Case studies
Case Study No. 1
John was diagnosed with multiple sclerosis (“MS”) in 1961.
In 1979, John and his wife, Elaine, mortgaged their residence to Royal Bank
of Canada (“RBC”). As part of the mortgage package, they elected to purchase
group life insurance under a group policy issued by Prudential Insurance Company
of America (“Prudential”).
In 1981, John became totally and permanently disabled from the MS.
In 1982, Prudential issued an amendment to the group policy to provide total
and permanent disability insurance coverage without payment of any additional
premium.
After the waiting period of 6 months specified in the amendment, John applied
for payment of the balance outstanding under the RBC mortgage on the basis of
total and permanent disability from the MS.
Prudential refused payment. John and Elaine sought the legal opinion of
Neville Johnston. Neville advised that they had a good case. John and Elaine
sued Prudential.
At the trial, Neville, as counsel for John and Elaine, presented expert
evidence of Quebec law as the contract of insurance provided that the governing
law was the law of Quebec.
The Trial Judge gave judgment in favour of John and Elaine. On an
interpretation of the wording of the amendment, the Court said that the
amendment had a retrospective effect, and took effect from the date of the
original life insurance, prior to John’s total and permanent disability from MS.
In any event, even if the amendment was ambiguous, the ambiguity was to be
interpreted against Prudential, the draftsman of the amendment.
The Court awarded judgment in favour of John and Elaine, together with costs.
Prudential appealed to the Ontario Court of Appeal. The Court of Appeal
dismissed the appeal, with costs to John and Elaine.
The net result: the RBC mortgage on the residence of John and Elaine was paid
out by Prudential, and the mortgage was discharged.
McClintock v. Prudential Insurance Company of America
[1984]
O.J. No. 596 (Ontario High Court of Justice)
[1986] O.J. No. 1173 (Ontario Court of Appeal) |
