Insurer not out of time to third party broker following 2013 life insurance denial

Insurance law – Life insurance – Misrepresentation in obtaining insurance – Third parties – Limitation of actions – Duties and liabilities of insurer – Agents and brokers – Negligent misrepresentation

Verrier Estate v. Manufacturers Life Insurance Co., [2022] B.C.J. No. 378, 2022 BCSC 348, British Columbia Supreme Court, March 4, 2022, Master J.W. Bilawich.

The insurer brought an application for leave to file a third party notice against the broker in an action commenced by the insured’s estate following a life insurance denial. Material misrepresentation was one of the bases for the denial. The limitation period was the primary issue on the application.

The insured died in August 2013. The notice of civil claim was filed in 2014 but the estate did not pursue the action until 2016. The insurer filed its response to civil claim in March 2016. In August 2017, the estate filed an application to add the broker as a defendant. In April 2018, the broker was added as a defendant by consent and the estate filed an amended notice of civil claim. In December 2019, the estate conducted an examination for discovery of the broker. In September 2020, the insurer filed the notice of application against the broker. It was adjourned generally by the court with the stipulation that no party could rely on the delay from September 2020 until the application was eventually heard. The application was heard in February 2022.

On the application, the insurer argued that it discovered the claim against the broker at the December 2019 examination for discovery because prior to that, all documentation concerning the application for insurance appeared in good order. Alternatively, the insurer said it did not discover the potential claim until the amended notice of civil claim was filed in April 2018 which named the broker as a defendant and was therefore still in time with the pandemic-related limitation suspension. The broker opposed the application and argued that the insurer was out of time since it ought to have been aware of a potential claim since 2014.

Although the court agreed that the allegations against the broker materially changed with the amended notice of civil claim, the court was not satisfied there was sufficient evidence before it to determine whether the limitation period had expired. On this basis, the court determined it was appropriate to follow the third option identified in Sohal v. Lezama, 2019 BCSC 1709, aff’d 2021 BCCA 40, and consider the remaining factors on the leave application. On consideration of those factors, the court was satisfied that the insurer should be granted leave subject to a reservation of the broker’s right to raise a limitation defence at trial.

This case was digested by Michael J. Robinson, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Michael J. Robinson at [email protected].

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