COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Esau v. Co-operators Life Insurance Company,

 

2006 BCCA 249

Date: 20060524


Docket: CA32417

Between:

Sandy Annabelle Ellen Esau

Appellant

(Plaintiff)

And

Co-operators Life Insurance Company

Respondent

(Defendant)

 

And

 

British Columbia Coalition of People with Disabilities

 

Intervenor


Before:

The Honourable Mr. Justice Hall

The Honourable Madam Justice Levine

The Honourable Mr. Justice Thackray

 

F.E. Hayman

Counsel for the Appellant

B.A. Laughton, Q.C.

Counsel for the Respondent

E.P. Good

Counsel for the Intervenor

 

Place and Date of Hearing:

Vancouver, British Columbia

March 27, 2006

Place and Date of Judgment:

Vancouver, British Columbia

May 24, 2006

 

Written Reasons by:

The Honourable Mr. Justice Thackray (P. 3, para. 1)

Concurring Reasons by:

The Honourable Mr. Justice Hall (P. 23, para. 44)

The Honourable Madam Justice Levine (P. 24, para. 46)

 

Reasons for Judgment of the Honourable Mr. Justice Thackray:

[1]                This is an appeal of an order of the Supreme Court of British Columbia dismissing the action of the plaintiff, Sandy Annabelle Ellen Esau.  Mr. Justice Joyce held that the claim was statute barred by a limitation period.  The reasons for judgment are reported at 16 C.C.L.I. (4th) 271, 2004 BCSC 1347.

FACTS

[2]                Ms. Esau, an employee of the Fraser Valley Regional Library, was an insured in a group disability insurance policy issued by the respondent, Co-operators Life Insurance Company.  The policy, being part of a life insurance policy, was regulated by Part 3 of the Insurance Act, R.S.B.C. 1996, c. 226.  However, in that section 22, which is not in Part 3, is relevant to this action, I will replicate it together with sections from Part 3:

Part 2 – General Provisions

 

Limitation of actions

 

s.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.

 

Part 3 – Life Insurance

 

Proof of Claim

 

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.

 

Limitation of action

 

65(1) … 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.

 

[3]                The policy contains the following provisions:

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 … 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.

 

 (The wording of the policy is reprinted here as the parties have reprinted it throughout these proceedings, but I note that the copy of the policy put in evidence before us indicates that proof of loss must be furnished “within 180 days” and not 90 days.  In any case nothing turns on this.)

[4]                In November 1998 Ms. Esau ceased her employment, claiming that she was disabled and unable to work.  The policy provided for disability payments from the 181st day of continuous disability which was 17 May 1999.  Ms. Esau completed a written proof of loss and application for disability benefits which was received by Co-operators on 23 June 1999.  There followed a series of letters that I will set forth at some length in that they formed the estoppel claim of the insured to the limitation period asserted by the insurer and were relied upon in the appeal to illustrate that there was no clear denial of the claim.

[5]                On 21 October 1999 Co-operators wrote to Ms. Esau saying that it had reviewed the information supplied by her, her physician and her employer.  It informed Ms. Esau that it was “unable to conclude that you are totally disabled from performing the duties of your occupation” in accordance with the terms of the policy.  Co-operators concluded that while Ms. Esau may, because of stress, choose not to return to her previous occupation, this “is not a basis for total disability and we are unable to provide LTD [long term disability] benefits on that basis.”  The letter further stated:

Therefore, we must advise that we are unable to approve payment of Long Term Disability benefits under the terms of Policy G.411.  Your file has been closed.

 

The letter went on to advise Ms. Esau that if she believed the evidence on which Co-operators based its decision was incorrect, or if there was evidence not known to it, she may appeal the decision.  It set a 31-day limit for the submission of additional medical evidence.  Ms. Esau replied on 15 November that she might be unable to provide additional evidence within that time frame.

