An award of $45,000 for mental distress due to a refusal to pay benefits under a long term disability policy were deemed to be excessive and was reduced to $25,000.
The appeal by the Government of Manitoba ("Manitoba") from a trial decision finding that Lumsden was totally disabled under the terms of the Long Term Disability Income Plan for Manitoba employees was allowed in part where the Court found that the $45,000 award for mental distress was excessive and reduced this award to $25,000.
Lumsden v. Manitoba, [2009] M.J. No. 48, February 17, 2009, Manitoba Court of Appeal, R.J. Scott C.J.M., M.H. Freedman and A.D. MacInnes JJ.A.
Lumsden had been working as a physiotherapy aide for Manitoba since 1985. Lumsden ceased working in 2002 due to various medical conditions, including Raynaud's phenomenon, back pain, and depression. Manitoba refused to pay disability benefits under its long term disability income plan. At trial, the Judge found that Lumsden suffered from a continuing decline and deterioration in health from 1995. The Trial Judge accepted the evidence of Lumsden's family physician and from various specialists consulted by the physician and found that Lumsden was not able to work when he left his employment in 2002. The Trial Judge found that by 2003, Lumsden was unable to perform his own occupation and by 2004, was totally disabled. The Trial Judge awarded Lumsden damages of $45,000 for mental distress due to Manitoba's failure to pay him disability benefits to which he was entitled. Manitoba appealed this decision, arguing that the Trial Judge erred in finding that Lumsden was totally disabled and in awarding damages for mental distress.
The Manitoba Court of Appeal allowed the appeal in part. The Court of Appeal held that the Trial Judge did not commit a reversible error in finding that Lumsden and his family physician were credible. There was no evidence after December 2003 from any source that Lumsden might be capable of working. The Court found that the test for disability in relation to employment was an individualized one, combining elements of both the objective and subjective. The Reasons of the Trial Judge were sufficient to support the findings. The Trial Judge did not solely rely upon Lumsden's subjective perception, but extensively reviewed the medical evidence and found it to be reliable and supportive of the claim for total disability.
With respect to the appeal concerning the damages for mental distress, both Parties agreed that the Trial Judge correctly relied upon the leading decision of the Supreme Court of Canada in Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30. There was no suggestion that the Trial Judge was not entitled, as a matter of law, to award damages for mental distress when dealing with "peace of mind" contracts, such as disability insurance, where the parties reasonably contemplated at the time of the contract that a breach in certain circumstances would cause a plaintiff mental distress. However, the Court applied a practical "sensible and realistic" approach in determining the appropriate award under this heading. The Court found that using the award in Fidler as a benchmark, the award of damages of $45,000 was neither "sensible" nor "realistic". Instead, a more appropriate award was $25,000.
In the result, Manitoba's appeal was dismissed except for the reduction in damages awarded for mental distress from $45,000 to $25,000.
This case was originally summarized by Jonathan D. Meadows and originally edited by David W. Pilley.
