Court of Appeal for Ontario

Date: 20211130 Docket: C69084

MacPherson, Simmons and Nordheimer JJ.A.

Between

Kamalavannan Kumarasamy Plaintiff (Respondent)

And

Western Life Assurance Company and Morris National Inc. Defendants (Appellant)

Counsel: Elizabeth Bennett-Martin and Heather M. Gastle, for the appellant Adam B. Kuciej, for the respondent

Heard: November 1, 2021 by video conference

On appeal from the order of Justice Jana Steele of the Superior Court of Justice, dated January 14, 2021, with reasons reported at 2021 ONSC 337.

Nordheimer J.A.:

[1] Western Life Assurance Company appeals from the dismissal of its summary judgment motion, in which it sought to have this action dismissed on the basis that the respondent’s claim is statute-barred under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. For the following reasons, I would allow the appeal, grant the summary judgment motion, and dismiss the respondent’s action.

A. Background

[2] The respondent was injured in a car accident on August 25, 2014. He has been unable to work since that time. At the time of the accident, the respondent was working as a truck driver. He says that, as a result of the accident, he suffered injuries to his back, neck, shoulders and right leg. He also suffers from severe depression, anxiety and chronic pain disorder, which he has treated with various anti-depressants and anti-psychotic medications. His medical condition following the accident is such that his driver’s licence has been medically suspended by the Ministry of Transport.

[3] At the time of the accident, the respondent was employed by Morris National Inc. (“Morris”), and was covered under Morris’ group long-term disability (“LTD”) policy with the appellant (the “Policy”). Under the terms of the Policy, the deadline for the respondent to provide a Notice of Claim to the appellant, and the first day that LTD benefits would become payable to the respondent, was February 26, 2015. The Policy also provided that a claimant waives their right to claim benefits if they do not provide notice within the prescribed time.

[4] On August 26, 2014, the respondent retained litigation counsel to represent him with respect to his tort and accident benefits claims. He did not retain these lawyers with respect to any potential long-term disability claim. The respondent’s lawyers wrote to Morris to advise it that they had been retained by the respondent with respect to his accident benefits claim.

[5] The respondent’s sister worked as a legal assistant for the lawyers that the respondent had retained. As found by the motion judge, the respondent’s sister:

[p]resumably, as a personal favour to her brother (who had limited ability in English and no knowledge whatsoever of legal matters), emailed his employer, Morris, for a notice of LTD claim form on December 15, 2014. She did this to help her brother put Western Life on notice regarding a potential LTD claim.

[6] Morris emailed the Notice of Claim form to the respondent’s sister. The respondent completed the form (again, presumably with help from his sister). The sister signed the form as the respondent’s “representative”, and noted the name of the law firm representing the respondent in parentheses. It was the sister who faxed the form to the appellant on March 9, 2015. This initial Notice of Claim is a brief form, not a completed LTD application.

[7] On March 11, 2015, the appellant says that it sent an acknowledgement letter directly to the respondent requesting that he complete the LTD application forms, which were enclosed. However, the respondent said that he never received this letter. The motion judge found that the respondent did not receive it.

[8] The appellant sent three follow-up letters to the respondent, including a letter dated June 2, 2015, that advised the respondent that it had closed the respondent’s file because he had not forwarded the completed LTD application forms. The motion judge found that, while the respondent did not receive the other letters, he did receive the June 2, 2015 letter.

[9] There is no evidence that anything consequential occurred between that time and October 13, 2016, when the respondent’s lawyers, although still not retained to deal with the respondent’s potential long-term disability claim, wrote to the appellant requesting the respondent’s LTD claim file.

[10] On November 8, 2016, the appellant responded to the lawyers to advise that the file had been closed on June 2, 2015, as the plaintiff had not sent the required LTD forms. The appellant enclosed a copy of the Notice of LTD claim form submitted by the respondent and a copy of the Certificate of Insurance for Group Benefits underwritten for Morris.

[11] The motion judge found that, between November 8, 2016 and February 10, 2017, and once again “presumably”, the respondent met with his lawyers to discuss what had happened to his LTD claim. On February 10, 2017, the respondent signed a retainer with his lawyers to also represent him on his LTD claim.