[6]                On 3 December 1999 Co-operators advised Ms. Esau that the 31-day period was flexible “as long as [the medical evidence is provided] within a reasonable amount of time from the date you advised you are to appeal.”  It added that “your file will remain closed” until such information is received.  In a letter dated 7 December 1999 Ms. Esau set forth details of her work history including problems that she encountered with management.  Co-operators replied on 14 January 2000 saying it would “await the medical information and once received, will advise you of any changes in the status of your claim.”  Ms. Esau informed Co-operators on 9 February 2000 that her doctor required a letter from Co-operators before forwarding medical information.  On 29 February 2000 Co-operators replied pointing out that it was not the party requesting information, but rather it was Ms. Esau’s responsibility to obtain medical information to support her disability claim.  It mentioned that this was “an appeal situation” and that her file would remain closed.

[7]                On 31 May 2000 Ms. Esau wrote to Co-operators outlining her problems with her employer and her union and requested Co-operators to waive the “one year deadline for appealing.”  Co-operators replied on 15 June 2000 saying:

The Claimant form completed by you was received on August 18, 1999, employer information received August 16, 1999, and physician’s information received on October 19, 1999.  The information was reviewed and you were advised of the denial for benefits on October 21, 1999.

 

Regarding waiving the deadline for an appeal, the letter advised Ms. Esau that the determination of benefits was dependent on medical information and that she should refer to its earlier correspondence as to the procedure.  It added:

To date, we have not received the medical information for your appeal.  We believe that sufficient time has been allowed for you to obtain further medical information to support your claim.  As we have not received further medical information, your file will remain closed.

 

[8]                A letter from Dr. Jean L. Toth, psychologist, to Co-operators dated 6 October 2000 contained an opinion and prognosis.  Ms. Esau wrote to Co-operators on 14 October 2000 and said she was enclosing further material for consideration.  Co-operators replied to Ms. Esau on 30 November 2000 saying it had reviewed the additional medical information.  It explained the procedure and requirements for eligibility and again referred to its letter of 21 October 1999 where “it was our opinion that the medical information did not support total disability from your own occupation.”  The letter reiterated that Co-operators was “unable” to approve long term disability benefits and that her “file will remain closed.”  The letter gave advice as to how Ms. Esau could appeal, adding that “additional medical evidence should be filed within 31 days”.

[9]                On 13 December 2000 Dr. B. Bright wrote to Co-operators recommending that her file be re-opened.  On 5 January 2001 Co-operators wrote to Ms. Esau and acknowledged “additional medical information submitted on your behalf.”  It said they were reviewing the information and would advise her of the status of her claim as soon as the review was complete.  The letter set out the procedure that it was following and that following possible “reviews” by the medical director and legal counsel its “decision will be communicated to you in writing.”  In a letter to Ms. Esau dated 12 March 2001 Co-operators informed her that it had completed a review of the claim and that its “decision to decline your LTD claim remains unchanged.  Please refer to our letters dated October 21, 1999 and November 30, 2000 where the reasons are outlined in full.”  It added that this was its “final decision on this matter.”

LEGAL PROCEEDINGS

Pleadings

[10]            A writ of summons was issued on 19 March 2002.  The endorsement on the writ claimed damages for breach of contract and for breach of the duty of good faith and fair dealing.  The statement of claim asserted that by a letter of 21 October 1999 Co-operators “denied her claim for long term disability benefits” and set forth the basis given for that position.  It claimed that the insurer was in breach of contract and of the duty of good faith and particularized the “lack of good faith and fair dealings”.  The insurer, in its statement of defence, pleaded the limitation as set forth in the policy.  The reply to the statement of defence pleaded only estoppel by way of the letters written by Co-operators subsequent to 21 October 1999.

Summary trial “pleadings” and proceedings

[11]            Co-operators sought a summary judgment by invoking the provisions of Rule 18A that provides a party “may apply to the court for judgment, either on an issue or generally”.  In its outline it set forth the following basis upon which it sought dismissal of the action:

The primary defence relied on by Co-operators is that the Plaintiff failed to commence her action within the limitation period created by the Policy and s. 65 of the Insurance Act.  The Plaintiff’s response to that defence is to assert that Co-operators is estopped from relying on the limitation.

 

Co-operators then summarized the legal authorities and asserted:

There is no conduct on the part of Co-operators which would have created an estoppel prior to the expiration of the limitation period on August 17, 1999.

