Court File No.: CV-00622897

Date: 2021-01-14

Ontario Superior Court of Justice

Between:

Kamalavannan Kumarasamy Plaintiff/Responding Party

– and –

Western Life Assurance Company and Morris National Inc. Defendant

Counsel: Adam Kuciej, for the Plaintiff Elizabeth Bennett-Martin, for the Defendant/Moving Party, Western Life Assurance Company

Heard: December 3, 2020

Before: J. Steele J.

The Motion

[1] This is a motion by the defendant, Western Life Assurance Company (“Western Life”), for summary judgment under Rule 20.01(3). Western Life seeks an order dismissing the plaintiff’s action as being statute-barred under the Limitations Act, 2002, SO 2002, c. 24, Schedule B (the “Limitations Act”).

[2] Alternatively, Western Life seeks an order dismissing the action against them for the plaintiff’s failure to make a long-term disability claim in accordance with the terms of the applicable long-term disability (“LTD”) insurance policy.

Background

[3] The plaintiff, Mr. Kumarasamy, 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 plaintiff was working as a truck driver. His medical condition following the accident is such that his driver’s licence has been medically suspended by the Ministry of Transport.

[4] In his affidavit, dated May 29, 2020 (the “Kumarasamy Affidavit”), Mr. Kumarasamy attests that as a result of the accident, he “suffered injuries to [his] back, neck, shoulders and right leg. [He] also suffer[s] from severe depression, anxiety and chronic pain disorder, which [he] has treated with various anti-depressants and anti-psychotic medications.”

[5] At the time of the accident, Mr. Kumarasamy was employed by the co-defendant, Morris National Inc. (“Morris”) and was covered under Morris’ group LTD policy UNI10007 with Western Life (the “Policy”).

[6] On August 26, 2014, the day after his accident, the plaintiff retained Levy & Associates (“Levy”) to represent him for his tort and AB claims. (The plaintiff apparently did not retain Levy for a potential LTD benefit claim until February 10, 2017, for reasons which will be apparent below). The retainer letter for the AB claim included the following clause:

“This will confirm that David J. Levy Law, Professional Corporation is NOT retained to represent my interests with respect to claims for property damage or short-term disability, or long term disability, or Canada Pension Plan disability benefits as a result of the aforementioned accident, unless specifically retained by me in a separate retainer agreement.”

The retainer letter for the tort claim included the following clause:

“The Client/s hereby agrees that David J. Levy Law, Professional Corporation, is not retained to advance any claims, commence litigation and/or protect any rights the Client/s has pursuant to the Statutory Accident Benefits Schedule and/or any other private disability insurance policy unless specifically retained for this purpose by the Client/s under a separate retainer agreement.”

[7] On September 8, 2014, Levy wrote to Morris to advise that Levy had been retained by the plaintiff in respect of his AB claim.

[8] In 2014, the plaintiff’s sister, Poorany Sornabala (“Sornabala”), was an employee of Levy & Associates (the plaintiff’s lawyers’ law firm). Sornabala worked as a legal assistant. Presumably, as a personal favour to her brother (who had limited ability in English and no knowledge whatsoever of legal matters), she 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. As indicated above, the Levy firm had not yet been retained to deal with this potential LTD claim, but it was certainly reasonable for the plaintiff to seek assistance from his sister, who had a better command of the English language and ability to deal with legal matters. Morris, as requested by Sornabala, emailed the LTD Notice of Claim form to Sornabala on December 18, 2014, for her brother to fill out and submit.

[9] Under the Policy terms, the deadline for the plaintiff to provide a Notice of Claim to Western Life, and the first day that LTD benefits would become payable to the plaintiff was February 26, 2015. (However, the plaintiff, had not yet been provided with a copy of the Policy setting out the policy terms).

[10] The plaintiff’s sister presumably helped her brother in filling out the initial Notice of Claim form because it was she who faxed this initial form to Western Life on March 9, 2015. This initial Notice of Claim is a brief form, not a completed LTD application. It was still over two years before Western Life or Morris were to send a copy of the Policy terms to the plaintiff.

