'Clear and unequivocal denial' not necessary for claim's discoverability: Court of Appeal
Ontario’s Court of Appeal has overturned a lower court ruling that an injured man’s claim against his insurance company was commenced in time under the Limitations Act, finding a “clear and unequivocal denial” of his insurance claim was not necessary to establish his claim’s discoverability.
The decision provides the insurance industry and their plaintiff and defence lawyers with clearer directions on how to assess the limitations period issue in disability cases, say Elizabeth Bennett Martin and Heather Gastle, lawyers for the insurer, who provided Law Times with joint remarks via email.
“We are very excited about the decision because prior to this case there were various ways to argue the application of s. 5 of the Limitations Act to disability actions and it could be a technical, complicated assessment,” they say. “Now it is clear how that assessment should take place and that will be a relief to many lawyers (both defence and plaintiff) finding themselves in a position of having to assess a limitation period issue for disability cases.”
“This decision provides a thorough analysis of the limitations law in Ontario as it applies to disability actions generally and particularly where a claimant does not apply or makes a late claim for disability benefits.”
In Kumarasamy v. Western Life Assurance Company, 2021 ONCA 849, Kamalavannan Kumarasamy was injured in a car accident in August 2014. Kumarasamy worked for Morris National Inc. and was covered under the company’s group long-term disability (LTD) policy. Under the policy, Kumarasamy had until late the next February to submit to the insurer a Notice of Claim.
Kumarasamy retained lawyers to assist with claims for tort and accident benefits. Not included in his retainer was any potential long-term disability claim. Kumarasamy’s sister worked as a legal assistant at the firm he engaged. She emailed Morris National to request a notice of LTD claim form. Once received, they completed the form and the sister signed as his “representative.” She faxed the form to the insurer, Western Life, on March 9, 2015. Western Life said it sent LTD application forms on March 11, but Kumarasamy said he never received them. Three more letters followed, including one on June 2, in which Western Life said it had closed Kumarasamy’s file because he had yet to mail the completed LTD application forms.
In October 2016, Kumarasamy’s lawyers wrote to Western Life requesting his LTD claim file. The company responded that they had closed the file and sent a copy of the Notice of LTD claim form and a copy of the Certificate of Insurance for Group Benefits underwritten for Morris. Kumarasamy’s lawyers wrote back that they had been retained on the LTD application and requested copies of the earlier letters he had not received. They received those, plus blank LTD claim forms.
The two sides corresponded into 2017. That May, Western Life provided a letter to the lawyers that said Kumarasamy should be aware that by evaluating his claim, the company was not waiving its “right to rely on any statutory or Policy provision including any time limitations.”
Explaining that he had failed to illustrate a reasonable cause for the delay, Western Life wrote Kumarasamy June 28, 2017, to tell him his claim was denied. Two years later, Kumarasamy issued a statement of claim against the insurer and Morris.
Under Ontario’s Limitations Act, a claimant has two years after the claim is “discovered” to bring it. The claim is discovered, according to s. 5, the day the claimant first knew – or should have known – of the injury, loss or damage; knew who was responsible and knew a proceeding would be an appropriate means by which to seek a remedy for it.
Western Life put discovery at Feb. 26, 2015, or, at the latest, June 7, 2015, when Kumarasamy received the letter closing his file. Kumarasamy argued it was June 28, 2017, the date of the denial letter. Superior Court Justice Jana Steele rejected Western Life’s position, finding that the claim closure letter could not be the date of discovery, because it happened before the LTD claim application had been submitted and was not therefore a claim denial.
Justice Steele found the claim “was not fully ripened” until the LTD claim was denied, which put Kumarasamy inside two years.
Western Life appealed and Court of Appeal Justices James MacPherson, Janet Simmons and Ian Nordheimer set aside Justice Steele’s order and dismissed Kumarasamy’s action.
The court found Justice Steele’s “central errors” were her conclusion as to when discovery happened and that the required element of discoverability – the awareness “a proceeding would be an appropriate means to seek to remedy” – was “only satisfied when the appellant clearly and unequivocally denied the respondent’s claim.”
“The Court of Appeal’s analysis of section 5 of the Limitations Act, 2002, resulted in the limitation period first commencing on the date disability benefits were first payable under the group policy by the insurer, and the plaintiff knew he was injured, believed himself entitled to disability benefits, and knew the insurer was not paying the benefits,” say Bennett Martin and Gastle. “The Court of Appeal held that a clear and unequivocal denial is not required to start the limitation clock and noted that while there will be some cases where an insurer’s conduct may lead an insured to believe their claim is ongoing (and therefore results in the limitation period being tolled), such cases will likely be rare.”
“The decision makes it clear that claim closure and non-waiver language in letters from insurers are factors that will be considered as attempts to avoid misleading claimants that their claim is ongoing so as to toll the running of the limitation period.”