BC Court of Appeal held that insurer’s settlement demands letter didn’t constitute confirmation of a cause of action
A “without prejudice” letter from an adjuster that invited the insured, who had been injured in a slip and fall, to forward their settlement demands did not constitute confirmation of a cause of action and therefore did not toll the limitation period. A summary trial decision dismissing the action as statute barred was upheld on appeal.
Insurance law – Limitation of actions – Extension of time – Confirmation of cause of action
Trombley v. Pannu, 2016] B.C.J. No. 1542, 2016 BCCA 324, July 21, 2016, D.M. Smith, D.C. Harris and R. Goepel JJ.A.
The insured was injured in a slip and fall accident on premises he and his mother rented from the respondent landlords. Approximately three months before the expiry of the limitation period, the insurer’s adjuster for the landlords wrote a “without prejudice” letter to the insured, asking for his “settlement demands”. The insured filed a notice of civil claim three weeks after the limitation period had expired. The action proceeded by summary trial where the judge dismissed the action as statute barred, finding that the letter did not acknowledge liability and toll the limitation period because (1) it was marked “without prejudice”, and (2) the purpose of the letter was to simply move the claim forward in view of the approaching limitation period.
On appeal, the insured relied on Podovinikoff v. Montgomery (1984), 58 B.C.L.R. 204 (C.A.) for the proposition that it is reasonable for a party to believe that an invitation to engage in settlement discussions constituted an acknowledgment of some liability absent an express reservation or disclaimer. Thus, using the test from Ryan v. Moore, 2005 SCC 38, the insured submitted that, objectively construed, a reasonable person reading the letter would interpret it as an acknowledgment of some liability.
The court dismissed the appeal, holding that the summary trial judge did not commit a palpable and overriding error when he found that, objectively construed, the letter did not demonstrate an intention to admit some liability. The court noted such requests were frequently made in these types of cases without an intention to admit liability. Rather, their purpose is typically to find out the other party’s position in order to (1) avoid the cost of litigation, (2) reduce potential future risk, and (3) determine if a claim is worth settling on a nuisance basis, without admitting liability. The context in which the request was made added support to the summary trial judge’s conclusion. Finally, the court did not agree that Podovinikoff could be relied on for the general proposition advanced by the appellants and distinguished it from the facts of this case.
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