The Alberta Court of Queen’s Bench has recently offered guidance on what an acceptable written notice of the applicable notice period looks like under section 5.3(2) of the Fair Practices Regulation AR 128/2001.
FACTS
On November 12, 2014, a fire occurred at the home of James and Juliett Statt (the “Statts”). Two days later the Statts filed a fire damage claim with their insurer, SGI Canada Insurance Services Ltd. (“SGI”). The claim was approved and the Statts began repairs on the house. Unfortunately, disagreements arose between the Statts and SGI regarding settlement of the loss claim, prompting SGI to stop repairs.
Over three years later, on December 22, 2017, the Statts brought an originating application seeking compensation for disputed amounts and an extension of the limitation period for commencing proceedings.
SGI argued the originating application was filed out of time and was statutorily barred by section 3(1) of the Limitations Act, RSA 2000, c L-12, and section 526 of the Insurance Act, RSA 2000, c I-3. The Statts argued that the two-year limitation period should be extended under section 5.3(7) of the Fair Practices Regulation, because SGI’s notification of the applicable limitation period as required under section 5.3 was not sufficient.
Section 5.3 of the Fair Practices Regulation reads:
Notice of limitation period
5.3(1) In this section,
(a) “claimant” means
(i) a beneficiary,
(ii) an insured, a group life insured or a debtor insured,
(iii) a person who has a claim against an insured who has initiated a claim for indemnity under a contract of insurance, or
(iv) a person referred to in section 579 of the Act;
(b) “insured” means a person insured by a contract of insurance, whether named in the contract or not.
(2) An insurer must give written notice to a claimant of the applicable limitation period
(a) if the claim has not been satisfactorily settled, within 60 days from the date the claimant notifies the insurer of the claim, in the case of a claimant referred to in subsection (1)(a)(i) or (ii),
(b) within 60 days of the insurer’s first becoming aware that an insured is claiming indemnity for a claim lodged by a third party against the insured, in the case of a claimant referred to in subsection (1)(a)(iii),
(c) within 60 days of the insurer’s first becoming aware that a claimant referred to in subsection (1)(a)(iv) has initiated an action pursuant to section 579 of the Act, or
(d) within 5 business days from the date the claimant’s claim is denied.
(3) The written notice referred to in subsection (2) must indicate the name of the Act or regulation that refers to the applicable limitation period.
(4) An insurer is not required to give notice under subsection (2) if at the time the notice is required to be given the insurer is aware that the claimant is represented by legal counsel.
…
(7) If an insurer fails to give notice under subsection (2) when required to do so, the Court may, on application by the claimant,
(a) order that the applicable limitation period be extended, and
(b) grant any other remedy that the Court considers appropriate.
The notification in question was sent by SGI’s adjuster to the Statts on November 14, 2014. The letter stated:
In accordance with the Alberta Insurance Act, we are enclosing a blank Proof of Loss form for your record, and must advise you of the two year limitation date applicable to your claim.
SGI maintained that this was sufficient notice of the applicable limitation period under section 5.3.
DECISION
The application judge dismissed the argument that the letter was insufficient for having been sent by an adjuster rather than the insurer, but he ultimately found the letter an insufficient written notice under section 5.3 for two reasons:
(1) it was not given after one of the triggering events set out in section 5.3(2), and
(2) the content was not enough to make the insured aware of the applicable limitation period.
The form notice by SGI was “issued almost immediately upon the making of the claim.” The application judge found that this does not meet the requirements under section 5.3. The language of section 5.3(2) suggests that any notice should occur after one of the triggering events listed, i.e. after a claimant’s claim is denied, or after an insurer becomes aware an insured is claiming indemnity for a claim lodged by a third party against the insured.
More concerning to the application judge was the insufficient content of the notice. He notes that while lawyers and insurance professionals understand what the words “limitation period” mean in the context of an insurance claim, an insured may not. It is therefore incumbent on the profession to ensure the insured fully understands what a limitation period is in this context. SGI’s notice mentions “the two year limitation date” from the Insurance Act, but it does not refer to what must be done within these two years and it is not clear what limitation period in the Act is being referenced. The notice also makes no mention of the Limitations Act.
The application judge goes on to describe what a sufficient notice under section 5.3 would be. Reading section 5.3 purposively, the notice mandated under section 5.3 should at least include what needs to be done, when it should be done by, and under which legislation. Ideally, it should include reference to the specific provision of the legislation. The notice should also be given after one of the triggering events in section 5.3(2).
Having found SGI’s notice insufficient under section 5.3, the application judge then decided that in light of circumstances of the case he would extend the limitation period to at least the day after the Originating Application was filed.
IMPACTS
As the application judge stated in his decision, section 5.3 of the Fair Practices Regulation is particularly interesting as it “removes what would otherwise be a substantive statutory defence for a defendant insurer.” But section 5.3 also fulfills an important purpose, to make certain an insured has clear notice regarding limitation periods. It is clear from this decision that the courts are willing to protect this purpose. If an insurer fails to give notice in accordance with section 5.3, an insured will likely be able to pursue the claim after the two-year limitation period has expired.
Moving forward it is clear that if an insurer wants to rely on the statutory limitation periods available, they must give sufficient notice to the insured. A sufficient notice under section 5.3 would:
(1) Be given after one of the triggering events set out in section 5.3(2);
(2) Refer to what legislation the limitation period in question is drawn, including the specific provision;
(3) Give the exact limitation period; and
(4) Mention what should be done within said limitation period.