The Court of Appeal’s decision in Clarke v. Sun Life Assurance Company of Canada is another addition to the jurisprudence considering when time runs for a benefits denial claim. It delineates the extent to which a denial must be unequivocal to cause the claimant to know the insurer has breached the benefit obligation.
The appellant made a claim for long-term disability benefits after she stopped working due to health problems in 2011. By letter of March 19, 2012, Sun Life denied her claim and advised that three levels of appeal were available. She appealed. By letter of February 24, 2014, Sun Life advised the appellant that it had approved the benefits for a period ending in April 2013 but was otherwise denying her claim.
The motion judge found that the February 2014 letter was not a sufficiently clear denial to cause the appellant to know that she had sustained damage (the benefits denial). The Court of Appeal overturned this finding. The letter informed the appellant that Sun Life was denying her benefits, which is the breach that founded her cause of action. More explicit correspondence was unnecessary:
 The motion judge started her analysis under the Limitations Act, 2002 by considering the date the injury, loss or damage occurred: ss. 5(1)(a)(i) and (b). The motion judge did not accept Sun Life’s submission that the February 24, 2014 letter marked the time at which Ms. Clarke first knew that an injury, loss or damage had occurred. She described the letter as “equivocal” and noted that it “did not use the language of refusal or denial”: at para. 21. She concluded that it was “not clear that the words used by the Sun Life letter of February 24, 2014 [were] a denial of disability benefits that amounted to ‘injury, loss or damage’”: at para. 23. She ultimately found, at para. 30, that the limitation period commenced with the denial communicated to Ms. Clarke by Sun Life on June 19, 2017, notwithstanding that that letter also did not use language of denial. With respect, the motion judge erred in law by failing to apply the principle stated by this court in Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017 ONCA 730,  I.L.R. I-5996, at para. 1, that an insured has a cause of action for breach of contract against her insurer when the insurer stops paying long-term disability benefits. In its February 24, 2014 letter, Sun Life informed Ms. Clarke that her disability benefits terminated as of April 25, 2013, which was the date the “Own Occupation” benefits period ended. Sun Life went on to state that it would not pay “Any Occupation” benefits. Accordingly, by February 24, 2014, a “loss, injury or damage” had occurred that would have been known to a reasonable person with the abilities and in the circumstances of Ms. Clarke: Limitations Act, 2002, ss. 5(1)(a)(i) and (b). I note that in reaching her conclusion on s. 5(1)(a)(i), the motion judge relied on the decision of the Divisional Court in Western Life Assurance Company v. Penttila, 2019 ONSC 14, 144 O.R. (3d) 198. The motion judge appears to have misapplied Western Life Assurance on the issue of when an insured knows that a loss, injury or damage has occurred. As that decision clearly stated, at para. 17, the parties agreed that for the purposes of s. 5(1)(a)(i) the insured knew that a loss had occurred on the date her benefits came to an end, which is the governing principle as stated in Pepper.
The decision also describes the findings of fact required by s. 5(1) and (2) of the Limitations Act:
 Section 5(1)(a) identifies the four elements a court must examine cumulatively to determine when a claim was “discovered”. When considering the four s. 5(1)(a) elements, a court must make two findings of fact:(i) The court must determine the “day on which the person with the claim first knew” all four of the elements. In making this first finding of fact, the court must have regard to the presumed date of knowledge established by s. 5(2): “A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved”; and
(ii) The court must also determine “the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known” of the four elements identified in s. 5(1)(a).
Armed with those two findings of fact, s. 5(1) then requires the court to compare the two dates and states that a claim is discovered on the earlier of the two dates: see Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, 142 O.R. (3d) 561, at paras. 34-35.
The motion judge erred by failing to make “any specific finding about either”: