Updated: Mar 9, 2019
The below discussion follows from a news item published by CBC.
A tree fell on a house following a heavy windstorm in October 2017, causing substantial damages. The current owners purchased the house in a “private sale” in 2015. What followed was not anticipated by the owners of the house, and to date, the owners are in limbo.
The township denied permits to repair the damages as almost two-thirds of the house was built without proper permits, and the house was deemed structurally unsound, requiring rezoning and new permits to rebuild. The permits haven’t been granted yet.
The basic limitation period in Ontario is two years. The Limitations Act, 2002, S.O. 2002, c.24, Sched.B provides:
Basic limitation period
Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
This is an absolute Limitation Period with very few exceptions (Minors, Incapable persons, sexual abuse claims).
The home Insurer at the material time told the owners that they only have until October 2019 to submit the repair receipts, in writing, via an email confirming that there are no exceptions to the deadline (Limitation Period) and that they could either file the receipts before that day or commence a legal action against the them.
Is the Insurer obliged, under law, to extend the Limitation Period or do the owners have no option but to:
1. Either commence a legal action against their Insurer to preserve the Limitation period, incurring substantial (and perhaps unnecessary) legal costs; or
2. Accept an ACV settlement and cash out based on the repair estimates.
There appears to be no provision where a party, such as an Insurer, has a legal obligation to extend the limitation period under such exceptional special circumstances that are beyond the control of the Insured.
Section 129 of the Insurance Act, R.S.O. 1990, c.18 provides:
Relief from forfeiture
Where there has been imperfect compliance with a statutory condition as to the proof of loss to be given by the insured or other matter or thing required to be done or omitted by the insured with respect to the loss and a consequent forfeiture or avoidance of the insurance in whole or in part and the court considers it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against the forfeiture or avoidance on such terms as it considers just. R.S.O. 1990, c. I.8, s. 129.
In Kozel v. The personal Insurance Company, 2014, the Court of Appeal for Ontario stated:
Relief from forfeiture simply refers to the power of a court to protect a person against the loss of an interest or a right because of a failure to perform a covenant or condition in an agreement or contract.
The remedy of relief against forfeiture is equitable in nature and purely discretionary.
The circumstances are obviously beyond the control of the owners of the house due to which they may not be able to meet the deadline of submitting the repair invoices within the limitation period. This however does not appear to prejudice their Insurer. Though the Insurer does not appear to have any legal obligation to extend the limitation period, they may however consider an extension in good faith. However, for how long can one expect them to extend the period? Or should they waive off the limitation period altogether until the repairs could begin on receipt of the relevant permits? Is there any provision in the relevant Limitations Act that could provide answers to these questions? There used to exist a legal doctrine of special circumstances that allowed amendments, including adding a cause of action after the expiry of the limitation period, provided no prejudice had occurred to the opposing party. It does not however apply under the new limitations act (see Joseph v. Paramount Canada’s Wonderland, 2008).
What should the owners of the house do? It may be a possibility that if they are forced to initiate a legal action against their Insurer to preserve the Limitation Period, legal costs incurred in doing so could be awarded against the Insurer in the court of law.
The content of this article is intended to provide general guidance only. A specialist must be consulted for specific circumstances