Penttila v. Western Life Assurance Company, 2017 ONSC 6733

Penttila v. Western Life Assurance Company, 2017 ONSC 6733

CITATION: Penttila v. Western Life Assurance Company, 2017 ONSC 6733

COURT FILE NO.: CV-16-0255

DATE: 20171109

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

KAREN PENTTILA Plaintiff

– and –

WESTERN LIFE ASSURANCE COMPANY Defendant

William G. Scott, for the Plaintiff

Stephen Simpson, for the Defendant

HEARD: July 20, 2017

LEDERER J.

1Litigation is a means to resolve disputes that are grounded in the law. For litigation to be effective there needs to be a measure of certainty surrounding the process involved. Ultimately there has to be an end; without one there can be no accepted and final resolution. In the same way, and for the same reason (finality) there has to be a point in time by which a person or entity complaining has to indicate that she, he or it wishes to make use of what litigation offers; otherwise the responding party can never know if the threat of an action has passed or remains. The challenge in providing for the latter is more difficult that dealing with the former. The tool generally utilized to limit, or control, the entry into litigation is the limitation period: if a proceeding is not commenced by a prescribed time the right to litigate is lost. Limitation periods are established by legislation and can, in certain circumstances, be agreed to by contract. The difficulty is in finding the balance to insure the party initiating litigation has time to understand and begin an action as against the point in time by which the responding party can be confident that no proceeding will be brought.

2This case concerns the search for that balance.

3The plaintiff, Karen Penttila, was employed as a “residential support worker.” She was insured through a policy held by the defendant, Western Life Assurance Company. The policy provided Karen Penttila with coverage for long term disability in the event that she became disabled. She developed problems with her back. She was assessed. She applied for long term disability benefits. At first the claim was not accepted but upon being provided with further information, it was approved. The approval was communicated to Karen Penttila through a letter dated May 16, 2012. Within relatively short order, which is to say by letter dated December 21, 2012, Karen Penttila was advised that there was to be a change to the definition of long term disability as it applied to her situation. The change was to be effective as of March 7, 2013. The letter advised that in recognition of the coming change Western Life Assurance Company would continue to assess her claim and that the company had written to a doctor and the nurse practitioner who were involved with the assessment, care and treatment of Karen Penttila requesting “additional information to support your claim”.

4Advice of the coming change was followed by a letter from the Western Life Assurance Company to Karen Penttila dated February 19, 2013, which explained that “in light of this definition change…your claim for LTD benefits will be declined as of March 7, 2013”.

5I pause to point out that in each of the letters of May 16, 2012 (approving the claim), December 21, 2012 (advising that the change in definition was coming) and the letter of February 19, 2013 (explaining that, as a result of the change the benefits of Karen Penttila would cease as of March 7, 2103) the definition of “Total Disability” and “Totally Disabled” is quoted. In each case the definition is precisely the same as in the others.¹ I will return to the “change” later in these reasons. For the moment I note only that without further explanation, it would confuse anyone trying to understand why the benefits of Karen Penttila were declined.

6Having advised that the claim was to be denied the letter of February 19, 2013 went on to offer an appeal of the decision that had been taken:

If you disagree with our determination, you may appeal this claim decision by sending your written request for review to our office within 60 days from the date of this letter. This request should include any medical documentation that you feel would assist you in your appeal, in addition to a written status of your CPP tribunal. The cost of obtaining additional medical documentation would not be covered by Western Life Assurance.

7The letter sought to impose what Western Life Assurance Company now submits is a limitation to the appeal it offered:

In offering to review additional evidence, we are not waiving our right to rely on any statutory or policy provision including any time limitations.

8Evidently, additional information was provided in the form of a letter dated March 14, 2013, from a Nurse Practitioner involved in the treatment of Karen Penttila. I say evidently because while this “medical” is referred to in subsequent correspondence sent in answer to it, the substance of what it says has been redacted in the copy included in the Motion Record. Be that as it may, the responding letter, dated March 27, 2013, indicates that, in company with the material already included in the file, this additional information does not alter the “prior decision” to decline the claim. It repeats the definition found in the three letters to which I have already referred. There is no change in the definition from the first letter (May 16, 2012) which approved the claim and the latter letter which confirmed its denial.

