Court Sides with Insured Seeking Relief from Forfeiture
Dube v. RBC Life Insurance Company, 2015 ONCA 641 – In this case the respondent Dube was unable to return to work after he was injured in a car accident. His employer had a group insurance policy with the appellant RBC, providing long term disability benefits to employees. When Dube failed to give notice or proof of his claim for the benefits within the 30 day time limit under the policy, RBC denied his claim and Dube started an action. The motion judged refused to dismiss the action when RBC moved for summary judgment and instead found that Dube was entitled to relief from forfeiture of his claim under s.98 of the Courts of Justice Act. RBC appeals that determination and contends that the motion judge erred in granting it.
The issue on appeal is whether the motion judge exercised his discretion unreasonably in his application of the three-part test for relief from forfeiture under s. 98. In dismissing the appeal, it was held that the motion judge exercised his discretion reasonably in granting Dube relief from forfeiture.
The central issue on the motion was whether Dube was entitled to relief from forfeiture. The relief is both equitable and discretionary and the test is three-fold, where the court must consider: (1) the conduct of the insured applicant, (2) the gravity of the breach, and (3) the disparity between the value of the property forfeited and the damaged caused by the breach.
RBC accepted that the motion judge stated the correct test, but was of the belief that the motion judge misapplied the second component of the test in that he failed to properly assess the gravity of the breach. The court agreed with RBC that the motion judge misstated the length of the breach, but noted that the critical question on the second prong of the test was whether RBC was prejudiced by the length of the breach. In coming to the decision that the prejudice to RBC was minimal, the motion judge did not err and further even if RBC did incur some prejudice because it couldn’t conduct its own investigations and medical examinations at an earlier date, that prejudice was outweighed by the harm to Dube from his being unable to pursue his claim.
What the Insurer Should Know
When an insured applies for relief from forfeiture, the courts will react in a sympathetic manner toward the individual seeking the relief.