Aug 18, 2016

Limitation Periods: Avoiding Hitting the Reset Button

Tuck v Supreme Holdings, 2016 NLCA 40 (CanLII)

The Newfoundland and Labrador Court of Appeal recently affirmed the test for confirming a cause of action and thus resetting a limitation period under the NL Limitations Act. Insurers dealing with NL claims can be reassured that payments made in the course of investigating claims, such as payments for medical charts and reports, won’t be considered “a payment in respect of that cause of action”, and won’t typically confirm a cause of action and thus reset a limitation period. However, insurers should be mindful that payments for lost wages and/or allied health costs might be treated differently. To minimize the ability of a party to later argue that an insurer reset her limitation period, any such payments made before a Statement of Claim is issued should be on a “without prejudice” basis. They also should be accompanied by a statement to the effect that they should not be construed as confirming a Plaintiff’s cause of action or waiving any limitation period.

The facts in Tuck v. Supreme Holdings were simple. On December 28, 2009, Ms. Tuck was involved in a motor vehicle collision and allegedly sustained injuries. Her Statement of Claim, though, wasn’t issued until February 28, 2012 - approximately two months after the expiration of the two year limitation period. On account of this, the Defendants’ insurer refused to deal with her claim on the basis it was statute-barred. Ms. Tuck, however, claimed the Defendants “reset” the limitation period by confirming her cause of action pursuant to section 16(1)(b) of the NL Limitations Act. If this was correct, her Statement of Claim was issued in time. Under section 16(1)(b), a confirmation of a cause of action occurs where a person “makes a payment in respect of that cause of action, right or title of another.”

The evidentiary record for both the initial Rule 38 Application and the later Appeal was limited because Ms. Tuck’s original lawyer’s paper file was destroyed by fire and the Defendants’ insurer’s file couldn’t be located. The Court of Appeal considered the following facts:

  • Tuck’s lawyer wrote to a named representative of the insurer on April 9, 2010, in correspondence marked “without prejudice”, advising he was in possession of a doctor’s report concerning Ms. Tuck that he would be pleased to forward upon receipt of the doctor’s fee plus tax.
  • The Defendants’ insurer subsequently forwarded a cheque in payment for the report that the law firm receipted on May 21, 2010.
  • Tuck’s lawyer forwarded the medical report to the insurer on that date or shortly after.

On August 4, 2016, the Court of Appeal affirmed that when a party establishes “confirmation” by the other, the limitation period is “reset” and runs from the date of that confirmation. The Court also concluded that an admission of liability is not required for confirmation under section 16(1)(b) and payment for a medical report in the context of a personal injury action is not a payment “in respect of that cause of action” within the meaning of that section.

No admission of liability required. Section 16(1)(b) does not require an admission of liability to constitute confirmation even though the Supreme Court of Canada previously held that a written admission of liability is required to constitute acknowledgment in section 16(1)(a) of the Act (Ryan v. Moore).

Payment relates to handling of claims, not in respect of a cause of action. The Defendants’ insurer’s payment for the medical report was not “a payment in respect of [her] cause of action” within the meaning of section 16(1)(b). The Supreme Court of Canada previously explained that the purpose of such a payment is to promote investigation and early resolution of certain aspects of a claim, not to indemnify (Ryan v. Moore). The Court of Appeal added that both insurers and plaintiffs require medical and other information: insurers to set their reserves and responsibly handle claims of and against their insureds, and plaintiffs to evaluate and prosecute their claims. The related expenses are “costs related to the handling of claims, not payments in respect of a cause of action”. The overall purpose of obtaining medical information respecting a claimant or a potential claimant in a personal injury action is investigatory, and absent unusual circumstances, actions taken to investigate claims, without more, should not operate to alter the applicable limitation periods.”

Please contact your McInnes Cooper lawyer or any member of the Insurance Defence Team @ McInnes Cooper to discuss this topic or any other legal issue.

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