Loading...
HomeMy WebLinkAbout2004-0050.Union.09-03-04 DecisionCrown Employees Grievance Settlement Board Suite 600 180 Dundas St. West Toronto, Ontario M5G 1Z8 Tel. (416) 326-1388 Fax (416) 326-1396 Commission de règlement des griefs des employés de la Couronne Bureau 600 180, rue Dundas Ouest Toronto (Ontario) M5G 1Z8 Tél. : (416) 326-1388 Téléc. : (416) 326-1396 GSB#2004-0050 IN THE MATTER OF AN ARBITRATION Under THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT Before THE GRIEVANCE SETTLEMENT BOARD BETWEEN Association of Management, Administrative and Professional Crown Employees of Ontario (Union) Association - and - The Crown in Right of Ontario (Ministry of Government Services) Employer BEFORE Marilyn A. Nairn Vice-Chair FOR THE UNION Michael Mitchell Sack Goldblatt Mitchell LLP Barrister and Solicitors FOR THE EMPLOYER David Strang Ministry of Government Services Senior Counsel HEARING December 10, 2008. 2 Decision [1] This grievance was filed on March 2, 2004 pursuant to the terms of the collective agreement in operation from April 1, 2001 to March 31, 2004. Three interpretation issues were heard over eight days of hearing and a decision on those matters issued on November 15, 2005. The parties agreed that a fourth issue dealing with the subrogation of benefits would not be dealt with in those proceedings. The parties were hopeful that the matter might be resolved as a result of certain judicial activity. That has not been the case and they have now brought the issue forward for determination. There is no dispute that I have the jurisdiction to hear and determine the matter. [2] The parties were agreed that any issue of subrogation in respect of the dental and supplementary health and hospital benefits was not before me at this time. The parties agree that I am to remain seized with that issue should it require determination. This decision deals with the subrogation issue only as it relates to the Long Term Income Protection Plan (“LTIP”) Plan (or the “Plan”). [3] The collective agreement in issue was the second collective agreement between the parties. Articles 31.1 and 31.2 of that agreement provide: 31.1 “Benefit Plans” in Articles 31-36 means the Basic Life Insurance Plan, the Supplementary & Dependent Life Insurance Plan, the Supplementary Health and Hospital Insurance Plan, …the Dental Plan, and the Long Term Income Protection Plan in force as of September 1, 1997 with the Great West Life Assurance Company or any successor Plan. 31.2 Subject to the provisions of this Agreement, the benefits contained in the Benefit Plans as they were constituted on September 1, 1997 shall be provided to full time employees on the same terms and conditions as were in place on September 1, 1997. These benefits and terms and conditions may only be altered by mutual agreement of the parties. [4] Articles PT.8.1 and PT.8.2 of the collective agreement replicate those provisions in reference to part-time employees. There is no dispute that the LTIP Plan is available to both full-time and part-time employees covered by this collective agreement. [5] The issue is whether or not the LTIP Plan in force as of September 1, 1997 provides a right of subrogation to the Crown (the “employer”). There is no dispute that the collective 3 agreement contains no express language dealing with this issue. The parties are agreed that I must look to the terms of the Plan. They are further agreed that the LTIP Plan is silent as to the effects of any third party recovery and does not expressly deal with the issue of subrogation, and that I must therefore interpret that Plan in relation to the common law. It is the position of AMAPCEO (the “Association”) that the LTIP Plan contains no right of subrogation. The Crown urges the opposite conclusion. The LTIP Plan [6] There was no dispute that the employer’s contract with Great-West Life for the LTIP Plan is an administrative services only contract. That is, the employer retains the risk of providing the benefit. The insurance company administers the Plan on behalf of the employer for a fee. There was also no dispute that the LTIP Plan is a plan of insurance. Broadly speaking, the LTIP Plan provides monthly benefits in an amount equal to 66 2/3% of an employee’s monthly earnings. Following six months of total disability (wherein short term sickness benefits are payable), the employee is entitled to receive LTIP benefits for the next 24 months if the employee is unable to perform the essential duties of her normal occupation. After 30 months from the onset of total disability, the employee is entitled to continue to receive LTIP benefits if she is unable to perform the essential duties of any occupation for which she is reasonably fitted by education, training or experience. [7] Relevant provisions of the LTIP Plan provide: DEFINITIONS In this Policy: …. 4. “Actively at Work” means actually at work for the Employer at the employee’s customary place of employment; … 7. “Elimination Period” means an initial period of the longer of (a) 6 months (b) the period the employee elects to use accumulated sick leave credits to defer the commencement of benefit payments, during which the employee is Totally Disabled. 4 8. “Totally Disabled” means, for the first 30 months of a Period of Disability, an employee is wholly and continuously disabled by illness or accidental bodily injury which prevents him from performing the essential duties of his normal occupation. However, during the Elimination Period, the employee shall be deemed not to be totally disabled and total disability shall be deemed not to exist if the employee is engaged in any employment for wage or profit. After the first 30 months of total disability, “Totally Disabled” shall mean he is unable to perform the essential duties of any occupation for which he is reasonably fitted by education, training or experience. …. 13. “Rehabilitative Employment” means a program of rehabilitative employment in which the employee first engages after qualifying for benefits under this policy and which is approved by the Company. Any of the following may be eligible for consideration as Rehabilitative Employment: (a) the employee’s regular occupation on a part-time basis; (b) any gainful occupation which is of a less demanding nature than the employee’s regular occupation; (c) a formal vocational training program … ELIGIBILITY 1. An employee is eligible for insurance under this policy on the date he meets all the following conditions: (a) is employed by the Employer on a permanent full-time or part-time basis. (b) is compensated by the Employer for services rendered in the normal course of the Employer’s business. (c) has completed the Waiting Period. (d) is Actively at Work or on an approved leave of absence and is not disabled. … AMOUNT OF INSURANCE 1. An employee’s Monthly Benefit Amount shall be an amount equal to 66 2/3 % of his Monthly Earnings. … TIME OF PAYMENT OF CLAIMS Subject to written proof of loss, all accrued indemnities will be paid to the insured employee each month during any period for which the Company is liable and any balance remaining unpaid upon the termination of liability will be paid immediately upon receipt of due written proof. If an employee dies before all benefits have been paid, the remaining benefits will be paid to his estate. … LEGAL ACTIONS No action at law or in equity shall be brought to recover on this policy prior to the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of 3 years after the time written proof of loss is required to be furnished. … AMOUNT PAYABLE The Monthly Benefit payable will be the amount to which an employee is entitled at the date of disability according to the Amount of Insurance provision including any retroactive adjustments in 5 Monthly Earnings which have an effective date on or prior to the date of disability. This amount will be reduced by other income to which the employee may be entitled, (A) from any of the following sources toward which the Employer makes a contribution: 1. Disability benefits payable under the Canada Pension Plan or Quebec Pension Plan… including benefits for dependents but excluding benefits payable directly to a dependent…. 