2014-09-02 Fernandes v. Penncorp Life Insurance Company, 2014 ONCA 615 (CanLII)

[1]         The trial judge awarded the respondent, Avelino Fernandes, $236,773 in damages for failure of the appellant, Penncorp Life Insurance Company/La Compagnie d’Assurance-Vie Penncorp, to pay disability benefits. He also awarded punitive damages of $200,000, aggravated damages of $100,000 (hereinafter referred to as mental distress damages) and full indemnity costs of $212,130.66.

[2]         The appellant does not challenge the award of damages for failure to pay disability benefits.  It only challenges the punitive and mental distress damages awards and, if successful, asks that the total cost award be halved. It submits that there was no reasonable basis for an award of punitive damages and challenges the quantum of the mental distress damages award.

[3]         For the reasons that follow, I would dismiss the appeal of the punitive damages award and allow the appeal of the mental distress damages award.

[68]       He noted that the surveillance did not remotely establish that the respondent was able to do the heavy continuous labour he had done as a bricklayer.  Additionally, the appellant had received Dr. Huth’s report dated August 10, 2005 in which he opined that the respondent would not be able to work at bricklaying again. The appellant never received a contrary opinion.  After viewing the surveillance, the appellant’s own expert, Dr. McGonigal, wrote that it was “impossible to say whether [the respondent] could return to work on a full time basis as a bricklayer.”

[69]       The trial judge commented that there was no evidence that Ms. Mayo ever considered the detailed description of the heavy nature of the bricklaying work that the respondent submitted with his completed December 6^th questionnaire and she tried to settle the claim on the basis that he was partially disabled when, in the trial judge’s opinion, there was never any doubt based on the information the appellant had that the respondent was totally disabled.  Later in his reasons, he wrote that Ms. Mayo ignored the detailed job description of his occupation of bricklaying that he had provided along with the December 6^th questionnaire.

[70]       He concluded that the appellant’s handling of the claim demonstrated bad faith. Citing 702535 Ontario Inc. v. Lloyd’s of London, Non-Marine Underwriters(2000), 184 D.L.R. (4^th) 687, he found that the appellant’s efforts to settle the claim on the basis of partial disability and its denial of benefits for six years amounted to a denial of coverage or delay of payment “in order to take advantage of the insured’s economic vulnerability or to gain bargaining leverage in negotiating a settlement.” [3] Ms. Mayo took an adversarial approach and did not deal with the claim fairly and in a balanced way.  The conduct constituted an independent actionable wrong and met the test for punitive damages.  It was “highhanded, malicious, arbitrary or highly reprehensible misconduct.”  He then awarded $200,000 in punitive damages.

 Source:https://www.canlii.org/en/on/onca/doc/2014/2014onca615/2014onca615.html