He was a different man when he returned to his employment, where he encountered difficulties.
As a result, his responsibilities were continuously reduced and, in frustration, he quit his employment. MacIvor was unaware of the permanent and disabling nature of his brain injury until after he resigned his employment with Pitney Bowes.
Within days of his resignation, MacIvor secured employment with Samsung where he performed a role similar to the one he held at Pitney Bowes.
The difficulties he had experienced in job performance before leaving Pitney Bowes soon became apparent and, less than a year later, Samsung dismissed him. Having asked Samsung about making an LTD claim, MacIvor learned that because his injury occurred when he was working for Pitney Bowes, he would have to apply for the coverage under Pitney Bowes’ policy.
At trial, Pitney Bowes argued that its policy provides for coverage only during employment and that coverage ends when employment ends. In a section titled “Termination of Coverage,” the policy stipulated: “[Y]our coverage will terminate on the earliest of the following dates unless continuation of coverage is provided under the Extension of Coverage Provision . . . the day on which you cease to be Actively Employed.”
Justice Andra Pollak accepted Pitney Bowes’ position and concluded that the policy provided no coverage for former employees.
The governing principles of interpretation applicable to insurance policies have been recently re-affirmed by the Supreme Court of Canada in Ledcor Construction Ltd. Northbridge Indemnity Insurance Co., 2016 SCC 37, where it reminded that “[t]he primary interpretive principle is that where the language of the insurance policy is unambiguous, effect should be given to that clear language, reading the contract as a whole.”
The top court added that “where, however, the policy’s language is ambiguous, general rules of contract construction must be employed to resolve that ambiguity.”
It further explained that “if ambiguity still remains after the above principles are applied . . . coverage provisions in insurance policies are [to be] interpreted broadly, and exclusion clauses narrowly.”
Relying on these principles, the ONCA reversed Pollak’s conclusion, because it was of the view that the exclusionary language of the policy relates to future claims, not claims that may have arisen during the course of the employee’s employment.
In other words, if an employee’s claim arises as the result of an occurrence that takes place during his employment, the policy provides coverage.
In the ONCA’s view, to conclude otherwise would leave former employees, like MacIvor, in the untenable position of having no disability coverage from either their former employer or any new employer.
Such a result “would be contrary to the very purpose of disability insurance and the plain meaning of the coverage provision.”
The policy required MacIvor to file the proof of claim within 90 days of the date benefits would begin.
MacIvor filed the proof of claim approximately 10 days late. Pitney Bowes argued that MacIvor’s failure to comply with the policy defeated his claim. In response, the ONCA stated that “it would be most unfair . . . to permit the imperfect compliance with the 90-day contractual period to defeat [MacIvor’s] claim in the particular circumstances of this case.”
As a result, the court exercised its discretion and granted an equable remedy of relief from forfeiture, even though it was not raised at trial.
MacIvor is a rare case and a personification of the old adage “Where there’s a will, there’s a way.”
It serves as a good illustration that, in deserving cases, a court will unilaterally invoke a remedy if doing so is in the interest of justice.
The exclusionary language of a policy that terminates former employees’ entitlement to the LTD coverage for undiscovered claims may no longer shield their former employers and their insurers from liability.
In a case where a younger employee becomes injured during their employment but did not appreciate the significance of their injury until after their employment ended, the financial impact on the former employer’s business may be substantial. The former employer could be found liable to pay the value of the LTD benefits, potentially indefinitely.
Nikolay Chsherbinin is an employment and immigration lawyer and author of The Law of Inducement in Canadian Employment Law. He can be reached at 416-907-2587 or by visiting nclaw.ca.