Warrington v. Great-West Life Assurance Co., (1996) 81 B.C.A.C. 164 (CA)

JudgeSouthin, Newbury and Huddart, JJ.A.
CourtCourt of Appeal (British Columbia)
Case DateSeptember 12, 1996
JurisdictionBritish Columbia
Citations(1996), 81 B.C.A.C. 164 (CA);1996 CanLII 1443 (BC CA);139 DLR (4th) 18;[1996] 10 WWR 691;24 BCLR (3d) 1;81 BCAC 164;[1996] BCJ No 1944 (QL);132 WAC 164

Warrington v. Great-West Life (1996), 81 B.C.A.C. 164 (CA);

    132 W.A.C. 164

MLB headnote and full text

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

(CA20339)

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

British Columbia Court of Appeal

Southin, Newbury and Huddart, JJ.A.

September 12, 1996.

Summary:

A beneficiary became entitled to benefits under two disability policies (one short-term and one long-term). The insurer persistently refused to pay. The beneficiary sued to recover the benefits and damages. Shortly before trial the insurer paid the accrued benefits. The trial proceeded. The trial judge allowed the action and awarded the benefi­ciary aggravated damages for breach of the duty of good faith by the insurer. The judge declined to allow the beneficiary to rescind the contract and receive the present day value of future benefits. Both parties appealed.

The British Columbia Court of Appeal allowed the appeal by varying the judgment, awarding the same quantum of damages to the beneficiary, but on a different basis.

Damage Awards - Topic 1007

Contracts - Breach of contract - Injured feelings or emotional upset - Mental dis­tress - [See second Damages - Topic 5706 ].

Damages - Topic 906

Aggravation - Aggravated damages v. exemplary damages - The British Colum­bia Court of Appeal distinguished between punitive or exemplary damages and aggra­vated damages - See paragraph 17.

Damages - Topic 912

Aggravation - In contract - For breach - The British Columbia Court of Appeal discussed when aggravated damages will be properly awarded in breach of contract cases - See paragraphs 18 to 19.

Damages - Topic 5706

Contracts - Breach of contract - Injured feelings or emotional upset - Mental dis­tress - The British Columbia Court of Appeal held that damages for mental dis­tress (aggravated damages) would be awarded in breach of contract cases when the subject matter of the contract was to provide peace of mind or freedom from distress - See paragraph 19 - The court further held that a disability insurance policy was one of the few contracts in which damages for mental distress were recoverable when they were proven to result from the breach of contract - See paragraph 22.

Damages - Topic 5706

Contracts - Breach of contract - Injured feelings or emotional upset - Mental dis­tress - The insurer breached its contract of disability insurance by unreasonably refus­ing to pay the beneficiary benefits despite his entitlement - The beneficiary suffered mental distress in that his ability to meet mortgage payments and prepare for a new baby was compromised - Additionally, the beneficiary's wife was hospitalized with pregnancy complications, causing him stress which exacerbated his own illness - The British Columbia Court of Appeal held that the beneficiary was entitled to damages for mental distress, not for breach of the insured's duty of good faith, but for breach of contract - The court affirmed an award of $10,000 - See paragraphs 22 to 25.

Insurance - Topic 727

Insurers - Duties - Fiduciary duties - The British Columbia Court of Appeal dis­cussed, without deciding, whether an insurer owed a fiduciary duty to an insured arising from its obligation to pay benefits to the insured upon entitlement - See paragraphs 9 to 12, 24.

Insurance - Topic 3300

Payment of insurance proceeds - Actions - Defences - General - The British Col­umbia Court of Appeal stated that where an insurer was obligated to pay benefits to a beneficiary upon proof of entitlement, the insurer was not entitled to withhold payment of benefits on the basis of some arbitrary or purely subjective judgment - See paragraphs 10 to 11.

Practice - Topic 7457

Costs - Solicitor and client costs - Enti­tlement to - Where defence without merit - The insurer breached its contract of disability insurance by unreasonably refus­ing to pay the beneficiary benefits despite his entitlement - The beneficiary suffered mental distress and was forced to sue for the benefits plus damages - Shortly before trial the insurer paid the outstanding bene­fits - The British Columbia Court of Appeal affirmed that the insurer's conduct warranted increased costs up until it changed its position - The court awarded the beneficiary special costs of one day of the trial and ordinary costs thereafter - See paragraphs 28 to 29.

Cases Noticed:

Adams v. Confederation Life Insurance Co., [1994] 6 W.W.R. 662; 152 A.R. 121 (Q.B.), consd. [para. 4].

Fredrikson v. Insurance Corp. of British Columbia, [1990] 4 W.W.R. 637 (B.C.S.C.), refd to. [para. 4].