[11] On March 11, 2015, according to Western Life, it sent an acknowledgement letter directly to the plaintiff requesting that he complete the disability application forms, which it was attaching. However, the plaintiff in his affidavit says that he never received this letter. Based on Western Life’s indisputable error in leaving out the unit number on subsequent correspondence to the plaintiff, resulting in undeliverable mail, together with the plaintiff’s affidavit evidence that there were at least 3 letters from Western Life he never received, and in keeping in mind the diligence with which his sister was helping him, it is difficult for me to make a finding that the plaintiff ever actually received the mail that Western Life says was sent to him.

[12] In the Kumarasamy Affidavit, the plaintiff attests that the missing letters were brought to his attention after Levy received them. The plaintiff states that “[a]fter review, I had never seen these letters prior to them being brought to my attention.” The missing letters do not indicate the method of delivery, nor has any proof of delivery of these letters been provided.

[13] Western Life maintains that it sent the plaintiff, (Levy, not yet having been retained for the LTD claim), three follow up letters:

a. April 6, 2015, following up with the plaintiff for the information requested on March 11, 2015;

b. April 28, 2015, advising the plaintiff that his file would be closed if he failed to provide the requested information within 30 days; and

c. June 2, 2015, advising the plaintiff that his file was closed, having failed to provide the completed disability application forms.

Save for the June 2, 2015 letter, there is simply insufficient evidence for me to make a finding that in fact the plaintiff received these follow-up letters.

[14] On October 13, 2016, Levy (although not yet retained to deal with the plaintiff’s potential LTD claim), wrote to Western Life requesting the plaintiff’s LTD claim file.

[15] On November 8, 2016, Western Life wrote to Levy to advise that the file had been closed on June 2, 2015, as the plaintiff had not sent the required LTD forms. Western Life enclosed a copy of the Notice of LTD claim form submitted by the plaintiff and a copy of Certificate of Insurance for Group Benefits underwritten for Morris. In his affidavit, Mr. Kumarasamy attests that “[p]rior to this date, Western had not provided [him] or [his] counsel with the Certificate of Insurance, nor the Policy.”

[16] Between November 8, 2016 and February 10, 2017, Levy presumably met with the plaintiff to explore what had happened to the plaintiff’s LTD claim. The plaintiff advised Levy that he had no recollection of receiving the March 11, 2015, April 6, 2015 and April 28, 2015 letters from Western Life. He had only received the June 2, 2015 letter advising his file was closed. On February 10, 2017, Levy had the plaintiff sign a retainer to represent the plaintiff for his LTD claim.

[17] Two weeks after being retained, on February 24, 2017, Levy wrote to Western Life advising Western Life that Levy had now been retained by the plaintiff to assist with his LTD application. Levy also advised that, although the plaintiff had received the letter of June 2, 2015, (advising that Western Life had closed its LTD file), he had no recollection of receiving any correspondence from Western Life before June 2, 2015. Levy requested copies of the March 11, 2015, April 6, 2015 and April 28, 2015 letters and the claim forms.

[18] On March 9 and 10, 2017, Western Life sent Levy copies of the missing letters together with blank LTD claim forms.

[19] On March 30, 2017, Levy sent the completed LTD claim forms to Western Life. The cover letter to Western Life from Levy states, among other things, “[p]lease correspond with our office about this matter.”

[20] On April 19, 2017, despite the fact that Western Life knew that the plaintiff had retained Levy to help with his LTD claim, Western Life wrote once again directly to the plaintiff. The letter, however, neglected to include the plaintiff’s unit number in the address and was returned to Western Life as undelivered mail on May 9, 2017.

[21] After sending the April 19, 2017 letter to the plaintiff, Western Life called Levy to advise that the plaintiff was being sent information and that Western Life would require an authorization signed by Mr. Kumarasamy so that Western Life could discuss the claim with Levy. This was documented in a Western Life internal email which states that:

“…[Western Life is] sending [Levy’s] client information today and that [Western Life] require[s] an authorization signed by [Mr. Kumarasamy] that specifies that [Western Life] can discuss the claim with the law office…”

[22] The signed authorization was sent to Western Life from Levy by email on May 2, 2017.