 

[12]            The “Response of the Plaintiff” was that estoppel applied.  In support the plaintiff relied upon her own affidavit filed on 4 October 2004 in which she exhibited many of the letters in question.

Reasons for judgment

[13]            The reasons for judgment commence as follows:

[1] The plaintiff has sued the defendant insurance company for disability benefits pursuant to a group policy of insurance.  The defendant applies under Rule 18A to dismiss the action on the ground that the plaintiff did not commence her action within the time limited by the policy and s.65 of the Insurance Act, RSBC 1996 Ch. 226.

 

[2] The plaintiff says that the defendant, by its words and conduct, is estopped from relying on the limitation defence.

 

[3] There is no dispute with respect to the underlying facts.  All communications between the defendant and plaintiff were in writing.  The issue is whether those communications give rise to an estoppel.

 

[14]            The judge set out the limitation provision of the policy and said it was “agreed the policy was also governed by section 65 of the Insurance Act”.  He continued:

[8] The result of the contractual and statutory provisions is that the plaintiff was required to commence any action to enforce the payment of disability benefits within one year of the date the proof of loss was required, that is to say, by August 17, 2000.

 

[9] The defendant refused to pay disability benefits.

 

[10] The plaintiff brought this action on March 19, 2002, outside of the limitation period.

 

[11] Between June 23, 1999, when the proof of loss was submitted, and August 17, 2000, when the limitation period expired, the parties exchanged a number of letters.

 

[15]            The judge referred to the law of estoppel, in particular Maracle v. Travellers Indemnity Co. of Canada (1991), 80 D.L.R. (4th) 652 (S.C.C.), for the proposition that it is necessary for an insured to establish that an insurer made an unambiguous promise or assurance that it would not rely on a limitation.  He then said:

[13] I am unable to find in any of the correspondence an unambiguous promise or assurance by Co-operators that it would not rely on the terms of the policy generally or the limitation provisions specifically in adjudicating the plaintiff’s claim.

 

[14] The letter of October 21, 1999 made it clear that Co-operators was denying the claim and closing the file.  In my view the fact that Co-operators advised the plaintiff she could appeal is not inconsistent with a clear denial of the claim and cannot be said to be a representation that the limitation period would not be relied upon.  Co-operators made it clear that it would deal with the matter in accordance with the terms of the policy.  One of those terms is the limitation period.

 

[16]            The judge said that there is no obligation on an insurer to state in positive terms that it will rely on a limitation and entertaining an appeal does not constitute an unambiguous representation that it will not rely on the limitation.  He added:

[21] Further, I cannot accept the insured’s suggestion that the conduct of the insurer in continuing to consider an appeal after the expiration of the limitation period can create an estoppel.  The short answer to this submission is that there can be no detrimental reliance by the insured after the expiration of the limitation period.

 

[17]            The judge said that the “final argument advanced” by the plaintiff was that the limitation period did not begin to run until Co-operators “unequivocally denied the claim” on 12 March 2001.  He noted that this appeared to be contrary to the plaintiff’s “concession that the limitation period expired August 17, 2000.”  He nevertheless considered this submission and concluded that he was “satisfied there was a clear denial of this claim in the letter of October 21, 1999” and “the defendant is entitled to the benefit of the limitation defence and the action is dismissed.”

Grounds of appeal

[18]            The case as presented in this appeal goes beyond the issue of estoppel.  The opening statement in the appellant’s factum says: “The plaintiff does not appeal the ruling of the chambers judge with respect to the estoppel argument.  The plaintiff does appeal the dismissal of her claim for long term disability benefits as time-barred.”  The appellant submits that the judge:

a) erred in law in failing to apply the provision of the policy which provided an extension of time;

 

b) erred in law in failing to apply insurance law jurisprudence to sections 65, 62 and 22 of the Insurance Act to determine that the applicable limitation period was governed by section 22 of the Act;

 

c) erred in law in failing to apply insurance law jurisprudence and principles of statutory interpretation to section 22 of the Insurance Act  and in misstating the legal test for determining whether the insurer had communicated a clear and unequivocal denial of benefits;

 

d) erred in finding that the limitation had expired, when it had not been triggered, or alternatively, that it was only triggered when the plaintiff received the defendant’s letter of March 12, 2001.

