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LIFE INSURANCE - Cash surrender value

Thursday, March 29, 2018 @ 8:32 AM  

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Appeal by the plaintiff, Alguire, from the dismissal of his action against the defendant, Manulife. The plaintiff owned a $5 million face-value life insurance policy issued by the defendant in 1982. The policy provided for guaranteed renewable insurance protection. By the time of trial in 2016, the policy's listed paid-up value was $13.4 million. The plaintiff alleged that the policy was specifically designed to provide an immediate $5 million in coverage, plus inflation protection ensuring growth of the value of the death benefit over the course of his lifetime. The defendant argued that the plaintiff never requested a policy that safeguarded against rising inflation, and that the paid-up values listed within the policy were mistakenly calculated on the wrong face value amount. The plaintiff sought declaratory and mandatory relief requiring the defendant to honour the policy's terms and listed paid-up values. The trial judge dismissed the action as lacking any objective air of reality. It defied logic to accept that the defendant prepared a special actuarial quote showing the paid-up values, and then agreed to increase them five-fold in exchange for equal premiums. The values listed in the policy reflected a common mistake. The plaintiff suffered no actual loss. The equitable remedy of rectification was available and was granted. The defendant was awarded substantial indemnity costs. The plaintiff appealed.

HELD: Appeal dismissed. There was ample evidence to support the trial judge's conclusion that a definite and ascertainable antecedent agreement existed in support of the rectification remedy. The conclusion was consistent with the defendant's files and the plaintiff's insurance application, none of which referenced inflation protection. Any argument based on agency law was disposed of by the plaintiff's ratification of the acceptance of the broker's quote. The rectification relief sought by the defendant was not statute-barred. Although rectification was an independent claim, that claim did not begin to run until the plaintiff commenced his action seeking declaratory relief in respect of the listed paid-up values. No error arose from the imposition of a substantial indemnity costs award in favour of the defendant, or in the determination of quantum.

Alguire v. Manufacturers Life Insurance Company (c.o.b. Manulife Financial), [2018] O.J. No. 1099, Ontario Court of Appeal, K.N. Feldman, E.A. Cronk and C.W. Hourigan JJ.A., March 1, 2018. Digest No. TLD-March262018011