Case Study: Burns v RBC Life Insurance Co
Defence + Indemnity
June 2020 - 4 min read
The Ontario Superior Court of Justice struck claims brought by an insured against an insurer’s disability claim specialist and an appeals consultant in their personal capacities as employees after his LTD benefits were terminated by them because the claims did not “manifest a separate identity or interest from their employer.
Burns v RBC Life Insurance Co, 2019 ONSC 6977, per Perell J.
Facts + Issues
The Plaintiff, Burns, had a disability benefits insurance policy issued by the defendant, RBC Life Insurance Company. The Defendants, Mclean and Oslizlok, were the RBC Life employees who administered Burns’s long term disability claim.
Burns alleged in his statement of claim that he stopped working as a fire alarm system technician in June 2013 after he began experiencing pain in his lumbar spine, waist, and lower right extremity. He was diagnosed with disc protrusion and cauda equina syndrome, and as a result underwent urgent spinal surgery.
RBC Life approved Burns’s LTD benefit and accordingly paid LTD benefits to Burns for five years. Then, in October 2017 Maclean, a disability claim specialist, advised Burns that his LTD benefits were being terminated. In 2018 Oslizlok, an appeals consultant denied Burns’s initial and further appeal of the termination of his LTD benefits.
Burns then sued RBC Life, Mclean, and Oslizlok, alleging that they had engaged in conduct that, jointly and/or severally, amounted to breach of contract, negligence, and/or negligent misrepresentation.
Mclean and Oslizlok applied for an order striking out the claim against them for failing to disclose a reasonable cause of action, pursuant to R. 21.01 (1)(b) of the Ontario Rules of Civil Procedure. RBC Life also applied for an order that Burns’s examination for discovery proceed first, before the examination of RBC Life’s representative witness.
HELD: For the Defendants; claims against Mclean and Oslizlok struck and Burns’s examination ordered to proceed.
- The Court struck the claims against Mclean and Oslizlok in their personal capacity because the claims disclosed no reasonable cause of action.
- The Court noted that for a plaintiff to properly plead a case of personal liability against an employee, they must specifically plead a cause of action against the employee in his or her personal capacity for tortious behavior which “manifest a separate identity or interest from the employer”:
22 Personal liability is not engaged solely because a corporation acts through human agency. Directors, officers, and employees, however, may be liable for their own tortious conduct. To properly plead a case of personal liability of a director, officer, or employee, the plaintiff must specifically plead a cause of action against the individual in his or her personal capacity.
23 In Lobo v. Carleton University [2012 ONCA 498], the Court of Appeal stated that for employees to be liable in tort for conduct associated with the work of their employee: (1) the actions of the employee must be in and of itself tortious; or (2) the actions of the employee must exhibit a separate identity or interest from those of the employer so as to make the employee’s conduct his or her own discrete conduct.
24 If the claim against the officer or director is that his or her acts were themselves tortious, the pleading must be intensely scrutinized so that the court can strike out claims that are improperly pleaded or claims where the material facts do not justify the allegations of a personal tort. In Piedra v. Copper Mesa Mining Corp. [2011 ONCA 191] the Court of Appeal stated at paragraph 75:
75. Since the plaintiffs’ claims against the Directors rest solely on the assertion that the Directors’ acts were themselves tortious, the plaintiffs’ pleadings against the Directors must withstand a high degree of scrutiny. See for example, Abdi Jama (Litigation Guardian of) v. McDonald’s Restaurants of Canada Ltd.,  O.T.C. 203 (S.C.), at para. 10. This accords with the responsibility of the courts to be “scrupulous in weeding out claims that are improperly pleaded or where the evidence does not justify an allegation of a personal tort”: Adga, at p. 114. As this court has indicated, were it otherwise, there is a risk that corporate officers and directors could be “driven away from involvement in any respect in corporate business by the potential exposure to ill-founded litigation”: Adga, at pp. 104-105.
25 When a plaintiff sues both a corporation and individuals within that corporation, including officers, directors or employees, the plaintiff must plead sufficient particulars that disclose a basis for attaching liability to the individuals in their personal capacities.
26 Where an employee is sued for his or her acts, the material facts giving rise to personal liability must be specifically pleaded because an employee is not personally liable for the tortious acts of his or her employer unless the actions of the employee can be shown to be in themselves tortuous or that the employee’s acts manifest a separate identity or interest from the employer. Personal liability of the employee requires actions of that employee that are themselves tortious.
- The Court found that Burns failed to plead the necessary facts with respect to his claims against Mclean and Oslizlok in their personal capacity. The Court found that Mclean’s act in denying Burns’s disability claim, and Oslizlok’s act in dismissing the appeal from Mclean’s decision, may make RBC Life vicariously liable for breach of contract, negligent misrepresentation, or breach of a duty of good faith, but these actions do not make Mclean and Oslizlok personally liable. The Court held that, even assuming the truth of all Burns’s allegations, the allegations did not manifest a separate identity or interest for Mclean and Oslizlok, and the allegations did not themselves reflect tortious acts by Mclean and Oslizlok in their personal capacity.
- The Court ordered that Burns’s examination for discovery proceed first, before the examination of RBC Life’s representative witness.
- The Court noted that, under R. 31.04 (3) of the Rules of Civil Procedure, the party who first serves a notice of examination on another party may examine first and complete the examination before being examined themselves.
- The Court found that there were no circumstances present to justify departing from the order of examinations provided in the Rules. RBC Life had complied with the Rules by serving Burns with an affidavit of documents, and there was no indication of complex scheduling requirements or a risk that a party would tailor its evidence, so there was no reason to depart from the normal order of examinations provided by the Rules.
- The Court noted that “neither party could identify why the order of examination actually mattered” and, accordingly, could not see how Burns being examined first would prejudice him (para 42).