The appeal of a decision finding that the contractual limitation period in a disability insurance policy was ambiguous and therefore unenforceable was dismissed.
Insurance law – Disability insurance – Group insurance – Interpretation of policy – Long term disability benefits – Limitation of actions – Running of limitation period – Discoverability – Contra proferentum rule
Kassburg v. Sun Life Assurance Co. of Canada,  O.J. No. 6222, December 29, 2014, Ontario Court of Appeal, D. Watt, K.M. van Rensburg and G.I. Pardu JJ.A.
The respondent was insured under a disability policy issued by the appellant insurer. The respondent made a claim for long-term disability benefits in 2008. Various correspondence took place between the respondent and the insurer respecting the sufficiency of medical records. Eventually, the respondent’s final and third internal appeal was denied by the insurer. The respondent started an action claiming entitlement to disability benefits in February 2012. The appellant insurer brought a motion for summary judgment, asserting that the action was out of time, as both of the potentially applicable limitation periods, either under the insurance contract or the Limitations Act, 2002 S.O. 2002, c. 23, Sched. B, [Limitation Act] had expired. That motion was dismissed and summary judgment was granted in favour of the respondent. The insurer appealed the decision.
The Ontario Court of Appeal held that, first, the trial judge had not committed legal error in deciding that the contractual limitation period was ambiguous and therefore unenforceable. The contract document and the booklet formed the entirety of the policy. The ambiguity resulted from each document expressing the limitation period differently.
Second, the lower court’s decision that the statutory limitation period began to run only after the respondent had exhausted the insurer’s internal appeal process was also upheld. The question of when the insured “discovered” her claim for the purpose of s. 5 of the Limitations Act was a question of fact for the trial judge to make.
Third, the appellate court further upheld the lower court’s decision in granting judgment in favour of the respondent on the limitations questions, finding that it was open for the motion judge to determine the issue of the limitation defence on a final basis on the record before him.
The Court of Appeal also found that the insurance policy at issue is a “business agreement” for the purpose of ss. 22(5) and (6) of the Limitations Act.
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