Thompson v. RBC Life Insurance Company, 2014 NSSC 434

SUPREME COURT OF Nova Scotia Citation: Thompson v. RBC Life Insurance Company, 2014 NSSC 434 Date: 20141209 Docket: Hfx. No. 348503 Registry: Halifax Between: Laura Thompson Plaintiff v. RBC Life Insurance Company and Boyne Clarke Defendants Decision Judge: The Honourable Justice Jamie Campbell Heard: December 4, 2014 in Halifax, Nova Scotia Written Decision: December 9, 2014 Counsel: David Brannen for the Plaintiff William Mahondy for the Defendant Boyne Clake Michelle Awad, Q.C. for the Defendant RBC Life Insurance Company Campbell, J. [ 1 ] RBC Life has brought a motion for

summary judgment, seeking an order dismissing Ms. Thompson’s claims against it under the terms of a group insurance policy. RBC argues that the limitation period set out in the policy has expired. The law firm Boyne Clarke has been added as a third party based on the allegation that they were responsible for missing that limitation period. They previously represented Ms. Thompson and now, along with her argue that this is not a proper matter for

summary judgment. Ms. Thompson and Boyne Clarke first say that there are issues of fact in dispute that require at trial. They also argue that the limitation period as set out in the insurance policy is unintelligible and the limitation should be 6 years as set out in the Limitation of Actions Act. [1] [ 2 ] The motion was brought under the Nova Scotia Civil Procedure Rule 13.04. The parties don’t disagree on the legal test to be applied on a motion for

summary judgment. [2] The applicant, in this case RBC, has to show first that there’s no genuine issue with respect to material facts. If that’s been established the responding parties, here Ms. Thompson and Boyne Clarke have to show that the claim has a real chance of success. That involves an assessment of the merits of the case. The defence here is based on RBC’s assertion that the claim can’t succeed because it’s outside the limitation period. In cases where that defence is raised, the test on a

summary judgment application is focused directly on timing. The first issue is then whether RBC has established that there are no genuine issues of fact on the specific question of whether the action is barred because the limitation period has expired. There might be other material issues for any eventual trial, but at this point the focus is strictly on the facts that relate to the application of the limitation period.

The second issue is whether the plaintiff has shown that the time has indeed not expired because, for example, the plaintiff could not reasonably have been aware of the claim or as is argued here that the limitation period as stated in the contract doesn’t apply because it’s ambiguous. [3] The Limitation Period in the Policy [ 3 ] RBC argues that the limitation period in this case is the one set out in the insurance policy that applied to Ms. Thompson. It takes a moment to figure it out but it’s not that complicated.

The policy says that a written proof of claim has to be sent in to the insurer no later than 90 days after the date on which the disability begins. If that isn’t possible then it must be given no later than 1 year after the time when proof is otherwise required. (None of that applies in the case is of legal incapacity). Essentially, that means that a person has 1 year plus 90 days to provide proof of the claim. The dispute here isn’t with the proof of the claim though.

It’s about the limitations that apply to starting a legal action. [ 4 ] The policy goes on to say that a person “can start legal action” regarding his or her claim “60 days after proof of claim has been given and up to 1 year from the time the proof of claim is required”. Once again, the proof of claim is required 90 days after the

disability begins or at the latest, 1 year and 90 days after the beginning of the disability. A legal action can be started up to one year after that. [ 5 ] Mr. Thompson’s last day of work was 13 May 2003. There is no dispute about that. The elimination period, which is the period of time she had to be off work in order to have a claim, was 120 days. So, on 10 September 2003 the time starts to run. Proof of disability must be sent in no later than 90 days after that, or by 8 December 2003.

The policy states that if that isn’t possible to get the proof of claim in by that time, it “must be given” no later than one year later. So, the proof of claim was absolutely required by 8 December 2004. The latest date on which a legal action could be started according to RBC’s

interpretation of policy was 8 December 2005. [ 6 ] The legal action here wasn’t commenced until 22 May 2011, almost 6 years later. To no one’s surprize, it’s a bit more complicated than that. Evidence [ 7 ] Ms. Thompson was an employee of the Halifax Regional School Board. She worked there as an education program assistant with special needs children. She was covered by a Group Long Term Disability policy with Provident Life and Accident Insurance. Responsibility for that policy was eventually taken over by RBC. Ms. Thompson submitted an application for disability benefits on 29 October 2003.