2. Retirement benefits payable under the Canada Pension Plan or Quebec Pension Plan…to which the employee is entitled on his own behalf. 3. Benefits payable under any workers’ compensation act, excluding any portion that was being received by the employee prior to becoming Totally Disabled. 4. Retirement or disability benefits provided by the Employer. (B) from either of the following sources: 1. 50% of the amount of remuneration received from Rehabilitative Employment. 2. In respect only of an employee who prior to becoming Totally Disabled, had income from other enterprises or occupations, 50% of the increase in such income due to the employee having more time available to devote to such enterprise(s) or occupation(s)….. … The amount of monthly benefit to which an employee is entitled shall be further reduced if, and by the amount by which, the sum of 1. his Amount of Insurance reduced by 50% of the monthly amount of remuneration from Rehabilitative Employment, plus, 2. the monthly amount of remuneration from Rehabilitative Employment exceeds 100% of his pre-disability Monthly Earnings. … PAYMENT OF BENEFITS Subject to the other provisions and limitations contained in this policy, if accidental bodily injury or sickness results in an employee becoming Totally Disabled, and if such disability commences while the employee is insured under this policy and continues for at least the Elimination Period (as defined) the employee shall be entitled to the payment of benefits in accordance with the AMOUNT PAYABLE provisions of this policy. Such benefits 1. shall commence on the first day following the last day of the Elimination Period, and 2. shall continue until the earliest of (a) the date he ceases to be Totally Disabled or engages in any occupation for wage or profit other than Rehabilitative Employment (as defined). (b) The end of the month in which he attains age 65. (c) The date the Company deems he has failed to furnish proof of the continuance of total disability, or failed to submit to an examination requested by the Company. (d) The date he becomes eligible for any plan replacing the benefits provided under this policy. (e) The date he dies. … [8] There was no dispute that the LTIP Plan provides for a reduction in the amount of benefit payable should the disabled employee be entitled to receive benefits from any other plan to which the employer contributes, such as workers’ compensation or the Canada Pension Plan (whether pension benefits or disability benefits attributable to that disability). 6 [9] There was also no dispute that, if before becoming totally disabled, an employee earned income from another enterprise or occupation, that employee is entitled to earn and retain income from that source up to the level earned at the time of disability, without it affecting the amount of benefit payable under the Plan. In addition, that employee is entitled to retain 50% of any increase to that income due to the employee having more time available to devote to such enterprise or occupation as a result of being disabled from their regular employment. In the same vein, where an employee in receipt of LTIP Plan benefits engages in “Rehabilitative Employment”, they are entitled to retain 50% of that income without any effect on the amount of their disability benefit under the LTIP Plan. Under the terms of the Plan, Rehabilitative Employment is limited to a maximum period of 24 months from the date such first employment commences. (The use of capital letters is a reference to a term as defined under the Plan.) [10] There was no real dispute that the Plan contains no limitation on, or reduction in the amount of the benefit based on proceeds payable from other insurance, whether that be long term disability insurance purchased through a private, individual plan of insurance or through membership in another group plan. Rather, the employer argued that any such other insurance would likely make provision for a set-off. [11] There was some dispute as to the proper interpretation to be given to section 2 (a) under the heading “Payment of Benefits” in the Plan. The union argued that the Plan did not prohibit an employee, during the first 24 months of long term benefits, from engaging in gainful employment for which they are able and further, that benefits were not reduced in that circumstance. The employer argued that an employee was entitled to engage only in ‘Rehabilitative Employment” as defined by the Plan, noting that section 2 (a) under “Payment of Benefits” provides that benefits will cease should the employee engage in any occupation for wage or profit, other than Rehabilitative Employment. [12] I prefer the interpretation asserted by the employer. In order to be eligible for LTIP benefits, the insured employee must be “Totally Disabled” throughout the “Elimination Period” (essentially the first 6 months of short term sick coverage). The definition of “Totally Disabled” stipulates that during the Elimination Period an employee is deemed not to be Totally Disabled if the employee is engaged in any employment for wage or 7 profit. Once the payment of LTIP benefits has commenced, the ‘Payment of Benefits’ section provides that benefits shall continue until the earliest of …“2 (a) the date [the employee]…engages in any occupation for wage or profit other than Rehabilitative Employment (as defined)”. [13] The single exception for Rehabilitative Employment is clear. The definition of “Rehabilitative Employment” is very broad, including “any gainful occupation which is of a less demanding nature than the employee’s regular occupation” (emphasis added). Such a broad definition may capture a significant percentage of work that a disabled employee may be capable of performing while still meeting the defined requirement of being Totally Disabled. LTIP benefits are reduced by 50% of the amount of remuneration received from such Rehabilitative Employment. [14] However, the use of the word “occupation” in section 2 (a) contrasted to the reference to rehabilitative “employment” and the use of the words “wage or profit” suggests a broad scope of activity is intended to be captured; which activity, if not Rehabilitative Employment, leads to the cessation of the payment of benefits. There appears to be no dispute that income from the continuation of pre-disability enterprises or occupations is exempted from the effect of section 2 (a) by virtue of paragraph B 2 under the “Amount Payable” section, provided that the employee still meets the definition of totally disabled under the Plan. [15] Having reviewed the terms of the Plan, I find that LTIP benefits will be reduced by either pension or disability amounts payable on behalf of the employee pursuant to the Canada Pension Plan; workers’ compensation entitlements payable should the disability reflect a work injury; and benefits payable under the pension plan provided by the Crown. Benefits will also be reduced by an amount equal to 50% of remuneration received from Rehabilitative Employment and 50% of any increase to pre-disability income from another enterprise or occupation due to the employee having more time available to devote to such activity. Benefits will be terminated should the employee engage in any occupation for wage or profit other than Rehabilitative Employment (and subject to the exception for pre-disability enterprises or occupations captured by the 50% reduction). 