In Reeb v The Guarantee Company of North America, 2019 ONCA 862, the Court of Appeal for Ontario considered two matters regarding the duty of an insurance company to defend. In one of the matters, an insurance company brought an application against two other insurance companies for a declaration that they are obligated to pay for one-third of the ongoing defence costs of the applicant. The applicant was successful and the respondents appealed. In dismissing the appeal and concluding the respondents had a duty to defend and contribute to the applicant’s defence costs, the Court of Appeal considered two limitation period arguments.
In Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156, the Ontario Court of Appeal examined discoverability principles in the context of an action in tort for negligent misrepresentation, and the application of ss. 11 and 22 of the Limitations Act, 2002, which suspend the running of a limitations period in certain circumstances.
The City purchased $10 million in non-bank sponsored asset backed commercial paper (“ABCP”) from the defendants on July 24, 2007, three weeks before the collapse of the Canadian ABCP market. The investment was to mature about two months later but some three weeks after the purchase, the market for this form of investment collapsed.
The Ontario Court of Appeal recently released its decision in Boyce v. The Co-Operators Insurance Company, 2013 ONCA 298, which highlights how important it is for contracts that shorten the relevant limitation period under section 22 of the Limitations Act, 2002 to have clear language.
This caseconcerned a contractual limitation period contained in an insurance policy; however, the case has general application to other types of business agreements that attempts to shorten a limitation period. In Boyce, the owners of a fashion boutique suffered loss as a result of a foul odour in their business premises. They sued their insurer more than a year after suffering the underlying loss, seeking indemnification for the loss. The insurance contract contained a one-year limitation period for bringing an action. The relevant provision states as follows:
Every action or proceeding against the insurer for recovery of any claim under or by virtue of this contract is absolutely barred unless commenced within one year* next after the loss or damage occurs.