She had been absent from work since 12 May 2003. [ 8 ] Her claim was denied. That denial was communicated to her by a letter from the insurer on 7 January 2004. They said that her claim didn’t satisfy the definition of disability in the group insurance policy. Ms. Thompson appealed that decision to the insurer on 14 January 2004 and provided additional medical information on 29 February 2004. She received a reply from RBC dated 14 June 2004, confirming the denial of the claim.

The file was sent to another level of internal appeal and on 23 June 2004, the Appeals Unit determined that the medical evidence submitted was insufficient. That decision was noted to be a “final decision”. [ 9 ] Then in July 2004, Ms. Thompson suffered an episode of blindness. She underwent an MRI which showed advanced signs of Multiple Sclerosis. Her neurologist told her that she had been suffering from MS for years. There had been no suggestion of MS or anything like it in the dealings with RBC. In November 2004 Ms. Thompson sent new medical information in to RBC regarding the diagnosis of MS.

RBC had a legal obligation to consider that entirely new information. Her claim was reopened. On 9 February 2005 RBC wrote to Ms. Thompson to advise that her claim was still under review but at that time issued 3 months of payments on a without prejudice basis. On 20 June 2005 Ms. Thompson was told that she would be getting another 2 months of benefits, again, on a without prejudice basis. [ 10 ] On 14 November 2005 RBC wrote to Ms. Thompson to tell her that her claim was being denied. The letter set out the further appeal options that were available.

RBC sent the claim to its appeal unit which, on 17 November 2005, upheld the decision to deny the claim. In a letter dated 17 November 2005 RBC confirmed that the decision this time was final. [ 11 ] Ms. Thompson doesn’t recall ever receiving the 17 November 2005 letter. She can’t say that she got the letter but can’t say that she didn’t get it either. The evidence is indisputable however that she was in contact with RBC at that time and that the decision was communicated to her as a final one. At her Discovery examination on 7 May 2013, Ms.

Thompson confirmed that she had been told that “it was the final thing” in late 2005. That understanding may have arisen from the receipt of the letter or from a verbal discussion with Ms. Abrahams an employee of RBC. Ms. Thompson specifically recalled getting advice from Ms. Abrahams that there were no more appeal options. She understood that the decision was indeed final. The tenor of that discussion was confirmed by Ms. Abrahams note to the file. [ 12 ] The word “final” had been used before in correspondence between Ms. Thompson and RBC.

It was used in a 7 January 2004 letter from RBC noting that her claim had been denied and that the determination was a final one. The letter goes on to advise her of appeal options so that it is clear that it was final only in the limited sense of being final at the first instance stage. The word is used again in the 23 June 2004 letter stating that the denial was final. At that point it was final and the file was opened for reconsideration only when evidence relating to MS was provided in November of that year. Another “final” determination was made in November 2005 at which point Ms.

Thompson on her own evidence understood that there would be no opportunities to file more medical information and keep appealing the decision. The word final had not been used and disregarded with such frequency that it can reasonably be said to have lost its meaning to her. The indisputable evidence is that Ms. Thompson was aware as of November 2005 that her claim for benefits had been unequivocally denied. [ 13 ] On 21 November 2004 Ms. Thompson wrote to RBC with regard to her claim.

She notes that she had “turned to legal advice”. “Should this matter not be settled in a timely and fair manner I have been advised, by my lawyer, to actively engage their services in this process.” At that point, Ms. Thompson indicated that she was aware that her claim had been denied and that she had retained a lawyer to deal with it. [ 14 ] In commenting on that letter in her Discovery examination Ms. Thompson says that at the time the letter was written in November 2004, her husband had “done stuff on line” to “see if it was something we could do.” Ms.

Thompson goes on to say, “We were not aware that we wouldn’t have to pay a lawyer unless we won.” Ms. Thompson’s husband had done some research and “figured out you know that I was in fact entitled to it.” They had determined that she was entitled to the benefits but didn’t have the money to hire a lawyer. [ 15 ] Then things went silent between RBC and Ms. Thompson. There were no more discussions. RBC denied the claim. Ms. Thompson wrote her 21 November 2005 letter. And that was it. Ms.

