Industrial Alliance Insurance and Financial Services Inc. v. Brine

Industrial Alliance Insurance and Financial Services Inc. v. Brine

Court held insurer was entitled to recoup CPP/PSSA-derived overpayment but applied the policy to require pro‑rata apportionment of lump sums to the insured's 65th birthday rather than a 100% upfront clawback; promissory estoppel did not bar recoupment; bankrupty's discharge extinguished the remaining claimed balance because insured was not an ad hoc fiduciary (no undertaking of loyalty nor discretionary power); insurer breached duty of utmost good faith by arbitrarily suspending and failing to reinitiate rehabilitation without adequate medical inquiry, by withholding a critical IME (Rubens) for years, and by failing adequately to address taxability after a Tax Court decision; damages...

Citation
2014 NSSC 219
Parties
Defendant (originally Plaintiff): Industrial Alliance Insurance and Financial Services Inc.; Plaintiff (originally Defendant by Counterclaim): Bruce Brine
Court
Supreme Court of Nova Scotia
Jurisdiction
Canada
Judgment Date
18 June 2014
Procedural Posture
Long Term Disability Insurance Dispute (contract and Bad Faith) / Trial Judgment (decision)
Outcome
Partial judgment for Bruce Brine on his counterclaim; partial judgment for Industrial Alliance on subrogation counterclaim; monetary awards entered as set out below
Legal Topics
Long Term Disability Benefits, Duty of Utmost Good Faith (insurer), Rehabilitation Benefits, Overpayment and Set Off, Subrogation, Promissory Estoppel, Bankruptcy Discharge S.178 BIA, Taxability of Benefits, Punitive and Aggravated Damages
Source Language
English
Insurance Law Contract Law Administrative Law Bankruptcy Law Tax Law Civil Remedies Long Term Disability Benefits Duty of Utmost Good Faith (insurer) +7 more

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Parties

Industrial Alliance Insurance and Financial Services Inc.

Defendant (originally Plaintiff)

Bruce Brine

Plaintiff (originally Defendant by Counterclaim)

Procedural Posture

Long Term Disability Insurance Dispute (contract and Bad Faith) / Trial Judgment (decision)

Legal Issues

  1. 1 Was insurer entitled to recoup alleged overpayment from CPP and PSSA lump sums?
  2. 2 Was insurer estopped from recoupment by its communications?
  3. 3 Was insurer entitled to an upfront 100% clawback instead of pro-rating?

Ratio Decidendi

Court held insurer was entitled to recoup CPP/PSSA-derived overpayment but applied the policy to require pro‑rata apportionment of lump sums to the insured's 65th birthday rather than a 100% upfront clawback; promissory estoppel did not bar recoupment; bankrupty's discharge extinguished the remaining claimed balance because insured was not an ad hoc fiduciary (no undertaking of loyalty nor discretionary power); insurer breached duty of utmost good faith by arbitrarily suspending and failing to reinitiate rehabilitation without adequate medical inquiry, by withholding a critical IME (Rubens) for years, and by failing adequately to address taxability after a Tax Court decision; damages...

Court Disposition

Partial judgment for Bruce Brine on his counterclaim; partial judgment for Industrial Alliance on subrogation counterclaim; monetary awards entered as set out below

Orders

  • Industrial Alliance to pay Bruce Brine CAD 62,036.81 for repayment of amounts wrongfully withheld (breach of contract)
  • Industrial Alliance to pay Bruce Brine CAD 30,000.00 for mental distress arising from breach of contract