When Does a Plaintiff “Discover” a Claim in Ontario? A Principled Approach to Limitation Periods

Most civil actions in Ontario are subject to a two-year limitation period under section 4 of the Limitations Act, 2002, S.O. 2002, c.24, Sched. B (the “Limitations Act”). 

When it came into force in 2004, the Act  was intended to bring uniformity to the patchwork quilt that was Ontario’s former limitations regime.  Despite this lofty goal, no one anticipated that the issue of when the two-year limitation period begins would continue to generate a flurry of litigation.

Sixteen years later, the Ontario Court of Appeal has lent much-needed clarity to the methodology all Courts should apply in determining when a plaintiff “discovers” their claim. 

In Clarke v. Sun Life Assurance Company, 2020 ONCA 11, the Court establishes a principled approach to how discoverability ought to be analyzed and applied.

A Denial, of Sorts

Clarke involved an action for long-term disability (“LTD”) benefits under a group policy of insurance. 

The plaintiff was an employee of Canada Post.  The LTD insurer provided the group disability insurance plan (the “Plan”) for Canada Post’s employees.

An employee’s right to total disability benefits under the Plan was established by two points in time. In the first period, which applied to the Plan’s elimination period and the two years following, an insured was treated as “totally disabled” if they were prevented from performing the essential duties of their ‘Own Occupation’”. In the second period following the initial two years, the Plan treated the insured as “Totally Disabled for Any Occupation” if they were prevented from “engaging in any commensurate occupation…”.

The plaintiff stopped working in 2011 due to health problems. 

She made a claim to the insurer, which denied her claim on March 19, 2012 and advised her of her right to appeal pursuant to the insurer’s internal appeal process. 

The plaintiff appealed.  In February 2014, the insurer wrote to the plaintiff to advise her that she was approved for LTD benefits during the Own Occupation period, which ended in April, 2013, but that the plaintiff’s medical information did not support her claim for “Any Occupation” total disability benefits. 

The plaintiff advised she would appeal the “Any Occupation” decision by the insurer in February, 2014.  However, the record did not disclose any further communication between the plaintiff and the insurer for the next three years. 

The plaintiff did not provide further medical information to the insurer until March, 2017.  In June, 2017, the insurer advised the plaintiff that she did not qualify for “Any Occupation” total disability benefits, although it did not formally use the word “deny” in its letter. 

The plaintiff then commenced her civil action against the insurer in August, 2018, seeking the payment of arrears of LTD benefits. 

The insurer brought a motion for summary judgment to dismiss the action as having been started outside the two-year limitation period under section 4 of the Limitations Act.

The motion judge denied the insurer’s motion to dismiss the plaintiff’s action as statute-barred.  The Court rejected the insurer’s argument that the limitation period began to run in February, 2014--when the insurer wrote to the plaintiff to advise that the medical information she provided did not support a claim for “Any Occupation” total disability benefits.  The motion judge held that the letter was not clear that the words used by the insurer were an actual denial of disability benefits at that time.  The Court decided instead that the limitation period started with the denial communicated by the insurer in June, 2017, even though that letter also did not use the language of denial.

On appeal to the Court of Appeal, the Court reversed the motion judge’s decision in part.  It held that the motion judge failed to make required factual findings pursuant to the required methodology under section 5 of the Limitations Act.  As such, the motion judge’s order was set aside.  The Court of Appeal declined, however, to determine on the facts whether the plaintiff’s action was statute-barred.  The issue was remitted to trial.

How Section 5 of the Limitations Act Works

In setting aside the motion judge’s discoverability analysis under section 5 of the Limitations Act, the Court of Appeal in Clarke clarified how the many parts of section 5 ought to operate in conjunction.

Section 5 of the Limitations Act sets out when a plaintiff discovers a claim against the defendant as follows:

5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

5 (2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.  2002, c. 24, Sched. B, s. 5 (2).

According to the Court, subsections 5(1) and 5(2) include “cumulative and comparative elements”.

Section 5(1)(a) identifies the four elements that “a court must examine cumulatively” to determine when a claim is discovered. 

Under section 5(1)(a), the Court is required to make two factual findings:

1. the Court first determines the “day on which the person with the claim first knew” all four of the elements. 
   
   The presumed date of the plaintiff’s knowledge for this first factual finding is set out under section 5(2) in which a plaintiff is “presumed to have known of the matters referred to in clause 1(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved”.  Applying the presumption under section 5(2) requires the Court to consider whether the plaintiff acted with “due diligence” in determining if she had a claim; and
   
   
2. the Court must further determine “the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known” of the four elements set out in section 5(1)(a).

Once these two findings of fact are made, section 5(1) then requires the Court to “compare the two dates”.  The claim is “discovered” on the earlier of the two.

In this case, the Court of Appeal held that the motion judge erred by failing to make two key factual findings under section 5:

1. the date on which the plaintiff first knew a proceeding would be “an appropriate means” to seek to remedy her injury under section 5(1)(a)(iv); and
   
   
2. the day on which a reasonable person with the plaintiff’s abilities and in the circumstances of the plaintiff first ought to have known of the matter under section 5(1)(b).

If the motion judge could determine when the plaintiff first knew a proceeding would be appropriate, the motion judge was required to analyze the presumption under section 5(2), including whether the plaintiff acted with “due diligence” in determining whether she had a claim.

A Principled Approach to Discoverability

The methodology affirmed by the Court of Appeal in Clarke for the discoverability of claims is not the theoretical stuff of legal scholars.  It has important implications.

The application of a uniform test for discoverability is necessary to ensure that limitation periods are applied consistently throughout the Province. 

While the discoverability question inevitably engages a factual inquiry, the application of a principled approach to all cases lends legitimacy to the Courts’ determination of when claims are statute-barred.