Overview
The Courts of Justice Act, section 108(2)10 provides that “The issues of fact and the assessment of damages in an action shall be tried without a jury in respect of a claim for any of the following kinds of relief: 10 declaratory relief.” Typically, in actions for payment of long-term disability benefits, a claim is made for a declaration that the plaintiff is totally disabled within the meaning of the insurance policy in issue. This paper will examine the use that can be made of juries in long-term disability actions with reference to several cases which have considered the issue. Consideration will also be given to the pleadings and pitfalls to be avoided where a jury notice is being contemplated. It will be seen that notwithstanding the terms of the Courts of Justice Act, the use of juries in long-term disability claims is alive and well and would seem to be tailor made for claims involving non-payment of long-term disability benefits.
The Nature of Declaratory Relief
The wording of the Courts of Justice Act suggests that delivery of a jury notice is precluded where a claim is made for a declaration of entitlement to long-term disability benefits. Appearances however can be deceiving. The question in this context is: what is the precise nature of a declaration or “declaratory relief”? In his text “The Law of Declaratory Judgments” (Carswell: Toronto, 1988, 2nd ed.) Professor Lazar Sarna refers to the distinction between a declaration which seeks an interpretation of a contract or other instrument so that the parties may know their rights and obligations, which is advisory in nature and has no coercive effect, and a declaration that is more factual in nature. It seems clear that a declaration that a plaintiff is entitled to long-term disability benefits is really nothing more than a finding of fact that the plaintiff is totally disabled within the meaning of the insurance policy. The claim for a declaration is thus subsidiary to the true nature of the claim, which is for payment of the disability benefits.
This analysis has been accepted in a number of decisions. I believe the best analysis on the subject is contained in the decision of Lang J. (as she then was) in Harrison v. Antonopoulos(2003), 62 O.R. (3d) 463 (S.C.J.) The action involved a claim for statutory accident benefits and the plaintiff sought a declaration that her injuries “continuously prevented her from engaging in any employment for which she is reasonably suited by education, training or experience.” The plaintiff brought a motion to strike out the insurer’s jury notice. Lang J. dismissed the motion. She said at pp. 473-474, paras. 25 and 29:
“When the court exercises its original jurisdiction between private parties, a ‘declaration’ usually refers to findings of fact naturally arising in the course of a fact-finding exercise. It would appear that courts have been increasingly willing to incorporate factual determinations into judgments with respect to issues of continuing liability and to give them the right to execution with respect to an ongoing right.”
“The essence of the relief requested by the plaintiff in this case is a declaration of fact for the purpose of obtaining executory or coercive relief. In pith and substance, it is not ‘declaratory relief’ as that term is used in s. 108(2) of the CJA either in a public or a private law context.”
To similar effect, Reilly J. in a well reasoned decision, Ramm v. Sun Life Assurance Co. of Canada (1999), 43 O.R. (3d) 652 (Gen. Div.) stated at p. 656: “It is clear that ‘declarations of fact’ will form part of the judgment in any civil case; the defendant was (or was not) negligent, the statement was (or was not) libelous. What then is the difference between a declaration of fact and declaratory relief?” Reilly J.’s answer is that in this context there is none, as he dismissed the motion to strike the jury notice.
While these decisions are very persuasive, it must be said that most authority on the subject prior to the Ramm decision was to the contrary (the decisions are helpfully summarized in a chart appended to the decision in Harrison) and there is precious little appellate authority on the subject. Until the issue is finally settled, it would seem to be good practice to avoid asking for a declaration altogether and simply request payment of outstanding disability benefits. It would also be wise to make it clear that the claim is only for benefits owing up to the date of trial. I believe a claim for benefits beyond the trial date might well trigger a response that what is being sought is a declaration as to future rights and obligations, which would be caught by the prohibition in section 108(2) and result in the jury notice being struck out.
Pleading Aggravated and Punitive Damages
There is no doubt that aggravated and punitive damages are available in actions for long-term disability benefits. As a result of the decision of the Supreme Court of Canada in Fidler v. Sun Life of Canada,[2006] 2 S.C.R. 3 (S.C.C.) the door has also now been opened to claims for damages for mental distress. Much has been written on these subjects elsewhere. The purpose here is to simply set out the constituent elements of such claims in order to survive a motion to strike out the pleading for failure to disclose a cause of action.
