COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Gumpp v. Co-operators Life Insurance Co.,

 

2004 BCCA 217

Date: 20040419


Docket: CA031140

Between:

Ruth Gumpp

Respondent

(Plaintiff)

And

Co-operators Life Insurance Company
Co-operators Compagnie D'Assurance-Vie

Appellant

(Defendant)

 


 

Before:

The Honourable Madam Justice Southin

The Honourable Madam Justice Newbury

The Honourable Madam Justice Saunders

 

B. Laughton

Counsel for the Appellant

T. Louis

Counsel for the Respondent

Place and Date of Hearing:

Vancouver, British Columbia

25th February, 2004

Place and Date of Judgment:

Vancouver, British Columbia

19th April, 2004

 

Written Reasons by:

The Honourable Madam Justice Southin

Concurred in by:

The Honourable Madam Justice Newbury

The Honourable Madam Justice Saunders


Reasons for Judgment of the Honourable Madam Justice Southin:

[1]            In KP Pacific Holdings Ltd. v. Guardian Insurance Co. of Canada, [2003] 1 S.C.R. 433, 2003 SCC 25, the Chief Justice of Canada, on a question of property insurance, said this:

3   The Insurance Act was passed in 1925 (S.B.C. 1925, c. 20).  Despite repeated housekeeping amendments, it remains essentially unchanged.  It was designed for a world where insurers issued policies geared to specific risks and subjects, such as fire insurance, theft insurance, business loss insurance, and so on.  Accordingly, it lays down rules, including limitation periods, based on different and discrete categories of insurance.

4   Insurance practices, by contrast, have changed.  A dominant policy in today's world is the "all-risks" or "multi-peril" policy, which covers a panoply of perils.  This is good for consumers.  It minimizes the number of policies they need to buy and ensures comprehensive coverage at lower cost. But it is bad when legal issues arise.  The outmoded category-based Act contains rules based on the old classes of insurance.  The newer comprehensive policies are difficult if not impossible to fit into the old categories.  The result is continued uncertainty about what rules apply. Claims stall. Litigation ensues.  Courts struggle with tortuous alternative interpretations.  The rulings that have emerged have been likened to a "judicial lottery": Professor J. A. Rendall, Annotation to Briggs v. B.C.A.A. Insurance Co. (1990), 40 C.C.L.I. 282, at p. 288 (commenting on B.C. case law prior to Dressew Supply Ltd. v. Laurentian Pacific Insurance Co. (1991), 57 B.C.L.R. (2d) 198 (C.A.)).

5   It would be highly salutary for the Legislature to revisit these provisions and indicate its intent with respect to all-risks and multi-peril policies.  In the meantime, the task of resolving disputes arising from this disjunction between insurance law and practice falls to the courts.  Brown and Menezes lament: "Surely there can be little which is less productive, or more wasteful, than litigation about such technicalities": C. Brown and J. Menezes, Insurance Law in Canada (2nd ed. 1991), at p. 16.  I whole-heartedly agree.

[2]            In matters of limitation periods on claims under policies of insurance against the vicissitudes of life, the Legislature has created a scheme so labyrinthine as to be deserving of even harsher judicial condemnation. 

[3]            This appeal is from a judgment of the Honourable Mr. Justice Warren pronounced the 28th April, 2003, whose reasons, and the reasoning therein with which I respectfully disagree, may be found reported at (2003), 19 B.C.L.R. (4th) 137, 2003 BCSC 1195. 

[4]            Before him was this special case:

Part 1 - Agreed Statement of Facts

1.    Commencing in approximately 1992 the Plaintiff Ruth Gumpp was employed with the 411 Senior Centre Society as an Information/Referral and Outreach Coordinator.  That Society was part of a larger organization known as Associated Coastal Community Services.

2.    On December 14, 1992 the Defendant Co-operators Life Insurance Company (Co-operators) entered into a contract of group insurance with Associated Community Services, which contract is described as Group Policy No. G1035-001 and 002 (the Policy).  A copy of the Policy is attached as Annexure A.

