Barber v. The Manufacturers Life Insurance Company (Manulife Financial)

Barber v. The Manufacturers Life Insurance Company (Manulife Financial) Collection Decisions of the Court of Appeal Date 2017-02-27 Neutral citation 2017 ONCA 164 Docket numbers C62383 Judges LaForme, Harry Smith; Pepall, Sarah E.; Pardu, Gladys I. Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: Barber v. The Manufacturers Life Insurance Company (Manulife Financial), 2017 ONCA 164 DATE: 20170227 DOCKET: C62383 LaForme, Pepall and Pardu JJ.A. BETWEEN Adrian Barber Appellant and The Manufacturers Life Insurance Company, carrying on business as Manulife Financial Respondent David Share and Samantha Share, for the appellant Gordon Jermane, for the respondent Heard: February 22, 2017 On appeal from the order of Justice Edward P. Belobaba of the Superior Court of Justice, dated June 16, 2016. ENDORSEMENT Introduction [1] Adrian Barber appeals from the dismissal of her action against The Manufacturers Life Insurance Company (“Manulife”) by the Superior Court of Justice. The motion judge granted Manulife’s motion to strike Barber’s claim, pursuant to r. 21.01(3), because Barber’s collective agreement (the “CA”) granted exclusive jurisdiction over her matter to the labour arbitration process. [2] Barber became disabled from her employment as a Port Hope police constable in July 2009. She applied for long-term disability (“LTD”) benefits under a group policy of insurance, insured by Manulife. Manulife paid these benefits until January 2013; then terminated the benefits. The collective agreement between the Port Hope Police Services Board (the “Board”) and the Port Hope Police Association (the “Association”), which governed Barber’s employment, requires the Board to offer disability insurance coverage to the Association’s members. [3] Barber commenced an action against Manulife asserting that LTD benefits were paid to January 31, 2013 and terminated effective February 1, 2013. She claimed they ought to have continued. As a remedy, Barber claimed payment of disability benefits. She alleged she has a contract for insurance with Manulife “through her employer, Port Hope Police Service, and was issued Group Policy Number 572397.” [4] Manulife brought a motion under r. 21.01(3)(a) of the Rules of Civil Procedure to have Barber’s claim dismissed because the Superior Court had “no jurisdiction over the subject matter of the action”. In a brief endorsement, the motion judge agreed with Manulife that the Superior Court lacked jurisdiction. [5] The motion judge concluded that the language of Articles 18.01 and 18.02 of the collective agreement made Barber’s matter “arbitrable” because the matter fell “within category 2 of the Brown & Beatty categories and possibly category 4”. The motion judge dismissed Barber’s claim and awarded $1,500 in costs to Manulife. [6] There is only one issue on appeal: Did the motion judge err in holding that the Superior Court does not have jurisdiction over Barber’s matter? Analysis [7] Although this case concerns jurisdiction, its resolution turns on the interpretation and application of a collective agreement. It is a negotiated contract and not a standard form contract. The issue determined by the motion judge, therefore, is a question of mixed law and fact to which the “palpable and overriding error” standard of review applies: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 50-55; Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, at para. 24. [8] Neither party denied that the essential character of the dispute concerned LTD benefits. Therefore, the motion judge moved directly to the question of whether the claim’s essential character arose from the interpretation application, administration or violation of the CA. If so, an arbitrator, not a court, had exclusive jurisdiction to decide the issue: Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, at paras. 11, 52, 54. [9] Arbitration jurisprudence has developed a well understood method of deciding the arbitrability of benefit entitlement claims, which is to consider the four Brown and Beatty[1] categories considered by the motion judge: see, London Life Insurance Co. v. Dubreuil Brothers Employees Assn. (2000), 49 O.R. (3d) 766, at para. 10. The four categories are: 1. where the collective agreement does not set out the benefit sought to be enforced, the claim is inarbitrable; 2. where the collective agreement stipulates that the employer is obliged to provide certain medical or sick- pay benefits, but does not incorporate the plan into the agreement or make specific reference to it, the claim is arbitrable; 3. where the collective agreement only obliges the employer to pay the premiums associated with an insurance plan, the claim is inarbitrable; and 4. where the insurance policy is incorporated into the collective agreement, the claim in arbitrable. [10] This court’s decision in London Life advanced the Weber analysis in the context of benefit disputes by adopting the four categories from Brown and Beatty. [11] Barber submits that the dispute falls within Category 3 and is not arbitrable. The Board's only obligations, she says, are to offer long-term disability coverage and remit premiums. The Board fulfilled its obligations under the CA. Therefore, there is no dispute arising out of the CA. [12] Manulife, Barber points out, assessed, paid and then terminated her long-term disability claim, pursuant to the terms and conditions of the Policy. Therefore, the dispute arises out of the Policy, not the CA and is not arbitrable. [13] Barber argues the dispute does not fall within Category 2, as the motion judge found, because the CA does not oblige the Board to pay or to provide long-term disability benefits. The Board merely offers the coverage and pays premiums; Manulife provides the benefits. Furthermore, she argues, the dispute does not fall within Category 4, as the motion judge suggested, because the CA does not incorporate the insurance policy; the CA merely refers to the Policy number and provides a short description of the coverage. [14] Article 18 establishes Barber’s rights to LTD benefits. They do more than merely oblige the employer to pay premiums for insurance — they cover terms, the amount of the disability benefits and even the definition of total disability, and it makes specific reference to the Policy. The employer may change insurers as long as the benefits defined in the CA are continued. [15] The fact that LTD benefits are paid under the Policy does not change the fact that Barber’s entitlement to LTD benefits is provided by the CA. Indeed, the degree of detail Article 18 provides on the terms of the relevant insurance plan supports the correctness of the motion judge’s decision. We agree with Manulife when it notes, the language of Article 18 demonstrates that the CA is “the root of the contractual entitlement” to the relevant disability insurance. [16] The decision of the motion judge is correct. Jurisdiction over this dispute belongs to an arbitrator and the motion judge correctly dismissed Barber’s action under r. 21. Accordingly, the appeal is dismissed. Manulife is awarded its costs of the appeal fixed in the amount of $ 2,000 inclusive of disbursements and HST. “H.S. LaForme J.A.” "S.E. Pepall J.A." “G. Pardu J.A.” [1] Brown and Beatty, Canadian Labour Arbitration, 3rd ed. (1988).