Contractual limitation period for making a claim against an excess motor vehicle insurer began to run from the time the insured had accumulated a body of evidence which would give him a reasonable chance of demonstrating that his claim exceeded the limits. Further, it was equitable in the circumstances that the insured was granted a four year extension for filing the claim.

[2014] N.S.J. No. 617

2014 NSSC 413

Nova Scotia Supreme Court

P.P. Rosinski J.

November 21, 2014

The insured was injured in a motor vehicle accident in 2001. He returned to work after the accident, but ultimately left work in 2004 and received CPP disability benefits thereafter. He suffered from cerebral palsy since birth and had a pre-existing problem located at disc C5-6. The insured’s counsel filed an action against the torfeasor solely responsible for the 2001 accident in 2003. The insured was involved in further motor vehicle accidents in 2005 and 2006. It was not until a 2008 mediation that the insured became aware that the tortfeasor’s limits were the minimum allowable of $200,000. The insured’s claim exceeded this amount and the insured notified the SEF 44 excess insurer. Negotiations between the insured and the insurer continued sporadically until 2010 when the assigned claims manager retired. Contact was thereafter sporadic. The insured filed an action in the SEF 44 matter in 2013. The insurer filed a defence in which it relied on the expiration of a 12-month contractual limitation defence on the basis that the limitation period ran from the date that the insured ought to have known that his claim exceeded the tortfeasor’s minimum limits. The insured was successful in a motion to disallow the insurer’s limitation defence.

The court considered the “ought to have known that the quantum of claims…exceeded the minimum limits” wording of clause 6(c) of the SEF 44 endorsement. Faced with conflicting authority from Alberta and Ontario, the court held that the Ontario approach fit the Nova Scotia statutory scheme better. “Ought to have known” was therefore interpreted as meaning from the point which the plaintiff had a body of evidence accumulated which would give him a reasonable chance of demonstrating that his claim exceeded the minimum limits. Given the plaintiff’s fluctuating medical condition and the difficulty in attributing his injuries, the court held that the plaintiff ought to have known his claim exceeded the minimum limits at the 2008 mediation, and not before.

The court held that the insurer had not waived its rights to the limitation defence; however, through its conduct at negotiations the court held that insurer was estopped from relying on the defence until at least 2009 and possibly 2010. In any event, the court was satisfied that a four year extension was equitable pursuant to s.3(2) of the Limitation of Actions Act, R.S.N.S. 1989, c. 258, given that the insurer gave the insured good reason to believe that the insurer was not insisting on its strict legal rights and there was no evidence or inference that the insurer was materially prejudiced by any delay.