Thompson says in her affidavit; “I was not aware that I had [sic] possible legal right to bring a lawsuit against RBC Life until May 2008, when I met with a lawyer George Ash.” She had consulted Mr. Ash at Boyne Clarke on other matters and the issue with RBC came up. [ 16 ] Mr. Ash encouraged her to speak with Robert Carter at that firm. What Ms. Thompson meant by not being aware of a legal right to bring a claim is that she was not aware that she could proceed with a claim without having to pay money upfront for a lawyer. Ms.

Thompson knew that she had a potential claim in November 2004 when she wrote to RBC. Her claim was clearly denied in November 2005. She didn’t have the financial resources to retain counsel to start an action and didn’t. She found out about contingency fee arrangements from Boyne Clarke in May 2008. [ 17 ] Ms. Thompson retained Robert Carter on 16 October 2008 and signed such a contingency fee agreement to deal with the issue of Long Term Disability benefits. [ 18 ] On 4 August 2010 Mr. Carter from Boyne Clarke sent a letter to Ms.

Thompson saying that he was in a legal conflict and could not continue to represent her. No action had been filed against RBC at that time. [ 19 ] In late March 2011 Ms. Thompson contacted David Brannen and retained him as her lawyer on 28 April 2011. He promptly filed the action in this matter on 22 May 2011 claiming insurance benefits from RBC. A defence was filed. In August 2012 Boyne Clarke was added as a third party defendant. Ms. Thompson claims against them that the firm was negligent in not advising her about the limitation period. Argument [ 20 ] RBC says that there should be no dispute here at all. Ms.

Thompson would normally have had until 8 December 2005 to start her action against RBC. The date flows directly from her claimed date of disability, 13 May, 2004. But, because there were extended dealings between Ms. Thompson and RBC the time runs from the date on which there was a “clear and unambiguous denial of benefits.” [4] [ 21 ] In Thornton v. RBC General Insurance Justice Wood reviewed the case law that has interpreted insurance policies with similar limitation provisions, where the time is said to run from the time that proof of the claim is required.

The time doesn’t run from the time when the cause of action rose but from the time that the proof of claim is required. When there are ongoing discussions with an insured about the sufficiency of medical information or if benefits are paid for a time then terminated, the ambiguity should be interpreted against the insurance company. It is difficult to know the date when proof of claim is required when discussions are ongoing. The ambiguity is resolved to the benefit of the insured by the determination that the time begins to run only when there has been a clear and unequivocal denial of benefits.

Insurance companies can’t claim the advantage of confusion about when time begins to run. [ 22 ] RBC says that the clear denial occurred on 17 November 2005. Ms. Thompson had one year from that date to file her action. [ 23 ] Here, the claim was not filed until May 2011, well beyond that time and beyond the 4 year time frame within which a judge can exercise discretion to extend the time. There is in that case no claim to be made. [ 24 ] Both Ms. Thompson and Boyne Clarke argue that things just aren’t that clear.

While the briefs filed in the matter made reference to the requirement for a trial to resolve evidentiary issues about whether there was a clear and unequivocal denial of benefits, that is not where the argument was focused. [ 25 ] Counsel on behalf of Ms. Thompson and Boyne Clarke each initially argued that the letter of 17 November 2005 was not a clear and unequivocal denial and that Ms. Thompson was not aware of her right to make a claim. It is evident from her letter to RBC dated 21 November 2004 and Ms.

Thompson’s evidence on Discovery examination that she was well aware of a denial of benefits and a potential legal claim, by November 2005 at the latest. What she didn’t know was that she could hire a lawyer on a contingency fee basis to take her claim. She had not been lured into thinking that appeals could go on indefinitely by the use of the word “final”. The evidence is indisputable that Ms. Thompson knew that she had a potential legal claim. [ 26 ] As of that November 2005 Ms. Thompson knew that she could either accept RBC’s denial or litigate it.