[23] Given that Western Life requires an authorization to deal with counsel, the fact that this authorization was only requested by Western Life from Levy in 2017 is consistent with Mr. Kumarasamy’s evidence and the Levy retainer that Levy was not retained in respect of Mr. Kumarasamy’s LTD claim until 2017.

[24] On May 10, 2017, Western Life and Levy had a call, following which Western Life provided Levy with a copy of the April 19, 2017 letter. This indisputably wayward letter provided that Western Life had “completed an initial review of [the plaintiff’s] claim” and that Western Life required “additional information to complete [their] assessment”. The letter sets out certain additional information that Western Life was requesting from the plaintiff. The letter also indicated that the “claim was received in excess of the Notice of Claim period outlined in your Group Policy” and that Mr. Kumarasamy “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”.

[25] On June 1, 2017, Western Life and Levy had a call regarding Levy’s request to access the plaintiff’s records, following which Western Life provided a copy of the Policy to Levy. This was the first time Levy was provided with the Policy.

[26] On June 9, 2017, Western Life sent the plaintiff a follow-up letter for the requested information. In this letter, Western Life again indicated that it was not waiving its right to rely on any “statutory or policy provision including any time limitations” and set out the Notice of Claim provision which contains the 6-month time limit.

[27] By email on June 9, 2017, Western Life provided Levy with a copy of the June 9, 2017 letter sent to the plaintiff and Levy requested a call with Western Life to discuss the claim.

[28] Western Life produced a record of a phone call, dated June 14, 2017, between Western Life and Levy’s office initiated by Western Life. This business record is very revealing, to the extent that I will quote it verbatim:

“Called to discuss o/s info. Lawyer explained again reason for late reporting. He was initially hired by EE to deal w his Aviva claim. While he is still eligible for their coverage, they haven’t paid any benefits since 2016 b/c they discovered EE has LTD covg through work and they want to know if he can receive LTD bens before they pay further (offset). EE did not claim before that because the ER had not made him aware that he had LTD covg and did not provide assistance in the process.

• Aviva file – lawyer has requested; will send to us along with another report – FCE? – they just rec’d.

• Medical – they have Dr’s notes going back to 2010, they can send. I adv. pre-ex period starts Oct 3/13 and ends Apr 2/14; we need to know all visits in that period, so we will also need OHIP claims history list – lawyer will request.

Lawyer will send all requested at earliest convenience, f/u this phone call w an email also.”

[29] On June 14, 2017, Levy’s office sent the follow up email, which provides:

“Thank you for taking your time to discuss this file with me today.

As per our discussion, I am attaching herewith copy of our client’s OHIP summary for the period from October 15, 2010 to August 09, 2016 and the Functional Abilities Evaluation Report dated June 02, 2017 for your review and consideration of our client’s case.

I explained to you on the phone this afternoon, the reasons for our client’s late submission of his application to your company are:

1. Our client was not provided with instructions from his employer about completing his statement and other necessary claim forms for claim with your company

2. Our client did not receive assistance or explanation from his employer about steps he had to do to complete his application and other required forms.

3. He did not receive application package from your company or from his employer

4. He only found out that he had to complete and submit his Application for Long Term Disability benefits to your company when his car insurance (Aviva) stopped paying his Income Replacement Benefits in Feb 2016.

5. He does not read or speak much English. He retained our service in November 2016.

Our client has not had any income or benefits since Feb 2016. He received some financial assistances from his family. He has exhausted his credit card limit. He is currently in a very difficult financial situation. He needs help.”

[30] On June 28, 2017, Western Life wrote to the plaintiff advising that the claim was denied “as the information provided in your letter does not support reasonable cause for the delay”. The letter further provides information on how the plaintiff may appeal the claim decision. The plaintiff appealed the decision, which appeal was denied.

[31] The plaintiff’s statement of claim against Western Life and Morris was issued on June 28, 2019.

