Supreme Court of Canada denies leave application to commercial property policyholder over limitation period dispute

The Supreme Court of Canada ruled Thursday in favour of The Co-operators General Insurance Company when it denied an application, from a commercial property policyholder operating a women’s fashion boutique, for leave to appeal an earlier ruling from the Court of Appeal for Ontario. 

In February 2012, Thomas and Marilyn Boyce filed a statement of claim against The Co-operators with the Ontario Superior Court of Justice in Perth. The Co-operators had denied a property claim from the Boyces’ store, the Portside Boutique, in Merrickville.

The court case centred not on the merits of the Boyces’ claim but on whether a clause in the Co-operators’ statutory conditions overrides Ontario’s Limitations Act.

The incident giving rise to the claim had occurred about 16 months before the Boyces filed their statement of claim. The Co-operators policy stipulated that “every action or proceeding” against the carrier for recovery of any claim “is absolutely barred unless commenced within one year next after the loss or damage occurs.”

Section 15 (2) of Ontario’s Limitations Act has a two-year limit but Section 22 (5) provides an exception for business agreements made on or after Oct. 19, 2006. Business agreements are defined in that section of the Limitations Act as contracts in which none of the parties is considered a consumer under the Ontario Consumer Protection Act.

Read More: Canadian Underwriter – July 2013: Limitation periods may differ

In a decision released in Nov. 13, 2012, Mr. Justice Michael Quigley ruled that the Boyces could proceed with their statement of claim. He found that a one-year limit in the statutory conditions of a policy could only override the two-year limit in Ontario law if certain conditions were met.

For example, Justice Quigley ruled, there would have to be  “clear and unequivocal language that the parties were intending to vary the statutory protection,” and a provision in the contract “clearly alerting the insured that they were foregoing a statutory right to a longer limitation period.”

But in a ruling released May 5, 2013, the Court of Appeal for Ontario disagreed with and overturned Justice Quigley’s decision.

“Nothing in the language of (the Ontario Limitations Act Section 22) offers any support for imposing these requirements,” wrote Madam Justice Eleanore Cronk, Mr. Justice Peter Lauwers and Mr. Justice David Doherty on behalf of the Court of Appeal for Ontario.

Last August, the Boyces filed an application for leave to appeal with the Supreme Court of Canada. On Oct. 17, the highest court in the land dismissed the Boyces’ appeal with costs.

The Boyces’ disputed claim arose Oct. 30, 2010 when Marilyn Boyce arrived at her boutique and discovered a foul odour. The Boyces contended the boutique had been vandalized, which was covered under their policy, but The Co-operators argued it was not covered because the odour was caused by a skunk.

“The business had to be closed for a time, substantial clean-up costs were incurred, and a great deal of inventory could not be salvaged,” according to background information provided with the Ontario Court of Appeal ruling.