 

[19]            Thus the question is whether the limitation period has ever been triggered and, if so, when.  In oral argument counsel for the appellant conceded that these are grounds that were not before the trial judge and that she therefore had an obligation to satisfy this Court that this was not prejudicial to the respondent.

[20]            The appellant submits that the reasons of the judge indicate that he set the limitation period with reference to the policy, which provides that an action must be brought “one year from the expiration of the time within which Proof of Claim is first required by the Policy”.  She submits that it must be set instead with reference to the Insurance Act, and specifically with reference to section 22 of that Act, which has been the subject of judicial decisions requiring a “clear and unequivocal” denial of benefits in order to trigger the limitation period.

[21]            In her oral argument counsel for the appellant crystallized her position by agreeing, in response to questions from the bench, that the core of this appeal is that the limitation period, whether a section 65 or a section 22 limitation, had not been triggered by Co-operators because there was no clear and unequivocal notice that the claim was denied.

[22]            The appellant seeks a declaration that the applicable limitation period is that set out in section 22 of the Insurance Act and that it was not triggered by Co-operators.  In the alternative the appellant asks for a declaration that the section 22 limitation was not triggered until 19 March 2001, the date upon which she says this Court should find the final letter was received.  In either case the order being sought would allow the appeal and dismiss the summary judgment.  In the further alternative the appellant asks for a declaration that the limitation period was triggered by the 12 March 2001 letter, but on a date prior to 19 March 2001 when the appellant received the letter.  The resultant order would be a dismissal of the appeal without costs.

DISCUSSION

 

[23]            I have set forth the process by which this case made its way to appeal.  It was not one that allowed for clarity as to the issues to be resolved.

[24]            In its opening statement on this appeal the respondent said the legal determination of the appropriate limitation periods, when that limitation period begins to run and the determination of what amounts to a clear and unequivocal denial of benefits has all been decided in Recchia v. Co-operators Life Insurance Co. (1999), 33 C.C.L.I. (3d) 271, [1999] B.C.J. No. 3176 (QL) (S.C.), affirmed on appeal 2000 BCCA 277; Watterson v. Sun Life Assurance Co. of Canada (2001), 99 B.C.L.R. (3d) 373, 34 C.C.L.I. (3d) 134, 2001 BCSC 1269, affirmed on appeal 14 B.C.L.R. (4th) 58, 48 C.C.L.I. (3d) 172, 2003 BCCA 305; and Gumpp v. Co-operators Life Insurance Company (2004), 27 B.C.L.R. (4th) 1, 13 C.C.L.I. (4th) 221, 2004 BCCA 217, and

[o]n the basis of these authorities the limitation period applicable to this case expired years prior to the date on which the Appellant commenced her action.  It is for this reason that the Appellant advanced her claim before the summary trial judge on the basis that Co-operators was estopped from relying on the limitation defence.  Having failed to convince the Summary Trial Judge that Co-operators ever made an unambiguous promise or assurance that it would not rely on the terms of the Policy generally or the limitation provisions specifically the Appellant now seeks to recast her case.

 

[25]            I generally agree with this submission.  It is not, in my opinion, open to the appellant to reframe the estoppel issue that has been decided and is not appealed.  Nor should she be allowed to raise matters previously abandoned.  The appellant, in her statement of claim, pleaded breach of the duty of good faith by Co-operators.  Particulars of its “lack of good faith” were set forth.  However, while this was not an issue in the trial, it is an underlying theme throughout the appellant’s factum.  It was abandoned and, in my opinion, must stay that way.

[26]            Further, without a compelling reason, matters previously conceded should not be raised in an appeal.  In the trial, counsel for Co-operators began his submission by stating that the only issue being pursued was “whether that estoppel [was] made out.”  The judge accepted this and Ms. Esau’s counsel opened his submission as follows:

Yes, My Lord, I think my friend has done a fine job at narrowing the issues.  I can confirm that we are not – we don’t take any issue with respect to when the limitation under normal circumstances would have commenced and run out, that is I believe August 17, 2000 is the date.  Likewise, we don’t take any position with respect to the appropriate statutory limitation that applies in these circumstances.  I think that’s certainly clear from the Gumpp decision.

