The Rolling Limitation Period
This concept is important to interpret a claim which (1) has arisen from a pre-2004 policy in Ontario or (2) an action under the relevant amended limitations statute.
Historically, prior to amendments to the statute, generally speaking for claims made where the benefit sum is paid monthly or any some other periodic basis, the view was that the rolling limitation period applied.
However, this is not a universal truth. When the rolling limitation period had been applied, it was due to the wording of the policy which speaks to a limitation period starting when the “cause of action” arose.
This wording is different from that of a limitation period which starts on the occurrence of a “certain event” such as the submission of a claim, as opposed to a “cause of action”. Although it would appear at first blush to be a matter of semantics, as the claim for benefits is in each instance one based on periodic payments, the wording has been seen to be of a critical distinction.
An early Ontario decision which accepted the concept of the rolling limitation period was that of the 1987 Divisional Court. 1The claim was subject to a one year limitation period.
The trial judge and the Divisional Court, on appeal, allowed the claim for the one year period prior to the issuance of the claim, holding the remainder was barred by the limitation period.
A similar case also held that the rolling concept was applied for accident benefits under the Insurance Act.2
In cases where the rolling limitation period does apply, there still will be an obligation upon the plaintiff to prove that he or she has been continually disabled through the qualifying period and continually through to the date of the cause of action. It will not suffice to merely show that when the cause of action arose that he or she met the test of disability.
A good example of this requirement was seen in a 2005 B.C. Supreme Court decision. 3The plaintiff was injured in a ski accident in April of 1998. She did not submit her proof of claim until October of 2001. She sued in June of 2003.
The insurer argued successfully that the issue of missed limitation period was not one to be answered as the plaintiff had not proven herself to be “totally disabled” within the relevant qualifying period. The claim was dismissed for this reason.
"Disability" Claims under Part V Ontario Insurance Act
An issue had arisen, however, as to whether the theory of the rolling limitation period should also apply to “disability” claims involving life insurance as governed by Part V of the Ontario Insurance Act. This issue was put to the test in a 2007 decision, 4 dealing with a policy which was prior to January 1, 2004. The court denied the applicability of the rolling limitation concept to the limitation period.
The court found that there had been a clear and unequivocal denial of this claim requiring the action to be commenced within 12 months. The rolling limitation period was not applied. The trial judge reviewed many of the cases cited above in favour of the rolling concept and found them of no value to the submission as the Part V life insurance section was distinct.
This will be of significance only to the modern case law interpreting rights under Part V policies which pre-date January 1, 2004. Claims under the new Limitations Act are not troubled by the conclusions reached above as the new legislation allows two years from the date on which the claim was discovered.
There, however, remains an issue as to whether the rolling limitation period will still be arguable under the new Act, as discussed below.
The wording of Part V is ill suited for a “disability” policy as it contemplates a one-time payment, given its overall application to a death benefit.
A similar argument was considered by a 2011 ruling of the Ontario Court of Appeal,5again dealing with a claim governed by a contract which pre-dated January 1, 2004.6
The action was dismissed on a summary judgment motion as it had been commenced outside the time period as stated in the Benefits Plan, which required proof of disability be submitted within 90 days following a period of 26 weeks of continuous disability.
There was no definition in the plan of “the covered event”. The action was started 11 years after the denial of the claim in 2006. One argument advanced was that the long term benefits were payable monthly and hence were governed by a rolling limitation period.
The rolling limitation submission did not apply as in this case there was held to be an event, which defined the obligation to pay, which was the “covered event”.
The wording of the Plan document was similar to the structure of the Part V claim, again phrased to contemplate a one-time payment.
The plan document allowed the insurer to request, from time to time, proof of continued disability. It would appear that the design of this plan would end the rolling limitation period argument by establishing a singular unique date on which benefit entitlement arose, followed, albeit, by medical updates. The plan creates the presumption that once the “covered event” has been successfully passed, benefits will follow. Hence the denial of the covered event starts only one time clock.
The decision, unlike Ruffolo,7was not dependent upon a particular statutory wording.
The Nova Scotia Supreme Court took the same view of this plea in 2014.8It did find that there was no clear and unequivocal denial and allowed the claim for this reason to survive, but agreed with the case law cited above on the rolling limitation issue, finding that the policy created a “defined date”.
The Supreme Court of Canada in its 2009 decision 9considered a claim made by a widow of a deceased worker covered under the province’s workers’ compensation statute. She had been denied a widow’s pension due to her marriage. The legislation was later amended, but not retroactively. She sued seeking the application of the rolling concept, unsuccessfully at all trial and appellate levels.
The Supreme Court decided that “the renewing cause of action argument cannot succeed as it assumes that the benefits which were terminated would otherwise have been paid”.
The Alberta Court of Appeal 10in a 2014 decision, considered the application of the amended Limitations Act and the assertion of the rolling limitation period. The policy in question called for the usual periodic payments on a monthly basis. The insurer had denied the claim effective December 2001. The claim was initiated some 4.5 years later.
The court found that the dispute arose at a distinct point in time which started the limitation clock on “the wording of this contract”. The precise wording was not repeated by the Court of Appeal but was referenced by the motions judge.
The motions judge interpreted the policy language as one contemplating a “covered event” similar to that of Goorbarry referenced below, which exempted the rolling limitation argument.
However, more importantly, the court distinguished the statutory term and noted that prior jurisprudence spoke to limitation periods which commenced with the “cause of action” or when payments became due. As the operative statute did not use this nomenclature, it was determined that the rolling concept could not apply. The Supreme Court decision immediately above was also referenced to assist in this determination.
The Halter decision was followed by the same court in 2014. 11This decision noted that the claim in question arose from a “disability” policy as a component of life insurance as opposed to a pure accident and sickness policy. The distinction was of no consequence as the court found the action was governed by the same statute and the rolling concept was not applied.
A similar conclusion was reached in a 2016 Ontario Court of Appeal decision. 12 In this case, the claim made for income replacement benefits was dismissed on a summary judgment motion. On appeal, the plaintiff submitted that the claim was subject to a rolling limitation period. The Court of Appeal denied the argument concludin that "It is well established in this court's case law that the limitation period is triggered by a single event, which is the refusal of an insurer to pay the IRB claimed".
Even should the rolling limitation concept be successfully applied, the result is only to establish the commencement date of benefits. The plaintiff must still prove the usual criteria for a successful claim, namely:
- Active employment at the onset of disability; and
- Continual disability for the elimination period; and
- Continual disability for the own occupation period, where such is a policy requirement; and
- Continual disability to the date of the commencement of the action, be that own occupation and/or any occupation for the duration of the claim.
It will not suffice to prove only disability at the commencement of the cause of action.