The recent case of Fernandes v. Penncorp Life Insurance Company provides useful and interesting insights into the obligations of insurers to pay up under disability insurance policies, and the consequences of any failure to act reasonably in dealing with disability insurance claims.

The Plaintiff was an immigrant to Canada with limited education and limited intellectual capability.  He obtained employment as a bricklayer, ten to twelve hours per day for six or seven days per week for many years.  The work was very demanding physically, requiring strength and endurance.  In December, 2004, he fell from a scaffold from a height of about eight feet.  He was badly injured to the extent that he could not return to work.

If common care and prudence would require an insured from working at his business or occupation in order to recuperate or prolong his life, he will be considered to be totally disabled within the meaning of an insurance policy.

He made a claim under his disability insurance policy.  The insurer, Penncorp, refused to pay and the Plaintiff sued.

The Plaintiff’s policy entitled him to benefits for two years if he was unable to work at his own occupation and further benefits thereafter if he was disabled from working at any occupation for which he was reasonably suited by education, training or experience.  In this case, Penncorp agreed that for the first two years following the Plaintiff’s injury he was unable to work as a bricklayer and paid him for the two years.  It refused to pay any further.

Penncorp made its decision to stop paying on the basis that after two years, the Plaintiff was now capable of doing other work.  It appears from the case that Penncorp relied primarily on surveillance video tape obtained by its investigators.  Between August, 2005 and February, 2010, the investigators conducted surveillance on nineteen different days showing the Plaintiff performing such activities as lifting a wheelbarrow in and out of a truck, shovelling earth in and out of a wheelbarrow, and carrying boxes out of a house.  As far as Penncorp was concerned, this was an indication that the Plaintiff was not totally disabled within the meaning of the policy.  Continue reading →

With apologies to Mark Twain for the mangling of his famous quote, fans of specific performance may be cheered by the very recent decision of the Court of Appeal in Maraschiello v. Shellrock Developments Ltd.

For the uninitiated, specific performance is an Order granted by a Court requiring the party in breach of obligations under a contract to perform those obligations.

In this case, the plaintiffs sold their farm, where they had lived and worked since 1978, to Shellrock.  The terms of the agreement included an obligation on Shellrock to use best efforts within 12 months after the May 2004 closing date to obtain a severance of a 1 acre parcel of the property on which the plaintiffs’ house was located.  The intention was that the plaintiffs would continue to own and live in their house.

Shellrock failed to obtain the severance and the plaintiffs sued for specific performance, alleging that Shellrock had failed to use best efforts to obtain the severance.  The plaintiffs maintained that had Shellrock made best efforts, or in fact any reasonable effort, it is very likely that severance would have been obtained.  Continue reading →

The area around Georgian Bay between Wasaga Beach and Meaford contains many interesting features.  The beaches along Georgian Bay, the private ski clubs in the area, the pedestrian village of Blue Mountain, a lengthy cycling trail, and beautiful golf courses are only some of the many wonderful recreational features of the area.  As idyllic as it may sound, however, weird things happen in that neighbourhood as evidenced by the recent Court of Appeal decision in a case between the Town of Meaford and a group of home and cottage owners along Georgian Bay and the Meaford area.

In this case, to quote the Court, the Town of Meaford quite literally “found a by-law in a box in its basement”.  I am not kidding.  The by-law was passed in August 1854 by the municipal council in place at the time.  It was entitled By-law No. 11 for 1854 and established a lakeshore road along 4 adjoining lots.  The road surface would have covered about 6,000 feet abutting Georgian Bay.

The by-law was never registered on title.  Rather, it was lost to history for about 150 years.  In fact, the road surface was largely lost to Georgian Bay when the area was washed out in a storm in 1986.  Continue reading →

Many years ago, I acted for a client who was in the business of running junkets to gambling destinations in the Caribbean. He was quite a gambler himself and managed to rack up a significant debt at a Puerto Rico casino which he neglected to pay. The casino sued him in Ontario, and he retained me to defend him.