3.    Pursuant to the Policy the Plaintiff was insured for life insurance benefits and long term disability benefits.

4.    The Policy is a policy of "life insurance" within the meaning of the Insurance Act and is governed by Part 3 of the Insurance Act.

5.    The Plaintiff stopped work on September 30, 1994 and on December 28, 1994 filed a Proof of Loss with Co-operators claiming disability benefits.  The Plaintiff asserts that she has suffered and continues to suffer from a severe and permanent from of depression which continues to render her disabled within the meaning of the Policy.

6.    Co-operators accepted the Plaintiff's claim and paid benefits under the Policy from the expiration of the 119 day elimination period until November 30, 1998.

7.    Co-operators terminated the payment of further benefits to the Plaintiff which decision was effective November 30, 1998.

8.    The decision to terminate benefits effective November 30, 1998 was first communicated to the Plaintiff in a letter dated October 8, 1998.  That letter stated:

"Based on the medical information submitted we have determined that the medical information no longer supports that you are totally disabled from all types of employment ... In order for you to make alternate arrangements, further LTD benefits have been approved up to and including November 30, 1998.  Your file will then be closed."

9.    The Plaintiff sought a review of that decision through Co-operators internal review process.  On October 20, 1999 Co-operators wrote to the Plaintiff and told her that:

"On review of the medical information submitted, we are of the opinion that we have not been provided with any new medical evidence to support Total Disability from any and all occupations beyond November 30, 1998.

Therefore, we must advise that our decision remains unchanged.  No further benefits beyond November 30, 1998 will be provided and your file remains closed."

10.   On May 24, 2001 the Plaintiff commenced this action against Co-operators.  Between October 20, 1999 and May 24, 2001 there was no communication whatsoever between the Plaintiff and Co-operators.

11.   The Policy contains the following provisions regarding Proof of Loss and Limitation of action.

"PROOF OF LOSS

Written Proof of Loss must be furnished to the Insurance Company at its Office in Regina.  In the case of a claim, proof must be furnished within 90 days from the date the Insurance Company is liable, and subsequent written proof of the continuance of disability must be furnished to the Insurance Company at such intervals as the Insurance Company may reasonably require.

Failure to furnish proof within this time shall not invalidate nor reduce any claim if it is shown not to have been reasonably possible to furnish the proof and that the proof was furnished as soon as was reasonably possible, but in no event shall this be more than 12 months after becoming eligible.

...

LIMITATION OF ACTION

No action or proceeding at law or in equity shall be brought against the Insurance Company to recover benefits payable under this Policy prior to the expiration of sixty (60) days after Proof of Loss has been filed in accordance with the requirements of this Policy, nor shall such action be brought at all unless brought:

(1)   where no benefits, which are the subject matter of the claim, have been paid to the Employee - within one year from the expiration of the time within which Proof of Claim is first required by the Policy or from the date on which the Insurance Company first denies the claim for benefits, whichever first occurs, or

(2)   where benefits have been paid under the provision under which benefits are being claimed - within one year of the date on which the Insurance Company terminates the payment of benefits under the said provision.

If any time limitation of this Policy with respect to the bringing of an action at law or in equity is less than that permit­ted by the law of the Province in which the insured Employee resides at the time of becoming insured under this Policy, then the limitation is hereby extended to agree with the minimum period permitted by law."

Part 2 - Questions for the Court

1.    Does Part 3 of the Insurance Act and in particular Sections 30 and 65 prohibit Co-operators from including the provisions regarding limitation of action in its Policy?

2.    Do the provisions of the Policy dealing with limitation of action bar the Plaintiff's claim for benefits[?]

The parties agree that if the answer to Question 1 is 'No' and the answer to Question 2 is 'Yes' that the Court may dismiss the Plaintiff's action in accordance with Rule 33(5).

[5]            This was the order pronounced by the learned judge below:

THIS COURT ORDERS that:

1.    The answers to the Special Case put before the Court by the parties are:

(a)   Does Part 3 of the Insurance Act and in particular Sections 30 and 65 prohibit Co-operators from including the provisions regarding limitation of action in its Policy?  Answer:  Yes

(b)   Do the provisions of the Policy dealing with limitation of action bar the Plaintiff's claim for benefits? 
Answer:  No.