8 LTIP benefits are not affected by benefits payable through another group or a private insurance plan. * * * [16] I turn to the question of whether this contract is one that provides a right of subrogation to the employer. In very brief summary, AMAPCEO argued that determining whether the LTIP plan was intended as an income replacement plan was not a sufficient inquiry. The inquiry must go further, argued AMAPCEO, and assess the extent to which the policy claws back from the payment of income or monies the insured might receive from other sources. Comparing the decisions in Tucker, infra, and Wilson, infra, the Association argued that the more the insurer is entitled to claw back monies from other sources, the more likely the plan is to be found to be a contract of indemnity, and thereby implicitly contain a right of subrogation. In this case, argued AMAPCEO, the limited degree of claw back led one to conclude that the LTIP Plan was not a contract of indemnification and therefore contained no right of subrogation to the employer. [17] The employer argued that insurance law is based on a fundamental principle whereby one is insured against an unforeseen event and is indemnified for the losses suffered from that event. The harm, argued the employer, is not indemnified twice, and an insured is not to be over-compensated for losses. It argued that the cases typically see long term disability plans as contracts of indemnity. If the contract is one of indemnity, argued the employer, there is a right of subrogation. [18] There was no dispute, noted the employer, that the Insurance Act, infra, statutorily limits the employer’s right of subrogation with respect to disability claims arising from motor vehicle accidents. However, if dealing with other torts (such as a slip and fall or medical malpractice), argued the employer, an employee could recover their full income loss or more from the defendant (or its insurer) while the employer’s obligation (as insurer) to provide disability benefits for the same loss would co-exist. Such a case, argued the employer, is subject to a right of subrogation. The employee, argued the employer, is not entitled to recover beyond 100% of their loss and the employer’s obligation is entitled to be reduced to the extent the employee’s recovery goes beyond 100% of their loss. 9 [19] The employer argued that the LTIP Plan is intended to indemnify against wage loss. Under this policy, argued the employer, the presumption is that the vast majority of individual disability benefit claims will be payable by the employer under that policy. The policy, argued the employer, also balances other potential financial interests that have no bearing on the application of the policy. If there is other employment and the disability does not inhibit the ability to continue that work, argued the employer, such employment is irrelevant to the question of compensating the insured. * * * [20] The parties referred me to and I have reviewed the following cases; Glynn v. Scottish Union & National Insurance Co. Ltd. [1963] 2 O.R. 705 (C.A.); Gibson v. Sun Life Assurance Co. of Canada (1984) 6 D.L.R. (4th) 746 (Ont. H.C.); London Life Insurance Co. v. Raitsinis [1990] O.J. No. 323 (H.C.); Maritime Life Assurance Co. v. Mullinex [1986] N.S.J. No. 479 (S.C.); Mutual Life Assurance Co. v. Tucker [1993] N.S.J. No. 56 (C.A.); Wilson v. Great-West Life Assurance Co. [2008] N.B.J. No. 303 (C.A.) overturning Wilson v. Great-West Life Assurance Co. [2007] N.B.J. No. 92 (Q.B.). The parties also made reference to the Insurance Act, R.S.O. 1990, C. I.8, as amended, particularly s. 267, as amended. [21] Given that the issue before me deals with insurance law and is one that appears not to have received arbitral attention, I intend to review the caselaw at some length. All of that jurisprudence arises in the civil litigation context. What is a right of subrogation? [22] In Gibson, supra, the right of subrogation was explained as follows: [pp. 752-53]…The basic principles of insurance law as they apply to [a contract of insurance] are well-settled so far as the right of subrogation is concerned; if the policy is a contract of indemnity, the doctrine of subrogation applies; if it is not a contract of indemnity, there is no right of subrogation…. The doctrine of subrogation is a principle of equity that applies to a contract of indemnity. The meaning of subrogation was stated by Chancellor Boyd in National Fire Ins. Co. et al. v. McLaren 10 (1886), 12 O.R. 682 at p. 687 (cited with approval by the Supreme Court of Canada in Ledingham et al. v. Ontario Hospital Services Com’n et al., [1975] 1 S.C.R. 332 at p. 337…: The doctrine of subrogation is a creature of equity not founded on contract, but arising out of the relations of the parties. In cases of insurance where a third party is liable to make good the loss, the right of subrogation depends upon and is regulated by the broad underlying principle of securing full indemnity to the insured, on the one hand, and on the other of holding him accountable as trustee for any advantage he may obtain over and above compensation for his loss. Being an equitable right, it partakes of all the ordinary incidents of such rights, one of which is that in administering relief the Court will regard not so much the form as the substance of the transaction. The primary consideration is to see that the insured gets full compensation for the property destroyed and the expenses incurred in making good his loss. The next thing is to see that he holds any surplus for the benefit of the insurance company. The insurer may also find his right to subrogation in the terms of the contract of insurance, or in statutory provisions confirming or abrogating it… The all-important question to be decided, therefore, is whether the group policy here concerned is a contract of indemnity. Such a contract is one in which the insurer binds itself to pay money to the insured upon proof of an uncertain event occurring, and upon further proof that as a result of that event the insured has suffered pecuniary loss. In such a case the payment of the insurance money is intended to indemnify the insured, wholly or partly, for his loss. It is inherent in the concept of insurance that most insurance contracts are intended to indemnify the insured for loss sustained, and are therefore contracts of indemnity. There are, however, important classes of insurance in which, under the contract, no proof of loss is required to entitle the insured to payment of insurance monies upon the occurrence of an event. These principally are…life insurance and contracts of “accident or sickness insurance”. In such cases where proof of loss suffered by the insured is not a condition of payment, the contract is not one of indemnity; this is because the liability of the insurer to pay a sum or sums fixed by the policy arises solely on the occurrence of the event irrespective of pecuniary loss or gain to the insured resulting from the event. The Issue [23] The question is whether or not the LTIP Plan is a contract of indemnity. If it is, a right of subrogation exists. There is nothing in the collective agreement, the terms of the LTIP Plan, or a statute that specifically speaks to any subrogation right under the Plan. However, there need not be such a provision in order to assert the claim (see Glynn, Gibson, and Mullenix, all supra). The claim exists in equity at common law. Analysis and Decision [24] Glynn, supra, is a 1963 decision of the Ontario Court of Appeal. Mr. Glynn and his dependant spouse were injured in a motor vehicle accident. They made a claim to Scottish Union, their insurer, for certain medical expenses incurred as a result of injuries received in the accident. Scottish Union refused to pay that claim unless and until Mr. 11 Glynn agreed that Scottish Union had a right of subrogation in the proceedings against the defendant driver, the vehicle owner, and their insurer. Mr. Glynn did not agree to this condition. Subsequently, Mr. Glynn entered into a settlement with the defendants and their insurer which settlement included payment for those medical expenses. Mr. Glynn then sued under his automobile insurance policy with Scottish Union for payment of those medical expenses. At trial, Mr. Glynn was successful. The insurer appealed. [25] The Court allowed the appeal on the basis that the contract of insurance was a contract of indemnity and therefore Scottish Union had a right of subrogation with respect to the claim made by Mr. Glynn. Although there is no dispute between the parties before me that subrogation rights arising out of motor vehicle accident claims in Ontario are now dealt with, and limited by the terms of the Insurance Act, supra, two key principles remain from this decision of the Court of Appeal. Firstly: Speaking generally with respect to all insurance other than life, the