Analysis

Test for Summary Judgment

[32] Under Rule 20.04, the court may grant summary judgment where the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[33] In Hryniak v. Mauldin, 2014 SCC 7, 2014 SCC7, 1 S.C.R. 87, the Supreme Court of Canada set out the principles for the summary judgment motion judge to consider in determining whether there is a genuine issue requiring a trial based on the evidence before the Court. The Supreme Court of Canada indicated that there will be no genuine issue requiring a trial when the summary judgment process: “(1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to a just result.”

[34] For the reasons set out below, I am dismissing Western Life’s motion for summary judgment.

Discovery of Claim/Limitations Act

[35] Western Life argues that summary judgment ought to be granted, as Mr. Kumarasamy’s claim is barred under the Limitations Act. The Limitations Act provides in section 4 that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

[36] Section 5(1) of the Limitations Act provides that 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 in clause a.

[37] In Clarke v. Sun Life Assurance Company of Canada, 2020 ONCA 11, 149 O.R. (3d) 433, the Ontario Court of Appeal, considering the elements set out in section 5(1)(a) of the Limitations Act, states (at para. 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:

(1) 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

(2) 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, 142 O.R. (3d) 561, at paras. 34-35.

(i) When did the plaintiff know that loss had occurred?

[38] The parties in this case disagree on which date the plaintiff suffered a loss. They further disagree on the date that the plaintiff became aware, or ought to have become aware, that a loss occurred.

[39] Unlike Clarke, where the plaintiff was paid disability benefits for a period of time and then the benefits were terminated, Mr. Kumarasamy was never paid LTD benefits. In fact, Mr. Kumarasamy did not complete and file his application for LTD benefits until 2017.

[40] Western Life argues that the loss to the plaintiff occurred the date that Western Life would have been required to pay LTD benefits to the plaintiff under the Policy (i.e., February 25, 2015).

[41] Western Life argues that a reasonable person in Mr. Kumarasamy’s circumstances ought to have discovered his claim on June 7, 2015, the date by which he would have received Western Life’s letter closing his claim. Western Life further argues that Mr. Kumarasamy’s counsel would have discovered his claim on November 10, 2016 when Levy was informed that Western Life had closed the plaintiff’s claim on June 2, 2015.

[42] The plaintiff disagrees. The plaintiff argues that he could not have become aware of the loss until there was a denial of the LTD claim by Western Life. The plaintiff argues that this occurred on June 28, 2017 – the date of the denial letter.

[43] As noted above, the plaintiff’s completed LTD forms were not provided to Western Life until March 30, 2017. This was when there was a request by Mr. Kumarasamy for indemnification by Western Life. As stated by Justice Sharpe in Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218, 109 O.R. (3d) 652 (at para. 24), in reference to the 4-part test in the Limitations Act:

“[22] I would observe at the outset that there is a certain element of artificiality in use of the word "discovered" in the context of these cases. A first party insurer will be fully aware of the claim for loss transfer well before it can be said that he or she has "discovered" the claim within the meaning of s. 5(1). That said, it is clear that the limitation period must be determined by interpreting "discovered" as defined by the Act.

[23] The contentious issues arise under subparas. (ii), (iii) and (iv). I turn first to subparas. (ii) and (iii), which, in the present context, pose this question: when does the first party insurer know that there is a loss "caused" by an "omission" of the second party insurer?

[24] Items (ii) and (iii) require that the second party insurer must have done or omitted to do something that can be said to have caused a loss. The second party insurer cannot be said to have omitted to indemnify if there was no request for indemnification. It follows that items (ii) and (iii) cannot be satisfied until the first party insurer has asserted the loss transfer claim against the second party insurer to trigger a legally enforceable claim or obligation.

[25] Once the loss transfer claim has been asserted, when does the first party insurer know that [the] second party insurer’s “omission” to pay the claim caused a loss to the first party insurer?

