1. Introduction

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The law does not like arbitrariness, instability and uncertainty. Many rules are thus formulated to promote each of those principles. Stability and certainty underlie the existence of limitation periods. The law is willing to sacrifice the civil rights and entitlements of individuals in exchange for some peace of mind. There is also some value in speedy resolution of disputes, if or when they arise. Little would be gained by letting civil matters fester indefinitely. Not surprisingly, the insurance industry lives by those principles as well.

Elsewhere, the type of no-fault coverage provided under automobile insurance policies were discussed (see “Section B Benefits”). The paper did not discuss various provisos precedent to such benefits being paid. Evidently, one such condition is the limitation period. Section 262 of the Insurance Act, RSNB 1973, c. I-12, states that:

262   Every action or proceeding against an insurer under a contract in respect of insurance provided under section 255, 256 or 257 shall be commenced within the limitation period specified in the contract, but in no event shall the limitation period be less than one year after the happening of the accident.

Along those lines, the Standard Owner’s Policy for New Brunswick (N.B.P.F. No 1) contains several limitation periods, i.e. essentially one for each Section. Regarding Section B no-fault benefits, the following is stated therein:

(7)   WHEN MONEYS PAYABLE

[…]

(c)   Every action or proceeding against the insurer for the recovery of a claim under this section shall be commenced within one (1) year from the date on which the cause of action arose and not afterwards.

[…]

Insofar as applicable the general provisions, definitions, exclusions and statutory conditions of the policy also apply.

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GENERAL PROVISIONS, DEFINITIONS AND EXCLUSIONS

Time and Manner of Payment of Insurance Money

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Limitation of Actions
(3)   Every action or proceeding against the insurer under this contract in respect of loss or damage to the automobile shall be commenced within two years next after the happening of the loss and not afterwards, and in respect of loss or damage to persons or property shall be commenced within two years next after the cause of action arose and not afterwards.

To the extent that there is a conflict between clause 7(c) of Section B and clause 6(3) of the General Provisions, the former is the applicable one. Thus, when an issue arises involving the Section B insurer, the action or proceeding has to be commenced within one year of the cause of action.

When Does the Cause of Action Arise?

This question is fundamental to the calculation and application of the Section B limitation period. The answer is not as straightforward as one might think in the circumstances. Some glaring differences can be quickly noted in the texts chosen to express the limitation periods, both under the statute and under the standard automobile insurance policy.

One obvious difference is the language used in s. 262 of the Insurance Act, supra, and the one of the Section B limitation provision. Section 262 sets the minimal threshold at not “less than one year after the happening of the accident [underlining added]”. Similar language is found under clause 6(3) of the General Provisions when speaking of “loss or damage to the automobile”, referring to a limitation of action “within two years next after the happening of the loss [underlining added]”. The underlined portion is not found in the relevant provision of Section B. It speaks instead of the “date on which the cause of action arose”. While the expression ‘accident’ is defined in Section B and s. 265.1 of the Insurance Act, supra, ‘cause of action’ is not.

The terms of the statute and of the contract suggest the cause of action spoken of under Section B is broader than the car accident itself. The economy of the standard policy suggests the same, and so the usual rules of interpretation of insurance contracts (see “Deductibility of Benefits in Insurance Contracts”). For example, since the insurer has a duty to pay weekly indemnity benefits as long as a disability persists, a cause of action can arise long after the car accident happened. Therefore, the cause of action cannot be limited to the car accident. When considering clause (7)(a) of the Special Provisions of Section B, subject to other provisions like clause (2) of Subjection I, it is clear the insurers have a continuing duty to pay money when sufficient proofs of claims are presented. Evidently, the limitation period will depend on the nature of the insurer’s action in each case.

As already suggested for insurers stopping payments more than two years after the ‘happening of the accident’, it is difficult to accept that the cause of action is the car accident itself. It is instead of the type of a right to recovery, a debt or an entitlement to benefits, which arises from the moment that the insurer breaches the terms of the insurance contract. In this respect, one of the issues that has been addressed by the courts is whether there is a rolling limitation period since the Section B insurer has a duty to pay weekly indemnity benefits monthly. In Couture v. Fidelity Insurance Co. of Canada (1987), 80 NBR (2d) 436 (CA), the unanimous Court of Appeal agreed that there was then a continuing right to benefits over a 3-year period, as long as the insured prove disability. The one-year limitation period starts to run whenever the insurer stops payments, during which the insured either has to file the action or submit further proof of disability. The cause of action extinguishes if neither is pursued (paras 8-9):

For the purposes of the policy, the letter was either a denial of liability or constituted in effect a request for proof of continued disability. If it was a denial of liability it would give rise to a cause of action to be taken within one year of notification. On the other hand, if it was a request for additional proof then the respondent had a choice. She could either take the position that the request was unjustified, thus giving her a cause of action and sue within one year of the request for additional proof or, alternatively, she could provide further proof of continued disability which if not accepted by the appellant would extend her cause of action to one year from the insurer’s refusal of her further proof.