purpose of insurance is to relieve the insured in whole or in part from the financial impact of some contingent event, by shifting the risk of the insured’s possible loss to the shoulders of the insurer … This being the purpose of insurance, it follows that indemnity, unless expressly excluded, is a controlling principle by reference to which the respective rights of the parties are to be determined; unless where the terms of the insuring agreement make it conclusive that the intention of the parties was not to enter into a contract of indemnity, a contract of insurance is to be construed as a contract of indemnity. [p. 5 of 8] [26] And secondly: Whether any particular engagement of an insurer constitutes a contract of indemnity is to be determined by the exact nature of the agreement into which he has entered and not by whether the insuring agreement can be conveniently categorized under one or other of several general designations. [p. 4 of 8] [27] I am bound to take note of the Court of Appeal’s statement that, apart from life insurance, there is a presumption that a contract of insurance is a contract of indemnity. However, that presumption is qualified by the court’s direction that one must look to the specific terms of the insurance agreement in order to determine whether it is a contract of indemnity. 12 [28] What follows is a review of the insurance plans considered in the cases, particularly the reductions and limitations affecting benefit levels in each, because the requirement for proof of loss has consistently been held to be a necessary component of a contract of indemnity. However, the courts’ approach has evolved when applying the requirement to disability insurance contracts which fall somewhere between a non-indemnity accident insurance policy (requiring the payment of a fixed sum solely upon the happening of an event) and a contract expressly requiring detailed proof of loss. [29] Some forty-five years ago the court in Glynn commented on the issue as follows [beginning at page 6 of 8]: Unless there are in a contract of insurance, express provisions to the contrary, to become entitled to recover thereunder the insured must prove: (1) the happening of some event by reason of which the insurer’s liability arises; (2) the loss occasioned to the insured by the happening of such event. Such loss, or the maximum amount specified in the contract if such maximum is less than the loss, is the measure of the insurer’s liability; it is that loss which the insurer contracts to pay and it is against that loss that the insured has sought to protect himself; it would be contrary to the whole nature of the contract if the insured were entitled to make a profit from his loss. By appropriate words the insured and their insurer may agree that the property insured, if lost or destroyed, shall be admitted by both to be at the date of loss or destruction of a predetermined value. In such a case the parties merely waive the necessity of the insured providing the amount of his loss; …but the obligation of the insured to prove the fact of his loss remains. This type of contract is generally referred to as a “valued” policy. The fact that the proof of the amount of the loss is waived does not change the nature of the contract. It is none the less a contract of indemnity unless other terms thereof serve to indicate that the intention of the parties was that it be otherwise. A valued policy is not to be confused with a policy which provides that, upon the happening of some contingent event, a sum fixed or calculable becomes payable to the insured, regardless of whether the insured suffers any pecuniary loss…Another example of [that latter type of] contract is the undertaking of an insurer to pay upon death or dismemberment or the suffering of some designated injury due to accident, a fixed sum…..Porter’s Law of Insurance 8th ed., p.449: But at present the usual form of an accident policy or contract is to pay a certain fixed sum per week in case of injury, and a certain other fixed sum in case of death, Such policies do not contemplate indemnity, and avoid the necessity of going into the assured’s accounts or private affairs. … Such statements are valid, however, only to the extent that, in the personal accident insurance contract concerned, there is no requirement that the insured, in order to become entitled to recover under the policy, prove pecuniary loss, in addition to the occurrence of the accident. They (sic) would be true of a contract whereby the insured agreed to pay a fixed sum per day for each day the insured by necessarily (sic) disabled from working. Since, under such a policy, it is not necessary for the insured to prove that any loss of wages or earnings were occasioned by the accident but only that a disabling accident had occurred to him, the contract is not one of indemnity. (emphasis added) 13 [30] Gibson, supra, did involve a claim under a long term disability plan. The disability arose as a result of a motor vehicle accident (occurring prior to the current statutory provisions). In a separate action, the insured was awarded general and special damages against the defendant driver, including an amount for past and future loss of earnings. The insured also claimed disability benefits from Sun Life, through the group insurance plan provided by her employer. Sun Life counterclaimed that it was entitled to recover disability payments made and be relieved from further payments under the plan on the basis that it was subrogated to the insured’s claim against the defendant driver. [31] Similarly to the case before me, the disability benefit under the Sun Life plan was calculated as a percentage of the insured’s earnings from her employment with that employer. Eligibility required that the insured be totally disabled through the Elimination Period. In finding that Sun Life had a right of subrogation the court stated: [p. 756]….. [The benefit to the insured] is payable in the event [she] becomes “totally disabled” due to illness, including bodily injury. That is the event that triggers liability upon the insurer to pay the benefits. No proof of loss of earnings is, in express terms, required. There are, however, important qualifications upon the obligation to pay the benefits. [emphasis added] [32] Although the court in Gibson found that no proof of loss was, in express terms, required, it concluded that, given the scope of circumstances wherein the obligation to pay benefits was reduced, the plan was intended to provide a limited form of income replacement and was therefore one of partial indemnity. As such, Sun Life had a right of subrogation. Sun Life could not, however, assert that right until such time as the insured had received full indemnity from the tortfeasor. The Crown does not dispute this limitation on the exercise of any right of subrogation. [33] The Sun Life plan stipulated that monthly disability payments would be reduced in the first 24 months by, a) 50% of earnings from any gainful occupation, and b) 100% of all amounts of Other Disability Income payable (excluding amounts reflected by a)). After 24 months, the plan stipulated that the monthly disability payments would be reduced by 100% of all Other Disability Income. “Other Disability Income” was broadly defined to include earnings from any gainful occupation; any indemnity under any other insurance plan or policy issued to the insured; any income provided by way of pension annuity or superannuation allowance; any indemnity provided under workers’ compensation 14 legislation; and any income payable by reason of the disability under any other legislation (excluding, essentially, any pre-existing amount payable as a war disability benefit). [34] The notable difference between the Sun Life plan and the reductions provided for under the LTIP Plan, is that benefits under the Sun Life plan were also reduced by any indemnity from any other insurance plan or policy. [35] Mullenix, supra, was an action brought by Maritime Life, as insurer, to recover benefits paid under a disability policy. The employer-provided group policy contained both weekly (short term) and monthly (long