In this chronic low back pain disability claim (Brennand v. Sun Life Assurance Company of Canada, 2011 BCSC 759) Sun Life issued a group policy of insurance to Telus Corporation in which Sun Life agreed to provide group long-term disability benefits for eligible Telus employees. The insurance claimant went off work as a customer service representative with Telus due to chronic lower back pain .
Sun Life denied his application for LTD Benefits on the basis that the injury claimant did not have a medical impairment due to injury or disease, which prevented him from performing, in any setting, the essential duties of his own occupation in which he participated just before his alleged total disability started.
In this application Sun Life applied to sever the claim that it breached its duty of good faith from the issue whether the insured is entitled to benefits under the contract of insurance. Sun Life was successful so there there will have to first be a trial and related discovery process to determine whether the injury claimant is entitled to benefits under the contract of insurance. If the claimant is successful at that first trial a second trial will be necessary to determine whether the insurer had breached its duty of good faith. This case will apply to ICBC car accident injury claims of bad faith for failure to pay accident benefits.
As the judge pointed out:
“[30] The issue of severing or bifurcating entitlement and bad faith claims is a matter of balancing interests in the principled exercise of discretion. The case that establishes the framework of analysis and provides guidance on the weighing of factors is Wonderful Ventures. Garson J. (as she then was) stated:
[33] I find that the prejudice to CNS [the insurer] of having the contract claim and the bad faith claim tried together overrides any inconvenience, cost or expense which may be suffered by Wonderful Ventures as a result of my severing paragraphs 67 to 70 of the Amended Statement of Claim. As noted, in R. v. McClure (supra) the protection of privileged communications is fundamental to the legal system and in my view should not be interfered with lightly.
[34] If there is any prejudice to Wonderful Ventures that would arise from having two trials, it is on balance less significant than the prejudice to CNS in having to disclose privileged communications. With severance, if Wonderful Ventures does not succeed on the contract claim, there will be no subsequent trial on the bad faith claim. If Wonderful Ventures succeeds on the contract claim, it will recover the insurance moneys found due under the contract, and possibly, damages. Wonderful Ventures will not have to await the outcome of the subsequent bad faith trial before being made whole, at least in respect to pecuniary losses.
[31] Wonderful Ventures has been repeatedly followed, particularly in circumstances where courts have been persuaded on the evidence that the proper defence of the bad faith claim may require the defendant to waive privilege over solicitor client communications. Indeed, in those cases, a number of courts have concluded that they are bound by that decision, even though they go on to state that, in any event, they consider it to have been correctly decided.
[32] In my view, I am similarly bound if I conclude that the proper defence of the bad faith claim may require the insurer to waive privilege.”
This personal injury decision promotes bad faith claims to be more prolonged and costly for personal injury claimants and will even apply to ICBC bad faith claims. In fact this is not really anything new as there have already been court orders in British Columbia separating the issue of ICBC benefits from the issue of bad faith in car accident injury cases. Posted by Mr. Renn A. Holness