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Limitations - Contracting Out of Statute

Kassburg v. Sun Life Assurance Company of Canada (Ont CA, 2014)

In this disability insurance case the Court of Appeal approved a motion judge's reasoning as follows on the circumstances required before a valid contracting out can be made of statutory limitation periods as is presently allowed for under the Limitations Act, 2002 with respect to some contracts [s.22(2) (pre-01 January 2004 contracts) and s.22(5) (some business contracts)]:
[20] The motion judge then considered whether the appellant met the requirements set out at para. 20 of Boyce v. The Co-Operators General Insurance Co., 2013 ONCA 298 (CanLII), 116 O.R. (3d) 56, at para. 20, leave to appeal to S.C.C. refused, [2013] S.C.C.A. No. 296, that any contractual term purporting to shorten a statutory limitation period must “in ‘clear language’” describe the limitation period, identify the scope of its application, and exclude the operation of other limitation periods.

[21] The Contract Document provides for a one year limitation period from “the end of the time period in which proof of the claim is required”. The Booklet provides for a one year limitation period from “after the date [the insurer] must receive [the insured’s] claim forms”.

[22] After reviewing the language in the Contract Document and the Booklet together, the motion judge concluded that the contractual limitation period was not clear, and that the appellant had not effectively contracted out of the statutory limitation period.

[23] The Booklet tied the limitation period to receipt of “claim forms”, whereas the Contract Document tied the limitation period to receipt of “proof of claim”. It was unclear whether “claim forms” are the same thing as “proof of claim”. The motion judge noted that, reading the contract as a whole, it appears that “proof of claim” is broader than “claim forms”. “Proof of claim” is the entire process of providing information to the insurer to enable it to decide whether to pay benefits. As indicated by the language in the Booklet, filling out the “claim forms” is only one step in providing “proof of claim”.

[24] The motion judge stated, “it would not be unreasonable to interpret the limitation period in the contract as providing that the limitation period of one year begins to run once Sun Life receives sufficient proof of the claim, and not simply the claim forms.” He found that it would be reasonable to believe, as did the respondent, that the appeal procedure formed part of the application process. In support of his conclusion on ambiguity, he noted that the appeal procedure was confusing to the respondent’s representative, who had not received a response to her questions about the process.

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