term) benefits. As here, the monthly benefit in Mullenix was calculated as a percentage of monthly earnings, in that case subject to a maximum benefit not to exceed 85% of the insured’s earnings. Total disability was defined in relation to a 24 month ‘own occupation’ period and a subsequent “any occupation’ period of disability. [36] Benefits were reduced by other income or monies paid or payable, including; a) the amount of income paid or payable under a pension or retirement plan; b) the amount of any plan or arrangement resulting in the payment of any salary, wages or other payment by the insured’s Employer; and c) the amount of any income or benefit payable on account of the disability under the Canada or Quebec Pension Plan; any other plan or programme provided by the Employer including income benefits under a group life insurance plan; any government program including workers compensation, but other than benefits payable under the Unemployment Insurance Act. [37] In the case where the insured engaged in a different and lesser paid occupation, the benefit was reduced by a proportionate amount using a formula that took into account that income compared to pre-disability earnings. That plan did not require a reduction in the monthly benefit based on benefits that may have been payable through any private individual insurance or arguably, a group insurance plan provided by a different employer. 15 [38] The court relied on a finding of the Manitoba Queen’s Bench, which commented on the distinction between “accident/sickness” plans and long term disability insurance provisions. The decision was also relied on in Gibson: Orion Insurance Co. Ltd. et al v. Hicks et al (1972), 32 D.L.R. (3d) 256…..followed the reasoning in the Glynn case. At page 260 Wilson, J. said: And so, the weekly benefit is not a mere solatium payable to the disabled insured, but rather it is an amount payable strictly to one disabled from continuing an employment and payable only up to the “money value of the time” of such person, an expression which to my mind is sensible only in terms of the income normally gained or accruing to the insured during the time of such disability. On a plain view of the agreement to insure, and having particular regard to the apportionment, if need be, of the insurer’s obligation to pay, that agreement contemplates not an automatic benefit which falls in [sic] upon the happening of the accident, but rather indemnity for loss of or a reduction of income occasioned by the accident. [p. 8 of 10] [39] Notwithstanding that there was a possibility of double recovery through the receipt of the monthly benefit and benefits from a private insurer, the court in Mullenix concluded that the facts of the case were “virtually on all fours” with those in Gibson [p. 6 of 9]. It found that the insurer was subrogated in respect of the monthly benefits as those benefits provided for income replacement and as such were indemnity provisions. [40] In comparison, the weekly benefit provisions were found to fall into the classification of a “classic accident policy” with no right of subrogation. The court found that the reductions from the benefit were limited, and, quite particularly, that the weekly benefit provisions allowed the insured to work in some other occupation, be paid for it, and still draw full benefits. (While such an opportunity seems counter-intuitive to the operation of a short term disability plan, the court’s finding was clear and was noted subsequently in Tucker, supra.) [41] The 1990 decision in London Life Insurance Co., supra, dealt with whether the insurer had a right of subrogation under the short term coverage of a disability insurance plan. The insured conceded that London Life had a right of subrogation in respect of the long term disability coverage. The decision relies on both Glynn and Gibson, and summarizes certain principles set out in Gibson: 16 6 There need be no specific subrogation clause in the contract: Gibson v. Sun Life Assurance Co. of Canada….. An insurance agreement that is a contract of indemnity does not need to contain a specific subrogation provision; the absence of such a provision does not lead to the conclusion that the contract excludes the doctrine of subrogation. 7 If the contract is one of indemnity, it follows that there is a right of subrogation: Gibson v. Sun Life, supra…. The basic principles of insurance law as they apply to [a group disability] contract are well-settled in so far as the right of subrogation is concerned; if the policy is a contract of indemnity, the doctrine of subrogation applies; if it is not a contract of indemnity, there is no right of subrogation. 8 It is the specific terms of the insurance contract which determine whether a contract is a contract of indemnity: Gibson v. Sun Life…. Whether any particular engagement of an insurer constitutes a contract of indemnity is to be determined by the exact nature of the agreement into which it has entered, and not by whether the insuring agreement can be conveniently categorized under one or other of several general designations, such as accident or sickness insurance. [42] Referring to Mullenix, the court compared the language in the short and long term provisions of the plan. Under the terms of the long term disability coverage, the amount of the monthly benefit was reduced by any entitlement under workers’ compensation and by any amount payable on account of the disability of the insured under “any other sick leave plan, association or group insurance plan, employee retirement plan, or government plan” [para. 14]. In addition, the plan stipulated that no benefits would be paid if, inter alia, the insured person was engaged in any occupation for compensation or profit, other than a rehabilitation program. These long term benefit provisions were very similar to those in Gibson. [43] The court found that the short term disability provisions did not require the insured to prove pecuniary loss (without commenting on that issue as it related to the long term disability provisions). The amount payable was related to weekly earnings affected by the disability and was subject to few limitations. Short term benefits were reduced by income replacement benefits under an automobile insurance plan determined to be the primary payor. Short term benefits were not payable if the employee retired, was entitled to workers compensation, or engaged in any occupation for compensation or profit. The court concluded that the short term provision was not a contract of indemnity. 17 [44] To this point in the development of the caselaw, despite varying limitations on double recovery, long term disability plans were generally found or conceded to be contracts of indemnity; thereby providing a right of subrogation to the insurer. [45] The exception arises in Tucker, supra. The insurer was seeking recovery of weekly disability benefits paid to the insured through a group plan provided by his employer. Under the terms of the weekly benefit plan employees could elect for certain coverage at specified premiums. Those premiums were paid by that employee. The insured had been injured in a motor vehicle accident and recovered a settlement from the tortfeasors. The Nova Scotia Court of Appeal accepted the trial judge’s finding that the settlement had been entered into in good faith and that the insured had not been fully indemnified by that settlement. That was the main finding in dismissing the appeal, as the court noted that any right of subrogation did not arise until after the insured had been fully indemnified for his loss. Any issue of subrogation was essentially moot. [46] However, the court went on to consider whether the insurance policy was a policy of indemnity giving rise to a right of subrogation. Benefits under the plan were payable following the expiration of a defined qualifying period. The definition of the ‘qualifying period’ under the plan is not reproduced in the decision. It is not clear therefore whether the benefit being considered was long term, or a combination of both short and long term. The court identified the benefit simply as a ‘weekly’ benefit. [47] The court compared the policy to the short term ‘weekly’ disability provisions in Mullenix and concluded that there was little to distinguish the two cases. It drew that conclusion notwithstanding that it recognized that the weekly policy provisions in Mullenix apparently allowed an insured to work in another occupation, be paid for it and still draw full benefits; a significant feature relating to the possibility of double recovery not available under the terms of the plan before the court in Tucker. The reductions to benefits in the plan in Tucker appear to go further than in Mullenix; and included income on account of disability from any other group insurance plan (but not an individual disability or life insurance policy); any automobile insurance policy; any retirement plan; and any government disability income plan unless that initial claim had been declined. 