{"id":926,"date":"2019-08-28T22:09:43","date_gmt":"2019-08-29T02:09:43","guid":{"rendered":"http:\/\/limitations.ca\/?p=926"},"modified":"2019-08-28T22:16:22","modified_gmt":"2019-08-29T02:16:22","slug":"ontario-an-insurers-denial-has-to-be-really-explicit-to-trigger-discovery","status":"publish","type":"post","link":"http:\/\/limitations.ca\/?p=926","title":{"rendered":"Ontario: An insurer’s denial has to be (really) explicit to trigger discovery"},"content":{"rendered":"

The Divisional Court decision in Western Life Assurance Company v. Penttila<\/em><\/a> demonstrates that if an insurer intends for a denial to commence a limitation period for a coverage proceeding, that denial needs to be as explicit as explicit can be.<\/p>\n

The insurer, Western, denied its insured Penttila’s claim for LTD benefits in February 2013, and told her that she could appeal the denial within 60 days by written request.\u00a0 At the same time, Western stated explicitly\u00a0that it wasn’t\u00a0waiving its right to rely on any “time limitations”.<\/p>\n

Penttila initiated an appeal within the prescribed time.\u00a0 Western\u00a0wrote to Penttila in October 2014 that its position “remained unchanged”.\u00a0 Pentilla didn’t understand this to mean Western had denied her appeal.\u00a0\u00a0She\u00a0wrote to Western in May 2015 asking about the\u00a0decision in her appeal.\u00a0 Western responded in June 2015 by confirming that benefits remained declined.\u00a0 Penttila commenced a proceeding in June 2016.\u00a0 Western defended, pleaded a limitations defence, and moved for judgment on it.\u00a0 The motion judge held that a trial was necessary to determine the defence.<\/p>\n

Penttila\u2019s evidence was that she believed Western continued to consider appeal June 2015.\u00a0 She didn’t understand Western October 2013 correspondence to be determinative of\u00a0her appeal.<\/p>\n

Western appealed. It argued that the Penttila should have known that a proceeding was an appropriate remedy for her loss once it terminated her\u00a0LTD benefits.<\/p>\n

Penttila\u2019s position was that a proceeding wasn\u2019t appropriate as of that date:<\/p>\n

\n

[24]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Ms.\u00a0Penttila\u00a0takes the position that it was not appropriate for her to file a claim as of March 7, 2013, as her appeal had not yet been finally determined by Western because:<\/p>\n

a) \u00a0\u00a0She was told she had a right to appeal provided she took certain steps which she did.\u00a0 It was therefore not clear that the process had run its course;<\/p>\n

\u00a0b) \u00a0\u00a0There was no denial of the appeal or any reason to believe that the matter would not be amicably resolved;<\/p>\n

\u00a0c) \u00a0\u00a0She was not represented by legal counsel;<\/p>\n

\u00a0d) \u00a0\u00a0There was no clear reference to the fact that the limitation period was running in the communications from the insurer.\u00a0 The insurer said only that \u201cthe limit\u201d, whatever it was, was not being waived;<\/p>\n

\u00a0e) \u00a0\u00a0She made concessions and repaid monies paid pursuant to her CPP disability setoff, believing that she was engaging in an attempt at dispute resolution.\u00a0 This was done at the request of the insurer;<\/p>\n

\u00a0f) \u00a0\u00a0 \u00a0There was no reason for her to do this except to attempt to resolve the claim instead of litigating; and<\/p>\n

\u00a0g) \u00a0\u00a0There is no suggestion that the delay was a tactical decision to delay the proceeding.<\/p>\n

[25]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Moreover, the courts have recognized that there is a clear policy objective to encourage parties to resolve matters instead of going directly to litigation.\u00a0 Waiting for the appeal to be determined is consistent with that important policy objective.<\/p>\n<\/blockquote>\n

The Divisional Court rejected Western\u2019s argument:<\/p>\n

\n

[50]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0For the reasons set out herein, we find that the motion judge was correct to hold that the triggering event for the commencement of the two-year limitation period was the date upon which it would be legally appropriate to commence legal proceedings to seek payment of long-term disability benefits that the insurer refused to pay.<\/p>\n

[51]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0We further find that the motion judge made no palpable and overriding error in dismissing the motion for summary judgment on the basis that Western had not established that the claim was statute-barred.\u00a0 We come to this conclusion for the following reasons:<\/p>\n

(i)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0<\/i>Right of Appeal<\/u><\/i><\/p>\n

[52]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Before March 7, 2013, Ms.\u00a0Penttila<\/span>\u00a0was advised that as of March 7, her benefits would no longer be paid by the insurer but that, \u201cyou may appeal this claim decision by sending your written request for review to our office within 60 days from the date of this letter.\u201d<\/p>\n

