IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20110530

Docket: S010598

Registry:
Vancouver

Between:

Harbans Toor

Plaintiff

And

Aetna Life
Insurance Company of Canada and

Maritime Life
Assurance Company of Canada

Defendant

Before:
Master Baker

Reasons for Judgment

ISSUE

[1]            
The defendant applies for an order dismissing Mr. Toor’s claim for want
of prosecution.

BACKGROUND

[2]            
In 1975 Mr. Toor purchased a policy of long-term disability insurance
from Excelsior Life and the policy was eventually acquired by the Manufacturers
Life Insurance Company (“Manulife”).  In this action Mr. Toor claims, among
other things, for benefits under that policy.  Because so much time has passed
and so many events have occurred a chronology is necessary:

–         July, 1975               Mr. Toor purchases his
policy

–         1997-99                  Mr. Toor is in three
separate motor vehicle accidents and sues in tort

–         1999                       Mr. Toor claims
disability benefits under this insurance policy

–         September – November 1999       Mr. Toor receives
disability benefits

–         February, 2000       Maritime refuses any further
payments

–         February, 2001       Mr. Toor commences these
proceedings, filing only an endorsed writ

–         September 2003     Maritime delivers a list of
documents

–         January 2006          Mr. Toor settles all of his
tort claims

–         September 2006     Mr. Toor’s counsel reports
himself to the Lawyers’ Insurance Fund (“the Fund”) (paras. 3 and 4, below)

–         October 2006          Mr. Toor delivers a notice
of intention to proceed and a statement of claim in these proceedings

–         June 2009               Mr. Toor delivers another
notice of intention to proceed

–         August 2009           Mr. Toor files an amended
statement of claim

–         April 2010               Manulife files a
statement of defence and delivers interrogatories and a demand for particulars

–         June 2010               the plaintiff delivers
particulars

–         July 2010                Mr. Toor delivers an
affidavit in response to the interrogatories

No trial date has been set and no discoveries have been
held.

[3]            
Mr. Toor’s counsel reported himself to the Fund for the following
reason.  Throughout the six or seven years that Mr. Toor and his counsel dealt
with Mr. Toor’s tort claims they (at least, certainly, his counsel) understood
that Mr. Toor’s disability policy allowed for benefits payable until age 65. 
Policy documents, however, confirm that Mr. Toor’s 1975 application stipulated
a maximum of two years’ benefits.

[4]            
As Mr. Toor was claiming under his Underinsured Motorist Policy (“UMP”),
and as any settlement sum payable under UMP would incorporate a deduction for benefits
payable under other policies of insurance, Mr. Toor’s counsel considered that,
assuming that the Maritime benefits would continue to 65, he accepted too small
a figure.  Had he realized that only two years’ benefits were payable he would,
inferentially, have bargained harder and potentially won a larger sum.  This is
not an abstract issue, for reasons discussed below.

ANALYSIS

[5]            
The principal points for analysis, of course, come from the case law in
this area.  Mr. Justice Scarth, for example, in March v. Tam et al.[1],
after an exhaustive review of the case authorities, boiled the law down
admirably at para. 3 of his reasons:

I conclude that the principles
of law which govern the exercise of the Court’s discretion in the circumstances
of this case may in summary form be stated as follows: The defendants must
establish that there has been inordinate delay and that this delay is
inexcusable.  If those two factors are established a rebuttable
presumption of prejudice arises and the onus shifts to the plaintiff to prove
on a balance of probabilities that the defendants have not suffered prejudice
or that on balance justice demands that the action not be dismissed.

Another authority should be
cited; about seven months prior to the decision in March the court of
appeal decided Tundra Helicopters Ltd. v. Allison Gas Turbine[2],
yet it seems the decision was not cited by Scarth J.  I mention this because at
para. 15 of Tundra Helicopters Esson J.A. approved the lower court’s
list of the necessary factors to be found:

1. There has been inordinate delay;

2. The inordinate delay is inexcusable; and

3. The delay has caused, or is likely to cause, serious
prejudice to the applicant.

If those tests are met, the
court must go on to consider whether or not the balance of justice demands that
the action should be dismissed.