[6]            The appellant, the defendant below, comes to this Court saying that the answers to these questions should be not "yes" and "no" but "no" and "yes".  The respondent, of course, seeks to sustain the answers given by the learned judge below.

[7]            During the hearing of the appeal, I assumed that paragraph 4 of the stated case was founded upon a definition in the Insurance Act.  To my surprise, upon considering the question after the hearing, I found that no such definition was in the statute although this had been the definition in the Insurance Act, R.S.B.C. 1979, c. 200:

"life insurance" means insurance whereby an insurer undertakes to pay insurance money

(a)   on death;

(b)   on the happening of an event or contingency dependent on human life;

(c)   at a fixed or determinable future time; or

(d)   for a term dependent on human life;

and, without restricting the generality of the foregoing, includes

(e)   accidental death insurance but not accident insurance;

(f)   disability insurance; and

(g)   an undertaking entered into by an insurer in the ordinary course of its business to provide an annuity, including an annuity in respect of which the periodic payments may be unequal in amount;

and "disability insurance" is defined in the 1979 statute as:

"disability insurance" means insurance undertaken by an insurer as part of a contract of life insurance whereby the insurer undertakes to pay insurance money or to provide other benefits in the event that the person whose life is insured becomes disabled as a result of bodily injury or disease.

[8]            Being perplexed, the Court asked counsel for further assistance.  This, in part, is Mr. Laughton's response to which Mr. Louis takes no exception and which the Court gratefully adopts:

I  OVERVIEW

6.    In British Columbia there are three types of insurance policies that will result in the payment of insurance monies when an insured becomes disabled.  The three types of polices and the applicable limitation periods are as follows:

·                     A Group Policy that provides "sickness insurance" - limitation period contained in Part 1 of the Insurance Act Section 22.

·                     An Individual Policy that provides "sickness insurance" - limitation period contained in Part 4, Section 89, Statutory Condition 12.

·                     A Group or Individual Policy that provides "disability insurance" - limitation period contained in Part 3, Section 65.

* * *

II  STATUTORY PROVISIONS

The Insurance Act

8.    The Insurance Act contains a number of definitions none of which [is] relevant to this case...  What is of relevance is Section 1(2) of the Insurance Act which provides that:

"The Lieutenant Governor in Council may, on the recommendation of the minister, make regulations determining and defining, for the purpose of this Act, and the Financial Institutions Act, what is deemed to be a distinct class of insurance and the nature of each class of insurance."

9.    In the exercise of this power the Lieutenant Governor in Council enacted the Insurance Classes Regulation.

Insurance Classes Regulation [B.C. Reg. 337/90, O.C. 1346/90]

10.   ...  In that Regulation various classes of insurance are defined.  Those classes correspond to parts of the Insurance Act e.g. Part 3 Life Insurance and Part 4 Accident and Sickness Insurance.

11.   The relevant definitions in the Regulation are:

"accident and sickness insurance" means personal accident insurance or sickness insurance;

"disability insurance" means insurance undertaken by an insurer as part of a life insurance contract whereby the insurer undertakes to pay insurance money or to provide other benefits in the event that the insured becomes disabled as a result of bodily injury or disease;

"life insurance" means life insurance as defined in the Financial Institutions Act;

"sickness insurance" means insurance against loss resulting from the illness or disability of a person and against expenses incurred for dental care, other than illness or disability or dental care arising from accident, but does not include disability insurance;

(emphasis [of the appellant])

12.   As the Insurance Classes Regulation defines life insurance by reference to the Financial Institutions Act [R.S.B.C. 1996, c. 141] it is necessary to consider the provisions of that Act.

