Skip to content

Brought to you by

Dentons logo

Limitations Law Blog

Updates on key developments on laws involving limitation periods in Ontario.

open menu close menu

Limitations Law Blog

  • Home
  • About us

Court of Appeal holds that the duty to defend is an ongoing obligation to be applied on a “rolling” basis and insurers cannot contract out of the Limitations Act where policy holders are consumers

By Dentons Limitations Law Group
November 8, 2019
  • Tolling/Varying Agreements
Share on Facebook Share on Twitter Share via email Share on LinkedIn

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.

First, the respondents argued that as the application was for contribution to defence costs, it is subject to the Limitations Act, 2002. Because the claim for contribution was not brought within two years of the respondents’ refusal to defend, the respondents argued that the claim for contribution was statute-barred. The Court of Appeal rejected this argument, stating that the duty to defend is an ongoing obligation and is applied on a “rolling” basis. The applicant was not seeking contribution toward any potential indemnity; but rather, sought contribution for costs incurred in the future.  Accordingly, as the applicant was seeking contribution on a “going forward basis”, the Court held that the limitation period could not be applied in the manner suggested by the respondents.

Second, the respondents argued that the application exceeded a specific contractual limitation period found in the respondents’ respective insurance policies. The Court of Appeal also rejected this argument on the basis that the insurance policies at issue are not business agreements under s. 22(5) of the Limitations Act. Subsection 22(5) allows parties to vary or exclude limitation periods by an agreement with respect to “business agreements.” However, the Court concluded that as the policy holders are consumers, the insurance policies do not constitute “business agreements” and therefore, the applicable limitation period is governed by the Limitations Act.

Co-authored by Ilan Levy

Share on Facebook Share on Twitter Share via email Share on LinkedIn
Subscribe and stay updated
Receive our latest blog posts by email.
Stay in Touch
Dentons Limitations Law Group

About Dentons Limitations Law Group

The Limitations Law Blog contains summaries of the latest developments arising from appellate and lower court decisions on limitations law in Ontario. Subscribe today and be one of the first to receive our insights on recent limitations law developments in Ontario.

All posts

RELATED POSTS

  • Tolling/Varying Agreements

Boyce v. The Co-Operators Insurance Company, 2013 ONCA 298 (Agreement to Shorten, s. 22)

By Dentons Limitations Law Group
  • COVID-19
  • Discoverability
  • Tolling/Varying Agreements

Limitation Periods during the Coronavirus Pandemic

By Ara Basmadjian
  • Attempted Resolution
  • Discoverability
  • Tolling/Varying Agreements

Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156 (Discoverability and Tolling Agreements)

By Dentons Limitations Law Group

About Dentons

Dentons is designed to be different. As the world’s largest law firm with 20,000 professionals in over 200 locations in more than 80 countries, we can help you grow, protect, operate and finance your business. Our polycentric and purpose-driven approach, together with our commitment to inclusion, diversity, equity and ESG, ensures we challenge the status quo to stay focused on what matters most to you. www.dentons.com

Dentons boilerplate image

Twitter

Categories

  • Acknowledgment
  • Adding a Party
  • Amending Pleadings
  • Attempted Resolution
  • Contribution and Indemnity
  • COVID-19
  • Demand Obligations
  • Discoverability
  • Enforcement of Foreign Judgments
  • General
  • Limitation Periods contained in "Other Acts"
  • Limitation Periods in Federal Court
  • Misnomer
  • Motions to Strike
  • Notable cases in other provinces
  • Special Circumstances
  • Statutory Variation of Time Limits
  • Successors
  • Tolling/Varying Agreements
  • Transitional Provisions
  • Ultimate Limitation Periods

Subscribe and stay updated

Receive our latest blog posts by email.

Stay in Touch

Dentons logo

© 2023 Dentons

  • Legal notices
  • Privacy policy
  • Terms of use
  • Cookies on this site