9The fourth letter (March 27, 2013) does not refer to any additional or fresh right of appeal. Rather it repeats the prospect of a consideration of additional evidence in the same fashion as quoted above; saying again that this is without waiver of any “time limitations.” What I take from this is that the appeal was not over; further material would be considered. Counsel for Western Life Assurance Company pointed out that his client is required to look at any evidence to determine if there is a valid claim. This may be so but the question is in what context is any given information received. Is it the review of a decision already made or a new and fresh claim? As I read the further correspondence it seems clear that the parties both treated what followed as further to the decision found in the letter from Western Life Assurance Company dated February 19, 2013, the letter which first advised that the claim had been denied.

10As Karen Penttila understood the progress of her claim, the additional information provided by the Nurse Practitioner (March 14, 2013) was “additional” to the original claim that was not yet subject to any appeal. I say this because it is only by letter dated April 8, 2013, that Karen Penttila indicated that she wished to appeal the decision of February 19, 2013. The letter begins:

I have received your letter of February 19, 2013. I wish to appeal this claim decision.

11It is not that she was unaware of the letter of March 27, 2013 confirming the decision. Rather the “additional information” to be provided was, at that point, not complete. The letter of April 8, 2013, goes on to say:

Your letter dated March 27, 2013 indicates you received a letter from Ingrid Aubry [the Nurse Practitioner]. As you are aware I have an appointment with Dr. Vasiliu on April 11, 2013. As soon as I obtain a report of this appointment I will forward a copy to you.

12Karen Penttila attended her appointment with Dr. Irene Vasiliu and, with a letter dated May 14, 2013, enclosed a copy of the promised report.

13For its part, it would seem that Western Life Assurance Company saw what was happening at least after April 8, 2013, as an appeal of the decision contained in the letter of February 19, 2013. This is demonstrated by a letter written by Karen Penttila on May 22, 2013, confirming that, as part of that appeal, Western Life Assurance Company had requested “along with my appeal letter and medical documentation you requested ‘written status of your [being Karen Penttila’s] CPP tribunal’ ”.

14The consideration of the appeal of Karen Penttila continued. On June 20, 2013, Western Life Assurance Company, generally in response to the receipt of the report of Dr. Irene Vasiliu, wrote to Karen Penttila. The position of Western Life Assurance Company remained “unchanged”. Karen Penttila did not fall within the definition of “Total Disability” as prescribed by the applicable insurance policy. The definition provided is the same as contained in the other letters to which I have already referred. What is added is an explanation of the change that effected the reassessment such that Karen Penttila no longer qualified for Long term Disability. It appears that it was not the definition that had changed but rather its application to her circumstances:

[Long Term Disability] benefits were paid to you up to and including March 6, 2013. On March 7, 2013, your definition of Total Disability changed from the definition outlined in point “a” noted above, to the definition outlined in point “b” noted above.

We find that as of March 7, 2013, you do not meet [the] definition of Total Disability as outlined in point “b” noted above, and the benefits are therefore terminated as of this date.

(See fn. 1 herein to review “point ‘a’ ” and “point ‘b’ ”)

15To my mind, this basis for the withdrawal of approval of the claim adds to any confusion as to the nature of the change and the substance of the appeal. The letter of June 20, 2013, went on to observe while Karen Penttila was “reporting symptoms” the company had “not received sufficient medical evidence to support your inability to perform sedentary work after March 6, 2013”.

16This letter repeats the caution that “by reviewing your appeal, we are not waiving our right to rely on any statutory or policy provision including any time limitations”.

17What is apparent is that the appeal was not complete. In a response dated August 14, 2013, Karen Penttila expressed frustration with the proposition that Western Life Assurance Company had not received sufficient medical evidence to support her inability to perform sedentary work. The doctors from whom she was receiving treatment had not indicated that she was capable of doing such work. This being so, she wondered how the professionals relied on by Western Life Assurance Company, from whom she had never received medical care, were able to make such a determination. She indicated that she would be providing a further report from Dr. Irene Vasiliu as well as a report from Dr. David Hoffman, to whom she had been referred by Dr. Irene Vasliu for the purpose of determining if she was “suffering from the spinal stenosis symptoms”.² In its response, dated September 4, 2013, Western Life Assurance Company indicated it “would be pleased to review any additional medical information” submitted by Karen Penttila in support of her claim but yet again repeated the caution that it was not waiving its right to rely on any “time limitations.”