13.   [By s. 1 of the Financial Institutions Act] life insurance is defined:

"life insurance" means insurance by which an insurer undertakes to pay money

(a)   on death,

(b)   on the happening of an event or a contingency dependent on human life,

(c)   at a fixed or determinable future time, or

(d)   for a term dependent on human life,

and, without restricting the generality of the foregoing, includes

(e)   accidental death insurance, but not accident insurance,

(f)   disability insurance, and

(g)   an undertaking entered into by an insurer in the ordinary course of its business to provide an annuity, including an annuity in respect of which the periodic payments may be unequal in amount;

(emphasis [of the appellant])

III  ANALYSIS

14.   In order to determine the appropriate statutory limitation period it is necessary to first classify an insurance policy.  This is the approach which this Court adopted in the Holmes Estate decision [83 B.C.L.R. (3d) 108, 2000 BCCA 627].  The Court set out its reasoning in some detail since it was noted that "there was some confusion below, and to some extent before us, concerning the applicable statutory provisions on the limitation question".

15.   We further note that this confusion arises from a rather loose use of the term "disability insurance".  In particular it is used in its colloquial sense and not as defined in the Insurance Classes Regulation.  This can ultimately lead to confusion when cases involving "sickness insurance" arise.

16.   In this case the policy issued by Co-operators is one which provides disability coverage as a part of a life insurance contract.  The policy is therefore one of disability insurance within the meaning of the Insurance Classes Regulation.

17.   It cannot be a policy of "sickness insurance" since the definition of sickness insurance contained in the Insurance Classes Regulation excludes "disability insurance".

18.   Because the definition of "life insurance" includes "disability insurance" the policy is properly classified as one of life insurance.  Accordingly, Section 65 which is contained in Part 3 of the Act provides the applicable limitation period.

19.   By contrast the insurance policy issued by Sun Life which was considered by this Court in Balzer v. Sun Life Insurance Co. of Canada (2003), 15 B.C.L.R. (4th) 6, 2003 BCCA 306 was one of "sickness insurance".  It was not part of a life insurance policy.

20.   We have specifically confirmed this fact with Mr. Oren Samuel who was counsel for Sun Life.  In addition, the Factum filed by Sun Life with this Court on June 27, 2002 under File No. CA029008 provides additional confirmation at paragraphs 33 to 40.

21.   The reason why Section 22 and not Section 89 of the Insurance Act was applicable to the policy in Balzer flows from the fact that it was a "group policy".  Section 89 which imports the limitation period of Statutory Condition 12 excludes contracts of "group insurance" (Part 4 of the Insurance Act is attached at Tab 3).  Section 89 is only applicable to individual policies of insurance.

22.   Accordingly in Balzer Part 2 (General Provisions) of the Insurance Act became applicable by reason of Section 3 of the Act which provides that Part 2 has effect unless another section or statutory condition contained in the Act applies.

IV  CONCLUSION

23.   In summary it is submitted that the policy issued by the Appellant is one of life insurance and not sickness insurance.  It is therefore regulated by Part 3 of the Act.

[9]            I accept this analysis insofar as it discloses how it is that disability insurance is governed, to the extent that it is applicable, by Part 3, Life Insurance.

[10]        I need not reproduce the whole of the policy but only those terms referred to in argument or of assistance in appreciating the scope of the policy:

DEFINITIONS (Continued)

* * *

"Total Disability" or "Totally Disabled" shall mean disability, as a result of Sickness or Injury, to the extent that the Employee:

(1)   is under the regular care and following the prescribed treatment of a Physician, and

(2)   is not engaged in any occupation or performing any work of any sort for wage, remuneration or profit, and

(3)   during the Long Term Disability Elimination Period and the first 24 months thereafter, is unable to perform the usual and customary duties of the Employee's occupation, and

(4)   thereafter is prevented from engaging in any occupation or performing any work of any sort for wage, remuneration or profit for which the Employee is able, or may reasonably become able, by means of education, training or experience.

The Employee will not, HOWEVER, BE CONSIDERED TO BE TOTALLY DISABLED IF THEY ARE PREVENTED FROM ENGAGING IN ANY OCCUPATION FOR WAGE OR PROFIT BY VIRTUE OF THE UNAVAILABILITY OF SUCH OCCUPATION(S) OR WORK IN THE PLACE IN WHICH THE EMPLOYEE RESIDES.

