The Ontario Court of Appeal in Tomec v Economical Mutual Insurance Company, 2019 ONCA 882, applied the reasoning of the Supreme Court of Canada (SCC) in Pioneer Corp v Godfrey, 2019 SCC 42, to conclude that the discoverability principle applies to statutory accident benefits. What this means for insurers is that they may be required to pay accident benefits past the limitation period articulated in the statute.
On September 12, 2008, the appellant, a pedestrian, was struck by a motor vehicle. After the accident, the appellant applied to her insurer for attendant care benefits and housekeeping benefits pursuant to s. 18 and s. 22 of the Statutory Accident Benefits Schedule – Accidents On or After November 1, 1996, O. Reg. 403/96 (SABS). These benefits are payable for 104 weeks following a motor vehicle accident unless the beneficiary's injuries are designated as "Catastrophic Impairment" (CAT), in which case the 104-week time limit does not apply. In approaching the end of this 104-week period, the appellant's insurer provided notice that these benefits would be terminated come the 104th week, as her injuries had not been designated as CAT.
Over the next five years, the appellant's injuries worsened and were designated as CAT. Nevertheless, the insurer declined the appellant's requests for attendant care and housekeeping benefits, asserting that she was time barred. Both s. 281.1(1) of the Insurance Act, R.S.O. 1990, c. I.8 1 and s. 51(1) of SABS provide that any dispute over benefits must be brought within two years of the insurer's refusal to pay the benefit. The insurer claimed that the limitation period began upon the appellant being notified that she was no longer qualified to receive the benefits.
Applying the discoverability principle to the Insurance Act and SABS
The Ontario Court of Appeal allowed the appeal. Following the SCC's reasoning in Godfrey, the Court of Appeal concluded that the discoverability principle applies to the limitation periods in the Insurance Act and SABS. Therefore the two-year limitation period does not begin until the claimant knows, or ought toknow through the exercise of reasonable diligence, of the material facts on which the cause of action is based.
- Substance rather than form applies to determine whether a limitation period is contingent upon the accrual of a cause of action
By way of background, in Godfrey, the SCC analyzed whether the cause of action found in s. 36 of the Competition Act, R.S.C. 1985, c. C-34 was subject to a two-year limitation period. Section 36 establishes a cause of action for conduct that is contrary to competition (i.e., price fixing). Although the Competition Act has a statutory limitation period of two years, beginning after the actionable conduct was alleged to have occurred, the SCC concluded that the limitation period does not begin until the accrual of the cause of action:
In determining whether a limitation period runs from the accrual of a cause of action or knowledge of the injury, such that discoverability applies, substance, not form, is to prevail: even where the statute does not explicitly state that the limitation period runs from "the accrual of the cause of action", discoverability will apply if it is evident that the operation of a limitation period is, in substance, conditioned upon accrual of a cause of action or knowledge of an injury. 2
What this means is that instead of the limitation period beginning at the occurrence of a certain event (a hard limitation period), the limitation period only begins running when the claimant discovers or ought to have discovered the facts giving rise to the cause of action. The Court of Appeal in Tomec affirmed that the refusal to pay benefits was clearly tied to the cause of action. Only at the point where the benefits were denied, after the appellant's injuries were designated as CAT, did the appellant's cause of action fully accrue and the limitation period start running.
- Legislative purpose of SABS and policy considerations
Consistent with the SCC's analysis in Godfrey, the Ontario Court of Appeal reviewed the purpose of SABS to determine whether the legislature intended for the limitation period to operate as a hard limitation period.
Justice Hourigan, writing for the Court of Appeal, considered SABS' consumer protection purpose – to maximize benefits for individuals injured and suffering from serious health impacts because of a motor vehicle accident. Justice Hourigan concluded that a hard limitation period would be inconsistent with the intention to provide fair compensation and minimize economic disruption in the lives of accident victims.
This conclusion is consistent with the principle that "statutes are to be interpreted in a manner that does not lead to absurd results."3 A hard limitation period would penalize claimants accessing statutory benefits immediately after a motor vehicle accident but before their injuries were designated as CAT; awarding those who wait to claim their benefits until their injuries deteriorate to that of CAT.
The recent trend in the case law seems to set the discoverability principle as the default for limitation periods unless: (i) a hard limitation period applies; or (ii) the legislature exempts a limitation period from the discoverability rule using clear legislative language. A hard limitation period is to be applied narrowly. Furthermore, irrespective of statutory language that begins a limitation period from the occurrence of a particular event, i.e., the denial of benefits, a court may interpret this generously unless the legislature clearly states that the discoverability principle should not apply.
Insurers need to be aware that putting the claimant on notice that their attendant care and housekeeping benefits will be discontinued no longer insulates the insurer from having to provide these benefits in the future. This decision holds insurers responsible for providing these benefits even if the claimant's injuries are first designated as CAT more than two-years after the insurer provides notice that these benefits will be discontinued.
1 Section 281.1 of the Insurance Act was repealed in 2014.
2 Pioneer Corp. v Godfrey, 2019 SCC 42, para 36.
3 Tomec v Economical Mutual Insurance Company, 2019 ONCA 882, para 46.
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