Shea v. Manitoba Public Insurance Corp. (1991), 55 B.C.L.R.(2d) 15 (S.C.), refd to. [para. 4].

Vorvis v. Insurance Corporation of British Columbia, [1989] 1 S.C.R. 1085; 94 N.R. 321; 58 D.L.R.(4th) 193; [1989] 4 W.W.R. 218; 36 B.C.L.R.(2d) 273; 90 C.L.L.C. 14,035; 25 C.C.E.L. 81, refd to. [para. 6].

Plaza Fiberglass Manufacturing Ltd. v. Cardinal Insurance Co. et al. (1994), 72 O.A.C. 66; 22 C.C.L.I.(2d) 161 (C.A.), refd to. [para. 10].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84, refd to. [para. 10].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14; 69 O.R.(2d) 287; 35 E.T.R. 1, refd to. [para. 10].

Fletcher v. Tayleur (1855), 17 C.B. 21, refd to. [para. 13].

Hobbs v. South Western Railway Co. (1875), L.R. 10 Q.B. 111, refd to. [para. 13].

Trans Trust S.P.R.L. v. Danubian Trading Co., [1952] 2 Q.B. 297 (C.A.), refd to. [para. 13].

Jarvis v. Swans Tours Ltd., [1973] 1 Q.B. 233 (C.A.), refd to. [para. 13].

Jackson v. Horizon Holidays Ltd., [1975] 1 W.L.R. 1468 (C.A.), refd to. [para. 13].

Heywood v. Wellers (a firm), [1976] 1 All E.R. 300 (C.A.), refd to. [para. 13].

Cox v. Philips Industries Ltd., [1976] 3 All E.R. 161 (Q.B.), refd to. [para. 13].

Perry v. Sidney Phillips & Son (a firm), [1982] 3 All E.R. 705 (C.A.), refd to. [para. 13].

Hadley v. Baxendale (1854), 9 Ex. 341, refd to. [para. 14].

Ribeiro v. Canadian Imperial Bank of Commerce (1989), 67 O.R.(2d) 385 (H.C.), varied (1992), 13 O.R.(3d) 278 (C.A.), refd to. [para. 14].

Wallace v. United Grain Growers Ltd., [1955] 9 W.W.R. 153; 102 Man.R.(2d) 161; 93 W.A.C. 161, supplementary reasons (1995), 107 Man.R.(2d) 227; 109 W.A.C. 227 (C.A.), refd to. [para. 14].

Hayes v. James & Charles Dodd (a firm), [1990] 2 All E.R. 815 (C.A.), refd to. [para. 15].

Bliss v. South East Thames Regional Health Authority, [1987] I.C.R. 700 (C.A.), refd to. [para. 15].

Rookes v. Barnard, [1964] A.C. 1129 (H.L.), refd to. [para. 16].

Francis v. Canadian Imperial Bank of Commerce (1994), 75 O.A.C. 216; 21 O.R.(3d) 75 (C.A.), refd to. [para. 16].

Cringle v. Northern Union Insurance Co. (1981), 124 D.L.R.(3d) 22 (B.C.S.C.), refd to. [para. 18].

Brown v. Waterloo (City) Regional Com­missioners of Police (1983), 150 D.L.R.(3d) 729 (Ont. C.A.), refd to. [para. 18].

Thompson v. Zurich Insurance Co. (1984), 7 D.L.R.(4th) 664 (Ont. H.C.), refd to. [para. 20].

Wilson v. Sooter Studios Ltd. (1988), 42 B.L.R. 89 (C.A.), refd to. [para. 25].

Just v. British Columbia (1992), 9 C.P.C.(3d) 302 (B.C.S.C.), refd to. [para. 29].

Heyman v. Darwins Ltd., [1942] 1 All E.R. 337, refd to. [para. 40].

Statutes Noticed:

Insurance Act, R.S.B.C. 1979, c. 200, sect. 202 [para. 26].

Authors and Works Noticed:

Ivamy, E.R. Hardy, General Principles of Insurance Law (6th Ed. 1993), generally [para. 10].

Mayne, Treatise on the Law of Damages (1st Ed. 1856), generally [para. 13].

Waddams, S.M., Law of Damages (1983), p. 562-3 [para. 6].

Counsel:

L.E. Pierce, for the appellant;

D.P. Roberts, Q.C., and J. Marquardt, for the respondent.

This case was heard in Vancouver, British Columbia, on June 5 and 6, 1996, before Southin, Newbury and Huddart, JJ.A., of the British Columbia Court of Appeal. The decision of the court was delivered on September 12, 1996, and the following opinions were filed:

Newbury, J.A. (Huddart, J.A., concur­ring) - see paragraphs 1 to 30;

Southin, J.A. - see paragraphs 31 to 43.

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