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Insurer’s Actions Don’t Extend Limitation Period
Published in the May 2008 issue of Litigation Notes - View Article
Synopsis: The Limitation Act of British Columbia provides that if a cause of action is confirmed while a limitation period is running, the clock is reset. The period begins to run anew after the act of confirmation. Confirmation can result from the acknowledgement of a cause of action or the making of a payment in respect of a cause of action. On the facts of this case, the insurer had not confirmed the cause of action and the claim was time-barred.
In the case of Nguyen v. Johnson, released in late May, the Court of Appeal for British Columbia upheld the dismissal of an action against an automobile insurer on the basis that it was time barred. There was no doubt that the relevant limitation period was two years and that the action was commenced 18 days after the expiry of that limitation period. The case turned on whether the insurance company had “confirmed” the cause of action and thus extended the limitation period. The court, after examination of the actions of the insurer, concluded that the limitation period had indeed expired and the action could not proceed.
The Limitation Act of British Columbia provides that if a cause of action is confirmed while a limitation period is running, the clock is reset. The period begins to run anew after the act of confirmation. Confirmation can take place in two ways: by the acknowledgement of a cause of action or by the making of a payment in respect of a cause of action.
There are a few details which proved significant in the Nguyen case which are best reviewed with reference to the facts of the case.
The case arose out of an automobile accident which occurred on April 9, 2003. Nguyen was involved in an accident while driving a car leased by her husband. She was an additional insured under his policy and had no property interest in the leased vehicle, a point which was significant in the end.
The Insurance Corporation of British Columbia (“ICBC”) provided third party liability insurance for the driver of the other vehicle. ICBC accepted that its insured was at fault. It paid for the costs of repairs, refunded the deductible applicable to the husband’s collision cover and paid the cost of renting a replacement vehicle.
ICBC is a provincial crown corporation. All owners of automobiles registered in British Columbia must purchase an insurance package which includes third party legal liability cover. Accordingly ICBC was the insurer of both parties to the accident.
As ICBC had settled the property damage claims, and in particular had reimbursed her husband in respect of his deductible, Nguyen argued that this amounted to a payment within the meaning of the Act and that the time for bringing her tort claim had thus been extended. The problem with this argument is found in section 5(6) of the Act which provides that any confirmation, in order to count, must be made to the person whose cause of action is in question. Nguyen had no property interest in the leased vehicle and she was not a person who could have claimed for the property damage. It follows that the payments which ICBC did make were not made in relation to something which Nguyen could have claimed. This was fatal to her first argument.
Nguyen also sought to rely on the payments in support of the second branch of her argument. Here, the question was whether ICBC had “acknowledged” the fault of the other driver and whether this amounted to confirmation of the cause of action. This argument was dismissed on the same basis. ICBC had, at most, acknowledged that her husband had a cause of action for property damage against its insured, Johnson, but this could not be taken to support the further conclusion that it had acknowledged, to Nguyen, that she had a cause of action for personal injury.
To underscore the basis of its decision, the court referred to an earlier decision which appears to support the idea that payment made to one party could amount to confirmation of another party’s cause of action. The court concluded that this case, to the extent that it so held, was wrongly decided.
This then leaves the final argument advanced on behalf of Nguyen. She relied upon a letter written by an ICBC claims agent to solicitors acting for Nguyen. This letter ended with the sentence, “I look forward to working with you to resolve this matter”. An earlier case did appear to lend some support for this argument. In Podovinikoff v. Montgomery, the following sentence in a similar letter was found to constitute confirmation of a cause of action: “The writer has attempted to reach you by telephone regarding settlement of your personal injury claim”.
However, the court found that in order to determine whether there was confirmation it was necessary to consider the entire letter to determine what was being acknowledged. It referred to obiter comments from the Supreme Court of Canada which suggest that simple acknowledgement of the existence of a cause of action will not amount to confirmation for the purpose of the limitations statute. What is required is the acknowledgement of some liability. The trial judge had reviewed the entire letter and found that taken as a whole it amounted to an “unequivocal denial of liability”.
The Court of Appeal agreed. It confirmed that an objective test should be applied: would a reasonable person, reading the entire letter, and having in mind that ICBC had paid her husband’s deductible, conclude that ICBC was admitting liability for Nguyen’s personal injury claim? The court was of the view that a reasonable person could not conclude that ICBC had expressly or impliedly admitted liability. It followed that the action was commenced out of time and was statute barred.
Nguyen v. Johnson,
2008 BCCA 218