The court made no mention of onus until the next paragraph
when it acknowledged its earlier decision[3]
that once inexcusable inordinate delay is found the onus shifts to the
plaintiff to rebut the presumption of prejudice.

[6]            
The parties agree that the delay has been inordinate, but is the delay
excusable? As Mr. Fishman notes, the plaintiff’s response to the application is
to treat the time that has passed as two separate phases.  The first phase runs
from the commencement of these proceedings until the settlement of the tort
claims in 2006.  The second phase runs from then until the present.  The reason
for the passage of time in each phase is different, but any putative delay in
each phase can be at least in part, argues Mr. Krekovic, due to the defendant
or its counsel.

[7]            
In phase one, if I can call it that, the defendant knew that the tort
claim was ongoing and seemed, to Mr. Toor and his counsel, content to await its
resolution before embarking further on this claim.  Mr. Krekovic submits that
five letters written in 2005 by Ms. Murray, then-counsel for the defendant,
enquiring as to the progress of mediation and settlement negotiations in the
tort matters support that view.  I have to say, as I did during submissions,
that one can take the exact opposite view, i.e. that Ms. Murray’s repeated
letters are evidence of an impatient party, wanting to press the matter and
simply get on with it.

[8]            
But more tellingly perhaps is the submission that the defendant may have
thought that resolution of the tort claims would help the defendant’s position
and arguably reduce any amount payable to Mr. Toor.  Mr. Toor’s then-counsel in
a memo to file dictated February 14, 2006 (after, it should be said, the tort
claims were settled in January 2006) said about a discussion with Ms. Murray:

she wants to know of the icbc
settlement, she says there is an offset provision for payments made by a third
party, I said I want to see that before I agree to provide details of the
settlement, but I want policy section that deals with that, usually it is the
reverse — that icbc gets the offest (sic)

Mr. Toor’s counsel also made a
note of a telephone conversation with Ms. Murray the next day:

hold off on S/C (statement of
claim), she talked to client, they want the (sic) adjudicate the matter first.

Again, if correct, this suggests something beyond
acquiescence, and implies that the defendant had an interest in waiting until
the tort claims were resolved with ICBC, so that it (the defendant) would know
the extent of its possible exposure.

[9]            
The second phase’s delay comes from a different direction, says Mr.
Krekovic, and it is a more complex analysis that goes back to Mr. Toor and his
counsel’s assumptions about Mr. Toor’s long term disability coverage (para. 3
above).  The defendant’s list of documents was sent in 2003, but did not
include a pivotal document, i.e. Mr. Toor’s 1975 application.  The 2003 list
included a document called “Reproduction of policy of insurance #H0824170” a
reasonable reading of which, without deciding the issue, could leave one with
the impression that benefits would be available until age 65 and for only one
year after 65.  Mr. Toor’s actual application, however, not received until August
2006[4],
would have cleared up any misconception and established that Mr. Toor’s
entitlement was to only two years’ disability payments and certainly not to his
65^th birthday.  The difference, of course, is considerable (on the
order, perhaps, of $200,000.00).

[10]        
As I understand the logic, it is: because the defendant did not make
full document disclosure until 2006 Mr. Toor’s counsel laboured under a
misconception.  Because he held that misconception he settled for a sum less
than he would have otherwise required.  Because he did all that he may have
been negligent.  Because he may have been negligent, in 2006 he involved the
Fund and its counsel.  After discussions with them he advised Mr. Toor of the
problem and recommended in 2006 that he consult independent counsel.  In 2007
Mr. Toor told his counsel that he did not wish to change lawyers.  Still (and
here is the nub of Mr. Krekovic’s point) because the Fund was involved its
counsel was consulted on significant steps in this claim which, inevitably,
delayed the matter after 2006.