18By letter dated October 1, 2013, Karen Penttila sent on the promised report from Dr. Irene Vasiliu but not a report from Dr. David Hoffman. It was delayed as a result of his determination that an MRI was required. She went on to advise that she had follow-up appointments with each of these physicians. The MRI was completed and an “MRI Report” was delivered to Western Life Assurance Company as an enclosure to a letter of October 17, 2013, from Karen Penttila. On November 13, 2013, Western Life Assurance responded indicating that it still “…did not have sufficient evidence to support Total Disability beyond March 6, 2013”. It requested further information, in particular two reports from Dr. David Hoffman (August 26, 2013 and November 18, 2013) and “…all correspondence from CPP regarding your application for disability benefits.” At this point, the offer to review had changed. The words used demonstrate that, as Western Life Assurance Company understood the process, it was coming to an end:

Upon receipt of all the above requested information, we will complete our review of your appeal and advise you of the decision.

19This letter makes no reference to the qualification consistently repeated in earlier letters to the effect that by reviewing the appeal Western Life Assurance Company was not waiving any right to rely on any time limitations. I point out that to the extent that any applicable time limitation is said to have started to run on February 19, 2013 (the date of the letter indicating that the claim was being denied) the letter dated November 13, 2013, was well within two years of that date. Two years is the standard limitation period set by the Limitations Act, 2002. ³

20Dr. David Hoffman prepared a report dated November 18, 2013, but there is no indication in the record that it was ever delivered to, or received by, Western Life Assurance Company. The Affidavit of Karen Penttila does not say that it was, nor does the further letter she sent to Western Life Assurance Company on December 11, 2103.⁴ On November 28, 2013, the Nurse Practitioner, Ingrid Aubry prepared another note. The letter to Western Life Assurance Company sent by Karen Penttila on December 11, 2013, does refer to and says it enclosed a copy of that note.

21On October 21, 2014, which is to say nearly a year after its last correspondence (November 13, 2013), Western Life Assurance Company wrote to Karen Penttila. Like its letter of June 20, 2013, it indicates that the file has been reviewed and the position of Western Life Assurance Company “remains unchanged”. It quotes, yet again, the definition of “Total Disability”, explains that as of March 7, 2103, the definition that applied to her changed from that found in point “a” to the definition in point “b” and that based on the medial information provided, as of that date, it could not be concluded that she was unable to perform any occupation for which she was qualified or could reasonably become qualified. Thus, her benefits remained terminated. This letter reintroduces the qualifier that this review of what was an ongoing appeal (“your appeal”) does not stand as a waiver of any applicable time limitations. Contrary to the expectation raised by the letter of Western Life Assurance Company, dated November 13, 2013, the letter of October 21, 2014 did not end the appeal.

22The delivery of this letter was followed by an exchange which required Karen Penttila to return some of the funds she had received. This occurred as a result of an award made by the CPP. Income received from CPP disability benefits are to be set off against any Long Term Disability benefits to be paid under the policy held by Western Life Assurance Company. The amount to be set off was $27,397.84. It was repaid by Karen Penttila.

23At the end of this exchange, on May 25, 2015, Karen Penttila wrote Western Life Assurance Company indicating that she had not received a decision.

…I asked if you reviewed my file, you stated you did and LTD entitlement was denied. From this conversation I was led to believe you sent a letter with your decision after you reviewed new information + existing file. To this date I did not receive a letter with your decision from your review. May you please check into this for me and resend a copy of this decision.

24Western Life Assurance Company did not resend the letter of October 21, 2014. Rather it sent another letter, this one dated June 18, 2015. Essentially, it repeats what was said in the earlier correspondence:

As per our letter dated October 21, 2014, it cannot be concluded that you are unable to perform any occupation for which you are qualified, or may reasonably become qualified by training, education or experience. We acknowledge that you have symptoms associated with Ankylosing Spondylitis, however the medical information provided does not support you would be restricted or limited from sedentary duties, therefore further disability benefits beyond March 6, 2013 remain declined.

