Sun Life Ordered To Pay Legal Costs

A previous blog post, Sun Life Ordered To Pay General Damages For Causing Mental Distress In LTD Claim, commented on the recent Kardaras v. Sun Life Assurance Company of Canada decision, where Sun Life was ordered to pay general damages for mental distress because it assessed the plaintiff’s long term disability claim in a manner that was not reasonable and acted contrary to the duty of good faith. The claimant was ultimately found to be disabled from her own occupation, even though she was working three days per week. She did not meet the more difficult any occupation test of disability necessary for LTD benefits to be paid for more than two years.

After the trial, both sides made submissions to the court regarding who should pay legal costs. Generally, a party that is unsuccessful is required to pay a portion of the other side’s legal fees, HST, and disbursements. The judge will consider many factors, not just who “won” the case, especially in circumstances as we see here where success was divided.

The plaintiff was successful in that Sun Life was ordered to pay LTD benefits of $12,037, plus $10,000 for mental distress damages. Her lawyer claimed legal costs of more than $300,000. Sun Life’s lawyer argued she was not successful on the any occupation test of disability and the total recovery was relatively small, within the jurisdiction of the small claims court.

The judge took into account the plaintiff’s partial success, proportionality, conduct at trial, and the missed opportunity to settle for an amount that exceeded the judgment. The judge ultimately awarded $70,000 for legal costs.

This case is unusual in that it proceeded to trial over a relatively small sum. The vast majority of long term disability claims, more than 95%, settle without going to court. It seems likely neither side is happy with the outcome, and with the benefit of hindsight perhaps the claim should have settled.

Michael Jordan is a Toronto LTD lawyer with offices in London and Ottawa. He offers free consultations, and would be pleased to discuss any long term disability questions you may have.

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Michael Jordan
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