Notice that a claim has been denied does not have to be accompanied by a layman’s explanation of the legal ramifications of the denial

The Plaintiff, Golic, was injured in an motor vehicle accident in 1995.  He received benefits for a period of time, and in 2000, ING Insurance, on behalf of its predecessor company, Guardian Insurance Company of Canada, sent Golic a detailed letter denying further benefits.  In 2008, Golic applied to the Superior Court of Justice for an Order permitting him to amend his Statement of Claim, arguing the running of the limitation period does not apply in his case because the Insurer failed to provide a layman’s explanation of its denial of benefits.  The Motion was dismissed.

Golic v. ING Insurance Co. of Canada, [2008] O.J. No. 5408 Ontario Superior Court of Justice, M.G.J. Quigley, J. December 29, 2008

Golic was involved in a motor vehicle accident in 1995.  Guardian Insurance paid disability benefits until January 1997.  Golic was represented by as many as five different lawyers between 1995 and 2006, and had participated in three separate mediations, all of which failed to reach an agreement.

In January 2000, Guardian Insurance provided Golic with a detailed letter denying him further benefits.  In the four-page letter, the insurance company’s position was that Golic was not eligible to receive an income replacement benefit and that it was not obliged to provide Golic with any further weekly benefit payments.  The letter concluded by advising Golic that he was entitled to dispute any decision, according to the procedures set out in Sections 279 to 283 of the Insurance Act.  The insurance company included copies of the subsections, rather than offering a complete explanation of the procedures.

In 2008, Golic, represented by a new counsel, participated in a fourth mediation through the Financial Services Commission of Ontario, regarding Income Replacement Benefits, Benefits, Care Giver Benefits and Other Disability Benefits.  The issues were not resolved, and Golic asserts that because of the mediation process, the limitation period in respect of the benefits had not yet begun to run.

ING’s position is that Golic is time barred.

Rule 26.01 of the Rules of Civil Procedures, permits a Court to grant leave to amend a pleading at any stage of action on such terms as are just.  The burden lies on the moving party to show the absence of prejudice or that costs or an adjournment will adequately compensate the responding party.  If the moving party meets the threshold, amendment is mandatory.  There is an exception to the Rule, in that a pleading should not be amended where the Defendant would be caused prejudice that cannot be compensated for in costs.  Also, amendments to pleadings which have the effect of relieving against the operation of a limitation period are not allowed, although the Courts do have discretion to permit amendments in certain circumstances.  The Plaintiff bears the onus in establishing that amending a pleading to add to a claim outside of an applicable limitation period will not result in irreparable prejudice to the Defendant.  The Plaintiff must address both prejudice and special circumstances in order to obtain the relief.

Both an application for mediation and Court proceedings must be commenced within two years of the insurer’s refusal to pay benefits.  The limitation period begins to run once the Insurer has complied with the requirement to provide clear and unequivocal notice to the Plaintiff.

Golic’s position is that the limitation period is inapplicable because of the failure to provide a layman’s explanation of the procedures for mediation and a making of claims required by the Insurance Act and schedules to the Act.  ING’s position is that it provided Golic with clear and unequivocal notice as of January 2000 at the latest.

ING would certainly suffer prejudice in trying to gather evidence in respect of such a stale claim.  While the Supreme Court in Smith v. Co-operators General Insurance Co., [2002] S.C.R. 129, reflects a need as a public policy objective to ensure as a matter of consumer protection that a claimant whose insurance benefits have terminated would be fully informed and have a clear layman’s understanding of exactly what his or her procedural options were.  It should not apply to a Plaintiff who feigns ignorance to mask the obvious knowledge he would have acquired through the course of three or four mediations of essentially the same claim.  The Court dismissed Golic’s application, finding that Golic failed to satisfy the onus that the amendment would not cause prejudice to ING that could not be compensated for in costs, and that the existence of special circumstances and the onus of establishing that, amending his pleadings to add this claim outside of the limitation period would not result in irreparable prejudice to the Defendant.

This case was originally summarized by Neil J. MacDonald and originally edited by David W. Pilley.

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