25This was the end of the appeal.

ISSUE

26The Statement of Claim by which this action was commenced was issued on June 6, 2016. The Statement of Defence is dated September 6, 2016. It pleads that the limitation period established by the Limitations Act, 2002 had expired and that the action was therefore statute barred. In support of this plea the Statement of Defence asserts that the plaintiff’s benefits were terminated by the letter dated February 19, 2013, and that since the action was not commenced until June 6, 2016, it was initiated on a date beyond the two-year limitation period found within the statute.

27The immediate issue is whether this position can be sustained. The broader question is the search for the balance referred to at the outset of these reasons. When should Karen Penttila, as the prospective plaintiff, reasonably have been expected to have the understanding necessary to start an action as opposed to the point where the possible defendant, Western Life Assurance Company could safely conclude that no action would be forthcoming?

LEGISLATION

28While the section 4 of the Limitations Act, 2002 puts in place a general limitation of two years that is not the end the legislative provisions that apply. The central question that remains is: when does the applicable time period start to run? The Limitations Act, 2002 provides guidance. Section 5 states:

5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(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; and

(b) 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 matters referred to in clause (a).

29This section is the codification of what, prior to its enactment had been a so-called “judge-made rule” that was founded on the premise that a limitation period should not begin to run in circumstances where the prospective plaintiff could not reasonably have known that there was an action that could be brought:

In general terms, the "discoverability rule" is a judge-made rule of statutory interpretation to the effect that a cause of action does not arise (for purposes of applying a statutory limitation period) until all of the material facts on which it is based have been discovered by the plaintiff or ought reasonably to have been discovered through the exercise of reasonable diligence… Its purpose is to avoid the injustice of precluding an action before it is possible for the injured person to discover the existence of the claim, and therefore to bring the action…⁵

30The “rule” was one of statutory construction.⁶ The premise on which it was founded continues to provide the policy or intention behind what is now section 5 of the Limitations Act, 2002. The section codified but also refined the “rule”. It instructs the examination of where the needed balance lies in any given circumstance.

ANALYSIS

31In applying section 5(1) of the Limitations Act, 2002 the first question is the identification of the day on which the person with the claim (Karen Penttila) first knew of the four elements addressed in subsection 5(1)(a). The answer, in respect of clauses 5(1)(a)(i), (ii) and (iii), is not hard to find. Karen Penttila would have known by February 19, 2012, or on March 7, 2012:

• that a loss (of the Long term Disability benefit she believes she was entitled to) had occurred;
• that the loss was caused by an omission (the failure to pay the benefit); and
• that the omission was occasioned by the person against whom a claim could be made (Western Life Assurance Company).

32February 19, 2012, was the date of the letter indicated the benefit was to be denied. March 7, 2012, was the date as of which the benefit was no longer recognized and was not paid.

33The answer to the question raised by clause 5(1)(a)(iv) is more difficult to find. For the most part the submissions revolved around the issue it raises. When should Karen Penttila as a reasonable person, in the position in which she found herself, have recognized that an action would be an appropriate means to seek a remedy for the loss she says she had suffered? This question was dealt with by the Court of Appeal in Markel Insurance Company of Canada v. ING Insurance Company of Canada⁷:

This brings me to the question of when it would be "appropriate" to bring a proceeding within the meaning of s. 5(1)(a)(iv) of the Limitations Act. Here as well, I fully accept that parties should be discouraged from rushing to litigation or arbitration and encouraged to discuss and negotiate claims. In my view, when s. 5(1)(a)(iv) states that a claim is "discovered" only when "having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it", the word "appropriate" must mean legally appropriate. 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 tone [sic] 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.⁸