[12] On February 24, 2017, the lawyers wrote to the appellant to advise that they had now been retained by the respondent to assist with his LTD application. The lawyers requested copies of earlier letters that the appellant had sent to the respondent but that the respondent had not received. They also requested a copy of the claim forms.

[13] On March 9 and 10, 2017, the appellant sent the lawyers copies of the missing letters together with blank LTD claim forms. On March 30, 2017, the lawyers sent the completed LTD claim forms to the appellant. A couple of weeks later, the appellant contacted the lawyers to advise them that the appellant would require an authorization signed by the respondent, so that the appellant could discuss the claim with the lawyers. The signed authorization was sent to the appellant by the lawyers through email on May 2, 2017.

[14] On May 10, 2017, the appellant and the lawyers had a call to discuss the respondent’s claim. After the call, the appellant provided the lawyers with a letter dated April 19, 2017, which the respondent had not previously received. In that letter, the appellant had advised the respondent of certain additional information that the appellant required from the respondent to evaluate his claim. In that letter, the appellant advised the respondent that he “should be aware that by reviewing your claim, we are not waiving our right to rely on any statutory or Policy provision including any time limitations”.

[15] On June 14, 2017, there was another telephone call between the appellant and the lawyers to further discuss the respondent’s LTD claim. After the call, the lawyers sent some information to the appellant by email. The lawyers also attempted to explain the reasons why the respondent had been delayed in making his LTD claim.

[16] On June 28, 2017, the appellant wrote to the respondent advising that his claim was denied “as the information provided in your letter does not support reasonable cause for the delay”. Presumably the letter referred to is actually a reference to the lawyers’ email of June 14, 2017. The letter also provided information on how the respondent could appeal the claim decision. The respondent did appeal the decision, but the appeal was denied.

[17] The respondent issued a statement of claim against the appellant and Morris on June 28, 2019.

B. The Decision Below

[18] The motion judge began her analysis with reference to s. 5 of the Limitations Act, 2002, and this court’s decision in Clarke v. Sun Life Assurance Company of Canada, 2020 ONCA 11, 149 O.R. (3d) 433, for the test on when a claim is discovered.

[19] The motion judge set out the opposing views on when the appellant’s claim would have been discovered. The appellant said that the loss to the respondent occurred on the date that it would have been required to pay LTD benefits to the respondent under the Policy (i.e., February 26, 2015). It argued that a reasonable person in the respondent’s circumstances ought to have discovered his claim on June 7, 2015, the date by which he would have received the appellant’s letter closing his file.

[20] The respondent, on the other hand, argued that he could not have become aware of the loss until there was a denial of the LTD claim by the appellant. The plaintiff argued that this occurred on June 28, 2017, which was the date of the denial letter.

[21] The motion judge did not accept the appellant’s submission that the respondent ought to have discovered his claim on June 7, 2015, when he received the claim closure letter of June 2, 2015. She found that the closure letter was not a denial of the respondent’s LTD claim because, at that point, no claim application had been made.

[22] Ultimately, the motion judge stated that the issue to be determined was when the respondent discovered that a proceeding against the appellant was the appropriate means to remedy his loss. She concluded that the claim “was not fully ripened” until the respondent’s LTD claim was denied by the appellant. Because the respondent commenced his claim within two years of this date, his action was not statute-barred. On this basis, the motion judge dismissed the appellant’s summary judgment motion.

C. Analysis

[23] As I shall explain, the motion judge erred in her analysis of the central question. Section 5(1) of the Limitations Act, 2002 requires consideration of when the plaintiff ought to have known four things: (i) that the injury, loss or damage had occurred, (ii) that the injury, loss or damage was caused by or contributed to by an act or omission, (iii) that the act or omission was that of the person against whom the claim is made, and (iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it. The subsection then requires a determination of the day when a “reasonable person” first ought to have known of these matters. A claim is discovered, within the meaning of the Limitations Act, 2002, on the earlier of these two dates.

[24] Of importance as well is section 5(2). It provides a statutory presumption regarding the state of knowledge of a person with respect to the requirements set out in s. 5(1). Specifically, s. 5(2) reads:

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.

The section is a statutory codification of the requirement that an insured person must act with due diligence in pursuing any claim: Longo v. MacLaren Art Centre Inc., 2014 ONCA 526, 323 O.A.C. 246, at paras. 42-43.