[9]   The policy, which provide time limits for the giving of notice and proof of loss, does not provide a time limit within which to comply with a request for proof of continued disability. Consequently, such proof should be furnished within a reasonable time and not more than one year of the request. I say one year because, if an insured has one year to bring an action, it is difficult to interpret the policy to give the insured a longer time to provide proof of continued disability.

In that case, the Court of Appeal struck the claim filed almost 3 years after the denial; no further proof of continued disability had been provided over some 22 months after the denial.

In Shanks v. TD Home and Auto Insurance Co., 2019 NBQB 269, Justice Clendening also struck a claim for Section B benefits filed 4½ years after the accident and 4 years 4 months after a definitive denial by the insurer. A similar result was reached in Howe v. Portage La Prairie Mutual Insurance Co., 1996 CanLII 12048 (QB). At the other end, Justice Creaghan, in LeBlanc v. Zurich Insurance Co. (2000), 231 NBR 211 (QB), refused to award summary judgment against an action filed more than 6 years after termination of benefits, even though a prior action for recovery had been filed within one year of the end of payment, withdrawn a few months after definitive denial and a claim against the third party settled in the meantime; the motion judge felt that there remained a genuine issue to be resolved by the trial judge.

Although not dealing with an action for recovery of Section B benefits, the matter of Co-Operative Fire and Casualty Co. v. Ferguson (1984), 59 NBR (2d) 299 (QB), supports the view that the limitation period does not start running as of the date of the accident. In that case, the plaintiff had settled a claim with the tortfeasor, including an amount for loss of income. The Section B insurer sought to recover the money it paid as per its subrogation rights (as such still existed then). The injured party argued that the limitation period had passed, being more than two years after the accident. The presiding judge held the date of settlement with the third party as the starting date of the insurer’s cause of action for recovery under the insurance contract, or debt (para 11); the action was therefore valid even if filed some 5 years after the accident. It is difficult to imagine how the claim of an injured person who is not getting what is owed under the insurance contract could be qualified differently than that of the insurer.

Other factors to consider in the calculation of the limitation period are the requirements for the proof of a claim and the ascertainment of the amount of the loss as set by clause (7)(b):

(7)   WHEN MONEYS PAYABLE

[…]

(b)   No person shall bring action to recover the amount of a claim under this section unless the requirements of provisions (4) and (5) are complied with, nor until the amount of the loss has been ascertained as provided in this section.

A prior version of that clause was invoked in Vautour v. Gore Mutual Insurance Co. (1985), 64 NBR (2d) 181 (QB), where the plaintiff filed his action 15 months after the accident. However, during the first 6 months he had received benefits from disability insurance, followed by another 4 months of Employment Insurance benefits. It was agreed that during those 10 months, his entitlement to Section B weekly indemnity benefits would have been nil. Justice Higgins held that the “cause of action did not arise until the amount of his loss was ascertained which, in these circumstances, absent any agreement, was when the insured’s employment benefits expired and the insured could then certify his continued total disability” (para 16). The action had thus been filed within the one-year limitation period.

Furthermore, Section B benefits are not limited to the driver and occupants of a vehicle: they also cover cyclists or pedestrians injured by the insured vehicle. Where a pedestrian and several vehicles are involved and it is uncertain which vehicle caused the prejudice, courts may delay the moment of the cause of action to when the proper defendant is identified. That is what Justice Garnett did in Smith v. Jevco Insurance, 2001 NBQB 133. The accident involved two motorcyclists and a cyclist; it was unclear which one had hit and killed the cyclist. A comprehensive accident reconstruction report was produced only 5 months after the fact. The widow filed a first action almost 15 months after the accident, but 10 months after the expert report had identified the culprit. Even though the two motorcyclists involved were insured by the same company, and thus the insurer’s identity was not really at play, the trial judge started the limitation as of the date of the expert report.

As the limitation period is the same for the three types of Section B no-fault benefits (i.e. death, medical and loss of income), the same considerations apply to each. ‘Cause of action’ in that part of the insurance policy is therefore broader than the car accident itself.

This paper is offered for the purpose of discussion only. It does not constitute legal advice and its distribution does not create a solicitor-client relationship. Please consult a lawyer if you require legal advice.