[11]        
Not only does this excuse the delay, argues Mr. Krekovic, but he submits
(and has pleaded) that the facts support a broader claim against Manulife, and
that because of Mr. Toor’s reliance on inadequate document production by the
defendant at a crucial time, i.e. during the currency of negotiations on the
tort claims, the defendant is estopped from paying Mr. Toor benefits any less
than those payable to 65 years of age.

[12]        
Mr. Fishman, for Manulife, says that both phases of the delay are
inexcusable.  The first arose, he argues, because Mr. Toor was maintaining a perceived
strategic advantage by deferring any resolution of the long-term insurance
claim so that less would be deducted in his tort claim.  This was acknowledged
by Mr. Toor’s counsel when he disclosed a note of a meeting he had with the
Lawyers’ Insurance Fund counsel:

Firstly, in my decision to
settle ICBC before going to judgment on the Manulife action.  That was a
strategic decision to try to reduce the amount deducted on the policy limits.

[13]        
The delay in the second phase, argues Mr. Fishman, is entirely due to
counsel’s recognition of possible negligence and the duplication, of sorts, of
communications thereafter (para. 10, above).  This, he submits, has nothing to
do with the defendant and lies entirely at the door of Mr. Toor and his
counsel.

[14]        
If the delay is inexcusable, has Mr. Toor rebutted the presumption of
prejudice?  Mr. Fishman says that if the onus lies with Mr. Toor it has not
been rebutted.  But if the onus lies with the defendant, he says, there is at
least the possibility of real prejudice, in that much of the plaintiff’s claim
now relies on or relates to discussions with Ms. Murray (para. 8, above). 
Those discussions are now five years old and as cases have repeatedly held, the
passage of time inevitably erodes witnesses’ recollections and renders evidence
less reliable.

[15]        
Mr. Krekovic points out that the defendant is (and through various
changes has always been) a corporate entity.  It is, he argues, unlike the
personal defendants in various of the precedents, and, as an insurance company,
engages constantly in litigation.  It is, he says, vastly more sophisticated
about and familiar with litigation and litigation strategy.  Much of the claim
will relate to the insurance coverage (or not) evidenced in existing documents,
or to discussions and positions recorded in file notes, memos, or
correspondence.  He says there is no indication whatever of lost files or
witnesses who have either died or gone missing.

[16]        
Finally, if the onus lies with Mr. Toor and it has not been rebutted,
does the balance of justice weigh in favour of him?  Should the claim be
allowed to continue even if he has failed every other test posed by Tundra
Helicopters?  Mr. Fishman says no; Mr. Toor has, in any event, a possible
claim in negligence against his counsel.  He has another remedy.  Mr. Krekovic
argues that Mr. Toor’s circumstances are such that, with limited personal,
educational, and employment capacities, the claim is extremely important.  He
emphasizes that Mr. Toor is functionally illiterate and has suffered frontal
lobe damage.

[17]        
One can, and must, proceed through the stepped analysis required by March
and Tundra Helicopters (para. 7, above), but Tundra Helicopters,
in quoting Diplock L.J. in an earlier case[5]
reaffirmed that “It is then a Draconian order and will not be lightly made”. 
This overarching principle, with respect, must be kept clearly in mind
throughout the analysis.

[18]        
First, as I have said, the parties agree that the delays in this matter
have been inordinate.  The first question, then, is: are they excusable?  Mr.
Toor, again, has amended his pleadings to claim that the actions or, possibly,
non-actions in deficient document disclosure, together with communications by
its agent in the person of its counsel, lulled him and his counsel into a
misconception. He says he relied on that misconception and settled for an
inadequate sum in the tort action.  I do not have to conclude in this
application whether that claim will succeed, of course.  But does it excuse the
delay?