As is well known, the decision of the Supreme Court of Canada in Whiten v. Pilot Insurance Company, [2002] 1 S.C.R. 595 (S.C.C.), holds that a plaintiff must prove an “independent actionable wrong” in order to obtain an award of aggravated or punitive damages. In the context of long-term disability claims, the failure to adequately evaluate the claim in a fair and balanced manner will give rise to a breach of the insurer’s duty of good faith. This is a “wrong” independent of the contractual breach of failing to pay the benefits. The words of O’Connor J.A. in the Court of Appeal decision in 702535 Ontario Inc. v. Lloyd’s London, NonMarine Underwriters (2000), 184 D.L.R. (4th) 687 (Ont. C.A.), para. 29, authoritatively describe the insurer’s duty to act in good faith:
“In making a decision whether to refuse payment of a claim of its insured, an insurer must assess the merits of the claim in a balanced and reasonable manner. It must not deny coverage or delay payment in order to take advantage of the insured’s economic vulnerability or to gain bargaining leverage in negotiating a settlement. A decision by an insurer to refuse payment should be based on a reasonable interpretation of its obligations under the policy. This duty of fairness, however, does not require that an insurer necessarily be correct in making a decision to dispute its obligation to pay a claim. Mere denial of a claim that ultimately succeeds is not, in itself, an act of bad faith.”
In Whiten, in referring to the importance of pleadings, Binnie J. stated at para. 87: “Moreover, the facts said to justify punitive damages should be pleaded with some particularity. The time-honoured adjectives describing conduct as ‘harsh, vindictive, reprehensible and malicious’ or their pejorative equivalent, however apt to capture the essence of the remedy, are conclusory rather than explanatory.”
Based on these authorities, when drafting a pleading it is advisable to set out, in summary fashion and in separately identified sub-paragraphs, the precise grounds alleged to create an independent actionable wrong in this particular claim. The greater the level of generality the less persuasive the pleading becomes. It is also advisable in my view not to overshoot the mark and include every possible ground of complaint no matter how tenuous it may be. As in other areas of persuasion, it is the quality not the quantity of the presentation that matters most.
As a result of the Supreme Court of Canada decision in Fidler v. Sun Life, the door has now been opened to an award of damages for mental distress. These can be awarded in claims for breach of contract, without the necessity of demonstrating an independent actionable wrong, where such damages are within the reasonable contemplation of the parties. This should not present a problem in long-term disability claims, where the contract at issue is designed to provide “peace of mind.” As stated by Abella J, at para. 57:
“Mental distress is an effect which parties to a disability insurance contract may reasonably contemplate may flow from a failure to pay the required benefits. The intangible benefit provided by such a contract is the prospect of continued financial security when a person’s disability makes working, and therefore receiving an income, no longer possible. If benefits are unfairly denied, it may not be possible to meet ordinary living expenses. This financial pressure, on top pf the loss of work and the existence of a disability, is likely to heighten an insured’s anxiety and stress.”
Based on this reasoning, in appropriate cases the pleading should now include a separate claim for damages for mental distress, with a statement that the plaintiff suffered such damages which the insurer either did or should have reasonably foreseen.
Strategic Considerations
In the motor vehicle context, there is much evidence to suggest that insurers are more likely to deliver a jury notice than are plaintiffs. This has most recently been remarked upon by the Honourable Coulter Osborne in the Civil Justice Review. For plaintiff’s seeking payment of long-term disability benefits, there is good reason to take a different approach. Unlike the motor vehicle context, the named defendant is in fact the insurance company, making for a stark contrast between the plaintiff, who is usually dependent on the benefits as a sole source of income, and a large insurer. While it is true that in Whiten, Binnie J., cautioned against the mention of an insurer’s assets (para 121: “Disclosure of detailed financial information before liability is established may wrongly influence the jury to find liability where none exists (i.e., the subliminal message may be ‘What’s a $345,000 insurance claim to a $231 million company?’)) the contrast will not be lost on the jury.
In those cases where the insurer has failed to process the claim in a timely manner or has ignored relevant medical evidence, a jury might well conclude that the plaintiff was not being dealt with fairly, thereby increasing the risk of a mental distress, aggravated or punitive damage award. For these reasons, many plaintiff’s counsel routinely deliver jury notices in long-term disability claims. (I gratefully acknowledge the thoughts of Steve Rastin, “Long-Term Disability Litigation: Ten Practical Tips” OTLA Long-Term Disability Conference, September 28, 2007).
Conclusion
Long-term disability claims can be challenging for plaintiffs. The stresses of litigation, added to the difficulties referred to by Abella J., can be overwhelming. The actions are strongly defended by capable counsel. Thoughtful guidance is needed to properly represent plaintiffs involved in these claims. It is my belief that the use of juries in long-term disability actions will increase the possibilities of a just outcome.