[53]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0On April 8, 2013, Ms.\u00a0Penttila<\/span>\u00a0advised that, \u201cI wish to appeal this claim.\u201d<\/p>\n

[54]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0On November 13, 2013, Western wrote her to advise that: \u201c[u]pon receipt of all the above requested information, we will complete our review of your appeal and advise you of the decision.\u201d<\/p>\n

[55]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Ms.\u00a0Penttila<\/span>\u00a0thereby accepted a clear offer to allow her to appeal the denial of her claim for benefits.\u00a0 A process was established, and her appeal was determined by the insurer.\u00a0 She was advised by letter dated October 21, 2014, of the decision that her appeal had been rejected.\u00a0 (Ms.\u00a0Penttila<\/span>\u00a0says she did not receive written confirmation until June 15, 2015.)<\/p>\n

[56]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The right to appeal was not simply part of an insurer\u2019s general obligation to accept any material; it was a specific and agreed right of appeal, a clear articulation of the process to be followed, and a specific decision in respect of the appeal.<\/p>\n

[57]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0A reasonable person in Ms.\u00a0Penttila<\/span>\u2019s position would have pursued her right of appeal.\u00a0 Until that process ran its course, it would be premature to commence legal proceedings against the insurer.<\/p>\n

(ii)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0<\/i>No Need to Review the Tone and Tenor of Discussions<\/u><\/i><\/p>\n

[58]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The court was not required to assess the \u201ctone and tenor\u201d of communications between the parties as there was a clear beginning and end to the process.\u00a0 Western told Ms.\u00a0Penttila<\/span>\u00a0that she had a right to appeal and that a decision would be rendered, and it was.<\/p>\n

(iii)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0<\/i>No Litigation Counsel Engaged<\/u><\/i><\/p>\n

[59]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Ms.\u00a0Penttila<\/span>\u00a0did not retain counsel while the appeal was ongoing. This fact does not \u201c[belie] any suggestion of a lack of awareness of the appropriateness of commencing a lawsuit at that point in time\u201d:\u00a0Pepper<\/i><\/span>, at para.\u00a01<\/a>.<\/p>\n

[60]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The words \u201cin offering to review additional evidence we are not waiving our right to rely on any statutory or policy provisions including any time limitations\u201d, in this factual context, were not sufficiently clear to demonstrate to Ms.\u00a0Penttila<\/span>\u00a0that the insurer intended to rely on the fact that the limitation period was running before the appeal had been decided.<\/p>\n

(iv)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0<\/i>Ms.\u00a0<\/u><\/i>Penttila<\/u><\/i><\/span>\u2019s Evidence as to Her Belief<\/u><\/i><\/p>\n

[61]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0On the contrary, Ms.\u00a0Penttila<\/span>\u2019s uncontradicted sworn evidence was that she at all times believed that, from the time the initial benefits were denied (in the letter dated February 19, 2013), to the time she received the final decision on appeal, Western was considering her appeal.<\/p>\n

[62]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0This belief is supported by the fact that, on November 13, 2013, Western advised that: \u201c[u]pon receipt of all the above requested information, we will complete our review of your appeal and advise you of the decision.\u201d\u00a0 There was no statement in respect of time limitations.<\/p>\n

[63]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Lastly, unlike\u00a0Nasr<\/i>, Ms.\u00a0Penttila<\/span>\u00a0never conceded that the insurer never told her that it would not be relying on a limitations defence.<\/p>\n

(v)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0<\/i>No Tactical Delay<\/u><\/i><\/p>\n

[64]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Ms.\u00a0Penttila<\/span>\u00a0made good faith efforts to avoid unnecessary litigation believing Western was considering her appeal. There is no suggestion that Ms.\u00a0Penttila<\/span>\u00a0engaged in a tactical delay of the proceeding.<\/p>\n

(vi)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0<\/i>Meets the Policy Objectives<\/u><\/i><\/p>\n

[65]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The motion judge\u2019s decision is consistent with the policy objective of avoiding unnecessary litigation and discouraging parties from rushing to litigation, provided there is no tactical delay.<\/p>\n<\/blockquote>\n

The court also provided a good summary of the principles for assessing the appropriateness of a proceeding against an insurer:<\/p>\n