[26] Once a legally valid (i.e., apart from any issue as to limitations) claim is asserted by the first party insurer’s Request for Indemnification, the second party insurer is under a legal obligation to satisfy it. All the facts are present to trigger the legal obligation [on] the part of the second party insurer to indemnify the first party insurer for the loss. The situation has crystallized into [a] complete and valid legal claim that is immediately enforceable against the second party insurer. There is nothing more that must happen to create the legal obligation of the second party insurer to pay the claim.” (emphasis added)

[44] In my view, the question of when the plaintiff ought to have become aware that a loss occurred is inextricably linked with the other parts of the test, particularly 5(1)(a)(iv). As mentioned in Clarke, the four elements set out in 5(1)(a) must be examined cumulatively. Justice Sharpe also alludes to this, when he states in Markel that “there is a certain element of artificiality in use of the word “discovered” in the context of these cases”. I therefore return to this issue below, when considering the other parts of the test.

(ii) When did the plaintiff know that the loss was caused by an act or omission?

[45] There is no real dispute that Mr. Kumarasamy’s loss of LTD benefits was caused by Western Life’s denial of the claim. The plaintiff was aware that his LTD benefits under his work Policy were provided by Western Life. The issue is around the timing.

(iii) When did the plaintiff know the act or omission was by Western Life?

[46] Again, the plaintiff was aware that the act of denying his claim for LTD benefits was by Western Life.

[47] Considering (i), (ii) and (iii) together, in my view, February 25, 2015, June 7, 2015 and November 10, 2016 were not dates when Mr. Kumarasamy could have discovered a possible claim against Western Life, as Mr. Kumarasamy had not yet applied for and been denied LTD benefits. Based on the record before me, before the plaintiff submitted his complete LTD application, he could not have known whether Western Life would pay or deny his LTD claim. I note that this is consistent with the Policy, which provides that Western Life is not required to pay benefits until a valid and complete claim is made.

[48] I do not accept Western Life’s submission that Mr. Kumarasamy ought to have discovered his claim on June 7, 2015 when he received Western Life’s claim closure letter of June 2, 2015. This closure letter was not a denial of Mr. Kumarasamy’s LTD claim. At that point, no claim application had been made. Further, the facts in the instant case are unlike those in Richards v. Sun Life Assurance Company of Canada, 2016 ONSC 5492, where there was a 5-year period following the file closure and commencement of the action, with very little correspondence in the interim. I note that in Richards (at para. 24) the court acknowledges that the limitation period may not have started to run at the time of the file closure, but in that case would have started to run sometime within the next 3 years and five months.

(iv) Discovery of when a proceeding against Western Life would be appropriate

[49] The main issue in this case is the question as to when Mr. Kumarasamy discovered that a proceeding against Western Life was the appropriate means to remedy his loss. As the plaintiff submits, this issue concerns when Mr. Kumarasamy discovered his “claim” against Western Life.

[50] When would a legal proceeding by Mr. Kumarasamy as against Western Life be appropriate? When was the claim “fully ripened”? Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017 ONCA 730. For the reasons set out below, it is my view that the claim was not fully ripened in this case until Mr. Kumarasamy’s LTD claim was denied by Western Life.

[51] Mr. Kumarasamy issued his statement of claim on June 28, 2019. Accordingly, if he discovered his claim prior to June 28, 2017, he would be outside the 2-year limitation period. However, if he discovered his claim on or after June 28, 2017, he is within the 2-year limitation period.

[52] Western Life argues that Mr. Kumarasamy’s claim was discovered prior to June 28, 2017. Western Life argues that the claim was discovered or ought to have been discovered on either June 7, 2015, November 10, 2016 or May 10, 2017. The June 7, 2015, and November 10, 2016, potential dates are discussed above.

[53] May 10, 2017 is the date that Levy received the April 19, 2017 letter from Western Life. This letter includes language that would lead a reasonable person to believe their claim had not yet been denied. It states “[w]e have completed an initial review of your claim and note we require additional information to complete our assessment”. The letter further states that “[b]efore a final decision can be made on your claim we are required to investigate your treatment in the period of October 3, 2013 to January 2, 2014, and January 3, 2014 to April 2, 2014” (emphasis added). The letter goes on to request additional information from the plaintiff. The letter includes language to preserve Western Life’s rights, such as alerting the plaintiff to the fact that the claim was received in excess of the Notice of Claim period and that “by reviewing [his] claim, [Western Life is] not waiving [their] right to rely on any statutory or policy provision including any time limitations”. However, because the letter requests additional information from the plaintiff and states that there has not been a final decision, I find a reasonable person would not conclude that their benefits had been denied.

[54] Western Life sent a follow up letter on June 9, 2017 again requesting the outstanding information. This letter states (in bold) that “[i]f the above requested information is not received within thirty (30) days from the date of this letter, a decision regarding benefits will be made with the information currently on file”. Again, I do not see how a reasonable person could conclude that there had been a denial of benefits at this point. On the contrary, this wording would strongly suggest that no decision had yet been made.

[55] The plaintiff argues that the earliest day he could have discovered his claim against Western is June 28, 2017.

[56] On June 28, 2017, Western Life sent a letter to the plaintiff (which was also sent by email that day to his lawyer) advising that his claim was denied. This letter is clear and unequivocal. It states: “Based on a review of the medical provided, in addition to all information presently on file, I must advise we are unable to accept your claim and Long Term Disability benefits have been declined”. This letter also includes information for the plaintiff to appeal the “claim decision”.

[57] In Western Life Assurance Company v. Penttila, 2019 ONSC 14, 144 O.R. (3d) 198, Justice Thorburn, as she then was, set out the guidelines as to when it is appropriate to bring a proceeding within section 5(1)(a)(iv) of the Limitations Act as follows (at para. 35):

a. The determination of whether legal action is “legally appropriate” takes into account what a reasonable person with the abilities and in the circumstances of the plaintiff ought to have known: Presidential, at para. 18.

b. Parties should be discouraged from rushing to litigation or arbitration. Rather, they should be encouraged to resolve claims as courts take a dim view of unnecessary litigation: Market Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218, 109 O.R. (3d) 652, at para. 34; and 407 ETR, at para. 48.

c. It is premature for a party to bring a court proceeding to seek a remedy if a statutory dispute resolution process offers an adequate alternative remedy and that process has not fully run its course or been exhaustive: Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541, 111 O.R. (3d) 561, at paras. 61-70.

d. However, where the insurer has been clear that it intends to rely on the limitation period, and the claim has “ripened”, the court should be wary of getting involved in assessing the “tone and tenor of communications” to determine where and when there was a denial of the claim by the insurer as this would inject an undesirable element of uncertainty into the law of limitation of actions: Markel, at para. 34.

e. The courts should also be wary of allowing a party to delay the commencement of proceedings simply for tactical reasons: 407 ETR, at para. 47; and Markel, at para. 34.

f. It is appropriate for the court to consider what was communicated to the insured and whether the claim was clearly and unequivocally denied: Kassburg v. Sun Life Assurance Company of Canada, 2014 ONCA 922, 124 O.R. (3d) 171, at para. 42.

g. The courts have specifically recognized two circumstances in which the issue of “appropriate means” may delay the date on which a claim was discovered.

• First, where the insured relies on the superior knowledge and expertise of the insurer, especially where the insurer made efforts to ameliorate the loss.

• Second, where other proceedings remain ongoing (such as criminal proceedings or arbitration): Presidential, at paras. 28-48.

h. Where an insured seeks to preclude an insurer from relying on a limitations defence on the basis of promissory estoppel, the insurer’s conduct must amount to a promise on which the insured acted to its detriment: Maracle v. Travelers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50; and Marchischuk v. Dominion Industrial Supplies Ltd., 1991 CanLII 59 (SCC), [1991] 2 S.C.R. 61.

[58] In Clarke, the Court of Appeal added two additional elements to those set out in Penttila to be considered: (i) due diligence; and (ii) the significance of an informal appeal process offered by the insurer.

[59] The key issue is when Mr. Kumarasamy knew or reasonably ought to have known that a proceeding would be the appropriate means to remedy his loss. Mr. Kumarasamy’s affidavit evidence is that he always understood that his LTD claim was open and ongoing until he received Western Life’s letter of June 28, 2017 denying his claim. At this point in time, the claim was “clearly and unequivocally” denied. In his affidavit, Mr. Kumarasamy attests that: “I have always thought that my case was open and ongoing until the letter of June 28, 2017 when Western indicated it was denying my claim. At no point in time before June 28, 2017, did I have any idea Western had denied my claim.”

