Insurer has 6 years to sue insured.
On November 28, 2012, in Sun Life Assurance Co. of Canada v. Catalano, [2012] B.C.J. No. 2566,British Columbia Supreme Court dismissed an application by an insured under a long term disability policy (“Catalano”) to dismiss an action by the disability insurer (“Sun Life”) seeking to recover insurance monies under a reimbursement agreement. The Court held that the applicable limitation period was six years.
Catalano worked for Teck Cominco Metals Ltd. until February 2003. He became disabled and was provided long term disability benefits under a group policy administered by Sun Life. Catalano was in five motor vehicle accidents between January 1998 and December 2003 and commenced actions for some of those accidents. The group policy contained a subrogation clause under which the plan sponsor was subrogated to all rights of recovery of the employee for loss of income. Pursuant to the subrogation clause, Catalano was required to sign a reimbursement agreement providing that if he recovered any amount from another person or another person’s insurer for loss of income, he would remit the amounts to Sun Life to the extent of the sum of disability benefits paid to him by Sun Life as of the date of recovery. Teck and Sun Life learned that Catalano had settled certain of the actions arising out of the motor vehicle accidents but failed to remit any sums or provide any information to Sun Life concerning the settlements.
On June 6, 2009, Teck and Sun Life commenced an action against Catalano seeking a reimbursement of any sums paid to him in the actions. Catalano took the position that the action was out of time by virtue of the limitation periods set out in sections 22 and 65 of the Insurance Act, R.S.B.C. 1996, c. 226 (the “Act”). Teck and Sun Life took the position that the limitations in the Act did not apply and that the six year limitation under the Limitation Act, R.S.B.C. 1996, c. 226 with respect to actions on a contract did apply.
The Court reviewed section 22(2) of the Act which required that an action on a contract must be commenced within one year after furnishing of a reasonably sufficient proof of loss or claim under the contract. The Court noted that this limitation only applied to actions against an insurer by an insured and that the phrase “claim under the contract” could not include a claim by an insurer against its insured for reimbursement under a separate agreement. The Court also noted that the one year limitation period contained in section 65 of the Act clearly referred only to life insurance. It did not apply to the circumstances of the case at bar.
The Court concluded that suing on the reimbursement agreement represented an action for breach of contract for which the limitation period was six years, citing Chisamore v. Cumis Life Insurance Company, 2006 BCSC 462. In the result, Catalano’s application for summary judgment was dismissed.
