Kumarasamy v. Western Life, 2021 ONCA 849 (CanLII) is an important decision from the Ontario Court of Appeal that confirms a clear an unequivocal denial of long term disability benefits is not required for a limitation period to start. The decision provides clear guidance on when a lawsuit must be commenced. The short answer is you may have less time than you thought, so it is best to contact a long term disability lawyer as soon as you suspect there may be a problem with your claim.
Mr. Kumarasamy was injured in a car accident on August 25, 2014. He stopped working due to injuries including chronic pain, depression, and anxiety. He was insured for long term disability benefits through his employer’s group plan, and submitted an LTD claim on March 9, 2015. On June 2, 2015, the plaintiff received a letter from the LTD insurer stating his file was closed.
In February 2017, the law firm assisting Mr. Kumarasamy with his car accident claim advised the LTD insurer it had been retained for the long term disability claim as well. Additional information was requested by the insurer and provided by the lawyers. The insurer denied the claim again on June 27, 2017. A lawsuit was issued on June 28, 2019.
In Ontario, most lawsuits must be commenced within two years of the date the claim was discovered. In this case, the legal proceeding was started more than four years after the insurer advised the claim was “closed”, but within two years of the second denial on June 28, 2017. There were several exchanges of information between these two dates that suggested there had not yet been a clear and unequivocal denial.
Section 4 of the Ontario Limitations Act, 2002 states:
Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
The last word of that section, “discovered”, is defined in section 5:
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).
Despite the relatively clear wording of sections 4 and 5 of the Limitations Act, 2002, many cases have been litigated on the issue of when a claim has been discovered. In the long term disability context, the focus is often on (5) (1) (a) (iv); that is, whether a lawsuit is an appropriate remedy. Before the Kumarasamy decision, some cases held that until there is a clear and unequivocal denial, a lawsuit is not an appropriate remedy, and therefore the claim is not discovered.
The LTD insurer brought a motion for summary judgement asking the court to dismiss the claim because the lawsuit was commenced more than two years after it was initially denied.
The Judge dismissed the insurer’s arguments and allowed the claim to proceed, noting the first denial was not clear and unequivocal. Further, various correspondence exchanged after the first denial and before the second suggested the claim had not been closed with finality.
The motion judge considered and relied on other cases that found until there is a clear and unequivocal denial, a lawsuit is not an appropriate remedy:
I am of the view that neither Mr. Kumarasamy nor a reasonable person would have discovered that a proceeding against Western Life for the denial of the LTD claim was appropriate until June 28, 2017 – the date that the claim was “clearly and unequivocally denied”.
Since the lawsuit was commenced on the two year anniversary of the clear and unequivocal denial, the judge ruled it was not out of time and could proceed.
The insurance company appealed the motion judge’s decision. The Ontario Court of Appeal agreed with the insurer that the lawsuit should be dismissed for failure to commence the lawsuit on time. The decision provides a detailed analysis of how limitation periods apply to long term disability cases.
The Court of Appeal disagreed that a lawsuit only becomes an appropriate remedy when the insurer clearly and unequivocally denies a claim. Rather, it held the two year limitation period started to run when:
(1) the plaintiff knew disability benefits were payable;
(2) he believed he was entitled to disability benefits; and,
(3) he knew the insurer was not paying the benefits.
This reasoning closely follows the Limitations Act, 2002.
Other than some rare circumstances, such as where an insurer misleads an individual to believe they still have time, a clear and unequivocal denial is not required for the limitation period to begin.
Long term disability lawyers (both plaintiff and defence) should read the entire Court of Appeal decision carefully, but some of the key paragraphs from the decision follow:
 The central errors made by the motion judge are her conclusion regarding when the respondent ought to have known that a loss occurred and her conclusion that the required element of discoverability, found in s. 5(1)(a)(iv), that “a proceeding would be an appropriate means to seek to remedy” the injury, loss or damage, was only satisfied when the appellant clearly and unequivocally denied the respondent’s claim. The motion judge does not cite any authority for this conclusion, and it is at odds with other authorities, most notably, this court’s decision in Thompson v. Sun Life Assurance Company of Canada, 2015 ONCA 162,  I.L.R. I-5721.
 In Thompson, this court found that there were two reasons why the injured party’s claim was barred. One was that the injured party had failed to meet the qualifying conditions of the policy: at paras. 11-12. The other was that the two-year limitation period had expired because the injured party knew of her total disability in August 2008 but did not commence her action until September 17, 2010: at paras. 13-14. The latter conclusion applies equally to this case. The respondent knew of the significance of his injuries by the end of August 2014. However, because of the terms of the Policy, the respondent was not entitled to receive LTD disability payments until February 26, 2015. Applying the Thompson approach, the limitation period would have commenced on February 26, 2015, which was the first day benefits would have been payable had the respondent submitted a timely application and met the Policy’s definition of Total Disability. By that time, the respondent knew that he was injured, he believed that he was entitled to long-term disability payments, and he knew that the appellant was not making those payments.
 The motion judge’s conclusion in this case is at odds with the jurisprudence from this court regarding the proper interpretation of s. 5(1)(a)(iv), that is, when litigation is an appropriate remedy. It is contrary to the decision in Thompson, as I have already explained. It is also contrary to this court’s decision in Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, 142 O.R. (3d) 561, where Brown J.A. undertook an analysis of the existing authorities on the proper interpretation of s. 5(1)(a)(iv). In doing so, Brown J.A. noted that there are certain circumstances where the conduct of an insurer may, essentially, toll the limitation period. He referred to the decision in Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325, 135 O.R. (3d) 321, where Pardu J.A. had identified two such circumstances: (i) where the plaintiff relied on the superior knowledge and expertise of the defendant, especially where the defendant undertook efforts to ameliorate the loss; and (ii) if an alternative dispute resolution process offers an adequate alternative remedy and that process has not fully run its course. Like the situation in Nasr, neither of those circumstances arise in this case.
 In the end result, there are three potential start dates for the limitation period that arise in this case and that would be consistent with the existing jurisprudence. One is February 26, 2015, when the elimination period required by the Policy expired and the respondent should have started to receive LTD payments, if he was entitled to them. Another is June 7, 2015, when the respondent would have received the appellant’s notification that his claim file had been closed. At that point, the respondent knew that, not only was the appellant not making payments to him, but the appellant was also not going to make payments to him in the future. Yet another is November 8, 2016, when his lawyers received copies of the same correspondence.
 I do not need to decide which of these three dates is the actual start date because the two-year limitation period passed with respect to all of them before this proceeding was commenced on June 28, 2019. The respondent’s claim for LTD benefits under the Policy is therefore statute-barred.
A missed limitation period is usually a complete and total defence to an otherwise meritorious claim. In the long term disability context, the limitation period can start to run as soon as benefits that should be payable are not paid. The notion that there must be a clear an unequivocal denial is no longer required for the clock to start.
Missing a limitation period can result in disastrous consequences, so if you feel you are entitled to long term disability benefits, but are not being paid, you should seek immediate legal advice.
Long term disability lawyers on the plaintiff side should never wait to the last minute to issue a claim. There are several reasons to start the lawsuit early, especially now that the lack of a clear and unequivocal denial is no longer a reason to delay the start of a limitation period.
About The Author
Michael Jordan is a long term disability lawyer with more than 17 years experience litigating all types of insurance claims. He is a founding partner of the Bay Street firm Jordan Honickman Barristers. Michael represents clients across all of Ontario, with satellite offices in Ottawa and London.
Direct Cell: 416-460-6823