Clarke v. Sun Life Assurance Company of Canada

[Indexed as: Clarke v. Sun Life Assurance Co. of Canada]

Ontario Reports Court of Appeal for Ontario D.M. Brown, Huscroft and Trotter JJ.A. January 8, 2020 149 O.R. (3d) 433 | 2020 ONCA 11

Case Summary

Insurance — Actions against insurer — Limitations — Insurer retro-actively paying "own occupation" disability benefits for two years — Insured waiting three years before supplying medical information to support "any occupation" disability claim — Claim rejected and insured commencing action — Insurer's motion to summarily dismiss claim as statute-barred denied — Motion judge failed to apply proper principles and conduct proper statutory analysis regarding discoverability — Limitations issues to be decided at trial.

Insurance — Disability insurance — Limitations — Insurer retro-actively paying "own occupation" disability benefits for two years — Insured waiting three years before supplying medical information to support "any occupation" disability claim — Claim rejected and insured commencing action — Insurer's motion to summarily dismiss claim as statute-barred denied — Motion judge failed to apply proper principles and conduct proper statutory analysis regarding discoverability — Limitations issues to be decided at trial.

Limitations — Discoverability — "Appropriate means" — Insurer retroactively paying "own occupation" disability benefits for two years — Insured waiting three years before supplying medical information to support "any occupation" disability claim — Claim rejected and insured commencing action — Insurer's motion to summarily dismiss claim as statute-barred denied — Motion judge failed to apply proper principles and conduct proper statutory analysis regarding discoverability — Limitations issues to be decided at trial.

The plaintiff was a member of her employer's group disability plan, which was operated by the defendant. She stopped working due to health problems in 2011 and submitted a claim for long-term disability benefits. The defendant replied by letter by saying that it was unable to establish her total disability from returning to her own occupational duties. The plaintiff appealed. In February 2014, the defendant approved disability benefits for the 24-month "own occupation" period, which ended in April 2013, and stated that the medical information did not support a claim for "any occupation" disability benefits. The file was closed. In March 2017, the plaintiff provided the defendant with further medical information to support her claim that she was totally disabled from any occupation. In June 2017, the defendant replied by letter by stating that the current information on file was insufficient to overturn the prior decision. The plaintiff issued a statement of claim in August 2018. The defendant's motion for summary judgment to dismiss the action as statute-barred was denied. The defendant appealed.

Held, the appeal should be allowed in part.

The decision of the motion judge was set aside and the matter directed to proceed to trial. The motion judge decided that the letter of June 2017 rather than the letter of February 2014 triggered the running of the limitation period, even though neither letter used language of refusal or denial in speaking of disability benefits. The motion judge erred by failing to apply the principle that the insured had a cause of action for breach of contract when the insurer stopped paying long-term disability benefits. A reasonable person in the plaintiff's circumstances would have known of a loss, injury or damage by February 2014, upon receipt of the letter stating that the "own occupation" benefits period was over and that no "any occupation" benefits would be paid.

The motion judge also failed to conduct a proper analysis under ss. 5(1) and 5(2) of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B. There were no specific findings of fact regarding discoverability. The judge was not prepared to draw any inferences from the plaintiff's unexplained three-year delay in providing additional medical information. She did not assess whether the plaintiff acted with due diligence. Therefore, her conclusion that the defendant had not established the elements of a limitation defence lacked an adequate factual and legal foundation. It was not an appropriate case for the Court of Appeal to exercise its fact-finding powers, so the limitation period issues were to be determined by trial.

Cited Cases and Statutes

Distinguished:

• Kassburg v. Sun Life Assurance Co. of Canada (2014), 124 O.R. (3d) 171, 2014 ONCA 922
• Western Life Assurance Co. of Canada v. Penttila (2019), 144 O.R. (3d) 198, 2019 ONSC 14 (Div. Ct.)

Applied:

• Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017 ONCA 730

Other cases referred to:

• Miaskowski (Litigation guardian of) v. Persaud, 2015 ONCA 758
• Nasr Hospitality Services Inc. v. Intact Insurance (2018), 142 O.R. (3d) 561, 2018 ONCA 725
• Presidential MSH Corp. v. Marr, Foster & Co. LLP (2017), 135 O.R. (3d) 321, 2017 ONCA 325

Statutes referred to:

• Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134(4)
• Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, s. 4, 5

APPEAL by the defendant from the dismissal of summary judgment motion of Leiper J. (2019), 147 O.R. (3d) 55, 2019 ONSC 2942 (S.C.J.).

Counsel: Linda Plumpton and Davida Shiff, for appellant. Allan Chapnik, for respondent.

The judgment of the court was delivered by

D.M. BROWN J.A. :

Overview

[1] Sun Life Assurance Company of Canada brought a summary judgment motion to dismiss, as statute-barred, Ms. Clarke's action for long-term disability benefits under a group policy of insurance. The motion judge dismissed the motion and, instead, declared that Ms. Clarke's action was not statute-barred as the limitation period for the action commenced on June 19, 2017, a little over a year before Ms. Clarke issued her claim. Sun Life appeals, asking this court to set aside the order below and dismiss Ms. Clarke's action.

