Clarke v. Sun Life Assurance Company of Canada, 2020 ONCA 11

Full Decision

Clarke v. Sun Life Assurance Company of Canada is an appeal decision following a summary judgment motion on the issue of whether or not the plaintiff sued her Long-Term Disability (LTD) carrier within the limitation period.

The motions judge held that the plaintiff sued on time and Sun Life appealed the decision.

The relevant sections at play were s. 5(1) and 5(2) of the Limitations Act, which are as follows:

5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

I. that the injury, loss or damage had occurred,

II. that the injury, loss or damage was caused by or contributed to by an act or omission,

III. that the act or omission was that of the person against whom the claim is made, and

IV. that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

The plaintiff was employed by Canada Post and part of a group disability insurance plain with Sun Life. The policy covered employees who were totally disabled from performing the essential duties of their own job for 24 months. After 24 months, the policy covered employees who were totally disabled from engaging in any occupation for which they were suitably qualified.

The plaintiff stopped working due to health problems in 2011. On March 19, 2012, Sun Life denied her claim for total disability with respect to her own occupation. The Sun Life letter advised of an appeal process.

On February 24, 2014, Sun Life wrote a letter to the plaintiff advising that she met the total disability test for her own occupation up to April 25, 2013. However, the medical documentation on file did not support her claim for total disability from any occupation beyond that date. Sun Life invited the plaintiff to provide further medical documentation for its review. It noted that it was the plaintiff’s responsibility to provide this documentation showing she meets the test. The word “deny” was never used. There was no reference to any limitation period or the Limitations Act.

There was a conversation between the plaintiff’s union rep and Sun Life about the claim on February 26, 2014. There was no further contact for 3 years. The plaintiff then submitted further medical documentation in March 2017.

On April 24, 2017, Sun Life sent a letter advising, “your request for a review of our decision is now being considered at the first level of appeal.” Then on June 19, 2017, Sun Life advised that the medical documentation was insufficient to overturn its prior decision. For the very first time, Sun Life included a paragraph that said any consideration of an appeal does not waive any of its rights under the policy, including any rights it has regarding the limitation period for the claim. The letter also advised that the claim was subject to a limitation period set out in the Limitations Act.

The motions judge held that the letter from February 24, 2014 was equivocal. It, for instance, did not use the language of a refusal or denial. It was held that the limitation period commenced as of the June 19, 2017 letter. The Court of Appeal, however, overturned the motion judge’s decision on this front. Relying upon Pepper v. Sanmina-Sci Systems (Canada) Inc., the Court of Appeal held that an insured has a cause of action for breach of contract against her LTD insurer when her insurer stops paying disability benefits. The Plaintiff knew or ought to have known a loss occurred on February 24, 2014. That is when Sun Life announced it was terminating her benefits.

That, however, did not end the analysis. The two-year limitation clock does not start to run until the plaintiff also knew or ought to have known that a proceeding would be an appropriate means to remedy the loss under s. 5(1)(a)(iv) and s. 5(1)(b).

In this case, the motions judge never found as a fact when the plaintiff first knew that a proceeding would be an appropriate remedy. In fact, the reasons showed that the motions judge was unable to make this determination based on the evidence before her. The motions judge also did not determine when a reasonable person with the abilities and circumstances of the plaintiff ought to have known a proceeding would be an appropriate remedy under s. 5(1)(b).

It is critical to make these determinations. The clock starts to run from the earlier of when the plaintiff first knew that a proceeding was an appropriate remedy and when the plaintiff first ought to have known that a proceeding was an appropriate remedy. Further, under s. 5(2), a plaintiff is presumed to know the matters in s. 5(1)(a) on the day on which the loss occurred, unless the contrary is proved. Also, the plaintiff is required to act with due diligence in determining whether or not there was a claim.

Ultimately, the motion decision was set aside. The motions judge failed to make findings of fact regarding s. 5(1)(a)(iv) and s. 5(2) of the Limitations Act. However, rather than find that the plaintiff was out of time, the Court of Appeal directed that the action continue towards trial. It noted that a full record is required to make the necessary findings of fact. No examinations for discovery or cross-examinations had taken place. Some form of trial was required. The significance of the informal appeal process offered by Sun Life and engaged by the plaintiff had to be assessed. For example, was the appeal process an alternative process whose end date was reasonably certain or ascertainable as found in Presidential MSH Corporation v. Marr Foster & Co. LLP?

Overall, I think this case is important for a number of reasons:

  1. For LTD matters, the date on which benefits are terminated will be the date on which claimants either knew or ought to have known a loss occurred under s. 5(1)(a)(i).
  2. If faced with what may appear to be a limitation problem, don’t forget to analyze when the plaintiff first knew or ought to have known that a proceeding would be an appropriate means to seek a remedy. This applies to LTD matters but also to negligence matters generally. In that regard, please have a look at Presidential MSH Corporation v. Marr Foster & Co. LLP, 407 ETR Concession Company Limited v. Day, and Brown v. Baum.
  3. If you are arguing that the plaintiff did not know she first had a claim when the loss or injury actually occurred, you should probably present direct evidence on this issue and not rely upon inferences from other indirect evidence. A plaintiff is presumed to know under s. 5(2) that she first had a claim as of the date of loss or injury. You cannot afford to be silent on the issue or not address this issue head on.
  4. When an LTD insurer has offered an appeal process, it may very well be that existence of the appeal process led the plaintiff to reasonably believe that a proceeding would not be an appropriate remedy until that process was over. In that regard, you may wish to look to Presidential MSH Corporation v. Marr Foster & Co. LLP.

James Page
Written by

James Page is a lawyer at Martin & Hillyer Associates in Burlington. He was called to the Bar in 2010. James is a Past President of the Brain Injury Association of Peel & Halton (BIAPH) and a former participant of the Ontario Justice Education Network (OJEN). He is the current Secretary of Halton County Law Association (HCLA).