The Alberta Court of Appeal has maintained a cautious and sensible approach to the interpretation of the "discoverability" limitation in paragraph 6(c) of Family Protection Endorsement SEF No. 44. In Shaver v. The Co-operators,1 Justice Cote opined in obiter that discoverability may occur when the injured plaintiff or her lawyer make a decision about the worth of the claims of the plaintiff, and, if applicable, of those of other persons injured in the accident, or that discoverability may occur later, once a judgment or binding settlement legally fixes the amounts of the claims.2 Under SEF No. 44, the 12-month limitation begins to run from the date in which:
the eligible claimant or his legal representatives knew or ought to have known that the quantum of the claims with respect to an insured person exceeded the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred.3
For reasons identified in the decision, and briefly commented on below, it is clear that discoverability will occur most frequently once a judgment or a binding settlement legally fixes the amount of the claims.
The Court of Appeal also pronounced that paragraph 6(c) of the endorsement will "quite often" let an injured plaintiff sue later than the ultimate 10-year deadline under s. 3(1)(b) of the Limitations Act.
II. SEF No. 44 Endorsement
Under SEF No. 44, a plaintiff can sue her own insurer in respect of an "inadequately insured motorist". The amount payable under the endorsement is excess to amounts a claimant would be entitled to recover from certain other sources, including an unsatisfied judgment fund. Pursuant to the Motor Vehicle Accident Claims Regulation, the Motor Vehicle Accident Claims Fund (the claims fund) can pay up to a maximum of $200,000, excluding costs, regarding all claims arising out of a single motor vehicle accident.
III. Action History
In Shaver, the plaintiff Lloyd Shaver was injured on July 14, 2000 in a three-car collision with one other identified driver, Alison Jevne. Jevne and Shaver commenced separate personal injury actions, including against the claims fund. In August 2008 – prior to Shaver's trial on damages – Jevne advised that the claims fund had settled her claim for $100,000, leaving only $100,000 available for Shaver under the prescribed $200,000 limit. In January 2010, the fund advised it was prepared to enter into a partial judgment in favour of Shaver, in the amount of $100,000, plus costs and disbursements. The partial judgment was taken out on January 19, 2010.
Shaver's injury was a broken foot which evolved into a pain syndrome in the foot, making it difficult for him to walk. His principal claim was loss of income available from an oilfield occupation he was no longer performing. Given his advancing injuries, Shaver commenced action against his insurer on July 29, 2010, claiming coverage under SEF No. 44. The insurer applied for summary judgment on the basis that the action was commenced beyond the 10-year "ultimate" limitation under section 3(1)(b) of the Limitations Act.
At trial, the parties agreed that discovery occurred well over nine years after the accident, when the partial judgment in favour of Shaver was consented to by the Motor Vehicle Accident Claims Fund and taken out. Shaver's subsequent action against the insurer was not commenced until over ten years after the accident.
The insurer's summary judgment application was unsuccessful at both levels of court. At the Court of Appeal level, Justice Cote underscored the challenges incumbent in discoverability under the endorsement. The inquiry may be factually-intensive, contingent upon many factors, including medical conditions, which may evolve and progress over time. Discovery may require information, including about other parties, that the other parties may not be obligated to disclose. On these issues, the Court of Appeal opined as follows:
[para. 12] ...[discoverability in this case] involves actions by and information from other entities, and indeed from other injured people...
[para. 14] If a plaintiff's own injuries are more than slight, it may take many months until his or her medical advisers can even tentatively assess the future, and before his or her counsel can suggest what those injury claims are worth. It is very common that the treating physician or surgeon initially hopes for a more or less full recovery; only the elapse of significant time shows that that is too optimistic in the case at hand...
[para. 15] After seeking that clarity for one victim's injury claim, the same process must be followed with respect to all other claimants injured in the same accident. That may not be easy or quick. An injured person (or his or her solicitor) can ask his or her own medical advisers for such information. But he or she has no right to demand such information from other persons injured in the accident; and statutory or other confidentiality obligations may well prevent their advisers or agents from revealing that. If the two injured people owed each other no duty of care, or the other victim was plainly not negligent, or plainly did not cause injuries, that other victim cannot be sued. So no discovery is available to compel such information.
[para. 16] Therefore it may well take a long time until one injured person can find whether the total claims from the accident exceed the compulsory minimum limits (or exceed any other relevant ceiling or sum). If a number of vehicles and passengers are involved, it could be a long time indeed...
[para. 43] It may well take over nine years to learn of inadequate insurance, or of the total claims exceeding minimum insurance limits, or both. It took that long here.4
V. Discoverability under SEF No. 44
The reasoning employed in the decision was consistent with prior Alberta Court of Appeal decisions in Birtles v. Dominion of Canada General Insurance Co.5 and Shoemaker v. Wawanesa Mutual Insurance Co.6 The prior decisions stand for the proposition that the limitation under SEF No. 44 will run from final judgment or settlement or "or some other final determination".
The Court of Appeal recognized the difficulties that could be encountered in reaching an opinion about the "quantum of the claims" in the absence of a settlement or a final judgment. This approach is cautious and sensible, while still preserving the potential that a court could find for an earlier start date in the appropriate factual setting.7 Such cases will likely be relatively sparse. It is one thing for a limitation to require knowledge of an injury attributable to a defendant which warrants bringing a proceeding. It is quite another to require accurate calculation above the minimum limits without the benefit of a settlement or a final judgment.
