Canada: Insurers Continue Success With Limitation Period Defences

Last Updated: November 24 2015
Article by Ashleigh T. Leon

Following the Court of Appeal's decisions in Sietzema v. Economical Insurance, 2014 ONCA 111 (CanLII), 118 O.R. (3d) 713 and Sagan v. Dominion of Canada General Insurance Company, 2014 ONCA 720 (CanLII), insurers have continued to see success with the use of limitation period defences on summary judgement motions throughout 2015.

In a superior court decision involving six plaintiff all of whom brought individual actions against Aviva for accidents benefits arising out of motor vehicle accidents that occurred in 2004 and 2005 were all dismissed by way of summary judgement motion by Baird J. in Straus v. Aviva, 2015 ONSC 4589. The plaintiff's argued that Aviva had failed to comply with the informational requirements pursuant to section 32(2) of the SABS by failing to provide a written description of benefits and should not be entitled to rely on the limitation period in the circumstances. Each claim can be briefly summarized as follows:


  • Accident occurred in 2004
  • Initial Disability Certificate indicated Straus did not meet criteria for NEB
  • Explanation of Benefits sent by Aviva on December 9, 2004 indicated claimant was entitled to IRB and denied NEBs because claimant was employed at the time of the accident
  • On February 21, 2005 Aviva sent an Explanation of Benefits denying further entitlement to IRBs
  • Statement of Claim issued on November 1, 2011


  • Accident occurred in 2004
  • OCF-1 indicated claimant was employed and working
  • Disability Certificate concluded claimant was not substantially disabled from employment and NEB was not applicable
  • On August 26, 2005 an Explanation of Benefits was sent indicating claimant not entitled to IRB based on the Disability Certificate and not eligible for NEBs because claimant was employed at the time of the accident
  • Statement of Claim issued on August 12, 2012


  • Accident occurred in 2004
  • Disability Certificate of January 2005 indicated claimant not substantially disabled from working but that claimant suffered a complete inability to carry on a normal life
  • Explanation of Benefits of February 8, 2005 indicated claimant not eligible for IRBs based on Disability Certificate and also indicated that she was not eligible for NEBs because "you must suffer a complete inability to carry on a normal life as a result of and within 104 weeks of the accident. There is a 26 week waiting period for this benefit"
  • Statement of Claim issued on August 2, 2012


  • Accident occurred in 2005
  • Disability Certificate indicated claimant not entitled to NEB
  • On October 31, 2005 an Explanation of Benefits was sent indicating claimant not eligible for NEBs because claimant was working at the time of the accident
  • On November 9, 2005 another Explanation of Benefits was sent this time stating not eligible for NEB because you must suffer a complete inability to carry on a normal life as a result of and within 104 weeks of the accident
  • Statement of Claim issued April 9, 2013


  • Accident occurred in 2004
  • OCF-1 indicated claimant employed at time of accident
  • Explanation of Benefits sent October 12, 2004 indicating not eligible for NEBs because claimant was employed at the time of the accident
  • Statement of Claim issued April 12, 2013


  • Accident occurred in 2004
  • Explanation of Benefits sent on October 12, 2004 indicating claimant eligible for NEB or CG benefits and requested an election of benefits
  • Claimant elected CG benefits which were terminated by Aviva following receipt of an In Home insurer examination. The denial was never disputed
  • On February 28, 2012 claimant's counsel write to Aviva stating the letter should be considered an "application for NEB"
  • Statement of Claim was issued on March 21, 2013

Justice Baird held that the Court of Appeal has repeatedly said that so long as the insurer provides a valid refusal, the limitation period should be strictly applied. It does not matter if the reason provided for the refusal of a benefit is incorrect or inaccurate at law. During the summary judgement motion, none of the plaintiffs provided any reason for why NEBs were not disputed during the two year limitation period.

The Explanation of Benefits provided to each of the plaintiffs were found to be "clear denials" of the benefit by stating that the insureds were not entitled to the benefit, a reason was provided for the lack of eligibility and a description of the dispute resolution process and a warning of the two year limitation period were also given. Justice Braid relied upon the reasoning in Smith v. Co-operators to find that the limitation period began to run at the time of the denial of the benefit and all six actions were brought outside of the limitation period.

The plaintiffs argued that they had not been provided with a description of the NEB and therefore the denial was invalid. Braid J. found that although Aviva did not provide a separate informational document during the initial application process with respect to NEBs the failure to do so did not prevent a timely and fulsome application for benefits. Aviva had provided descriptive information regarding NEBs in the various forms provided to each of the plaintiffs.

Braid J. also dismissed the plaintiffs' claims for relief from forfeiture and mental distress and bad faith.

The Court of Appeal granted another summary judgment motion and the claim was dismissed in the case Bustamante v. Guarantee Co. of North America, 2015 ONCA 530.

In this case, the plaintiff was injured in an accident on June 3, 2004 and elected to received IRB. The plaintiff was advised that she did not qualify for NEB on September 1, 2004 and Guarantee began paying IRB, only terminating entitlement following post 104 assessments. On September 25, 2009 plaintiff's counsel notified Guarantee that she intended to pursue a claim for NEB as there had been no denial. On June 17, 2010 Guarantee again notified the plaintiff that she was not entitled to NEB.

When litigation pursued, Guarantee moved for summary judgement which was granted by Ramsay J. based on the passage of the limitation period. On appeal, the Court of Appeal held that the OCF-9 form provided to the plaintiff back in 2004 gave clear notice of her rights of dispute as well as a warning of the two year limitation period. As such the limitation period was triggered and the claim was out of time.

Finally, in the case Machaj v. RBC General Insurance Company, 2015 ONSC 4310, summary judgement was brought by RBC on the basis that the plaintiff's claim was statute barred because mediation was not commenced within two years of the denial of the benefit claimed.

The plaintiff applied for Determiantion of Catastrophic Impairment on January 6, 2009. RBC conducted insurer examinations and responded on May 25, 2009 with an Explanation of Benefits stating "the assessors have formed the consensus opinion that you have not sustained a catastrophic impairment and therefore you do not qualify for the increased benefits".

Mediation was applied for on July 18, 2011. During the summary judgment motion, the case of Do v. Guarantee Insurance Company, 2015 ONSC 1891, was contended (recall this case held that the limitation period does not begin to run based on a finding that an insured is not catastrophically impaired because this is not a denial of a benefit). Whitten J. found that this case was distinct from Do, supra, as RBC stated in its OCF-9 that the claimant did not qualify for the increased benefits thus flushing out the consequences of the denial of the status of catastrophic impairment; namely that enhanced benefits were not available. The action was dismissed on the basis that there was no genuine issue for trial.

The courts have consistently applied the limitation period in a strict manner with respect to accident benefits claims. As long as insurers are diligent in their denials by including a reason for the denial (which does not have to be correct at law) as well as information about the dispute resolution process and a warning of the limitation period, the two year limit for disputing the benefit will be upheld. In cases of catastrophic impairment, following the Machaj decision, the limitation period will begin to run as long as the insured is informed of the consequences of the denial of catastrophic impairment which include no access to increased benefits.

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.

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Ashleigh T. Leon
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