34To counsel for Western Life Assurance Company this action should have been commenced within two years of either February 19, 2012, or March 7, 2012, whichever is found to be the appropriate answer to clauses 5(1)(a)(i)(ii) and (iii). This means it was within that frame of time that Karen Penttila should have understood that an action was an appropriate means of seeking a remedy. Neither February 19, 2012, nor March 7, 2012, was that day. By those days a decision had been made based on a change in what was identified as the applicable definition of “Total Disability”. The benefit was denied based on the determination of Western Life Assurance Company that although, as a result of treatment (Humira injections), there had been improvements in her back pain and stiffness and that Karen Penttila “…may be unable to perform the duties of [her] own occupation it [was] evident based on the medical evidence provided, in conjunction with [her] past work experience that [she] would be able to perform the duties of more sedentary work”.⁹ This is not enough on which to found an action. An “appeal” was suggested. The process was not truly an appeal. For one thing it did not proceed from an adjudicative or quasi-adjudicative process. It was the assessment of a claim under an insurance policy. What was offered was a review of additional medical information. The offer was founded on the realistic and legitimate understanding that the information that explained the claim might not be complete. After all the only information that was used to withdraw the approval that had been given and deny the claim was information provided by a doctor and nurse practitioner that had been requested by Western Life Assurance Company and obtained directly, by it, from those treating professionals. To that point Karen Penttila had been given no opportunity to contribute or respond.

35Taking into account the observation found in Markel Insurance Company of Canada v. ING Insurance Company of Canada, that to proceed to court when additional material brought forward by the claimant could impact the insurer’s evaluation of the claim would be to rush to litigation, it would not be “legally appropriate” to commence an action while it was unknown what the conclusive determination of the insurer would be. If the additional information meant that the claim would be recognized there would be no loss or damage and no basis to resort to the court. You cannot “discover” a loss until there is one.

36This is made clearer when the facts in this case are set up against those in Markel. This reflects on the reminder found in that case that s. 5(1)(a)(iv) of the Limitations Act, 2002 requires that “regard” be had “to the nature of the injury, loss or damage”. In Markel the court considered two appeals from the decisions of two arbitrators as to the application of the two year limitation period as it applied to loss transfer claims made by one insurer from another. These arise when, following a motor vehicle accident, the first party insurer has paid Statutory Accident Benefits to its insured when liability lies with the other party. In certain circumstances the Insurance Act¹⁰ allows a first party insurer to claim indemnification for the Statutory Accidents Benefits from the insurer of the second party.¹¹ The issue was whether the two year limitation period began the day after the demand for payment was made (as one of the two arbitrators had found) or from the time the second party insurer definitively refused to pay (the conclusion of the second arbitrator). The Court of Appeal agreed with the motion judge that it was the former rather than the latter. It is at that point, having regard to the Limitations Act, 2002, s. 5(1)(a)(iv), that it would be “legally appropriate” to commence a proceeding. The first party insurer suffered a loss caused by the second party insurer’s omission in failing to satisfy the claim the day after the request for indemnification was made. It was on that day that the presence of a loss was established.¹² It should not be forgotten that in that situation the liability was imposed by statute. In this case the court is being asked to consider the interpretation of and application of a contract (the insurance policy). The nature of the loss is different. One (Markel) is an equalization of responsibility between insurance companies. It is a matter of social policy: which company should pay for the damage suffered by the individual? The other (this case) considers whether the individual should be compensated at all. Until that decision is made no loss has been established.

37I end this part of these reasons with rhetorical question: how would Western Life Assurance Company have responded if the letter of February 19, 2012, had been met with a Statement of Claim? The question cannot be answered but it can be surmised that it would not have been seen as a constructive response by Karen Penttila to the situation she confronted when the letter was received.