From an insurer's perspective, the consistent approach of the Alberta courts to discoverability under the endorsement has a further advantage: it reduces the possibility of a flood of SEF No. 44 claims, filed out of caution given the uncertainty over the start of the limitation period.
VI. The Application of the Limitations Act
The application of the Limitations Act8 in respect of SEF No. 44 remains uncertain. At the Queen's Bench level, Justice Veit held that the 10-year limitation did not commence at the time of the accident, but rather, when the insured knew, or ought to have known, that the tortfeasor's coverage would be inadequate to cover the insured's damages.9 At the Court of Appeal, Justice Cote expressly declined to make the same finding. Rather, he held that:
...the endorsement quite often will purport to let the injured person sue later than the ultimate "ten-year" statutory s. 3(1)(b) of the Limitations Act will. Therefore s. 7(1) of the Limitations Act expressly allows that.10 And its s. 7(2) does not forbid it. Or its s. 7(2) does not forbid it in these circumstances...
All that renders academic whether the ultimate 10-year back-up section can be said to start later than is commonly supposed.11
At trial, the insurer had argued that the 10-year limitation under s. 3(1)(b) of the Limitations Act had commenced at the time of the accident, and further, that discoverability was not part of the 10-year limitation under the Act. That argument may have missed the point. The drafting of the endorsement imports discoverability into the insurance contract, such that the limitation only begins to run once there is discovery that the minimum limits have been exceeded. Indeed, the Court of Appeal seems to have acknowledged this briefly in Shaver: "Maybe ordinary limitation periods do not require evaluating the claim; but this one expressly does."12
The Court of Appeal's pronouncement that the endorsement will "quite often" extend the 10-year statutory limitation may have to be revisited in a case where the 12-month endorsement limitation is found to have expired over ten years after the accident date. In such a case, the insured will point to the two-year limitation under s. 3(1)(a) of the Limitation Act in order to preserve his claim. The insurer will counter that, despite the Court of Appeal's closing comments in Shaver, the decision was based on a determination that discoverability under the endorsement occurred within less than 12 months before the commencement of the claim. In a case where the 12-month endorsement limitation has expired, the insurer will argue that the statutory 10-year limitation applies as the period which "expires first" under the Act, since discoverability is not part of 10-year rule. The issue will no longer be academic at that point.
For a more comprehensive analysis of
Shaver and other Alberta Court of
Appeal decisions on the SEF No. 44 limitation, and an opinion on
the potential impact of the new Insurance
Act, please see my upcoming article in the
spring 2013 special insurance edition of the
Limitations Act, R.S.A. 2000, c. L-12 (current)
3(1) Subject to section 11, if a claimant does not seek a remedial order within
(a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known,
(i) that the injury for which the claimant seeks a remedial order had occurred,
(ii) that the injury was attributable to conduct of the defendant, and
(iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding,
(b) 10 years after the claim arose,
whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim.
R.S.A. 2000 c. L-12 s. 3;2007 c. 22 s. 1
7(1) Subject to section 9, if an agreement expressly provides for the extension of a limitation period provided by this Act, the limitation period is altered in accordance with the agreement.
(2) An agreement that purports to provide for the reduction of a limitation period provided by this Act is not valid.
R.S.A. 2000 c. L-12 s. 7; 2002 c. 17 s. 4
1 2011 ABCA 367 [Shaver].
2 Ibid. at para. 18.
3 Family Protection Endorsement SEF No. 44, paragraph 6(c). The full paragraph reads: "Every action or proceeding against the Insurer for recovery under this endorsement shall be commenced within 12 months from the date upon which the eligible claimant or his legal representatives knew or ought to have known that the quantum of the claims with respect to an insured person exceeded the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred. No action which is commenced within 2 years of the date of the accident shall be barred by this provision."
4 Shaver, supra note 1 at paras. 12, 14-16 and 43.
5 1986 CarswellAlta 153 (C.A.) [Birtles].
6 1993 CanLII 7048 (Alta. Q.B.); upheld in 1994 CarswellAlta 19 (C.A.) [Shoemaker].
7 This cautious approach appears consistent with the Ontario Court of Appeal's past approach in respect of a substantively identical endorsement limitation. In Caruso v. Guarantee Co. of North America, 1996 CarswellOnt 4384 (C.A.), Justice Finlayson opined at paragraph 24: "I have some difficulty in understanding the significance of the alternate limitation periods in s. 17 of the O.E.F. 44. Like the courts in [omitted], I find the language ambiguous. In these circumstances, I think it ill advised to embark upon an analysis of whether the significant event is the [solicitor's] determination of the quantum of damages. I will content myself with accepting the finding of the motions judge that it is difficult to conclude in this case that the appellant's solicitor knew that her injuries would exceed the minimum limit more than twelve months before the action against the respondent was commenced."
8 Please refer to the attached Appendix to refer to sections 3 and 7 of the Limitation Act. Section 3 sets out the two and ten-year limitation periods; section 7 deals with extensions and the prohibition on reductions of limitation periods.
9 Shaver v. Co-operators General Insurance Company, 2011 CarswellAlta 478 (Q.B.) [Shaver Q.B.].
10 Section 7(1) of the Act expressly allows for limitations under the Act to be extended by agreement.
11 Shaver, supra note 1 at paras. 43-44.
12 Ibid. at para. 10.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.