[25] In this case, the respondent knew of his injuries at the time of the accident. At the same time, he knew that he was covered by his employer’s long-term disability insurance provided by the appellant. Indeed, he knew enough, with the help of his sister, to ask for an LTD claim form from the appellant, which the appellant provided. By June 7, 2015, the respondent knew that the appellant had closed its file. The respondent had to know, from that fact alone, that his claim for coverage was in jeopardy. Further, from this time forward, the respondent had lawyers representing him with respect to his injuries and, more specifically, with respect to his accident benefits. He therefore had access to legal advice and assistance if he chose to use it.

[26] Yet, it is almost a year and a half later before the respondent speaks to his lawyers about his LTD claim. Throughout this time, the respondent knows that he is not receiving any LTD payments from the appellant. The respondent’s lawyers are told that the file has been closed and they have discussions with the respondent about his claim. Notwithstanding those circumstances, the respondent does not expand his lawyers’ retainer to include the LTD claim until February 10, 2017.

[27] Thereafter, the lawyers engaged in discussions with the appellant. Both the lawyers and the respondent had to know that there was an issue about whether the appellant was going to agree to coverage. Indeed, by May 10, 2017, the appellant expressly told the respondent’s lawyers that by engaging in a review of the respondent’s claim, “we are not waiving our right to rely on any statutory or Policy provision including any time limitations”. By this point, the alarm bells ought to have been ringing loudly, and yet the claim is still not commenced until June 2019.

[28] The central errors made by the motion judge are her conclusion regarding when the respondent ought to have known that a loss occurred and her conclusion that the required element of discoverability, found in s. 5(1)(a)(iv), that “a proceeding would be an appropriate means to seek to remedy” the injury, loss or damage, was only satisfied when the appellant clearly and unequivocally denied the respondent’s claim. The motion judge does not cite any authority for this conclusion, and it is at odds with other authorities, most notably, this court’s decision in Thompson v. Sun Life Assurance Company of Canada, 2015 ONCA 162, [2015] I.L.R. I-5721.

[29] In Thompson, this court found that there were two reasons why the injured party’s claim was barred. One was that the injured party had failed to meet the qualifying conditions of the policy: at paras. 11-12. The other was that the two-year limitation period had expired because the injured party knew of her total disability in August 2008 but did not commence her action until September 17, 2010: at paras. 13-14. The latter conclusion applies equally to this case. The respondent knew of the significance of his injuries by the end of August 2014. However, because of the terms of the Policy, the respondent was not entitled to receive LTD disability payments until February 26, 2015. Applying the Thompson approach, the limitation period would have commenced on February 26, 2015, which was the first day benefits would have been payable had the respondent submitted a timely application and met the Policy’s definition of Total Disability. By that time, the respondent knew that he was injured, he believed that he was entitled to long-term disability payments, and he knew that the appellant was not making those payments.

[30] The motion judge attempted to avoid the consequences of Thompson, and other cases in the Superior Court of Justice subsequently decided along the same lines, on the basis of s. 5(1)(a)(iv), that is, that litigation was not an appropriate remedy until the appellant categorically denied the respondent’s claim. While the motion judge said, “I agree with Western Life that a clear and unequivocal denial is not necessarily required to start the limitations clock” (at para. 62), it is evident from the balance of her reasons and her conclusion that that is, in fact, what she required.

[31] There is no authority for the proposition that a clear and unequivocal denial is required. It may be that there will be some cases where an insurer may, by its conduct, lead an insured person to believe that their claim has not been denied (and thus litigation is not required). Those cases will likely be rare, and, in any event, this case is not one of them. The appellant did not do anything to lead the respondent into the belief that his claim was still alive and well. In fact, the appellant did the opposite. First, the appellant had told the respondent that his file had been closed. Second, when the issue was raised again, almost two years later, the appellant expressly told the respondent’s lawyers that, in undertaking its re-examination of the claim, the appellant was not waiving any applicable time limits.