38How do the letters reminding Karen Penttila that Western Life Assurance Company did not see the review of additional medical information as a waiver of “any time limitations” affect the determination that, as of February 19, 2012, and March 7, 2012, an action was not an appropriate means of seeking a remedy? They do not. I begin by observing that these letters do not suggest any particular limitation that might apply. I do not say that there was any obligation placed on Western Life Assurance Company to provide such an understanding. However, in its absence, all these letters did was confirm that whatever limitation applied continued. If neither February 19, 2012, nor March 7, 2012, was the date on which Karen Penttila should have understood that an action was an appropriate means of proceeding, the letters did not change that fact. Any suggestion that they did proposes that at some point these letters should have compelled Karen Penttila to go back and reconsider whether February 19, 2012, or March 7, 2012, had been the date when an action was an appropriate means of seeking a remedy. This would be so even though this would not have been apparent to “a reasonable person with the abilities and in the circumstances of the person with the claim”¹³ at that earlier time. In such a situation, the effective limitation period would not be two years. It would begin on the date of the letter that should have caused the re-evaluation and ended two years following February 19, 2012, or March 7, 2012. There is nothing in legislation that would allow for such a result. It would deny the efficacy of the balance being searched for. In theory if the letter that was the proper catalyst for the reconsideration was found to be the one dated June 20, 2013, the effective limitation period would have been shortened to approximately eight months. If the letter found to be the proper catalyst was the one dated October 21, 2014, the Statement of Claim (dated as it was on June 6, 2016) would not have been out of time. As it is the medical information was understood, by the parties, to be incomplete until the end of the process.

39As late as its letter of November 13, 2013, Western Life Assurance Company was asking for more information which it continued to receive, at least until the letter from Karen Penttila dated December 11, 2013, which enclosed the note from Ingrid Aubry (the Nurse Practitioner) dated November 28, 2013. The process did not end until the letter of June 18, 2015, which represents the final decision of Western Life Assurance Company or the letter of October 21, 2014, which it may have intended to be the final decision but, it seems, was not received by Karen Penttila. It does not matter which. Only then was it accepted that the medical record was complete. Both dates are within two years of the date the Statement of Claim was issued. Counsel for Western Life Assurance Company submitted that his client is required to examine all medical information it receives. This may be so but, in this case, it was all received in the context of what was called an “appeal” but stands as a continuation of the collection of medical information in the context of the denial of the benefit that initially had been approved.

40It follows that either June 15, 2015, or October 21, 2014, was the date on which the person with the claim (Karen Penttila) would have understood that a proceeding was an appropriate means to seek a remedy and if she did not the reasonable person in her circumstance would have. Thus whether under the auspices of subsection 5(1)(a) or 5(1)(b) of the Limitations Act, 2002 one of these was the date on which the limitation would have begun to run. The Statement of Claim was in time.

41The Court of Appeal has cautioned that case law applying section 5(1)(a)(iv) of the Limitations Act, 2002 “depends on the specific factual or statutory setting of each individual case” and for that reason is of “limited assistance”.¹⁴ Nonetheless I find confirmation for the finding that the Statement of Claim was in time in the case of Kassburgh v. Sun Life Assurance Company of Canada.¹⁵ The plaintiff was a police officer. She applied for Long Term Disability. On December 4, 2008, the claim was denied. She was offered the opportunity to appeal; that is to deliver new material. She did so and, on being told that it was insufficient,¹⁶ continued to do so. The final decision refusing the claim was delivered on February 24, 2011. That was the date on which the limitation began to run:

The motion judge made a determination, based on the evidence, as to when the respondent discovered her claim in this particular case. He concluded that the claim was discovered on February 24, 2011, the date of the letter in which the appellant advised the respondent that her final appeal had failed.

The appellant contends that, if the statutory limitation period applies, the claim was discovered by the respondent on December 4, 2008 when her claim for LTD benefits was initially denied. The claim was discovered because the respondent knew the material facts giving rise to her cause of action. The fact that there was an appeal process did not extend the limitation period. The fact that the respondent may have believed that the limitation period had not expired is irrelevant to the legal analysis; in any event her attention was repeatedly drawn to the potential application of limitation periods to her claim in the insurer’s correspondence.

Whether a limitation period “expired prior to the issuance of a statement of claim is a question of mixed fact and law”: Longo v. MacLaren Art Centre Inc., 2014 ONCA 526, [2014] O.J. No. 3242, at para. 38. The question of when the respondent “discovered” her claim for the purposes of s. 5 is, in the circumstances here, essentially a question of fact.

The appellant asserts that the motion judge failed to consider certain evidence that it put forward on the motion. In particular, the appellant points to various passages in the correspondence between the parties where the insurer communicated that the claim had been denied and reserved its rights to rely on limitation defences.

