



COURT OF APPEAL FOR ONTARIO

CITATION: Burns v. RBC Life Insurance
    Company, 2020 ONCA 347

DATE: 20200604

DOCKET: C67837

Gillese, Brown and Jamal JJ.A.

BETWEEN

Randolph
    Burns

Plaintiff (Appellant)

and

RBC Life Insurance Company,
    Lauren McLean and Anna Oslizlok

Defendants (Respondents)

Sloan H. Mandel and Deanna S. Gilbert,
    for the appellant

Barry G. Marta, for the respondents

Heard: In-writing

On
    appeal from the order of Justice Paul Perell of the Superior Court of Justice,
    dated December 3, 2019, with
reasons reported at 2019
    ONSC 6977
.

REASONS FOR DECISION

OVERVIEW

[1]

This
appeal concerns the adequacy of the claims
    pleaded against corporate employees for torts allegedly committed in the course
    of their employment.

[2]

The appellant, Randolph Burns, brought an action seeking the payment of
    long-term disability (LTD) benefits under a policy of insurance issued by the
    respondent, RBC Life Insurance Company (RBC Life), as well as damages against
    RBC Life and two of its employees, the respondents, Lauren McLean and Anna
    Oslizlok.

[3]

After the defendants delivered a joint statement of defence, Ms. McLean
    and Ms. Oslizlok moved pursuant to r. 21.01(1)(b) of the
Rules of Civil
    Procedure
to strike out the statement of claim as disclosing no reasonable
    cause of action as against them. At the same time, RBC Life moved for
an order requiring Mr. Burns examination for discovery to proceed
    before that of RBC Lifes representative witness.
The motion judge
    granted both motions. He struck out the statement of claim as against Ms.
    McLean and Ms. Oslizlok, without leave to amend, and granted RBC Life the
    relief it sought in respect of the examinations for discovery. The same law
    firm represented all the defendants. The motion judge awarded costs for both
    motions in the combined amount of $6,000.

[4]

Mr. Burns appeals that part of the order of the motion judge that struck
    out his statement of claim. Although he has not formally sought leave to appeal
    the costs order, Mr. Burns requests that the $6,000 award of costs against him
    be set aside.

[5]

For the reasons set out below, we allow the appeal in part, to the
    extent of granting Mr. Burns leave to amend his statement of claim.

THE STATEMENT OF CLAIM

[6]

The RBC Life policy of disability benefits (the Policy) purchased by
    Mr. Burns provides for the payment of LTD benefits in the event of a total
    disability. According to the statement of claim, in June 2012, Mr. Burns
    stopped working as a result of pain in or around his lumbar spine, waist, and
    right lower extremity. In September 2012, RBC Life accepted that Mr. Burns was
    suffering from a total disability and approved the payment of LTD benefits to him.

[7]

RBC Life terminated Mr. Burns LTD benefits in October 2017. The
    statement of claim identifies Ms. McLean and Ms. Oslizlok as employees involved
    in the termination process. Mr. Burns pleads:

24. On or about October 30, 2017, on behalf of the Insurer,
    Lauren McLean advised Mr. Burns that his LTD benefits were being terminated.



26. On or about May 4, 2018, on behalf of the Insurer, Anna
Oslizlok
denied Mr. Burns' appeal of the termination of
    his LTD benefits.

27. On or about August 2, 2018, on behalf of the Insurer, Anna
    Oslizlok denied Mr. Bums' further appeal of the termination of his LTD
    benefits.

[8]

Mr. Burns advances two claims in his pleading. First, he alleges that
    the failure of RBC Life to pay his LTD benefits amounted to a breach of
    contract.

[9]

Second, he advances claims against RBC Life and the two individual
    defendants based in bad faith, negligence, and/or negligent misrepresentation.
    In paras. 29 and 30 of his statement of claim, Mr. Burns pleads that:

29. At all material times, the Defendants owed to Mr. Burns a
    duty of the utmost good faith.

30. At all material times, the Defendants represented to Mr. Burns
    that, in exchange for the premiums he paid, Mr. Burns would receive the
    benefits offered by the Policy in keeping with the terms, conditions, and
    definitions expressly set out therein.