18 [48] The court identified the key test for determining if a policy was one of indemnity as being whether proof of loss was necessary in addition to proof of the occurrence of the event insured against. It found: ….seen as a whole [the policy provisions] leave no doubt that the scheme of the policy is to pay a weekly benefit without proof of actual loss. Nowhere is there mention of a requirement for proof of actual loss. The amount to be paid each individual employee is calculated by a formula related to his or her rate of earned income. The formula is a matter of contract, agreed to in advance of any loss by the parties, as are the deductions of income from other sources including another group policy, an automobile insurance policy, a retirement income plan or a government disability plan. The formula and the deductions may leave the insured with a weekly income equal to what he or she had enjoyed prior to the disability, but it is immaterial whether or not they do so. An employee who enjoyed frequent overtime might be left with substantially less than he or she was earning; an employee with an individual disability income policy might enjoy substantially more income during the period of disability. There is nothing to suggest the contract formula was intended to generate a figure equal to lost income, only that the weekly benefit would not be less than unemployment insurance. In the present case the respondent received two-thirds of his employment earnings from the appellant during his period of disability. Because the weekly benefit is a creation of a contractual formula, independent of the actual amount of the loss suffered by the insured, the policy cannot be considered one of indemnity; it is not intended to make the insured whole, merely to provide him with a predetermined weekly income during disability. Therefore subrogation does not arise. [pp. 6- 7 of 8] (emphasis added) [49] The court in Tucker was also disinclined to characterize the disability plan as a contract of indemnity when the insurer, which had drafted the policy; ...had not seen fit either to protect its own rights nor to give the insured fair notice of what to expect when a tortfeasor is sued. If the insurer wishes to be ‘subrogated’ for partial indemnity, or to impose duties upon the insured when action is brought against a third party, that provision should be made in the policy. [p. 8 of 8] [50] While such might be prudent, this direction is at odds with the doctrine of subrogation being a principle not founded on contract, but existing as a creature of equity and the commentary in earlier decisions that express reference to a claim of subrogation is not required. [51] By way of contrast, the court in London Life focused the discussion of proof of loss as follows: 9 The basic test to determine if a contract is one of indemnity or one such as life insurance which is not indemnity, is whether the insured must establish, in addition to the happening of the event covered by the policy, that there has been an actual financial loss arising from the event (in this case the disability). …. 19 11 While these principles are readily understood, the present case does not fall clearly into either category [indemnity or accident/sickness insurance]. While the insured does not have to prove pecuniary loss, the amount payable is related to weekly earnings that are affected by the disability. Also, certain other possible compensation disentitles the insured to the benefits, that is, workers’ compensation; disentitlement for injuries while engaged in an occupation for compensation or profit; disentitlement after death; disentitlement after retirement under a pension plan. …. 18 If the policy provides that payment is conditional upon (1) the event, and (2) proof of actual pecuniary loss, then it is clearly one of indemnity and the right of subrogation follows. If the policy is not clearly one or the other but (1) requires the happening of an event i.e., disability, sickness, etc., and (2) eliminates some of the possible means by which the insured could achieve double recovery, such as workers compensation, then it is a matter of how close the limitations in payment come to, in effect, requiring proof of actual monetary loss. 19 In the Gibson case, supra, Henry, J. was in effect saying that “although proof of loss of earnings was not in express terms required”, the listed qualifications on the obligation to pay come very close to requiring proof of loss. Therefore, it is a contract of indemnity. The policy closes almost all loopholes under which the insured could achieve double recovery and therefore it is a contract of indemnity. … 21 While an exact definition cannot be provided to distinguish the two types in all foreseeable circumstances, the insurer can require in express words that proof of financial loss is required. [52] The London Life decision does not appear to have been before the court in Tucker when it reached its conclusion. [53] Tucker is then to be compared to the recent decision of the New Brunswick Court of Appeal in Wilson, supra. In Wilson, the insured was injured in a motor vehicle accident. She received monthly disability benefits under a group plan of insurance. The insured subsequently received a judgement against the operator of the motorcycle she was riding at the time of the accident. That judgment included an award of damages fully indemnifying the insured for her past and future loss of income. In light of that judgment, the insurer stopped paying the disability benefits. An action was brought by the insured to confirm her entitlement to the continuation of those benefits. She succeeded at trial. However, the appeal court overturned the trial decision and concluded that the policy was one of indemnity with an attendant right of subrogation. [54] The appeal court in Wilson noted that the difference between a contract of non-indemnity and one of indemnity was that the latter required the insured to establish an actual disability-related pecuniary loss. That statement was consistent with the finding at trial. 