\n

[35]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0In assessing when it is legally \u201cappropriate\u201d to bring a proceeding within the meaning of\u00a0s. 5(1)<\/a>(a)(iv) of the\u00a0Limitations Act, 2002<\/a><\/i>, the courts have articulated the following guidelines:<\/p>\n

a)\u00a0\u00a0 \u00a0\u00a0\u00a0The determination of whether legal action is \u201clegally appropriate\u201d takes into account what a reasonable person with the abilities and in the circumstances of the plaintiff ought to have known:\u00a0Presidential<\/i>,\u00a0<\/i>at para. 18.<\/p>\n

b)\u00a0\u00a0 \u00a0\u00a0\u00a0Parties should be discouraged from rushing to litigation or arbitration.\u00a0 Rather, they should be encouraged to resolve claims as courts take a dim view of unnecessary litigation:\u00a0Markel Insurance Company of Canada v. ING Insurance Company of Canada<\/i>,\u00a02012 ONCA 218 (CanLII)<\/span><\/a>,\u00a0109 O.R. (3d) 652<\/span>, at para.\u00a034<\/a><\/span>; and\u00a0407 ETR<\/i>, at para. 48.<\/p>\n

c)\u00a0\u00a0 \u00a0\u00a0\u00a0It 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:\u00a0Volochay v. College of Massage Therapists of Ontario<\/em>,\u00a02012 ONCA 541\u00a0(CanLII)<\/span><\/a>,\u00a0111 O.R. (3d) 561<\/span>, at paras.\u00a061-70<\/a><\/span>.<\/p>\n

d)\u00a0\u00a0 \u00a0\u00a0\u00a0However, where the insurer has been clear that it intends to rely on the limitation period, and the claim has \u201cripened\u201d, the court should be wary of getting involved in assessing the \u201ctone and tenor of communications\u201d 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:\u00a0Markel<\/i>,\u00a0<\/i>at para. 34.<\/p>\n

e)\u00a0\u00a0 \u00a0\u00a0\u00a0The courts should also be wary of allowing a party to delay the commencement of proceedings simply for tactical reasons:\u00a0407<\/i>ETR<\/i>, at para. 47; and\u00a0Markel<\/i>, at para. 34.<\/p>\n

f)\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0It is appropriate for the court to consider what was communicated to the insured and whether the claim was clearly and unequivocally denied:\u00a0Kassburg v. Sun Life Assurance Company of Canada<\/i>,\u00a02014 ONCA 922 (CanLII)<\/span><\/a>,\u00a0124 O.R. (3d) 171<\/span>, at para.\u00a042<\/a><\/span>.<\/p>\n

g)\u00a0\u00a0 \u00a0\u00a0\u00a0The courts have specifically recognized two circumstances in which the issue of \u201cappropriate means\u201d may delay the date on which a claim was discovered.<\/p>\n

\u2022\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0First, where the insured relies on the superior knowledge and expertise of the insurer, especially where the insurer made efforts to ameliorate the loss.<\/p>\n

\u2022\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0Second, where other proceedings remain ongoing (such as criminal proceedings or arbitration):\u00a0Presidential<\/i>, at paras. 28-48.<\/p>\n

h)\u00a0\u00a0 \u00a0\u00a0\u00a0Where an insured seeks to preclude an insurer from relying on a limitations defence on the basis of promissory estoppel, the insurer\u2019s conduct must amount to a promise on which the insured acted to its detriment:\u00a0Maracle v. Travellers Indemnity Co. of Canada,\u00a0<\/i>1991 CanLII 58 (SCC)<\/a>,\u00a0[1991] 2 S.C.R. 50<\/span><\/span>; and\u00a0Marchischuk v. Dominion Industrial Supplies Ltd.,\u00a0<\/i>1991 CanLII 59 (SCC)<\/a>,\u00a0[1991] 2 S.C.R. 61<\/span><\/span>.<\/p>\n<\/blockquote>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Divisional Court decision in Western Life Assurance Company v. Penttila demonstrates that if an insurer intends for a denial to commence a limitation period for a coverage proceeding, that denial needs to be as explicit as explicit can be. The insurer, Western, denied its insured Penttila’s claim for LTD benefits in February 2013, and … Continue reading Ontario: An insurer’s denial has to be (really) explicit to trigger discovery<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[85,292,517,291,33,173,193,303,59],"class_list":["post-926","post","type-post","status-publish","format-standard","hentry","category-ontario","tag-appropriateness","tag-benefits-of-denial","tag-coverage","tag-denial-of-benefits","tag-insurance","tag-insurance-esoterica","tag-legal-appropriateness","tag-ontario-divisional-court","tag-summary-judgment"],"_links":{"self":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/926","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=926"}],"version-history":[{"count":3,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/926\/revisions"}],"predecessor-version":[{"id":929,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/926\/revisions\/929"}],"wp:attachment":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=926"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=926"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=926"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}