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05 Oct 2020

Disability insurer seeks permission to pursue counter-claim against insured

by Erika Hachey
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Thorburne v. Sun Life Assurance Company of Canada, 2020 NSSC 240

Ms. Thorburne brought an action against her long-term disability insurer, Sun Life, after they ceased paying her disability benefits. Ms. Thorburne alleged she was entitled to benefits on the basis she was totally disabled from her own occupation and ‘any occupation’.

At discovery, Ms. Thorburne brought a summary of income she earned from selling shampoo in a multi-level marketing business, Monat. Ms. Thorburne indicated her duties were relatively minor and included only posting to social media. Following discovery, online surveillance showed Ms. Thorburne had been hosting events to sell products throughout the province. Ms. Thorburne later admitted to selling products during the time she had been receiving LTD benefits. The LTD insurer moved to amend their pleadings to include a counter-claim against Ms. Thorburne to recover any funds she earned while receiving LTD benefits.

At issue was whether the LTD insurer could bring the counter-claim against Thorburne, or if the insurer was time-barred by the limitation period. Justice Gabriel stated that the LTD insurer could not have ‘discovered’ the nature of the income disclosed in the Affidavit of Documents as it was over 800 pages long and was not immediately clear. He further stated that the 1-year contractual limitation period on the LTD policy would apply only to the insured, and not to the insurer. He held the LTD insurer would be allowed to bring the counter-claim to attempt to recover the income.

You can read Thorburne v. Sun Life Assurance Company of Canada in its entirety here.