Under B.C.'s former and current Limitation Act, the limitation period for a Plaintiff's claim can be extended on the basis of a Defendant having acknowledged in writing some liability for the cause of action.
In the insurance industry, a good understanding of these provisions is particularly important given the amount of time spent by adjusters seeking to investigate and/or settle a Plaintiff's claim prior to an action being filed.
In the recent decision of Trombley v. Pannu, 2016 BCCA 324, the British Columbia Court of Appeal held that an insurance adjuster had not admitted liability such that a Plaintiff's limitation period for a claim was extended when she invited Plaintiff's Counsel to engage in settlement discussions. The Plaintiff's failure to file his Notice of Civil Claim within the two year time period to do so, therefore resulted in his claim being dismissed.
The decision concerned section 5(2)(a)(i) of B.C.'s former Limitation Act, R.S.B.C. 1996 c. 266 (the "Former Limitation Act"), however, section 24 of B.C.'s current Limitation Act, S. B.C. 2012, c. 13 (the "Current Limitation Act") contains a similar provision.
While sections 5 and 24 differ in their wording, they both in effect provide that a Plaintiff's limitation period can be extended if an acknowledgment of liability is made in writing, and is signed by hand or electronic signature by the person making the acknowledgment to the person making the claim (or their respective agents).
While the Trombley decision does not result in a change in the law, it serves as a useful reminder as to how communications between Adjusters and Claimants (or their Counsel) should be written in order to avoid the unintended result of extending the limitation period for a Plaintiff's claim. It is also important given the number of times that settlement requests are made even when liability remains unclear, simply because the economics of the situation are such that a nuisance settlement early on is more economical than the costs of potential litigation.
The Trombley Decision
In Trombley, the Plaintiff alleged that he slipped and fell on the Defendant's premises in July 2012. In April 2013, Plaintiff's Counsel advised the Defendants that he would be pursuing a claim on behalf of the Plaintiff. Shortly afterwards, an insurance adjuster became involved in actively trying to investigate the Plaintiff's claim and make inquiries regarding settlement. Ultimately a settlement was not reached and the Plaintiff filed his claim three weeks after the limitation period expired.
The context of the communications between the parties prior to the expiration of the limitation period is important in understanding the Court's decision in finding that no admission of liability had been made.
In September 2013, the Adjuster sent a letter to Plaintiff's Counsel in which she noted that an investigation was underway and that "we are unable to comment on liability". She also requested that Plaintiff's Counsel provide an account of the incident and medical records, which were subsequently provided.
In December 2013, the Adjuster requested a meeting with the Plaintiff to obtain a statement. As Plaintiff's Counsel was only agreeable with written questions being posed, forty questions were subsequently sent, more than half of which pertained to issues of liability. When the answers were later provided, Plaintiff's Counsel commented that they were being provided in order to assist the Adjuster with her investigation into her client's claim.
In April 2014, the Adjuster wrote a letter to Plaintiff's Counsel which read in part as follows (the "April Letter"):
"As the matter of investigation and assessment has continued, there has been no indication of what is expected in terms of settlement. As we are nearing the two year mark following the date this incident occurred, in an attempt to keep the matter moving forward, please forward your settlement demands.
...we look forward to further discussions regarding settlement."
The Plaintiff argued that it was this letter that resulted in the limitation period being extended, as it implicitly acknowledged some liability.
In May 2014, the Adjuster left Plaintiff's Counsel a voice mail inquiring of his plans regarding commencing an action or settlement. They spoke the following day and Plaintiff's Counsel advised that he was unable to make a settlement proposal at that time.
Importantly, all of the letters sent by the Adjuster were marked without prejudice.
The Defendant moved to have the Plaintiff's action dismissed by way of a summary trial on the basis that it had been filed three weeks after the limitation period expired.
The Plaintiff relied on section 5(2)(a)(i) of the Former Limitation Act to argue that the claim was not statute barred. This section provides that a limitation period is extended where the cause of action has been confirmed. In dismissing the action, Justice Myers relied on the Supreme Court of Canada decision of Ryan v. Moore, 2005 SCC 38, which concerned the application of a similar provision in Newfoundland's limitation statute.
In Ryan, the Supreme Court of Canada found that in order to establish confirmation, one of two events must have occurred: (1) the Defendant must have acknowledged the cause of action; or (2) there was payment made in respect of the cause of action. The Court further found that an acknowledgment of the cause of action must involve an admission of liability.
Justice Myers also found that in B.C., in determining whether there has been a confirmation of a cause of action, the Courts apply an objective test, namely, how a reasonable person would interpret the words and actions of the parties. Ultimately, he found that there were two things that resulted in no acknowledgment of liability being made.
The first was that the April Letter was written without prejudice.
The second was that the Adjuster indicated that the limitation period for the claim was approaching and she wanted to move the matter forward. This was important because it emphasized that she wanted to canvas settlement in order to avoid an impending legal action. Her subsequent voice mail emphasized that this was the case.
