Manulife found guilty of fraudulent concealment.
A judge of the Alberta Court of Queen’s Bench found The Manufacturers Life Insurance Company (“Manulife”) guilty of fraudulent concealment in Atchison v. Manufacturers Life Insurance Company.
The trial judgment is found at: Atchison v Manulife, 2002 ABQB 1121.
Ms. Atchison’s husband was covered by a group life insurance policy with Manulife. He applied and paid for “excess” life insurance, in addition to his group coverage. The excess policy was issued, with coverage effective one month prior to his death in a boating accident. Manulife paid the widow on her husband’s group insurance but failed to tell the widow that he had also purchased, and been issued, additional coverage of $199,000.00.
After a delay of 5 1/2 years, the widow accidentally happened upon evidence that her husband may have purchased additional life insurance before his death. She went to a lawyer who, after threatening litigation, obtained proof of the additional coverage. Manulife denied her claim for the additional coverage. When she sued, Manulife relied on the “limitation defence”, stating that she had waited too long to sue.
The judge found that Manulife could not rely on the limitation defence as the widow’s delay was caused by Manulife’s actions. In assessing Manulife’s conduct, the judge wrote:
[83] I conclude that Manulife acted unconscionably toward the Plaintiff, thereby breaching its duty of fairness and good faith toward her, which conduct resulted in the fraudulent concealment of her cause of action in this matter both at common law and pursuant to the provisions of ss. 6 and 57 of the LAA. Her action is therefore not statute-barred.
[84] The unconscionable conduct included not advising the Plaintiff that her husband had completed an application for excess insurance and had provided all of the information in relation to his insurability that he had been asked to provide prior to his death. It included not providing her with a copy of the policy and the Insurability form promptly and particularly when it specifically received a request for same through Adams who it expected to be its conduit for all communication with the insured and beneficiaries based on the testimony of its own witnesses.
[85] Manulife would have known that she would have had no means on her own to acquire this information. If it chose to refer her to the insured Diagnostic for information, it bore the risk if any information turned out to be incorrect. While Tom Morton could not recall telling her that she had received all the benefits she was entitled to receive under the contract in January 1991, i.e. the two $135,000 sums only, he testified he could well have done so as he believed that was the case. The only source of his information about the insurance contract was the material provided to him by Manulife via Adams and what Adams told him, as Manulife’s appointed conduit for that purpose.
The facts of this case are rare. Very few Canadian life insurance companies have been found guilty of such serious misconduct.
Manulife was represented by in-house counsel, M. Blair Anderson. 4 years later Mr. Anderson was a witness in a case against Manulife which went to the Ontario Court of Appeal. The OCA discussed Mr. Anderson’s conduct at paragraph 46 of: Manulife v Ward, 2007 ONCA 881.
