Case information

Insurance — Automobile insurance — Duty of good faith — Insurer terminating claimant’s income replacement indemnity payments, then after years of reviews, reinstating them retroactively — Are Canada’s public insurers subject to good faith obligations — To what extent do general insurance principles apply to a public scheme of insurance and the conduct of a public insurer — What is required to demonstrate that a public insurer has engaged in bad faith conduct — Do public insurers get to walk away scot-free — Does a different corporate structure (e.g. public vs. private) absolve a Canadian insurer of good faith responsibilities ordinarily imposed — Can good people trying their best still produce bad faith consequences — Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, [2006] 2 S.C.R. 3.

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The applicant was a passenger in an uninsured vehicle that was involved in a serious accident. She suffered significant physical injuries as well as post-traumatic stress disorder. She claimed and received benefits, including income replacement indemnity (IRI) under s. 2 of the Manitoba Public Insurance Corporation Act, C.C.S.M. c. P125, until the respondent received a tip that the applicant was working again and had not reported her income. After an investigation, her IRI payments were terminated, and the applicant was charged and then acquitted of fraud. The applicant sought an internal review of the decision to terminate her IRI. After reviews and issues spanning a number of years, the applicant ultimately received a full, retroactive payment of IRI plus interest up to 2012, and she continues to receive IRI. The applicant then sued the respondent in damages for breach of its duty of good faith in how it processed her claim.

The Court of Queen’s Bench of Manitoba granted the applicant’s action in damages for breach of a duty of good faith and awarded her damages of $348,248. The Court of Appeal of Manitoba allowed the appeal and held that there had been no breach of the duty of good faith by the insurer.