[10]

In
    para. 31 of his statement of claim, Mr. Burns lists 45 particulars of his
    allegation that the Defendants engaged in conduct that, jointly and/or
    severally, amounted to bad faith, negligence, and/or negligent
    misrepresentation conduct. Eight of the particulars refer only to the conduct
    of RBC Life. The remaining particulars refer to conduct that the pleading
    attributes to the defendants collectively, without differentiating which of
    them engaged in any particular act. By way of illustration, the first five particulars
    pleaded in para. 31 of the statement of claim allege:

31. Mr. Burns pleads that in the course
    of the adjustment and appeals of his LTD claims,
the
    Defendants engaged in conduct that, jointly and/or severally, amounted to bad
    faith, negligence, and/or negligent misrepresentation conduct including
,
    but not limited to:

(a) they terminated Mr. Burns' LTD
    benefits on the basis of an erroneous, extra-contractual, reckless, misleading,
    and/or bad faith interpretation of the language of the Policy;

(b) they terminated Mr. Burns' LTD
    benefits on the basis of language, criteria, terms, and/or conditions that were
    not prescribed in the Policy and which they, instead, elected to import into
    the Policy;

(c) they terminated Mr. Burns' LTD
    benefits on the basis of their unilateral interpretation of the phrase
    "gainful occupation" in the Policy and despite the Insurer's written
    admission of May 4, 2018 that "the term gainful occupation is not defined
    in the policy";

(d) they terminated Mr. Burns' LTD
    benefits on the basis of a single, 16 year old, extra-provincial case involving
    a different type of insurance policy and different type of benefits;

(e) they "cherry picked"
    case law when interpreting the Policy and terminating Mr. Burns' LTD benefits;



[11]

Mr.
    Burns seeks payment of the LTD benefits under the Policy and special damages
    for expenses he has incurred. In addition, he seeks to recover against all the
    defendants $1 million in punitive, aggravated, and/or exemplary damages, in
    part on the basis of the following undifferentiated allegations contained in
    paras. 34 and 35 of the statement of claim:

34. Mr. Burns pleads that the Defendants knew or ought to have
    known that at or around the time that it terminated his LTD benefits and/or
    denied his appeal(s), Mr. Burns was under financial strain and was financially
    dependent upon the receipt of his LTD benefits. The Defendants nevertheless
    embarked upon a course of conduct that caused and/or aggravated Mr. Bums'
    vulnerable psycho-emotional state.

35. Mr. Burns pleads that in terminating his LTD benefits when
    it did, and without any material change since the Insurer had found him totally
    disabled for over five years, the Defendants engaged in bad faith, high handed,
    reckless, wilfully ignorant, and/or grossly arbitrary conduct. So as to condemn
    this conduct, to modify the Defendants' behaviour, and/or to deter the
    Defendants from engaging in such conduct in future, Mr. Burns pleads that an
    award of punitive, aggravated, and/or exemplary damages are warranted.

[12]

The
    motion judge held that Mr. Burns had not pleaded a viable cause against Ms. McLean
    and Ms. Oslizlok that would attach liability to them in their personal
    capacities because the allegations advanced against them did not manifest an
    identity or interest separate from RBC Life: at para. 36. Accordingly, he
    struck out the claim as against them without leave to amend: at para. 37.

ANALYSIS

[13]

Mr.
    Burns submits that the motion judge erred by failing to follow the
    well-established jurisprudence that a cause of action in tort can lie against
    the employee of a corporate employer for conduct carried out in the usual
    course of employment:
Sataur v. Starbucks Coffee Canada
    Inc.
, 2017 ONCA 1017, 140 O.R. (3d) 307, at para. 4. According to
    Mr. Burns, had the motion judge given proper effect to that jurisprudence he
    could not have concluded that it was plain and obvious that Mr. Burns
    statement of claim disclosed no reasonable cause of action against Ms. McLean
    and Ms. Oslizlok.

[14]

We
    read the motion judges reasons in a different way. The motion judge referred to
    the well-established jurisprudence at several points in his reasons: at paras.
    22-25 and 33. The crux of his reasons focused not on legal principles, but on whether
    Mr. Burns had properly pleaded the material facts to support separate tort and
    bad faith claims against the individual defendants.

[15]

We
    see no error in the motion judges statement, at para. 26, that [w]here an
    employee is sued for his or her acts, the material facts giving rise to
    personal liability must be specifically pleaded. That led him to conclude, at
    para. 35, that Mr. Burns has not pleaded such a claim against the respondent
    employees. We agree.

[16]

Rule 25.06(1) requires a statement of claim to contain a concise
    statement of the material facts on which the party relies for its claim.
Each
    defendant named in a statement of claim should be able to look at the pleading
    and find an answer to a simple question: What do you say I did that has caused
    you, the plaintiff, harm, and when did I do it?