I would not give effect to this argument…¹⁷

42Counsel for Western Life Assurance Company does not accept that Kassburgh v. Sun Life Assurance Company of Canada is helpful. He referred to Presidential MSH Corporation v. Marr Foster & Co. LLP.¹⁸ The defendant was an accounting firm. It filed the plaintiff’s tax return after the date it was due. As a result CRA denied certain tax credits. The plaintiff sought the assistance of the defendant. On the advice of the defendant, a tax lawyer was retained. A Notice of Objection was filed. CRA confirmed the original assessment. A Statement of Claim alleging the loss was the fault of the accounting firm was issued more than two years after the initial denial of the credits but within two years of the refusal to alter the assessment. On the motion to dismiss the judge found in favour of the defendant. He dismissed the action. The claim was barred by the expiry of the limitation period. The Court of Appeal overturned this finding. The decision of the Court of Appeal draws on Markel and, in particular, on the caution that the court should not be left to “assess [the] tone and tenor of communications in search of a clear denial …” as the means of ascertaining when a claim was discovered. This would “…inject an unacceptable element of uncertainty into the law of limitation of actions” (see para. [33] above quoting Markel at para. 34). It was this concern that caused the Court of Appeal in Markel to conclude that “appropriate” as found in s. 5(1)(1)(a)(iv) of the Limitations Act, 2002 meant “legally appropriate. The Court of Appeal in Presidential MSH Corporation v. Marr Foster & Co. LLP. took this to demonstrate that for the date any alternative process (in this case the “appeal”) “has run its course or is exhausted” to be the point that a proceeding became an appropriate means to seek a remedy, that date must be “reasonably certain or ascertainable by a court.”¹⁹ In Presidential the Court found that “[i]t was clear that the end of the CRA appeal was the day “when the CRA responded to the appellant’s Notice of Objection advising that it intended to confirm the assessment.”²⁰

43There is little if anything to distinguish this case from the finding in Presidential MSH Corporation v. Marr Foster & Co. LLP. The end of the process, whether it was an appeal or the initial determination (made once all the “additional evidence” was complete or sufficient) came with the letter of June 18, 2015. It was the decision. It came further to the letter of November 13, 2013, from Western Life Assurance Company (“Upon receipt of all the above information, we will complete our review of your appeal and advise you of the decision.”) and the letter of May 25, 2015, in which Karen Penttila asked that the decision be “resent”. To that point the process was ongoing.

44The Court of Appeal has pointed out that there is a policy foundation for the resolution to matters of this kind:

[I]t seems to me one reason why the legislature added “appropriate means” as an element of discoverability was to enable courts to function more efficiently by deterring needless litigation. As my colleague Juriansz J.A. noted in his dissenting reasons in Hare v. Hare, courts take a dim view of unnecessary litigation.²¹

45As alluded to earlier in these reasons, this is a refinement to the judge-made discoverability rule which preceded s. 5(1) of the Limitations Act, 2002:

Laskin J.A. also noted, at para. 33 [of 407 ETR Concession Company Limited v. Day], that the appropriateness criterion in s. 5(1)(a)(iv) was not an element of the former limitations statute or the common law discoverability rule, and that this added element “can have the effect … of postponing the start date of the two-year limitation period beyond the date when a plaintiff knows it has incurred a loss because of the defendant’s actions.”

46As such clause 5(1)(a)(iv) is demonstration of the dedication to finding the balance between the provision of a sufficient and appropriate period to commence a legal proceeding and the point where that right is lost by the passage of time.

47For the reasons reviewed herein the motion is dismissed.

COSTS

48No submissions were made as to costs. If the parties are unable to agree I will consider written submissions on the following terms:

(a) On behalf of the responding party, the plaintiff, Karen Penttila to be received by the Court no later than 15 days following the release of these reason. Such submissions to be no longer than 4 pages, double spaced not including and Bill of Costs, Costs Outline and any case law that may be provided.

(b) On behalf of the moving party, the defendant Western Life Assurance Company to be received by the Court no later than 10 days thereafter. Such submissions to be no longer than 4 pages, double spaced not including any Bill of Costs, Costs Outline and case law that may be provided.