 

What we do take issue with is the conduct of Co-operators throughout this application process for long term disability benefits and it’s that conduct of Co-operators that we say estops them from relying on the limitation period defence.

 

[emphasis added]

 

[27]            The words “under normal circumstances” must be taken to refer to the estoppel issue raised by the letters in question.  It can be seen that the trial proceeded on the basis of a concession that there was no issue as to the expiration of the one year limitation.

[28]            Furthermore, while the appellant agreed for trial purposes that section 65 was the relevant limitation, she now submits that the judge erred in failing to hold that section 22 of the Insurance Act contained the applicable limitation.  Her authority is Gumpp, where Madam Justice Southin said that Section 65 is “inapt for claims under the disability provision of life insurance policies” because it contemplates only one “event”, that being death.  Madam Justice Southin then quoted from Balzer v. Sun Life Assurance Co. (2003), 15 B.C.L.R. (4th) 6, 50 C.C.L.I. (3d) 29, 2003 BCCA 306 and concluded that “on that footing” it was section 22 that applied and in that there had been a clear and unequivocal denial of future benefits the action was statute barred.  Those remarks raise concerns and point to possible disagreement as to the state of the law in this area.

[29]            The limitation date pursuant to the policy provisions, as reflected in the reasons of the summary trial judge, was 17 August 2000.  The appellant raised the provision in the policy which requires the time limitation to be extended to agree with the minimum period provided for in any provincial statute.  However, the policy is in these circumstances more generous than the statute so it is not necessary to consider this matter.

[30]            Section 22 requires an action to be brought “within one year after the furnishing of reasonably sufficient proof of a loss or claim under the contract” and if it were applicable, the insured had to commence the action by 23 June 2000 because proof of loss was supplied on 23 June 1999.  The language of section 65, though more complex in that it relies on section 62, points in these circumstances to that same date.

[31]            None of these dates was met.  This was conceded by appellant’s counsel during the oral hearing of the appeal.  I am not prepared, nor do I find it necessary, to pass judgment on counsel’s agreement at trial as to which limitation period applied.  The choice of limitation period, which is purportedly the primary issue in this case, is irrelevant in that the action was brought outside of all possible limitation periods.

[32]            Appellant’s counsel relied on the cases, including Balzer and Gumpp, that interpret section 22 to require an insurer to provide a clear and unequivocal denial of a claim prior to the one year limitation commencing.  The respondent’s answer was as follows:

In considering these decisions it is important to remember that they both dealt with cases where benefits had been paid and discontinued.  The practical problem which arose in these cases was that neither s.22 nor s.65 had been designed to deal with such circumstances.  It was therefore necessary for the Court to adapt those sections in order to fulfil the legislature’s intention of creating a one year limitation period.

 

The approach adopted by this Court was to accept that the limitation period could be triggered by a clear and unequivocal denial of a claim.  This adaptation, as recognized in Watterson, was not necessary where benefits had never been paid.

 

[33]            The respondent is correct that the cases relied upon by the appellant involved situations where benefits had been paid.  The context in which the insureds in Balzer and Gumpp were asked for proof of loss led them reasonably to believe that they were applying to keep existing benefits.  They were not on notice that a limitation period was commencing.  In such cases notice would only be achieved by the conduct of the insurer in denying them coverage and this notice would only be effective if it was clear and unequivocal.

[34]            It can be seen most clearly in Dachner Investments Ltd. v. Laurentian Pacific Insurance Co. (1989), 36 B.C.L.R. (2d) 98, 37 C.C.L.I. 232 (C.A.) that the clear and unequivocal test comes into play when it is the conduct of the insurer that invokes the commencement of a limitation period.  Mr. Justice Taggart said:

In my opinion, when an insurer seeks to rely on the running of a period of limitation whose commencement is fixed by the conduct of the insurer in denying coverage under a policy of insurance, the denial of coverage must be clear and unequivocal.