20 However, the appeal court disagreed as to how to assess the requirement for proof of loss. Following Tucker, the trial court had held: 27 In summary, it is my opinion that the Respondent insurer did not have a subrogated right under the LTD policy, only a right of reimbursement if it was provided for in the policy of insurance. As well, I am of the view that the policy, itself, was not a policy of indemnity because all the insured had to do was establish that she was disabled. Then the formula kicked in to establish the amount of her monthly payment. There was no requirement to file a proof of loss as to the amount of the loss, which is a requirement of an indemnity policy. [55] On appeal, the court held that the policy did not provide coverage unless the employee was both totally disabled from a medical standpoint and was without employment income. The court stated: 15. With respect, the application judge's stated belief that "a policy providing LTD benefits is [not] an indemnity policy" is contrary to settled law. The correct view is that a policy providing LTD benefits may be a contract of indemnity: it depends on its terms. The law on point is aptly summarized by Richard Hayles, Disability Insurance: Canadian Law and Business Practice (Toronto: Carswell, 1998) at pp. 278-279: Disability policies rarely, if ever, require the insured to prove the precise amount of his loss. Exact proof would be difficult because an individual's income varies over time; the income that an insured was earning at the date the disability arose may or may not represent what he would have earned over the ensuing months or years. Although a property insurance indemnity can rationally be based on the market value of the property at the date of the loss, it would be arbitrary to do so in an income indemnity policy as there is no market in which a person's long-term capacity to work can be bought and sold. Many disability policies do, however, try to achieve an approximation of the indemnity concept by calculating benefits as a percentage of the insured's past income, and by deducting various alternative income sources from the benefit amount. Strictly speaking, the insured is still not called upon to prove loss of income. In most cases, the employer will inform the insurer as to the amount of the claimant's income at the relevant date. The policy may require the insured to report certain receipts, or to apply for certain benefits, but this is not a requirement for proof of loss. The courts have acknowledged this state of facts by recognizing the concept of an "income replacement policy". This is a class of disability insurance which falls somewhere between the traditional, non-indemnity accident and sickness policy and the true indemnity coverage common in property and casualty insurance. Whether or not a policy is income replacement insurance, which gives rise to a right of subrogation, is a question of degree depending on how closely the policy bases benefits on an estimate of the insured's actual loss of income. The key factor in this determination is how the basic benefit is arrived at. Policies which pay a stated amount without reference to the insured's income would probably never be classed as income replacement. Where the periodic benefit is stated as a proportion of the insured's pre-disability income, the policy may or may not be one of income replacement. The court will then look at the offsets stipulated in the policy. It would probably be impossible for the insurer to include an offset for every kind of income a disabled individual could conceivably earn during a period of disability; if, however, the policy allows the insurer to deduct most of the insurer's 21 potential post-disability receipts, it will likely be deemed an income replacement policy. In any consideration of an insurer's subrogation claim, the first priority for the court is to see that the insured receives full compensation for her loss. Once this has been achieved, the rule against double recovery comes into play, and the insured is deemed to hold any surplus in trust for the benefit of the insurer. 16 In Graham v. Hill (2003)....NBCA 24, the group disability policy under review was similar in many respects to the Policy. The Court concluded the LTD benefits paid to Ms. Graham were "income replacement" benefits. When called upon to distinguish that case, counsel for Ms. Wilson conceded the Policy is an income replacement policy. In my view, that concession is in harmony with the terms of the Policy. 17 As can be gleaned from the Gibson v. Sun Life passage...., there is jurisprudential support for the view that a long term disability insurance policy is presumptively one of indemnity. It is otherwise only if the policy's terms make it conclusive that the intention of the parties was not to enter into a contract of indemnity. That approach is appealing for both theoretical and practical reasons. (emphasis added) 18 First, it is theoretically sound in light of the longstanding principle that indemnity is the governing general rule in insurance policies (see Glynn......). Second, the Gibson approach is practical because it enhances the predictability of the outcome of any potential litigation and correlatively, discourages lawsuits that commonly turn out to be very expensive, stressful and energy-consuming. 19 If one were to begin the process of interpreting the Policy with the rebuttable presumption that it is a contract of indemnity, Great-West Life's challenge to the judgment under appeal would be unanswerable. Indeed, there is simply nothing in the Policy's terms to displace that presumption and to conclusively establish an intention to provide for the payment of the LTD benefits regardless of whether the insured suffers a disability-related loss of income. That said, the present appeal can be resolved without resort to any such presumption. It is so, in my opinion, because the cumulative effect of the Policy terms in play here compels the conclusion that it is indeed a contract of indemnity. Those terms are the following, the italics being mine throughout: (1) only employees "who were in the active full-time employment of the Employer for full pay" qualify for "total disability" benefits; (2) the base amount of those benefits is calculated as a percentage of the employee’s monthly rate of earnings; (3) that base amount is reduced by the total amount of "income" benefits the insured receives or is entitled to receive from a number of sources including Workers' Compensation, the Canada Pension Plan and any other group insurance plan; (4) "total disability" is defined as one that prevents an employee "from, for compensation or profit, engaging in any occupation or performing any work for which the Company considers the employee to be reasonably qualified by education, training or experience"; and (5) an employee is not totally disabled if he or she "is, for compensation or profit, engaged in any occupation or performing any work". 20 The upshot of those provisions is that the Policy does not provide coverage unless the employee is both totally disabled from a medical standpoint and without employment income. The single exception provided by the Policy is in respect of Rehabilitative Employment, which is part- time employment approved by Great-West Life and undertaken while the employee is disabled from engaging in full-time employment. Even there, the insured is allowed to keep only 50% of his or her employment-generated compensation or profit. Moreover, where an eligible employee's medical condition entails "total disability" and he or she is without compensation or profit arising from engagement in any occupation or performing any work, the total disability benefits are reduced by income benefits from a host of sources. Clearly, the "reduction" clause is designed to avoid double compensation, a strong indicator that the Policy operates to provide indemnifying benefits. 21 In sum, the insured is not entitled to benefits under the Policy upon mere proof of a "totally" disabling medical condition. Unless he or she is without employment income, and therefore 22 incurring actual pecuniary loss, disability benefits are not payable. If disability benefits are payable, the basic amount is calculated as a fraction of the insured employee’s rate of earnings and then reduced by specified income benefits. At bottom, what the Policy provides is partial indemnity for the employee's disability-related loss of income. As such, the Policy meets the essential requirements of a contract of indemnity. Furthermore, I am not persuaded that [Tucker] is authority to the contrary. [56] The court states that proof of disability on its own, does not entitle an employee to benefits. The employee must also be without employment income and incurring actual loss. I might articulate this notion slightly differently. The cases speak to the need for proof of an unforeseen event occurring, and proof of concomitant loss as necessary components of a contract of indemnity. The disability is sometimes referred to as the unforeseen event. It seems however that the event insured against is the injury or illness suffered by the employee. The disability is a consequence of the unforeseen event. It is the case that such injury or illness must be of such a degree so as to render the employee “totally disabled”; incapable (at