On appeal, the Appellant submitted that Justice Myers erred in failing to properly apply the legal test for confirmation of a cause of action set out in Ryan. He argued that Ryan established that a cause of action was confirmed when there was an admission of some liability, which was evident from the April Letter.
In support of the argument, he relied on the British Columbia Court of Appeal's decision in Podovinikoff v. Montgomery (1984), 58 B.C.L.R. 204 (C.A.) for the principle that it is reasonable for a party to believe that an invitation to engage in settlement discussions constitutes an acknowledgment of some liability, absent an express reservation or disclaimer. The Appellant submitted that Justice Myers erred in his application of the Ryan test, as the plain and ordinary meaning of the words inviting settlement discussions in the April Letter implied an intention to pay something on a claim, and therefore was an acknowledgment of some liability.
The Appellant also argued that Justice Myers erred in giving any weight to the without prejudice marking on the April Letter to determine the issue because all of the written communications between the parties were marked without prejudice, and none contained terms of settlement exchanged during settlement negotiations. Given the marking on all of the letters, the notation was, in effect, meaningless, and, in any event, not material to the issue of whether there was an acknowledgment of some liability, as the conventional use of the phrase was to protect a communication that was subject to settlement privilege. He further argued that the notation did not change the letter's objective meaning that implicitly included an intention to pay something, which therefore constituted an acknowledgment of some liability.
Ultimately, the Court of Appeal found that Justice Myers correctly applied the law in Ryan and that the April Letter did not demonstrate an intention to admit some liability. In reaching this conclusion, it considered the overall context in which the April Letter was sent, which included the fact that:
- the inquiry was made while the investigation and assessment of the Appellant's claim was continuing;
- the Appellant was informed at the outset of the investigation that the insurer had not reached any decision yet on the issue of liability;
- the Respondent requested and received from the Appellant a written summary of the circumstances of the incident, hospital records, and answers to forty questions of which a little more than half related to issues of liability; and
- approximately a month prior to the expiration of the limitation period, the Respondent asked Counsel what he expected "in terms of settlement" and stated that she looked forward to receiving his "settlement demands" and to "discussions regarding settlement".
In reaching this conclusion, the Court of Appeal also found that it did not agree that the Podovinikoff decision stood for the general proposition that all inquiries into settlement demands constitute an admission of some liability for the purpose of confirming a cause of action absent an express reservation or disclaimer, and that Podovinikoff was distinguishable.
Ultimately, the Court found that the "without prejudice" notation on the April Letter reinforced the Respondent's position that the letter was made during the ongoing "investigative and assessment" stage of the Appellant's claim, where liability was always a live issue, and that it did not demonstrate an intention to admit some liability. The "without prejudice" marking, therefore, fell within the category of a reservation contemplated in Podovinikoff to avoid a finding of acknowledgement of some liability.
The details of the Podovinikoff decision bear mentioning given that it remains good law and an admission of some liability was found in the case.
In Podovinikoff, the Adjuster had written three letters to the Plaintiff, two of which were found to have been admissions of liability. None of the letters were marked without prejudice. The two letters that were found to constitute admissions read in part as follows:
"March 19th, 1981
The writer has attempted to reach you by telephone regarding settlement of your personal injury claim. As we have been unsuccessful, we would ask that you contact the writer at your earliest convenience.
September 10th, 1981
Please be advised that the Insurance Corporation's Claim Centers have now re-opened to the public. In view of this, we would ask that you contact the writer at your earliest convenience in regard to settlement of your personal injury claim."
The trial judge held that the first letter referenced above had a strong connotation that an offer had been made or was going to be made. In relation to the second letter, the Court queried how anyone could interpret the letter as a desire to communicate to the Plaintiff that he had no claim. An admission of some liability was therefore found. In upholding the decision on appeal, the Court of Appeal also added that this conclusion was strongly supported by the fact that there was nothing in the letters to indicate that the insurer had any reservations about settlement, as there was nothing to indicate to the Claimant anything other than that his claim would be settled. If there were doubts about liability or settlement, the Court would have expected "without prejudice" to have been included on the letters.
Importance of Trombley
The Trombley decision emphasizes the importance of ensuring that the notation "without prejudice" is on all written communications by Adjusters with Claimants, and of at least initially making clear to the Claimant in writing that liability has not been determined and remains a live issue.
While the Former Limitation Act provided that a limitation period could be extended if a cause of action was confirmed, the Current Limitation Act adopts the common law and provides that extension occurs where "a person acknowledges liability in respect of the claim". While this does not result in a change in the law, it emphasizes that it is the law in B.C. that the extension of a limitation period is contingent upon an acknowledgement of liability in writing having been made.
Given this wording and the law generally, ideally all written communications with Claimants by Adjusters should include a disclaimer that liability is not being acknowledged or the cause of action confirmed, and the notation "without prejudice" included as well. While the Trombley decision illustrates that a Court will consider the entire context of the communications between the parties in determining whether an admission has been made, a disclaimer of this nature would assist in making clear that liability was not admitted, should litigation arise.
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.