* * *

CLAIMS

* * *

PROOF OF LOSS

Written Proof of Loss must be furnished to the Insurance Company at its Office in Regina.  In the case of a claim, proof must be furnished within 180 days from the date the Insurance Company is liable, and subsequent written proof of the continuance of disability must be furnished to the Insurance Company at such intervals as the Insurance Company may reasonably require.

Failure to furnish proof within this time shall not invalidate nor reduce any claim if it is shown not to have been reasonably possible to furnish the proof and that the proof was furnished as soon as was reasonably possible, but in no event shall this be more than 12 months after becoming eligible.

* * *

LIMITATION OF ACTION

[This provision is stated in the stated case and need not be repeated.]

* * *

EMPLOYEE DISABILITY BENEFIT (Continued)

If after the 104 week from the end of the Elimination Period, satisfactory proof is received by the Insurance Company that an Employee is then Totally Disabled in accordance with the terms of this Policy, the Insurance Company will, subject to the provisions of this coverage, continue to make payments to the Employee, at the rate of Monthly Benefit the Employee received in accordance with the first paragraph of this provision, while the Employee remains so disabled.  In any event the benefit shall not be paid beyond:

(1)   the date the Employee ceases to be Totally Disabled, or

(2)   the date of the Employee's 65th birthday, or

(3)   the date of death of the Employee, or

(4)   retirement or normal retirement date as determined by the Employer, or the date withdraws or elects to receive pension funds, whichever first occurs, or

(5)   the date the Insurance Company deems the Employee to have failed to furnish evidence of the continuance of Total Disability satisfactory to the Insurance Company, or

(6)   the date the Employee engages in any occupation or performs any work of any sort for wage, remuneration or profit, or

(7)   the date the Employee refuses to submit to a Medical Examination by a Physician chosen by the Insurance Company,

whichever first occurs.

Benefits payable for periods of Total Disability of less than a full month shall be pro-rated based on the actual number of days in the applicable month.

For the purpose of determining the elimination period for any claim, if the period of disability is interrupted by a return to work for a period of; a) 7 consecutive days or less when there is an elimination period of less than 180 days, or b) 14 consecutive days or less where there is an elimina­tion period of 180 days or more then, the elimina­tion period will be considered to be uninterrupted, but the days at work will not be included.

[11]        These are the statutory provisions found in Part 3 mentioned in the answers to the stated case:

30 (1)   Despite any agreement, condition or stipulation to the contrary, this Part applies to a contract made in British Columbia on or after July 1, 1962, and, subject to subsections (2) and (3), applies to a contract made in British Columbia before that day.

[By s. 29 "contract" is defined as "means a contract of life insurance".]

65 (1)   Subject to subsection (2), proceedings against an insurer for the recovery of insurance money must not be commenced more than one year after the furnishing of the evidence required by section 62 or more than 6 years after the happening of the event on which the insurance money becomes payable, whichever period first expires.

(2)   If a declaration has been made under the Survivorship and Presumption of Death Act, an action or proceeding to which reference is made in subsection (1) must not be commenced more than one year after the date of the declaration.

[12]        As s. 62 is mentioned in s. 65, I reproduce it:

62    If an insurer receives sufficient evidence of

(a)   the happening of the event on which insurance money becomes payable,

(b)   the age of the person whose life is insured,

(c)   the right of the claimant to receive payment, and

(d)   the name and age of the beneficiary, if there is a beneficiary,

it must, within 30 days after receiving the evidence, pay the insurance money to the person entitled to it.

[13]        Section 65 is inapt for claims under the disability provisions of life insurance policies.  By its very terms, it contemplates a single event, i.e. death.

[14]        The obvious purpose of the second branch, "more than six years after the happening of the event...." is to cover those cases now rare in the modern world in which, for some years after its happening, the death of the life insured cannot be proven or, indeed, is not even known to the beneficiary.

