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Insurer's Limitation Defence Upheld

Grace Tsang, BridgePoint Financial Services | February 25, 2014

Lawyers should be aware of the Court of Appeal's recent decision to uphold the motion judge's finding that the appellant insured's right to claim Non-Earner Benefits was barred by a limitation period.1

On November 11, 2005, Tanya Sietzema was involved in a car accident. She filed an application for benefits with the Economical Mutual Insurance Company ("Economical"). Economical provided Ms. Sietzema with its Explanation of Benefits Payable by Insurance Company ("OCF-9"), which allowed her to receive Income Replacement Benefits until March 2, 2006. The OCF-9 also indicated that she would not receive Non-Earner Benefits because she was employed at the time of the accident.2 At the bottom of the OCF-9, under the heading, "WARNING: TWO YEAR TIME LIMIT", Economical advised Ms. Sietzema that she had two years to dispute Economical's assessment of her claim.

Ms. Sietzema retained counsel in January 2006, but it was not until February 3, 2010, when her lawyer wrote to Economical disputing as to whether there had been a denial of Ms. Sietzema's Non-Earner Benefits. A statement of claim was issued on April 14, 2011. Economical moved for summary judgment.

The motion judge found that as Ms. Sietzema had retained a lawyer in 2006 to advise her of her rights as a result of the accident, this would have included advice on her right to accident benefits and any pertinent limitation periods. Further, the OCF-9 clearly stated that she had been denied Non-Earner Benefits, thus triggering the limitation period as per s. 51(1) of the SABS. The Court of Appeal agreed.

Ms. Sietzema's counsel tried to argue that she had been provided with a legally incorrect answer on her OCF-9 with respect to her eligibility for Non-Earner Benefits, but the Court of Appeal cited its decision in Turner v. State Farm Mutual Automobile Insurance Co. 2005 CanLII 2551 (ON CA), (2005), 195 O.A.C. 61: so long as clear notice has been given that the benefits would be cancelled, the limitation period starts to run, even if the insurer gave legally incorrect reasons for cancelling the benefit.

The Court of Appeal also found that the Insurance Act and SABS did not require an insurer, on termination of benefits, to give the claimant a further notice advising that he or she may have a right to renew a claim for a benefit that had previously been denied. Otherwise, the limitation period would never begin to run and this would defeat one of the primary purposes of SABS - to ensure the timely submission and resolution of claims for accident benefits.

One wonders if the outcome would have been different if Ms. Sietzema had not retained counsel. This decision simply reiterates to lawyers the importance of being alert to limitation periods when advising clients on their matters.


1Sietzema v. Economical Mutual Insurance Company, 2014 ONCA 111 (CanLII)

2This was not the legally correct answer as s.36 of the Statutory Accident Benefits Schedule - Accidents on or After November 1, 1996, O Reg 403/96 ("SABS") does not allow the insured to receive both Income Replacement Benefits and Non-Earner Benefits. This has also changed with the decision in Galdamez v. Allstate Insurance Company of Canada, 2012 ONCA 508 (CanLII), 111 O.R. (3d) 321, which allowed a person who was able to continue to work to possibly still qualify for Non-Earner Benefits.

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