Court finds denial letter met clear and unequivocal standard


Bonilla v Preszler et al., 2016 ONCA 759 – The respondent, an insurer, informed the appellant via two letters on February 4, 2003, that they will no longer be paying her income replacement benefits (“IRB”) after February 27, 2003. the appellant was represented by legal counsel and did not challenge the respondent upon being informed. In 2007, she retained new legal counsel and commenced an action against her former counsel for negligence and breach of fiduciary duty. Six years after the end of her IRB payments, the appellant commenced an action against the respondent after her initial proceedings for mediation were unsuccessful.

The apellant argued that the respondent’s notice of termination of her IRB payments were not clear nor equivocal. The motion judge found that the notice in the two letters sent to the appellant by the respondent was clear and unequivocal and the appeal court agreed with this finding. The appellant was aware that the insurer was terminating her IRB payments, and after consulting with her counsel chose not to pursue an action within the proper time-period.

The appellant also argued that the two-year limitation period is a rolling limitation that resets upon each refusal to pay the IRB. However, the court noted that it was well-established that the limitation period was not rolling but triggered by one single event. In this case, the triggering event was the respondent’s first refusal to pay her IRB. The court did not accept this proposition and concluded that the limitation period was clear, settled in the case law, and that it would be inappropriate to overrule prior decisions.

What the Insurer Should Know

The court will uphold a denial letter as long as it remains clear and unequivocal.

Mitch Kitagawa and Sara Reich, Summer Student