least initially) of performing the essential duties of their occupation. In that light, establishing the fact of ‘total disability’ is inextricably part of the proof of loss. If the employee is incapable of performing the essential duties of their occupation, it is self-evident that they will not be paid for work not performed, and will lose their normal income, however calculated, as a result. [57] More to the point, the court relied on the underlying rationale of a right of subrogation. The application of the ‘formula’, including reductions, to calculate benefits payable was evidence that the plan was designed to avoid double recovery; indicating to the court that the policy provided indemnifying benefits. The use of a formula is not an indication that no proof of loss is required. It evidences the difficulty in the circumstances of long term income loss of attempting to predict and establish the precise amount of that loss over time. The benefit payable is not a fixed sum and, unlike the circumstance noted in Glynn quoted at paragraph 29 above, the application of the formula requires “going into the assured’s accounts or private affairs” in order to be able to know and apply the stipulated reductions to the calculation of the benefit payable. [58] For purposes of determining whether or not a contract is one of indemnity, I do not think it matters that benefits are reduced in some circumstances and terminated in others. In either event, the benefit is reduced or eliminated by virtue of other remuneration being 23 payable, which remuneration acts to replace the income lost. Both the reduction of benefits and the termination of benefits speak to whether the contract was designed to avoid double compensation. [59] Many of the terms of the insurance coverage in Wilson (and in Gibson and London Life) are similar to the LTIP Plan before me. As in Wilson, those ‘reduction clauses’ appear designed to avoid double recovery. AMAPCEO argued that this Plan, however, allowed a disabled employee to keep certain monies in addition to disability benefits, thereby allowing for double recovery. The Plan allows a disabled employee to retain benefits from any other insurance. It also allows a disabled employee to continue to earn monies from pre-disability activities which continue while disabled (subject to reductions based on increases to that income arising as a result of having more time to devote to that activity). Do these provisions of the Plan lead to a conclusion different from that in Gibson, Mullenix, London Life, and Wilson? [60] From a collective bargaining perspective, parties bargain long term disability coverage as a means to insure against a loss of income arising in the context of the particular employment relationship. An employer is unlikely to have any interest in agreeing to insure employees for income losses going beyond those arising from that employment relationship. Nor, particularly, does a union representing those employees. To the extent that an employer agrees to contribute the bulk of the cost of premiums for long term disability coverage, it is not likely amenable to paying a higher premium to capture coverage going beyond a loss of income related to that employment. [61] Features of the Plan need be considered in that context. The LTIP Plan provides for no reduction in benefits based on income from another enterprise or occupation in which the insured was engaged prior to becoming disabled and is able to continue. For example, an employee may hold more than one position at the time of becoming disabled from performing the insured work. LTIP benefits are not reduced if the employee is able to continue that ‘second’ job. That income does not replace the income lost from the job the employee is disabled from performing. It was, and is, over and above the income lost due to disability. The benefit is reduced by 50% of any increase to that other income due to the employee having more time available to devote to such enterprise or occupation as a 24 result of being disabled from performing the insured work. Such an increase does reflect replacement of income lost due to the disability and the insurer recovers an amount as a result. Both are consistent with a conclusion that double recovery is not intended. [62] The fact that the LTIP Plan does not stipulate a reduction based on benefits payable from other group insurance plans is also reflective of the limited scope of the coverage. Group disability plans typically require that one be a member of the insured group. For example, should an employee be working part-time in the OPS and be employed either part-time or full-time elsewhere, group disability coverage could potentially flow from two insurance sources. However, group disability insurance available as a feature of that part-time or full-time employment is unlikely to go beyond a measure of earnings in that position and is irrelevant to replacing income lost as a result of being disabled from performing the OPS position. [63] It is the case that one cannot assume the terms of other insurance that may be available to, or purchased by employees also covered by this LTIP Plan. However, from a collective bargaining perspective, disability coverage is an important feature of group insurance benefits in collective agreements because the private purchase of disability coverage is typically very, if not prohibitively expensive for employees. As in Mullenix, there does exist some possible opportunity for double recovery in the circumstances here. I am inclined to the view that such opportunities would not exist as the norm. I am not persuaded, however, that such a limited opportunity suggests a different intention, or a change in the fundamental characteristic of the LTIP Plan as seeking to replace lost income. Virtually by definition “income replacement” reflects an intention to indemnify. [64] In London Life, the opportunity to engage in “Rehabilitative Employment” was not seen as detracting from a conclusion that the long term coverage was a contract of indemnity. Similarly, in Gibson, an insured was entitled to retain a portion of earnings from any gainful occupation during the first 24 months of disability. The opportunity to engage in Rehabilitative Employment fulfills other important policy objectives and works to the benefit of all parties. The insured is encouraged through financial incentive to attempt and participate in different work for which they may be able, and is not penalized financially for so doing. Any opportunity to engage in rehabilitative employment 25 promotes the broader goals of ensuring that disabled employees are able to return to productive employment and participate in an important aspect of society, while at the same time reducing costs to the employer and insurer. Given that the Plan provides a monthly benefit of 66 2/3% of pre-disability income, and that benefits are reduced by 50% of income from Rehabilitative Employment, relatively substantial Rehabilitative Employment earnings would be required before the insured reached 100% of pre- disability earnings, and before even raising any potential for double recovery. [65] Overall, the Plan puts significant limitations on the possibility of double recovery. I am supported in the view that this LTIP Plan is a contract of indemnity by language in the Plan. The Plan provision titled “Time of Payment of Claims” stipulates that “Subject to due written proof of loss, all accrued indemnities will be paid to the insured employee each month…” (emphasis added). And see similar reference under the heading “Legal Actions”. [66] Having regard to all of the above, I find that the LTIP Plan is a contract of partial indemnity. As such, the employer, as insurer, has a right of subrogation. This aspect of the grievance is therefore dismissed. [67] Having made this finding, it remains the case that the employer’s opportunity to exercise its right of subrogation is limited. As noted, the Crown accepts that an insured employee must be fully indemnified for all losses before any subrogation right may be exercised. Dated at Toronto this 4th day of March 2009. Marilyn A. Nairn, Vice-Chair