[19]        
In my view it does.  There is no doubt that the defendant was well
aware, from the time the claim was filed until 2006 that Mr. Toor was dealing
with another insurer and, whoever was correct in the calculation of deductions
and credits for insurance coverage (paras. 3, 4, and 10 above) there is a
reasonable possibility that the defendant or its counsel felt that the eventual
settlement of the tort claim would reduce any benefits payable by the defendant
to Mr. Toor.  The defendant, therefore, acquiesced in the delay out of (rightly
or wrongly) a sense of self-interest.  And acquiescence is enough: viz. Tundra
Helicopters at para. 20.  It is also clear that the plaintiff may have
reasonably misconstrued his entitlement to long term benefits due to incomplete
document disclosure by the defendant.

[20]        
During the so-called second phase, from 2006 to the present, matters
proceeded slowly owing at least in part to the background involvement of the Fund. 
But by no means were matters completely static; in fact, over the past two
years, at least, the case has moved along in a slow and perhaps halting
manner.  Amended pleadings have been filed.  Particulars have been demanded and
delivered.  Interrogatories have been sent and responses given.  I doubt,
therefore, that one can conclude that, over the past two years, at least, there
has been such significant delay.  Moreover, I accept Mr. Toor’s argument
that any delay can be, in part at least, explained by the extra communications
with the Fund.  I have discussed the reason for the Fund’s involvement and the
allegation that it became involved as a direct result of the late disclosure of
certain documents by the defendant.  While those events may or may not support
Mr. Toor’s amended claims, it is enough to accept them as contributing to the
delay.

[21]        
It could be argued that this delay would not have arisen had Mr. Toor
and his counsel parted ways in 2006.  It is not for me to judge that, as a
litigant’s choice of counsel will not lightly be second-guessed by the court.

[22]        
If I am wrong in this, and if the delays have not been excused, what of
any prejudice arising?  I am in sympathy with Mr. Krekovic: the defendant is a
sophisticated and experienced litigant.  It is more than likely that documents,
communications, and records have been preserved throughout the life of this
proceeding.  Certainly, as he pointed out, there is no indication of any
records having been lost or destroyed, or of any lost witnesses.

[23]        
Delay, onus, and prejudice have been considered by the court in other
contexts.  In Amezcua v. Taylor[6]
the plaintiff appealed a refusal to add a new defendant.  In considering
prejudice, the court said

[49]         There is
presumed prejudice in the loss of a limitation period which is a constant
feature of many applications under Rule 15(5).

[50]         However,
the chambers judge did not identify any actual prejudice to the Minister if he
were added.  Further, the Minister provided no evidence as to when he
became aware that he might be added as a party or as to what prejudice he might
experience if he were added… 

[51]        
The onus is on the Minister, as the proposed party to be added, to demonstrate,
by evidence, actual prejudice. 

It seems to me, then, that prejudice and onus are not as
simple as one might think.  How could Mr. Toor, for example, divine the inner
workings of the defendant so completely as to firstly anticipate any prejudice
and then rebut it?  In a case such as this I conclude that there is at least
some duty on the defendant to show (as in Amezcua) prejudice, and none
has been shown.

[24]        
Finally, if my analysis so far is, again, completely wrong: in whose
favour does the balance of justice weigh?  I have no doubt that in this case it
weighs in favour of Mr. Toor.  A man so damaged by events not of his making, so
limited in his prospects, and so reliant (as he has been) on professionals and
institutions to deal fairly and equitably with his claims, should not be
deprived of access to this court on the facts of his case.  To do so would be,
as the court said in Tundra Helicopters, truly a Draconian step.  It is
possible, as Mr. Fishman argued, that he could still pursue a claim against his
counsel.  It is not clear to me at all that such a claim would succeed but if
it did it would mean, surely, proving two claims: first that he would
have received more in his tort claim and second that his counsel was negligent
in not realizing that.  It is simplistic and presumptuous to assume that a
person so limited as Mr. Toor could achieve this.

[25]        
In the result the application is dismissed with costs in the cause.

Master D. Baker