[emphasis added]

 

Here, even if the limitation period was the one set out in section 22, it was Ms. Esau’s own application of 23 June 1999 that triggered it.  The matter of whether notice by the insurer was clear and unequivocal does not arise.

[35]            I therefore do not consider it necessary to consider the appellant’s argument that the summary trial judge misstated the legal test as to when a denial of benefits is clear and unequivocal.  If I were called upon to do so I would answer the question as I do in Pekarek v. The Manufacturers Life Insurance Co., 2006 BCCA 250, an appeal which was heard at the same time as this one and the reasons in which will be released immediately following these reasons.  Applying that test to the case at bar, on the whole of the evidence I am of the opinion that Ms. Esau understood the notice of termination of benefits provided to her by Co-operators and understood that she was involved in an appeal procedure.  As stated by the judge, “there is nothing preventing the appeal process from continuing while the limitation period is running.”  Taking all of those matters into account it cannot, in my opinion, be found that the judge erred in his conclusion that “there was a clear denial of this claim in the letter of October 21, 1999.”

CRY FROM THE HEART

[36]            This does not entirely dispose of the major argument put forth by the appellant in her factum, which is with respect to the “unique” nature of a contract of disability insurance.  She submits that there should be a “purposive analysis” of the legislation that would “protect the interests” of insureds.  The appellant cited Smith v. Co-operators General Insurance Co., [2002] 2 S.C.R. 129, 36 C.C.L.I. (3d) 1, 2002 SCC 30 where the insurer ceased paying statutory benefits and in its notice of termination advised the insured, as required under section 71 of the Insurance Act of Ontario, of her right to seek mediation.  When mediation failed the insured sued, but the insurer sought summary judgment on a limitation period set out in the act.  The motion was allowed and upheld on appeal.  The Supreme Court of Canada allowed the appeal.  In doing so it commented that one of the main objectives of insurance law is consumer protection.  The appellant in the case at bar takes comfort in this observation.

[37]            The appellant, while acknowledging that the Insurance Act governs in the case at bar, suggests that “important principles of equity” can be found in the Limitation Act, R.S.B.C. 1996, c. 266 “which may inform this Court’s approach to interpreting section 22 of the Insurance Act.”  Section 7(2) provides that the running of time is postponed as long as long as the person who has a right of action is under a disability.  A disability is defined as when the person is a minor or “is in fact incapable of or substantially impeded in managing his or her affairs.”

[38]            The appellant also asserts that, based upon the nature of disability insurance and an insurer’s obligation to deal with their insureds fairly and in good faith, it is:

… essential to the fair and equitable operation of section 22 that the issue of whether there has been a clear and unequivocal denial of benefits be interpreted restrictively as against the insurer.

 

On its face, it is not fair for an insurer to invite an insured to continue to submit more information, all the while waiting for the clock to “strike midnight”.  Insureds should be able to trust that if at any stage there is an invitation to provide more information, their claim is “safe” until such time as the information is submitted and they receive a response from the insurer.  In that insurers are not required to communicate that a denial is final and will trigger a limitation period, it is submitted that a modified objective test should be adopted to determine whether the insured understood that there was indeed a clear and unequivocal denial of benefits.

 

The preferable solution is that set out in the Supreme Court of Canada decision in Smith that insureds who are entitled to disability benefits are also entitled to know when a limitation period for pursuing their claim is to expire.  This view was echoed by Huddart J.A. in Balzer.

 

[39]            The appellant points out the courts have suggested legislative changes and have encouraged insurers, for their own sakes as well as that of their insureds, to make a better effort of informing insureds of limitation periods.  She points to the remarks of Madam Justice Huddart in Balzer:

[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.

 

[40]            The appellant references the comments of this Court in Dachner:

… it is open to the insurer, at any time, to give a clear and unequivocal notice to the insured that coverage under the policy of insurance is denied.  If such notice is given, then the insurer will be entitled to say that the period of limitation will begin to run on the day when the insured has notice of clear and unequivocal denial of coverage by the insurer.  If the insurer wishes to avoid any possibility of misunderstanding, in its letter it can expressly draw attention to the limitation period and state its position to be that the time limit begins to run on receipt by the insured of that letter.