[60] There was significant correspondence from Western Life from 2014 to 2017, requesting information and reiterating that there was not a final decision or denial. In fact, Western Life’s June 9, 2017 letter provides that if certain information is not received within 30 days from the date of this letter, a decision regarding benefits will be made with the information currently on file. I agree with the submission of Mr. Kumarasamy that the letters from Western Life prior to June 28, 2017 gave the impression that unnecessary litigation could be avoided.

[61] In Markel Justice Sharpe cautions that if a claim has “ripened” the court should be cautious of “assessing the tone and tenor of communications”. However, in my view, it is not necessary to assess the “tone and tenor of communications” to see that there was no actual denial of Mr. Kumarasamy’s LTD claim until the June 28, 2017 letter, when the claim was unequivocally denied.

[62] I agree with Western Life that a clear and unequivocal denial is not necessarily required to start the limitations clock and that each case will turn on its facts. Western Life argues that the fact that the plaintiff was aware of his disability coverage prior to his car accident, when considered alongside the claim closure correspondence, supports its position that the claim was discovered or ought to have been discovered by the plaintiff at an earlier date. However, given the communications from Western Life suggesting that the matter was ongoing and requesting additional information from Mr. Kumarasamy, I do not see how the claim was “ripened” until the correspondence of June 28, 2017.

[63] Western Life submits that, where the file is closed and the insurer has not made any payments, a reasonable person would conclude that the insurer will not pay benefits and that the claim is denied. In this regard, Western Life relies on Richards v. Sun Life Assurance Company of Canada, 2016 ONSC 5492. In my view, Richards is readily distinguishable on its facts. In Richards there was a file closure letter, then a few phone calls, followed by the issuance of the statement of claim about 5 years after the closure letter.

[64] Given the significant correspondence from Western Life from 2014 to 2017 suggesting that the matter was ongoing, Mr. Kumarasamy’s affidavit evidence, and the record before me, on balance I am of the view that neither Mr. Kumarasamy nor a reasonable person would have discovered that a proceeding against Western Life for the denial of the LTD claim was appropriate until June 28, 2017 – the date that the claim was “clearly and unequivocally denied”.

[65] Accordingly, I find that Mr. Kumarasamy’s action is not barred by the Limitations Act.

Failure to make LTD claim within the period required under the LTD Policy

[66] Given my finding that Mr. Kumarasamy’s action is not barred by the Limitations Act, I now consider Western Life’s alternative argument that summary judgment ought to be granted due to Mr. Kumarasamy’s failure to make his LTD claim in accordance with the long-term disability Policy.

[67] Western Life argues that because Mr. Kumarasamy delivered his notice of claim under the Policy eleven days after its due date on February 26, 2015, he forfeited his rights under the contract. Western Life also emphasizes the fact that Mr. Kumarasamy’s LTD application (submitted to Western Life on March 30, 2017) was submitted 2 years, 7 months and 6 days after his disability arose.

[68] Section 5.2 of the Policy provides that Western Life “will not be liable for Benefits and the Employee waives the Employee’s right to claim Benefits unless the Insurer receives written notice from the Employee or Employer within six (6) months after the Total Disability commences”. It provides further that “if this notice is not provided, the employee will not be eligible to receive benefits”.

[69] Mr. Kumarasamy seeks relief from forfeiture under section 98 of the Courts of Justice Act and section 129 of the Insurance Act. The Court has discretion to grant relief from forfeiture, which is an equitable remedy.

[70] In the context of insurance matters, the Supreme Court of Canada has stated in Elance Steel Fabricating Co. Ltd. v. Falk Bros. Industries Ltd., 1989 CanLII 38 (SCC), [1989] 2 S.C.R. 778 (at page 784):

“The purpose of allowing relief from forfeiture in insurance cases is to prevent hardship to beneficiaries where there has been a failure to comply with a condition for receipt of insurance proceeds and where leniency in respect of strict compliance will not result in prejudice to the insurer.”

[71] Due to my findings above, I do not accept Western Life’s submission that there is non-compliance with the Policy, due to the Policy provisions regarding the Limitations Act.

