The British Columbia Court of Appeal gave reasons for judgment in Asselstine v. Manufacturers Life Insurance Co. et al on May 25, 2005. The decision was eagerly anticipated by disability insurers.

The plaintiff was a research nurse employed by the defendant University of British Columbia. She was diagnosed with multiple sclerosis and took sick leave for several weeks. When she returned to work, she was restricted to doing sedentary tasks. Subsequently, UBC terminated her employment due to a lack of funding. The plaintiff applied for long term disability benefits after UBC terminated her employment.

Following the Supreme Court of Canada’s decision in Whiten v. Pilot Insurance, [2002] 1 S.C.R. 595, insurers have faced an increasing number of claims for punitive and aggravated damages founded on an alleged breach of the duty of good faith and fair dealing. In the trial judgment in Asselstine, punitive damages of $150,000, aggravated damages of $35,000 and increased costs were awarded against the defendant employer and insurer.

type Canadian Insurance Law Alert - June 2005