 

[41]            The conclusion to the appellant’s argument in her factum ends as follows:

The principle that an insured is entitled to know that a limitation period has been triggered, and when it will expire is consistent with principles of statutory interpretation of the type of legislation which interferes with legal rights.  Ideally, the requirement to advise an insured of this would be read into s.22.  If it cannot, this Court should nonetheless stress that, in order for insurers to ensure that they have triggered a limitation period, they should clearly advise their insureds that their letter of denial constitutes a final decision which commences the running of a one year limitation period.

 

[42]            While I have sympathy for the plea of the appellant, this Court cannot, as acknowledged by the appellant, mandate the “ideal.” It cannot order legislative changes.  Nor can it mandate that insurers must advise insureds as to policy or statutory limitation provisions.  It would clearly be advisable for insurers to advise insureds as to the existence of limitation periods, but even here caution must be exercised because there are different limitation provisions with inconsistent commencement dates.  Insurers could not, therefore, as suggested by the appellant, “advise their insureds that their letter of denial … commences the running of a one year limitation period.”

CONCLUSION

[43]            I would dismiss the appeal.

 

 

 

“The Honourable Mr. Justice Thackray”

 

 

Reasons for Judgment of the Honourable Mr. Justice Hall:

[44]            I have read the draft reasons of Thackray J.A. and Levine J.A.  I am in agreement with the contents of those reasons. 

[45]            Further to what is said by Levine J.A., it might be a useful exercise for the Legislature to consider whether amendments of extant limitation provisions generally consonant with the legislative approach manifested in ss. 6 and 7 of the Limitation Act, R.S.B.C. 1996, c. 266, could be crafted and made applicable to the insurance legislation relevant to cases like the instant one.  This could enable a court dealing with such cases to bring into consideration the type of reasoning found in Novak v. Bond, [1999] 1 S.C.R. 808, 172 D.L.R. (4th) 385.  While this might diminish to some degree the rigorous certitude manifested under the current legislative regime, such amending legislation should afford a greater amount of flexibility to a court to grant relief where appropriate in cases of possible hardship. 

“The Honourable Mr. Justice Hall”

 

 

Reasons for Judgment of the Honourable Madam Justice Levine:

[46]            I have read in draft form the reasons for judgment of my colleague, Mr. Justice Thackray, in this appeal, and in the appeal of Pekarek v. Manufacturers Life Insurance Co., heard at the same time.  I agree with my colleague that both appeals should be dismissed, for the reasons he has given. The factual and legal obstacles to successful appeals are insurmountable in these cases.

[47]            I wish to respond in my own words, however, to the appellants’ arguments concerning the legal difficulties encountered by persons in their circumstances in making claims under policies of disability insurance. My colleague has responded to these arguments in his reasons for judgment in this appeal under the heading “Cry From the Heart.”

[48]            In my opinion, the appellants’ arguments are not simply a “cry from the heart” or a plea for the Court’s sympathy, overlooking legal precedent and authority. In their arguments, they pointed the court to a series of judicial pronouncements, including from the Supreme Court of Canada, on the nature of insurance contracts, the state of the Insurance Act, R.S.B.C. 1996, c. 226, and the obligations of insurers.  For the reasons given by my colleague, the principles articulated in these various pronouncements do not apply on the facts of these cases to provide relief to the appellants.  They demonstrate, however, that the difficulties encountered by these appellants are not unique, and that the time has come for the Legislature to act.

[49]            In Smith v. Co-operators General Insurance Co., [2002] 2 S.C.R. 129, 2002 SCC 30 (a case about accident benefits), Gonthier J. for the majority said the following about the nature of insurance (at para. 11):

There is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance. The Court of Appeal was unanimous on this point and the respondent does not contest it. In Insurance Law in Canada (loose-leaf ed.), vol. 1, Professor Craig Brown observed, “In one way or another, much of insurance law has as an objective the protection of customers” (p. 1-5).