[72] Mr. Kumarasamy was late in providing his notice and proof of loss. This was imperfect compliance, as opposed to non-compliance. Accordingly, relief of forfeiture may be granted if the well-established common law test is satisfied.

[73] In exercising discretion as to whether to grant relief from forfeiture, the Court must consider 3 components: (1) the conduct of the insured, (2) the gravity of the breach, and (3) the disparity between the value of the property forfeited and the damage caused by the breach: (Dube v. RBC Life Insurance Company, 2015 ONCA 641, 127 O.R. (3d) 161). However, this is not a 3-part test where each part must be satisfied. Instead, the Court is required to “consider and balance all three elements to determine whether equitable relief should be granted”: Monk v. Farmers’ Mutual Insurance Company (Lindsay), 2019 ONCA 616, 92 B.L.R. (5th) 1.

[74] I turn first to the conduct of the insured. Mr. Kumarasamy indicated that he presumed that Western Life knew about his injuries because he had notified his employer. He also indicated that he was unaware of the Policy terms. It is also notable that Mr. Kumarasamy has limited education and language skills. Further, he did not retain counsel in respect of his LTD claim at the outset.

[75] In considering the gravity of the breach, the Court considers “both the nature of the breach itself and the impact of that breach on the contractual rights of the other party”: Kozel v. The Personal Insurance Company, 2014 ONCA 130, 119 O.R. (3d) 55. As noted above, Mr. Kumarasamy’s breach of the Policy terms was his failure to provide the Notice of Claim within the 6-month period required under the contract. Mr. Kumarasamy was eleven days late in filing his Notice of Claim.

[76] The impact of the breach on Western Life is fairly minimal. The plaintiff has provided an extensive medical brief of his condition. This brief includes another insurer’s (Aviva’s) independent medical examination reports and treatment records. There is extensive medical and treatment information from Aviva’s involvement in Mr. Kumarasamy’s treatment. This information has been provided to Western Life.

[77] With regard to the disparity between the value of the property forfeited and the damage caused by the breach, Western Life submits that it has suffered prejudice as it was unable to conduct medical examinations during this time and actively partake in Mr. Kumarasamy’s recovery. However, as noted above, other insurers have been involved and expended significant resources in adjusting and defending the claim. There is an extensive medical and documentary record available. In my view, the potential prejudice to Mr. Kumarasamy in not being able to obtain LTD coverage far outweighs the potential prejudice to Western Life. This is similar to the case in Dube, where the Court of Appeal stated (at para. 12):

“But the critical question on this component of the test is whether RBC was prejudiced by the length of the breach. We are satisfied that the motion judge did not err in finding that the prejudice to RBC was minimal. Or, as he found later in his reasons, even if RBC incurred some prejudice because it could not conduct its own investigations and medical examinations at an early date, that prejudice was outweighed by the harm to Dube from his being unable to pursue his claim.”

[78] The plaintiff would suffer significant harm if he was unable to access his LTD benefits. He was 46 years old at the time of the accident and has been unable to work since that time. He has 3 children, 2 of whom are minors. The potential value of Mr. Kumarasamy’s LTD entitlement to age 65 is approximately $400,000. I agree with the submission of the plaintiff that this case is one where “”the substantial disparity between the value of the property forfeited and the damage caused [to Mr. Kumarasamy] by the breach’ is so manifest and so grossly disproportionate that relief from forfeiture is patently a correct result”: Scicluna v. Solstice Two Limited, 2018 ONCA 176, 421 D.L.R. (4th) 675.

Disposition and Costs

[79] In the result, therefore, Western Life’s claim for summary judgment is dismissed.

[80] I encourage the parties to come to an agreement on costs. If no such agreement can be reached by January 29, 2021, the parties may deliver written submissions on costs (not to exceed 3 pages each, double spaced) together with their costs outlines. The plaintiff may deliver his by no later than the close of business on February 12, 2021 and Western Life will have 10 business days to respond. In that case, my costs decision will be released in due course once I have considered these additional submissions.

J. Steele J.

Released: January 14, 2021