsel:

Won J. Kim, Victoria A. Paris and Norman Mizobuchi, for the appellant;

F. Paul Morrison, Glynnis P. Burt and Heather L. Meredith, for the respondent.

This appeal was heard on April 12, 2012, before Laskin, Rosenberg, and Goudge, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Laskin, J.A., and was released on February 25, 2013.