She chose not to do anything about it because she couldn’t afford to do anything about it. The issue of whether she had turned her mind to the limitation period is not material to the issue. A person cannot avoid a limitation period by ignoring it or not noticing it. There is no dispute on the material facts with respect to the limitation period. Accordingly any one year limitation would begin to run as of 17 November 2005. [ 27 ] That’s where the Ms. Thompson and Boyne Clarke take up the argument that there should be no one year time limitation but a 6 year time limitation.

They assert that in order to be enforceable the time limitation in the insurance policy has to be clear. The wording in their view is permissive not mandatory. The relevant

section reads as follows: WHAT ARE THE TIME LIMITS FOR LEGAL PROCEEDINGS? You can start legal action regarding your claim 60 days after proof of claim has been given and up to 1 year from the time proof of claim is required. [ 28 ] The issue isn’t with the part of the sentence that reads “60 days after proof of claim has been given”. That sets the time before which no action can be started.

Nor is there a real problem with latter part of the sentence, “from the time proof of claim is required.” Courts have had no particular difficultly with interpreting that to mean the date when a clear and unequivocal denial of benefits has been communicated. The ambiguity is argued to be not so much with when the time starts to run but when it ends. [ 29 ] The problem is with the use of the word “can”. Ms. Thompson and Boyne Clarke argue that the policy doesn’t specifically prohibit an action after one year. It does not say that an insured cannot start a legal action after that time.

This, it is said, distinguishes the case from Thornton v. RBC General Insurance Co. where the policy said that a claimant “cannot start any legal action….more than 3 years after the time proof of claim is required.” [ 30 ] That case is not dispositive of this one. It confirms the point that the time runs from the clear and unequivocal denial in the case where there are ongoing discussion between the insurer and the insured. That does not result in ambiguity that should void the limitation

period in the insurance policy. [ 31 ] The argument here is that permissive language is used. It could be taken to mean that a person can start a legal action within that time frame but he or she doesn’t have to. The plain language use of the word “can” is being interpreted then to mean perhaps only that a person is welcome to start an action in that time period but not that they can’t start an action after that. It would on that

interpretation be an anti-limitation period. An action could be started pretty much anytime, up to the 6 years set out in the Limitations of Actions Act . If that

interpretation were used the provision would have no real meaning at all and the perplexed reader would be left to wonder why it had been put in there in the first place. The invitation to start an action within the year would be meaningless. [ 32 ] It also means ignoring the bolded introduction that uses the phrase, “time limits”. A person reading that document is alerted that there are limits to when an action can be started. The wording immediately after that introduction says clearly that the limit is one year. It also ignores the use of the phrase “up to”.

If an action can be started “up to” one year after an event a reasonable reader would conclude that “up to” infers “and not after”. [ 33 ] Communication in any context requires a basic shared understanding, about the meaning of words and significance of syntax and context. Neither party to a contract gets to defy that shared understanding and make up meanings to suit their purposes. Almost any sentence, whether in plain language or not, can be rendered ambiguous, meaningless or bizarre by a creative enough reading of it.

For example, had the word “must” been used, which is admitted mandatory language, a strange result could be contemplated. If a person “must” start an action within a year, is every insured then obligated to start an action? Taking it further, if a person “must” start a legal action would it have to be exactly 60 days after proof of claim had been given?

Even legal contracts have to be read with common sense; perhaps not the kind that is the subject of “revolutions” but the kind that allows people to communicate with each other. [ 34 ] A reasonable person upon being told that he or she had up to one year to start an action would know that involves a time limit. The presence of a written heading with the phrase “time limits” should secure the

interpretation of the requirement against even the most wishful doubt. [ 35 ] The limitation period as set out is clear. It should be given its meaning. In the face of the undisputed and indisputable facts on the material issues related to the time limitation there are no evidentiary issues for trial. And, in the face of those facts, there is no arguable case for the plaintiff to make against RBC. [ 36 ] The issue at this stage is not what Ms. Thompson believed the limitation period to be, but what the contract says. It says one year.

The law says that the year starts from the date of an unequivocal denied of benefits, not from the date when the person receives legal advice, or becomes aware that she can retain a lawyer without paying money upfront. Here, the statement of claim was filed long after the expiration of that time period and after the 4 year period within which an extension could legally be granted. [ 37 ] The motion is granted, with costs to the applicant, RBC. If the parties are not able to agree on an amount I will hear them on that matter. J.