[15]        Thus, we have in Part 3 a casus omissus.  How this ridiculous situation came about becomes clear upon looking at the origin of this section.  It comes, albeit in slightly different words, from the Life Insurance Act, S.B.C. 1923, c. 27, the long title of which was, "An Act to make Uniform the Law respecting Life Insurance Contracts".  In that statute, "Contract of life insurance" was defined thus:

... means a contract by which the insurer undertakes with the insured to pay insurance-money contingently on the death, or on the duration of the life, of a designated human being.

[16]        This was the limitation section:

  45. (1.)  Subject to the following subsections of this section, any action or proceeding against the insurer for the recovery of insurance-money shall be commenced within one year next after the furnishing of reasonably sufficient proof of the maturity of the contract and of the right of the claimant to receive payment, or within six years next after the maturity of the contract, whichever period shall first expire, but not afterwards.

  (2.)  Where an order has been made declaring that death is presumed from the fact that the person whose life is insured has not been heard of for seven years, an action or proceeding shall be commenced within one year and six months from the date of the order, but not afterwards.

  (3.)  Where the death of the person whose life is insured is unknown to the person entitled to claim under the contract, an action or proceeding may be commenced within the prescribed period or within one year and six months after the death becomes known to him.

  (4.)  Where an action or proceeding is prematurely brought, the plaintiff may commence a new action or proceeding at any time within the prescribed period or within six months after the final determination of the first action or proceeding.

[17]        It is unfortunate that the draftsman who fashioned the words grafting onto what is now Part 3 of the Insurance Act, "disability insurance" did not ask himself whether s. 65 was apt to claims under a disability policy. 

[18]        As to what a court should do with a casus omissus, see E. A. Driedger, Construction of Statutes, 2d ed. (Toronto: Butterworths, 1983) under the heading at p. 96, "Filling in Gaps".  From that passage, the classic answer is "nothing".

[19]        That being so, in my opinion, the words of the policy are binding on the parties unless Part 2, General Provisions, comes into play.  By it:

3     This Part has effect, despite any law or contract to the contrary, except that

(a)   if any section or statutory condition contained in Part 3, 4, 5, 6 or 7 is applicable and deals with a subject matter that is the same as or similar to any subject matter dealt with by this Part, this Part does not apply, and

(b)   sections 6 to 14, 17 and 25 do not apply in the case of a contract to which the Insurance (Marine) Act applies.

* * *

22 (1)   Every action on a contract must be commenced within one year after the furnishing of reasonably sufficient proof of a loss or claim under the contract and not after.

[20]        Huddart J.A., in Balzer v. Sun Life Assurance Co. of Canada (2003), 15 B.C.L.R. (4th) 6, 2003 BCCA 306, addressed this provision in a claim on a policy of "sickness" insurance.  She said:

[36]  What emerges from this brief discussion is that s. 22(1) does not easily fit with income replacement insurance policies or with the practice of the insurance industry.  Its application requires adaptation if the Legislature’s intention to create a one-year limitation period for all insurance claims is to be given effect.  One promising approach is that the limitation period may be triggered by a clear and unequivocal denial of a potential claim.  Such a denial precludes any claim because it tells the insured no purpose will be served by making one.  This will have the effect of telling the insured she may want to consider commencing an action if she wants to pursue her claim. 

[37]  The respondent submits the more instructive reasoning is that of Donald J.A. in Holme Estate, [Holme Estate v. Unum Life Insurance Co., 83 B.C.L.R. (3d) 108, 2000 BCCA 627]In the respondent’s view, its application to the Canada Safeway policy would mean that a claim to disability benefits, once established by agreement or by judgment within the limitation period, would accrue from month-to-month for the duration of total disability, and the limitation period would apply, if at all, only to limit recovery of insurance money payable during the 12 month period preceding the commencement of the action.  This reasoning, she submits, would “protect insured parties in long-term claim situations where a strict interpretation of the limitation clause is inappropriate, and where the claim and the necessity for proof of claim are continuous.”  It would also allow for situations like that in Watterson, supra, where a proof of claim is furnished and denied.

