A two year limitation period contained in a disability policy can be extended pursuant to the discoverability rule

Gray v. Canada Life Assurance Co., [2003] M.J. No. 412, Manitoba Court of Queen’s Bench

Gray sued The Canada Life Assurance Company (“Canada Life”) for payment of a one time benefit under a group disability policy. The policy provided for a one time payment to an insured if the insured became “totally and permanently disabled”. Gray suffered a back injury while working in March of 1997. He was performing light duty work until August of 1997, when he underwent surgery to alleviate his back condition. He improved somewhat, but was unable to return to work. After suffering the injury, Gray applied for and received benefits from the Workers’ Compensation Board (“WCB”), and remained in the work force of Manitoba Hydro until May of 2001 while the WCB attempted to render him fit to return to work. In May of 2001, three physicians wrote reports indicating that Gray was permanently disabled from work and his employment was terminated. Gray commenced an application against Canada Life for payment of his disability benefits in May of 2001. Both Gray and Canada Life brought a summary application to have the court rule on whether his claim was barred pursuant to the two year limitation period contained in the insurance policy. Canada Life took the position that Gray should have commenced his claim within two years of when he initially injured his back in March of 1997. Gray argued that he did not discover that his injury fell within the definition of a total permanent disability until January of 2000, and that his claim was therefore started within the two year limitation period. Schulman J. relied upon Haberman v. Peixeiro (1997), 151 D.L.R. (4th) 429 and determined that the limitation period did not commence until Gray discovered that he was totally and permanently disabled, which did not occur until January 2000. Canada Life’s application was dismissed, and Gray’s application to have a declaration that the action had been commenced within the limitation period was granted.

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