[17]

Mr.
    Burns statement of claim does not provide either Ms. McLean or Ms. Oslizlok
    with an individualized answer to that question. The heart of Mr. Burns claim
    against Ms. McLean and Ms. Oslizlok is found in paras. 29 through to 35 of his
    statement claim, much of which is reproduced above. None of those paragraphs of
    the statement of claim inform Ms. McLean or Ms. Oslizlok what each did individually
    that Mr. Burns alleges constitutes actionable wrongs against him for which he
    seeks a remedy, and when did they it. Instead, his pleading lumps the defendants
    together, without providing the necessary separate, differentiating material
    facts that could support a claim against each individual.

[18]

Mr.
    Burns relies on some comments made in
Moynihan v. Rowe
, 2018 ONSC 502, at paras. 37-38, that a statement of claim need not
    draw a distinction between the conduct of employees and that of the employer,
    and where it does not, it is always open to the defendant to seek particulars.

[19]

Those comments were made in
obiter.
The requirement for a
    proper pleading remains that set out in r. 25.06(1). As applied to a tort
    claim, the rule requires a plaintiff to set out the materials facts specific to
    each defendant that support a claim against the defendant that it owed a duty
    of care to the plaintiff, and by reason of specified conduct, breached that
    duty and caused injury or harm to the plaintiff. As this court noted in
Sataur
, at para. 5, in re-instating the
    statement of claim that had been struck out, in that case the plaintiff had
    pleaded specific acts of negligence against each individual defendant for
    which each may be personally liable: see also,
ADGA
    Systems International Ltd. v. Valcom Ltd.
, [1999]
    O.J. No. 27 (C.A.), at para. 39.

[20]

Since
    Mr. Burns statement of claim failed to plead specific acts of bad faith,
    negligence or negligent misrepresentation by Ms. McLean or Ms. Oslizlok, the
    motion judge did not err in concluding that Mr. Burns has not pleaded a claim
    against the individual employee defendants that complied with the jurisprudence
    governing personal liability in tort for the acts of an employee done in the
    course of employment: at para. 35.

[21]

However,
    the motion judge did err in concluding that Mr. Burns cannot plead such a
    claim against the employees: at para. 35. That conclusion was premature. The
    deficiencies in Mr. Burns pleading might well be cured by an appropriate
    amendment had the motion judge granted him leave to amend.

[22]

The
    motion judge denied Mr. Burns leave to amend but gave no reasons for doing so. As
    this court has stated, leave to amend should be denied only in the clearest of
    cases, especially where the deficiencies in the pleading can be cured by an
    appropriate amendment and the other party would not suffer any prejudice if
    leave to amend was granted:
Tran v. University of Western Ontario
,
    2015 ONCA 295, at para. 26;
South Holly Holdings Limited v. The
    Toronto-Dominion Bank
, 2007 ONCA 456, at para. 6.

[23]

In
    the absence of reasons explaining why he denied leave to amend, the discretionary
    order of the motion judge is not entitled to deference.

[24]

Here,
    there was no reason to deny Mr. Burns leave to amend his statement of claim as
    an appropriate amendment might cure the pleadings deficiency and there is no
    suggestion that the respondents would suffer litigation prejudice by granting
    leave to amend. Although we do not interfere with that part of the order of the
    motion judge striking out the statement of claim as against Ms. McLean and Ms. Oslizlok,
    we grant Mr. Burns leave to amend.

[25]

Given
    the deficiencies in Mr. Burns statement of claim, it is not necessary to
    resolve the dispute between the parties as to whether alleged bad faith conduct
    by the employees of an insurance company constitutes a distinct actionable
    legal wrong that can be pleaded against the employees in their personal
    capacities. The resolution of that dispute, if required, must await Mr. Burns
    amending his statement of claim to properly plead individualized claims against
    Ms. McLean and Ms. Oslizlok.

DISPOSITION

[26]

Accordingly,
    we allow the appeal to the extent of varying para. 1 of the order to read:

THIS COURT ORDERS that the Statement of Claim shall be struck
    as against the Defendants, Lauren McLean and Anna Oslizlok, with leave to
    amend.

[27]

If the parties are unable to resolve the matter
    of costs of this appeal and Mr. Burns wishes to pursue that matter, he shall
    file written cost submissions to a maximum of three pages, with the Court,
    within seven days of the date of release of these reasons. The respondents shall
    have a further seven days within which to file responding submissions, such
    submissions not to exceed three pages in length.

E.E.
    Gillese J.A.

David
    Brown J.A.

M. Jamal
    J.A.


