The Supreme Court of Canada has dismissed the plaintiff's
appeal in Boyce v the Co-Operators General Insurance Company on the
question of whether the contractual limitation period in a
commercial insurance policy can override a statutory limitation
The plaintiff owned a clothing boutique, which was closed down
for a period of time in order to address a foul odour emanating
from the store. The closure resulted in clean-up costs and a
loss of inventory. The plaintiff believed the store had been
vandalized and filed a proof of loss within two months of the
closure. The insurer took the position that the odour was
caused by a skunk and denied the claim. The plaintiff
commenced an action challenging the denial just over one year after
The insurer moved for summary judgment on the basis that the
action was statute-barred by operation of the one-year limitation
period in Section 148 of the Ontario Insurance Act2,
which had been incorporated by reference into the terms of the
policy. The insurer relied on section 22(b) of the
Limitations Act, which allows parties to a "business
agreement" to vary the applicable statutory limitation
period. A "business agreement" is understood to be
an agreement made by parties "none of whom is a consumer as
defined in the Consumer Protection Act, 2002"3.
Under the heading "statutory conditions" the policy
read (as many policies do):
Every action or proceeding against the insurer for recovery of
any claim under or by virtue of this contract is absolutely barred
unless commenced within one year next after the loss or damage
What the plaintiff did not argue – and what may have saved
them on appeal – was that an insurer who denies coverage has
repudiated the policy and can no longer rely upon its technical
The motion judge dismissed the insurer's motion reasoning
that the policy lacked the specific language necessary to override
the applicable statutory limitation period of two years and that,
in any event, the policy was not a "business
agreement". The insurer appealed.
On appeal, the Court considered the foundational question of
whether the policy did in fact provide for a one-year limitation
period and, if it did, whether it was capable of overriding the
otherwise applicable two year limitation period.
The Court of Appeal answered all question in the
affirmative and found in favour of the insurer.
The Court held that the one-year limitation in the policy was
written in clear and unambiguous language and that the policy
qualified as a "business agreement" as neither party was
a consumer acting for personal, family or household purposes
– the policy was capable of overriding the Limitations
The Court of Appeal's decision is significant for any
commercial insured but – in our view –should also be
top of mind for those in the brokerage and legal community who can
expect to be held to account by insured's who are not made
aware of a one-year limitation period in their policy.
1 Limitations Act, 2002, S.O. 2002, C.24.
2 R.S.O. 1990, c. I-8.
3 "consumer" means an individual acting for
personal, family or household purposes and does not include a
person who is acting for business purposes.
4 See for example, York Region Condominium Corporation
No. 772 v. Lombard Canada Ltd., 2007 CanLII 3885 (ON SC), aff'd
2008 ONCA 272 (CanLII).
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