(c) In reply, if necessary, on behalf of the responding party, the plaintiff, Karen Penttila to be received by the Court no later than 5 days thereafter. Such submissions to be no longer than 2 pages double spaced.

Lederer J.

Released: November 9, 2017

CITATION: Penttila v. Western Life Assurance Company, 2017 ONSC 6733

COURT FILE NO.: CV-16-0255

DATE: 20171109

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

KAREN PENTTILA Plaintiff

– and –

WESTERN LIFE ASSURANCE COMPANY Defendant

REASONS FOR JUDGMENT

Lederer J.

Released: November 9, 2017

"Total Disability" or "Totally Disabled" means restriction or lack of ability due to a Disease or injury which prevents and [sic] Employee from performing the Essential Duties of:

a) His own occupation, during the Payment Qualifying Period and the two (2) years immediately following the Payment Qualifying Period; and

b) Any occupation for which the Employee is qualified, or may reasonably become qualified, by training, education or experience, after the two (2) years specified in part a) of this provision.

The availability of work will not be considered by the Insurer in assessing the Employee's Total Disability.

An Employee who must hold a government permit of license to perform his duties will not be considered Totally Disabled solely because such permit or license has been withdrawn or not renewed.

Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

at para. 10 referring to see, Kamloops (City) v. Nielsen, 1984 21 (SCC), [1984] 2 S.C.R. 2 at pp. 19-20, 10 D.L.R. (4th) 641; Central Trust Co. v. Rafuse, 1986 29 (SCC), [1986] 2 S.C.R. 147, 31 D.L.R. (4th) 481 and to Peixeiro v. Haberman, 1997 325 (SCC), [1997] 3 S.C.R. 549, 151 D.L.R. (4th) 429 (per Major J., at para. 36)

Footnotes

1. 1In these letters the Long Term Disability policy is said to have read as follows:
2. 2Report of David V. Hoffman dated August 26, 2013
3. 3S.O. 2002, c 24, Sch B, s. 4 states:
4. 4Affidavit of Karen Penttila sworn on May 16, 2017, see in particular para. 29 which says only that dr. David Hoffman prepared the report and the subsequent letter of Karen Penttila, dated December 11, 2013 makes no reference to this report (Affidavit of Karen Penttila sworn on May 16, 2017 at Exhibit 27 and para. 31)
5. 5Canadian Red Cross Society (Re), 2002 12908 (ON SC), 62 OR (3d) 227; [2002] OJ No 4326 (QL) 2002 12908 (ON SC)
6. 6Ibid at para. 11.
7. 72012 ONCA 218, 109 O.R. (3d) 652
8. 8Ibid at para. 34
9. 9Letter from Western Life Assurance Company to Karen Penttila dated February 19, 2012
10. 10R.S.O. 1990, c. I.8 at s. 275
11. 11Markel Insurance Company of Canada v. Kingsway General Insurance Company, supra (fn. 7) at para. 6
12. 12Ibid at para. 27
13. 13Limitations Act subsection 5(1) (b) quoted at para. [ ] herein
14. 14Presidential MSH Corporation v. Marr Foster & Co. LLP 2017 ONCA 325 at para. 18 relying on 407 ETR Concession Company Limited v. Day 2016 ONCA 709, 403 D.L.R. (4th) 485 at para. 34. In referring to this paragraph I do not wish to be taken as detracting from the assistance the Court in Presidential MSH Corporation said is provided by “prior case law” in “identifying certain general principles”. Those principles include “the effect of assistance provided by the defendant to eliminate the loss” and “the effect of other processes that may eliminate the loss”.
15. 152014 ONSC 1523 appeal dismissed 2014 ONCA 922
16. 16Ibid (S.C.J.) at para. 36
17. 17Ibid (C.A.) at paras. 38-42
18. 18Supra (fn. 14)
19. 19Supra (fn. 14) at para. 48
20. 20Supra (fn. 140 at para. 54
21. 21407 ETR Concession Company Limited v. Day, supra (fn. 14) at para. 48 quoted in Presidential MSH Corporation v. Marr Foster & Co. LLP, supra (fn. 14) at para. 17