[2] For the reasons set out below, I would allow the appeal in part.

Background Facts

[3] Ms. Clarke was employed by Canada Post. Sun Life was the insurer for Canada Post's group disability insurance plan. Ms. Clarke was a member of the plan.

[4] Under the plan, an insured employee's eligibility for total disability benefits was determined by reference to two periods of time. In the first period, which covered the plan's elimination period and the following 24 months, the plan treated as "totally disabled" an insured who was prevented from performing the essential duties of her regular or "Own Occupation". For the period beyond the 24 months, the plan treated an insured as "Totally Disabled for Any Occupation" if she was prevented from engaging in any commensurate occupation for which she was or became reasonably qualified by education, training, or experience.

[5] Ms. Clarke made a claim for long-term disability benefits after she stopped working due to health problems in 2011. In a letter dated March 19, 2012, Sun Life "denied" her claim, stating that it was unable to establish her total disability from returning to her own occupational duties. The letter informed Ms. Clarke that three levels of appeal were available to her. The appeal process was not a term of the plan of insurance but a practice by Sun Life that its counsel described as the "operationalization of the duty of good faith" of the insurer.

[6] Ms. Clarke appealed.

[7] By letter dated February 24, 2014, Sun Life wrote to Ms. Clarke to tell her that it had approved disability benefits for the "Own Occupation" period, which had ended in April 2013. The letter went on to tell Ms. Clarke that the medical information she had provided did not support her claim for "Any Occupation" total disability benefits. Specifically, the letter stated:

The current medical information in your file does not appear to support Total Disability from Any Occupation. Therefore your last payment date is April 25, 2013 and your LTD file is now closed.

Should you feel Totally Disabled from Any Occupation, you will need to provide medical information for our review. You will need to [provide] objective medical information including diagnosis, treatment, complications to date preventing you from working in any occupation. Kindly note this is your responsibility.

(Emphasis in original)

[8] On February 26, 2014, Ms. Clarke and her union representative spoke to Sun Life and advised that she would appeal the "Any Occupation phase". Sun Life's call record of that conversation went on to state: "Union Rep stated that PM's [Plan Member's] doctor don't think that PM is TD any [Totally Disabled Any Occupation], but due to a recent surgery in January/2014, PM needs few more months of LTD [long-term disability] benefits, she said maybe 1 more year of LTD benefits."

[9] The record before us does not disclose any further contact between Ms. Clarke and Sun Life over the next three years. 1 It was not until March 2017 that Ms. Clarke provided Sun Life with further medical information for her "Any Occupation" claim.

[10] By letter dated April 24, 2017, Sun Life informed Ms. Clarke that "your request for a review of our decision is now being considered at the first level of appeal".

[11] On June 19, 2017, Sun Life wrote to Ms. Clarke about the "decision at the appeal process". The letter reviewed the merits of Ms. Clarke's claim for "Any Occupation" benefits, explaining in some detail why it maintained the position that she did not qualify for "Any Occupation" total disability benefits. The letter stated: "[W]hile we are pleased that we could issue payments for a considerable period, the current information on file is not sufficient to overturn our prior decision." Like the February 24, 2014 letter, the June 19, 2017 letter advised Ms. Clarke that her file was closed; as well, it did not use the word "deny" in its text.

[12] The June 19, 2017 letter informed Ms. Clarke that a final level of appeal was available. The letter concluded with a statement that Sun Life had not included in its previous communications with Ms. Clarke:

Our consideration of an appeal shall not constitute a waiver of any of our rights under the policy or otherwise, including with respect to the applicable limitation period. If you decide to take legal action against Sun Life, please be advised that your claim is subject to a limitation period. This limitation is set out in the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B or in the applicable contractual provisions.

[13] On August 2, 2018, Ms. Clarke issued her statement of claim seeking the payment of arrears of long-term disability benefits from the cessation of payments on April 25, 2013.

[14] Sun Life brought a motion for summary judgment to dismiss the action as statute-barred, which the motion judge denied. Sun Life appeals.

Analysis

The day on which the injury, loss or damage occurred

[15] The motion judge started her analysis under the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B by considering the date the injury, loss or damage occurred: s. 5(1)(a)(i) and (b). The motion judge did not accept Sun Life's submission that the February 24, 2014 letter marked the time at which Ms. Clarke first knew that an injury, loss or damage had occurred. She described the letter as "equivocal" and noted that it "did not use the language of refusal or denial": at para. 21. She concluded that it was "not clear that the words used by the Sun Life letter of February 24, 2014 [were] a denial of disability benefits that amounted to 'injury, loss or damage'": at para. 23. She ultimately found, at para. 30, that the limitation period commenced with the denial communicated to Ms. Clarke by Sun Life on June 19, 2017, notwithstanding that that letter also did not use language of denial.