[50]            Equally, there can be no dispute that one of the main objectives of disability insurance is consumer protection, in the sense that it provides protection for those who are, at the time they need the insurance, vulnerable and weak.  Contracts of disability insurance also have all the hallmarks of a consumer transaction: the “purchaser” (or beneficiary) is presented with a standard form contract, which he or she has no power to negotiate or change. Indeed, in these cases (as is typical in the employment context), the contracts of insurance were made between the appellants’ employers and the insurance companies; the appellants had no involvement in determining the terms and conditions.

[51]            In Smith, Gonthier J. held (at para. 14) that the insurer had a statutory obligation to “inform the person of the dispute resolution process contained in ss. 279 to 283 of the Insurance Act [of Ontario] in straightforward and clear language, directed toward an unsophisticated person.” [Underlining added.]  The information provided would include a description of “the relevant time limits that govern the entire process.”

[52]            The British Columbia Insurance Act includes no such statutory obligation, and, as my colleague points out, it is not within the power of this Court to require insurers to provide specific information regarding limitation periods.  But the judicially imposed requirement to provide a “clear and unequivocal denial,” articulated in cases such as Dachner Investments Ltd. v. Laurentian Pacific Insurance Co. (1989), 36 B.C.L.R. (2d) 98 (C.A.), Knight Towing Ltd. v. Guardian Insurance Co. of Canada (1989), 37 C.C.L.I. 222 (B.C.S.C.), and Balzer v. Sun Life Assurance Co. of Canada (c.o.b. Sun Life of Canada) (2003), 227 D.L.R. (4th) 693, 2003 BCCA 306, reflects the same principle: that insurers have an obligation to provide clear information to insured persons, who are consumers, about their claims under the policy. In Balzer, Huddart J.A. for the Court went so far as to recommend (at para. 45) that insurers intending to deny coverage “include an alert in the letter drawing the insured’s attention to the one year limitation in s. 22(1) [of the Insurance Act] and informing the insured that the insurer will rely on the denial as starting the running of time.”

[53]            The evidence in these appeals demonstrates that the appellants had no information about the relevant limitation periods until those periods had expired. Their employers had provided them with “benefits booklets” that contained no information about limitation periods, and none of the correspondence between the appellants and the insurers mentioned limitation periods.

[54]            This situation arises in the context of a statutory scheme relating to limitation periods under policies of insurance against the “vicissitudes of life” that has been described by Southin J.A. (in Gumpp v. Co-operators Life Insurance Co. (2004), 239 D.L.R. (4th) 638, 2004 BCCA 217 at para. 2) (a case about disability insurance) as “so labyrinthine as to be deserving of even harsher judicial condemnation.” The reference to “judicial condemnation” was to the comments made by McLachlin C.J.C. in KP Pacific Holdings Ltd. v. Guardian Insurance Co. of Canada, [2003] 1 S.C.R. 433, 2003 SCC 25 (a case about property insurance), in which she described the effects of “[t]he outmoded category-based [B.C. Insurance] Act” and exhorted the Legislature to act (at paras. 4-5):

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” [citations omitted].

It would be highly salutary for the Legislature to revisit these provisions…. 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.

[55]            As do I, and add that such litigation is not only unproductive and wasteful, it is also, in many cases, unjust.

[56]            The confusion that results from the “labyrinthine” statutory scheme and the lack of information about limitation periods is compounded by the insurers’ ongoing references in their correspondence to appeals and time limits to submit additional information. Lawyers know the difference between an appeal and an action for breach of contract, but in the absence of any clear information about the process for disputing a denial of a claim, including information regarding the relevant limitation period, a layperson, and especially a layperson suffering from a mental disability, is at a serious disadvantage.

[57]            It is clear that insurers have no intention of voluntarily following judicial recommendations that they provide clear information about the effect of their denial of coverage. As my colleague points out, that is understandable, given the confusion arising from inconsistencies between statutory and contractual limitation periods and from the statutory scheme.

[58]            So I make yet another judicial plea for the Legislature to act to relieve consumers, insurers, and the courts from this untenable situation in which disabled persons are experiencing the stress of technical legal battles rather than the peace of mind their disability insurance is intended to provide.

[59]            Despite these comments, I would dismiss the appeal.

“The Honourable Madam Justice Levine”