Earlier this year, the Divisional Court released its unanimous decision in Western Life Assurance Company v. Penttila, which determined that the limitation period in LTD cases does not start to run until the date upon which it is “legally appropriate to commence legal proceedings to seek payment of benefits that the insurer refused to pay”. In that case, the Court stated that if the appeal process remains open and has not “run its course” it would be premature to commence legal proceedings against the insurer and therefore the limitation period has not start to run.
Prior to this decision, it was generally accepted (based on the Ontario Court of Appeal’s decision in Kassburg v. Sun Life Assurance Co. of Canada) that the limitation period began to run once a clear and unequivocal denial of benefits had been made by the insurer. Penttila appears to have somewhat altered the landscape by which we analyze limitation period defences in LTD cases and given plaintiffs’ lawyers a new argument to defeat claims that an LTD matter is statue barred on the basis of expiration of the limitation period.
Assessing whether or not a client’s LTD claim is statute barred on the basis of expiration of a limitation period can be complex and requires a detailed look at the specific facts of that particular case (i.e. wording of the denial letter, details of the appeal process, etc). The law in this area is continually developing and it is important that clients seek advice from a lawyer with relevant experience in this area and knowledge of recent case law and its impact on your potential claim.