[16] With respect, the motion judge erred in law by failing to apply the principle stated by this court in Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017 ONCA 730, at para. 1, that an insured has a cause of action for breach of contract against her insurer when the insurer stops paying long-term disability benefits. In its February 24, 2014 letter, Sun Life informed Ms. Clarke that her disability benefits terminated as of April 25, 2013, which was the date the "Own Occupation" benefits period ended. Sun Life went on to state that it would not pay "Any Occupation" benefits. Accordingly, by February 24, 2014, a "loss, injury or damage" had occurred that would have been known to a reasonable person with the abilities and in the circumstances of Ms. Clarke: Limitations Act, 2002, s. 5(1)(a)(i) and (b).

[17] I note that in reaching her conclusion on s. 5(1)(a)(i), the motion judge relied on the decision of the Divisional Court in Western Life Assurance Co. of Canada v. Penttila, supra. The motion judge appears to have misapplied Western Life Assurance on the issue of when an insured knows that a loss, injury or damage has occurred. As that decision clearly stated, at para. 17, the parties agreed that for the purposes of s. 5(1)(a)(i) the insured knew that a loss had occurred on the date her benefits came to an end, which is the governing principle as stated in Pepper.

A proceeding would be an appropriate means

[18] The motion judge next considered the issue of when a proceeding would be an appropriate means to remedy the loss, injury or damage: Limitations Act, 2002, s. 5(1)(a)(iv) and (b). For the reasons that follow, I conclude that the motion judge failed to conduct the analysis required by the Act on this point.

[19] The discoverability analysis required by s. 5(1) and (2) of the Act contains cumulative and comparative elements.

[20] Section 5(1)(a) identifies the four elements a court must examine cumulatively to determine when a claim was "discovered". When considering the four s. 5(1)(a) elements, a court must make two findings of fact:

(i) the court must determine the "day on which the person with the claim first knew" all four of the elements. In making this first finding of fact, the court must have regard to the presumed date of knowledge established by s. 5(2): "A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved"; and

(ii) the court must also determine "the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known" of the four elements identified in s. 5(1)(a).

Armed with those two findings of fact, s. 5(1) then requires the court to compare the two dates and states that a claim is discovered on the earlier of the two dates: see Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, at paras. 34-35.

[21] Accordingly, as part of her cumulative and comparative discoverability analysis, the motion judge was required to determine (i) the day on which Ms. Clarke "first knew . . . that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it" (s. 5(1)(a)(iv)), and (ii) the day on which a reasonable person with the abilities and in the circumstances of Ms. Clarke first ought to have known of that matter (s. 5(1)(b)).

[22] The motion judge's reasons disclose that she failed to make any specific finding about either date.

[23] Although the motion judge noted, at paras. 29(iii) and (iv), that Ms. Clarke's three-year delay in providing additional medical information was "unexplained" and her evidence was "silent as to her knowledge, intentions or assumptions" about the matter, the motion judge was not prepared to draw any inferences from this absence of evidence. Read as a whole, her reasons disclose that she was not able to determine when Ms. Clarke first knew that a proceeding would be an appropriate means to seek to remedy her injury.

[24] In that circumstance, the motion judge was required to deal with s. 5(2) of the Act, which presumes that a person with a claim knows of the matters in s. 5(1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. Applying the presumption requires the court to assess whether the claimant had acted with due diligence in determining if she had a claim: Miaskowski (Litigation guardian of) v. Persaud, 2015 ONCA 758, at paras. 24-27. The motion judge did not deal with the s. 5(2) presumption or the related obligation of the insured to act with due diligence.

[25] Given the motion judge's failure to make the requisite findings of fact in respect of s. 5(1)(a)(iv), (b) and (2), her conclusion that Sun Life had not established the elements of a limitation defence under ss. 4 and 5 of the Act lacked an adequate legal and factual foundation. For that reason, her order must be set aside.

[26] I do not consider this to be an appropriate case to exercise this court's fact-finding powers under Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134(4), in respect of s. 5(1)(a)(iv), (b) and (2), including the issue of Ms. Clarke's due diligence. No examinations for discovery or cross-examinations have been conducted in this proceeding. A fuller record is required to assess, for the purposes of the s. 5(1)(a)(iv) analysis, the significance of the informal appeal process offered by Sun Life and engaged by Ms. Clarke, including whether that process constituted an alternative process with a reasonably certain or ascertainable date on which it runs its course or is exhausted, as required by Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325, at para. 48. Accordingly, the remaining issues related to the limitation period defence are more appropriately determined through some form of trial.

Disposition

[27] I would grant the appeal, set aside the order of the motion judge and direct that the action proceed to trial.

[28] The parties agreed that the successful party on the appeal should be awarded costs of $10,000, inclusive of disbursements and applicable taxes. Success on the appeal has been divided. Accordingly, I would fix the costs of the appeal at $10,000 but order that they be payable in the ultimate cause of the action.

Appeal allowed in part.

Notes

1 This unexplained lengthy period of inactivity by Ms. Clarke in pursuing an appeal factually distinguishes this case from the situation in Western Life Assurance Co. of Canada v. Penttila (2019), 144 O.R. (3d) 198, 2019 ONSC 14 (Div. Ct.), a case relied upon by Ms. Clarke. The lack of contact between the insured and insurer over the three-year period differentiates this case from the circumstances in Kassburg v. Sun Life Assurance Co. of Canada (2014), 124 O.R. (3d) 171, 2014 ONCA 922.

End of Document