[38]  While the reasoning in Holme Estate, supra, will always be appropriate where the cause of action accrues monthly and the limitation period is determined by the date the insurance money becomes payable, as is apparent from my reasons in the companion appeal Watterson v. Sun Life Assurance Co. of Canada, 2003 BCCA 305, I would not apply s. 22(1) as a general rule to limit recovery under disability coverage to benefits for the year preceding the action.  I agree with Pitfield J. to do so would be to ignore the wording of s. 22(1).

[39]  I have no difficulty with the proposition that the claim of Ms. Balzer is continuing, that her cause of action accrues monthly, and that the risk insured against was the continuance of a total disability.  But that coverage could terminate at any time for want of continuing proof of total disability.

[40]  It is at denial of coverage or termination of benefits that an insured would have reason to sue the insurer.  That is when a limitation period should begin to run, not while benefits are being received, not on some later date when an insured decides to file a proof of loss or commence an action. This sensible result is at the root of the reasoning in the authorities cited to us.

[41]  I am persuaded that good sense dictates the solution to the conundrum posed by the entirely inadequate words the Legislature has chosen to incorporate into every group accident and sickness policy by the convoluted provisions of the Insurance Act.  Read literally, the words of s. 22(1) create the absurd result that the limitation period in this case would have begun to run while the benefits were being paid, or alternatively, would not begin to run until after a claim is made.

[42]  But the words, by edict of the Legislature, have become an overriding provision of the Canada Safeway policy.  Both parties are bound by them, and this Court must give the insurance contract such business sense as can be made of it.

[43]  The authorities interpreting marine insurance policies provide the best route to a practical interpretation of the policy as statutorily amended.  A clear and unequivocal denial of coverage precludes the need to furnish a claim (where the policy does not require the filing of a proof of claim) and triggers the commencement of the limitation period.  This general rule permits a case-by-case application of the one-year limitation period appropriate to the wide variety of factual circumstances that may give rise to disputes about continuing coverage under generic group accident and sickness policies. It avoids the absurd results a literal reading of the words of s. 22(1) would otherwise produce in this and like cases.  It leaves room for their application to cases where the policies permit that reading.

[44]  Here, there was no unequivocal denial, Ms. Balzer had been paid some benefits, and when payment stopped she was left with the impression that her coverage could be reconsidered if additional medical information was supplied.  Sun Life never effectively engaged s. 22(1), and as time never commenced to run under it no part of her claim is time-barred.

[45]  Any ambiguity in the communication of a refusal of benefits, as to whether it is a clear and unequivocal denial, should be resolved in favour of the insured.  To avoid any doubt, the preferred course for an insurer intending to deny coverage should be to include an alert in the letter drawing the insured's attention to the one year limitation in s. 22(1) and informing the insured that the insurer will rely on the denial as starting the running of time.  The communications of Sun Life in Watterson are not that explicit but they are suf­ficiently unambiguous in the circumstances of that case to support Pitfield J.'s conclusion, and that is the essential difference between the two cases.

[Emphasis mine.]

[21]        On that footing, the clear and unequivocal denial of future benefits set the limitation period of one year in s. 22 and the limitation in the policy running on 30th November, 1998, and this action is barred.

[22]        I add, however, that had it been open to me, I would have said that s. 22 is as obviously inapt to this policy as s. 65 and, therefore, the limitation is that mandated by the policy.

[23]        It follows from all this that I would allow the appeal and answer the questions thus:

(a)   no;

(b)   no, but upon the construction of s. 22 of the Insurance Act propounded by this Court in Balzer v. Sun Life Assurance Co. of Canada, supra, read with the policy, this action is statute barred.

[24]        It follows that the action must be dismissed with costs to the appellant both here and below if the appellant chooses to demand them.

 

 

 

“The Honourable Madam Justice Southin”

 

 

I agree:

 

 

 

“The Honourable Madam Justice Newbury”

 

 

 

I agree:

 

 

 

“The Honourable Madam Justice Saunders”