I did come up with a number of arguments for setoffs based on his business relationship with the casino concerning the planeloads of gamblers he was bringing in, but I was intrigued by the fact that there did not seem to be very much of a defence to the casino’s claim against him for his gambling debt.

From time to time, someone comes up with an interesting defence to an action to collect gambling debts. The latest effort was put forward in a case recently decided by the Court of Appeal called Moreira et al. v. Ontario Lottery and Gaming Commission et al.

In this case, the Plaintiffs were high stakes gamblers who had lost over $2 million playing roulette at the Niagara Fallsview Casino Resort over a span of about 3 ½ years. During that time, they signed markers to the casino. When the casino demanded payment on the markers, the Plaintiffs sued first and demanded the return of all of the money that they had lost.  Continue reading →

I recently submitted a paper entitled “The Role of Anger in Mediation” for the Masters course I’m taking at Osgoode Hall Law School in ADR. The paper was well received, and I am in the process of trying to have it published. It is fairly lengthy, but it may be of interest to anyone who participates in mediations, either as a party, as counsel or as mediator. I attach a copy on the link below.

The Role of Anger in Mediation

In an action against a company whose financial status is questionable, it is common to consider whether or not it might be possible to sue an individual representative of the company, such as its owner or president, in the hope that if a judgment is not enforceable against the company, it might be enforceable against the individual.  Sometimes, such an action is brought as a tactical step, intended to intimidate or unsettle the company’s decision-maker into a quick settlement.

The law is very clear on the point.  As a general rule, an individual representative of a corporate entity will not be liable for wrongful conduct unless it can be established that the individual committed what the cases refer to as an “independent tort”.  In other words, the alleged wrongful conduct on the part of the individual has to be independent from the tort or breach of contract allegedly committed by the company.  Otherwise, and if the individual was simply making decisions on behalf of the company, there is no personal liability.

An interesting twist on the point arose on the facts of a recent Court of Appeal decision, Richards v. Media Experts M.H.S. Inc. and Mark Sherman.

In that case, Ms. Richards sued her former employer, Media Experts, for damages for wrongful dismissal.  She also sued Mr. Sherman, the executive chairman of Media Experts, for damages for the torts of intentional and negligent infliction of nervous shock.  The alleged shock arose out of the act of termination.

The courts have become very sensitive to any attempt to fix liability on an individual where the claim against his company is problematic.

Mr. Sherman brought a motion to have the claim dismissed as against him, and succeeded.  The motion judge noted that the Plaintiff’s employment contract contained a clause limiting the company’s liability for wrongful dismissal to compensation equal to 12 months’ pay.  The judge went on to conclude that to permit a claim to proceed against Mr. Sherman would allow the Plaintiff to circumvent that clause, by obtaining compensation over and above the contract amount.

Continue reading →

The recent decision of the Ontario Court of Appeal in Di Battista v. Di Battista Farms Ltd. et al. is a useful reminder of the requirements for certainty before a contract will be found to be binding and effective.

In this case, Tony Di Battista worked with his three brothers in construction.  Together with their nephew, they started Di Battista Farms Ltd. which owned property in Kleinburg, Ontario.

A dispute arose, and Tony was bought out by the other shareholders.  As part of the buyout, they signed a memorandum of agreement indicating that they would all cooperate with either or both of Tony or their nephew if either decided to try to obtain a building permit to build a house on a part of the property.

The word “cooperation” is open-ended and lacks specificity.

About 15 years later, Tony decided to try to obtain a building permit and asked his brothers to consent to his application for a severance of a section of the property.  They refused.  Tony then sued to enforce the memorandum of agreement.

The judge hearing the matter dismissed Tony’s application, finding that there was not sufficient certainty in the contract.  Tony appealed to the Court of Appeal.  The Court of Appeal agreed with the judge and dismissed the appeal.  Continue reading →