In this disability insurance case the Court made an award for full indemnification of the claimant’s legal fees because she was forced to hire a lawyer to enforce the disability contract through litigation (Tanious v. The Empire Life Insurance Company, 2017 BCSC 85). The Supreme Court Judge came to this conclusion based on the following considerations:
a) The claimant had a disability insurance contract with the defendant, the purpose of which was to provide her, in the event of a disability that rendered her unable to work, with a subsistence level amount of income with which to feed, clothe, and house herself while unable to work; and to provide her with the peace of mind that flows from the coverage.
b) The claimant did in fact suffer a disability which rendered her unable to work and triggered the defendant’s obligation to pay those subsistence level benefits, which it did not do.
c) The claimant was required to commence litigation against the defendant or else forfeit the benefits to which she was entitled under the contract. The significant challenges caused by the claimant’s disability also necessitated (and complicated) the assistance of counsel for virtually every aspect of that litigation.
d) The legal costs the claimant reasonably incurred in obtaining her contractual benefits in this case substantially deprived her of the full benefit of the contract, leaving her with less than the necessary amount of income on which to obtain the basic necessities of food, clothing, and shelter.
e) The full indemnification is appropriate where a claimant has been forced to enforce a disability or other type of insurance contract through litigation, and ought to be put in the position they otherwise would have been in had the litigation not been required.
The claimant was totally disabled by multiple sclerosis (“MS”) under the terms of her disability insurance policy issued by the defendant, the Empire Life Insurance Company. For mental distress caused by the Insurance Companies refusal to pay disability benefits, the claimant was awarded a meager $15,000 in aggravated damages.
The claimant applied for “solicitor client costs of the proceeding, either as costs or damages”. Usually claimants are entitled to the certain court ordered “units” to compensate for legal fees, which are lower than the actual solicitor client costs.
This could signal a positive change for legal fees compensation in cases involving breach of disability benefits.