January 07, 2020, Kitchener, Ontario
Posted by: Robert Deutschmann, Personal Injury Lawyer
Employees were just doing their jobs - Burns v. RBC Life Insurance Co., 2019 ONSC 6977 (CanLII)
Date of Decision: December 3, 2019
Heard Before: Perell, J.
LIABILITY: duty of good faith; Rules of Civil Procedure; breach of contract; can an adjuster be liable in their personal capacity; insurance adjusters cannot be successfully sued when they are acting within the scope of their employment
Justice Perell has provided clarity in an issue of whether insurance adjuster owe a duty of good faith to an insured regardless and independent of any duty owed by the insurer and in the personal liability of an insurance adjuster. He held that:
- When an employee of an insurance company is acting strictly in their capacity as an employee, they cannot be held liable to the insured for breaching the duty of good faith. They can be held liable only if their acts exhibit a separate identity or interest from that of the insurer and if they employee’s actions are tortious, and
- Generally, the first party to serve a notice of examination will be the first party to conduct the examination. The court does have discretion to change the order of examinations in the favour of organization, efficiency and fairness.
The Disability Claim and the Motion to Strike:
The Plaintiff, Randolph Burns, had a disability benefits insurance contract with the Defendant, RBC Life. When Mr. Burns’ disability claim was denied he brought against RBC Life and their employees who administered the claim them for failing to disclose a reasonable cause of action.
The Employees then brought a motion under the Rules of Civil Procedure to strike the plaintiffs claim against them on the basis of no reasonable cause of action.
Breach of Contract
Initially RBC accepted that Mr. Burns was suffering from a total disability as of June 13, 2012. The Insurer retroactively approved the payment of LTD benefits to Mr. Burns, effective September 11, 2012 (post a 90-day elimination period commencing on June 13, 2012.
RBC paid Mr. Bums an LTD benefit for 5 years on the basis that he suffered a total disability. On October 30, 2017 Lauren Mclean (on behalf of RBC) advised Mr. Bums that his LTD benefits were being terminated on the basis that Mr. Burns had not been suffering from a total disability from 2013 onwards. At the time of its denial, the Insurer had access to medical records and was aware through direct consultations with Mr. Burns that he continued to suffer from the physical, neurological, and psychological complications of his cauda equina syndrome. At the time of its denial, the Insurer was also aware that Mr. Burns was enduring the psycho-emotional catastrophe of coping with his wife's unexpected terminal illness.
On May 4, 2018, on behalf of RBC, Anna Oslizlok denied Mr. Burns' appeal of the termination of his LTD benefits and on August 2, 2018 she denied Mr. Bums' further appeal of the termination of his LTD benefits. Mr. Burns pleads that at all material times since June 12, 2013 he has suffered from a total disability within the meaning of the Policy. Mr. Burns pleads that in the course of the adjustment and appeals of his LTD claims, the Defendants engaged in conduct that, jointly and/or severally, amounted to bad faith, negligence, and/or negligent misrepresentation.
Mr. Burns cited Spiers v. Zurich in support of their claim however Justice Perell found that it was wrongly decided given the lack of underlying Court of Appeal authority to determine how and when employees can be held liable individually for their tortious conduct while engaged int eh activity of their employer.
Justice Perell granted the employees’ motion. He determined that the plaintiff had not proven the material facts against the employees in their personal capacities. He noted that in denying Mr. Burns claim, and then in dismissing the appeal the employees may make RBC liable for breach of contract, breach of duty of good faith, or of negligent misrepresentations but those acts did not meet the criteria laid out in ScotiaMcLeod Inc et al. v. Peoples Jewellers Limited et al. , Court of Appeal, which Justice Perell was bound to follow. Specifically, the actions of the employees did not exhibit any separate interest or identity from RBC’s interest. The employees’ actions were not themselves tortious acts in their personal capacities.
The Order of Examinations was then brought as an issue by RBC who sought an order that it be allowed to examine the plaintiff before the plaintiff examined its representative witness. Justice Perell granted the motion on the basis that:
- The party who first serves a notice of examination may examine first pursuant to Rule 31.04(3) and,
- The plaintiff would not be prejudiced by being examined first. Justice Perell went on to note that courts retain the discretion to place examinations in the order that achieves the most efficient, organized and fair conduct of examinations for both parties.