*Since the writing of this blog the decision has been reversed.
Don’t shoot the messenger – insurance adjusters cannot be successfully sued when acting within the scope of their employment.
In Burns v. RBC Life Insurance Co.,  O.J. No. 6148, Justice Perell of the Ontario Superior Court of Justice held that:
- Employees of insurance companies, when acting strictly in their capacity as employees, cannot be held liable to an insured for breaching a duty of good faith. Rather, they can only be held liable if their acts exhibit a separate identity or interest from the insurer and the employees’ actions are themselves tortious; and
- In general, the first party to serve the notice of examination shall be the first party to conduct an examination. However, the court has discretion to change the order of examinations in the interest of fairness, efficiency, and organization.
The Disability Claim and the Motion to Strike
The plaintiff, Randolph Burns, had a disability benefits insurance contract with the defendant, RBC Life Insurance Company. When RBC Life denied his disability claim, the plaintiff brought an action against RBC Life and its employees who had administered the claim, Lauren Mclean and Anna Oslizlok.
The employees brought a motion under Rule 21.01(1)(b) of the Rules of Civil Procedure to strike the plaintiff’s claim against them as disclosing no reasonable cause of action.
Justice Perell granted the employees’ motion. He reasoned that the plaintiff had not pleaded the necessary material facts as against the employees in their personal capacities. The acts of Ms. Mclean, in denying the plaintiff’s disability claim, and of Ms. Oslizlok, in dismissing the appeal from Ms. Mclean’s decision, may make RBC Life vicariously liable for breach of contract, negligent misrepresentations, or breach of a duty of good faith. However, these acts did not meet the criteria established by the Court of Appeal in ScotiaMcLeod Inc. et al. v. Peoples Jewellers Limited et al.—criteria which Justice Perell was bound to follow. Specifically, the employees’ actions did not exhibit a separate identity or interest from that of RBC Life and were not themselves tortious acts of either employee in their personal capacities.
In support of his claim against the employees, the plaintiff cited the case of Spiers v. Zurich, wherein Justice Cavarzan of the Ontario Superior Court of Justice held that insurance contracts have an implied term that both the insurer and its adjusters owe a duty of good faith to the insured and could both be held liable for breaching that duty. However, Justice Perell found that Spiers was wrongly decided, referencing the lack of underlying Court of Appeal authority delineating how and when an employee could be individually held liable for his or her tortious conduct when engaged in the activities of his or her employer.
The Order of Examinations
RBC Life sought an order that it be allowed to examine the plaintiff before the plaintiff examine its representative witness. Justice Perell granted the motion, reasoning that (1) pursuant to Rule 31.04(3), the party who first serves a notice of examination may examine first and (2) the plaintiff would not be prejudiced by being examined first. However, Justice Perell found that courts retain the discretion to place examinations in the order that would achieve the most fair, efficient, and organized conduct of examinations for both examiners and examinees.