[32] To accede to the motion judge’s conclusion is to do that which this court cautioned against in Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218, 109 O.R. (3d) 652, where Sharpe J.A. discussed the appropriate means requirement in s. 5(1)(a)(iv) and said, at para. 34:

To give “appropriate” an evaluative gloss, allowing a party to delay the commencement of proceedings for some tactical or other reason beyond two years from the date the claim is fully ripened and requiring the court to assess to tone and tenor of communications in search of a clear denial would, in my opinion, inject an unacceptable element of uncertainty into the law of limitation of actions.

[33] I would add another reason for rejecting any suggestion that a limitation period does not commence until an insurer has made a “clear and unequivocal” denial of a claim. To adopt such an approach would only serve to encourage insurers to make such denials at their earliest opportunity to ensure that the “limitations clock” starts to run. It would thus discourage insurers from undertaking a fair evaluation of the claim before making a decision. It might also lead to the commencement of more premature or needless proceedings, which is contrary to the intent of the subsection: Markel, at para. 34; 407 ETR Concession Co. v. Day, 2016 ONCA 709, 133 O.R. (3d) 762, leave to appeal refused, [2016] S.C.C.A. No. 509, at para. 48.

[34] The motion judge’s conclusion in this case is at odds with the jurisprudence from this court regarding the proper interpretation of s. 5(1)(a)(iv), that is, when litigation is an appropriate remedy. It is contrary to the decision in Thompson, as I have already explained. It is also contrary to this court’s decision in Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, 142 O.R. (3d) 561, where Brown J.A. undertook an analysis of the existing authorities on the proper interpretation of s. 5(1)(a)(iv). In doing so, Brown J.A. noted that there are certain circumstances where the conduct of an insurer may, essentially, toll the limitation period. He referred to the decision in Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325, 135 O.R. (3d) 321, where Pardu J.A. had identified two such circumstances: (i) where the plaintiff relied on the superior knowledge and expertise of the defendant, especially where the defendant undertook efforts to ameliorate the loss; and (ii) if an alternative dispute resolution process offers an adequate alternative remedy and that process has not fully run its course. Like the situation in Nasr, neither of those circumstances arise in this case.

[35] Indeed, in this case, there is little to which the respondent can point in the conduct of the appellant that could give rise to a situation akin to promissory estoppel that is often used in insurance cases to avoid the effect of a limitation period: see the discussion in Nasr at paras. 53-56. Any such suggestion becomes more problematic, in the circumstances of this case, since the respondent had access to lawyers throughout the five years before this action was commenced.

[36] In the end result, there are three potential start dates for the limitation period that arise in this case and that would be consistent with the existing jurisprudence. One is February 26, 2015, when the elimination period required by the Policy expired and the respondent should have started to receive LTD payments, if he was entitled to them. Another is June 7, 2015, when the respondent would have received the appellant’s notification that his claim file had been closed. At that point, the respondent knew that, not only was the appellant not making payments to him, but the appellant was also not going to make payments to him in the future. Yet another is November 8, 2016, when his lawyers received copies of the same correspondence.

[37] I do not need to decide which of these three dates is the actual start date because the two-year limitation period passed with respect to all of them before this proceeding was commenced on June 28, 2019. The respondent’s claim for LTD benefits under the Policy is therefore statute-barred.

[38] Before concluding, I should note that the motion judge did not expressly address s. 5(2) of the Limitations Act, 2002 when conducting her appropriate means analysis. In fairness, it is not clear that the parties raised it. Nevertheless, it was a matter that was required by the terms of the Limitations Act, 2002 to be taken into account. However, it is obvious that the motion judge took the view that the respondent had displaced the presumption that the date of the injury (extended to February 26, 2015 because of the terms of the Policy) was the day he ought to have known that a proceeding was an appropriate means to remedy his loss, because the appellant had not made an unequivocal denial of his claim. I have already explained why the motion judge erred in adopting that approach.

D. Conclusion

[39] I would allow the appeal, set aside the order below, and, in its place, make an order granting the summary judgment motion and dismissing the action. The appellant is entitled to its costs of the appeal, which I would fix in the amount of $10,000 inclusive of disbursements and HST. The appellant is also entitled to the costs of the summary judgment motion, which the parties have agreed are to be fixed at $25,000 inclusive of disbursements and HST.

Released: November 30, 2021 “J.C.M.” “I.V.B. Nordheimer J.A.” “I agree. J.C. MacPherson J.A.” “I agree. Janet Simmons J.A.”