Case Summary: Nasr Hospitality Services Inc. v Intact Insurance
Defence + Indemnity
The Court, applying Ontario’s appropriateness factor under the Limitations Act, 2002, SO 2002, c 24, Schedule B., found the limitations period did not begin to run until the insurer denied the claim under the insurance policy, sometime after the date of loss.
Nasr Hospitality Services Inc. v Intact Insurance, 2017 ONSC 4136 (CanLII)
FACTS AND ISSUES
Nasr Hospitality Services Inc. [NHS] was flooded January 31, 2013 in Ontario. The loss was immediately reported to the insurer, Intact. Between February and May 2013, Intact made payments to NHS pursuant to the policy. NHS submitted several proof of loss forms, but these were rejected by Intact. On July 22, 2013, Intact formally denied the claim.
On April 22, 2015, NHS commenced an action against Intact. On July 3, 2015, Intact filed a Statement of Defense. Intact’s position was the claim was statute barred by way of the Limitations Act as it believed the two-year limitation period began February 1, 2013 (the date of loss). NHS’ position was that the time began to run from either May 2, 2013 (date of last payment) or July 22, 2013 (date contract repudiated).
The Ontario Limitations Act, 2002, SO 2002, c 24, Schedule B, s. 5 provided as follows:
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;
The Court also had to take into account the enactment of s. 5(1)(a)(iv) which provided that “a claim is ‘discovered’ on the earlier of the date the claimant knew -- a subjective criterion -- or ought to have known -- an objective criterion -- about the claim: Ferrara v. Lorenzettie, Wolfe Barristers and Solicitors, 2012 ONCA 851 at paras. 33 and 70”.
Intact moved for summary judgement on the basis of the Limitations Act.
HELD: Summary judgment motion dismissed – the action should proceed to trial
1. The Court was prepared to assume for the summary motion that the breach of the contract arose on February 1, 2013 for discreet point decided
a. It also assumed that NHS knew or ought to have known, meeting section 5 (1)(a)(i-iii) of Ontario’s Limitations Act
b. This was held to have met the first three of four requirements of the discoverability principle in Ontario law
2. It was held that the additional appropriateness factor at s 5(1)(a)(iv) of the Limitations Act can delay the discoverability principle
a. The Court held that appropriateness must be assessed on the facts of each case
b. The delay, to be appropriate, must be for a juridical reason. The explanation must be established in law as to why commencing was not yet appropriate
c. The delay in this case was held to be appropriate. It would not have been appropriate for NHS to resort to court proceedings before Intact had repudiated from its insurance policy. The limitations period began running in July 2013 (the date that Intact formally denied the claim.
3. There was no issue of promissory estoppel or Intact’s obligation to alert NHS of the running limitation period.
Alberta’s Limitations Act, RSA 2000, c L-12, carries a similar discoverability provision in section 3. However, there is no appropriateness factor in the Alberta legislation, as such. However, the two-year basic limitation period begins to run when the claimant knows, or ought to know that the injury had occurred, that it is attributable to the defendant and that “assuming liability on the part of the defendant, warrants bringing a proceeding” (s. 3(1)(a)).
The Ontario Court’s main focus was appropriateness. However, it appears that on its face, the action was not solidified until July 2013. The injury the insured is facing in this matter is the breach of contract by the insurer to cover the damage resulting from the flood, not the flood itself. Absent the appropriateness factor, the action does not crystalize until the contract is breached.
We submit that the Ontario appropriateness factor does not change the analysis. If this case were to be decided in Alberta, the Court would likely hold that the insured could not have brought an action for breach of contract until there was one. The breach occurred in July 2013. Until that point in time, the claim did not “warrant bringing a proceeding” as not all the elements of the cause of action had occurred. In essence, the breach of the contract is the date where the cause of action and the corresponding limitations period crystalizes.