Legal Update: Care in Communication is Crucial - First Decision Under Section 22 of the N.B. Limitation of Actions Act
February 27, 2013
By Chris Keirstead, at McInnes Cooper
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The N.B. Court of Queen’s Bench recently released its first decision interpreting and applying section 22 of the N.B. Limitation of Actions Act (Act), which the N.B. Legislature had significantly revised in 2012. In Gildart v. Minhas, the Court refused the plaintiff’s application to strike a limitation period defence and take advantage of the six month extension under section 22 of the Act, based on negotiations with the defendant’s insurance adjusters.
The decision highlights the crucial importance of taking care in communications with plaintiffs and their representatives and agents. To minimize the risk that the limitation period under section 22 of the Act may be extended, we recommend insurers and/or their agents and representatives:
- negotiate on a without prejudice basis; and
- ensure all correspondence includes wording clearly indicating the negotiations do not constitute an admission of liability or provide any waiver or extension of time.
On June 14, 2009 Ms. Gildart was involved in a motor vehicle accident in N.B. Under the N.B. Limitation of Actions Act (Act), the two-year limitation period began on the date of the accident, meaning that she had until June 14, 2011 to commence her lawsuit against the defendant driver.
Ms. Gildart retained counsel on June 30, 2009. Ms. Gildart’s lawyer then exchanged correspondence with the defendant’s adjuster regarding several issues, including Ms. Gildart’s medical and other expenses, and particulars of her loss of income. All of their communications were in writing. Each of the numerous letters/emails the adjustor sent on the defendant’s insurer’s behalf included the following written “disclaimer”: “Nothing herein contained is or shall be construed as either an admission of liability or a waiver or extension of any applicable notice, claim or limitation.”
The defendant’s insurer ultimately made a “without prejudice” offer of the cap maximum of $2,500.00. Ms. Gildart made a counter-offer of $82,000.00. The defendant’s insurer responded by requesting further information. On July 7, 2011, the defendant’s insurer wrote another letter and requested a copy of the Notice of Action with Statement of Claim Attached.
Ms. Gildart’s lawyer did not file a lawsuit until July 26, 2011, more than three weeks after the lapse of the limitation period. In his Statement of Defence, the defendant driver alleged Ms. Gildart’s action was barred because she had failed to bring her action within the limitation period. Ms. Gildart then brought a motion asking the Court to strike this portion of the defence, based on section 22 of the Act. Under section 22, the limitation period can be extended by six months if the plaintiff can show, on the balance of probabilities, that:
- she reasonably believed the claim would be resolved by agreement due to the defendant’s (or his agent’s) actions or assurances; and
- such reasonable belief caused her to delay bringing the claim.
The N.B. Court of Queen’s Bench Decision
Ms. Gildart argued that she reasonably believed that the claim would be resolved by agreement based on the exchange of correspondence, information and ultimately settlement proposals between her lawyer and the defendant’s insurer’s representatives, and she thus delayed in bringing her claim, exceeding the two-year limitation.
On September 17, 2012, the New Brunswick Court of Queen’s Bench decided that the six-month extension did not apply to Ms. Gildart’s claim. The Court found that there was no evidence that Ms. Gildart’s delay in bringing the lawsuit resulted from her belief that the claim would be resolved by agreement. The Court based that conclusion on the following findings:
- The parties were far too apart to reasonably believe the matter would be resolved by agreement.
- The defendant’s insurer never agreed the claim would be resolved by agreement, and had not decided what the settlement figure would be, or determined the range within which it would be settled.
- The defendant’s insurer never admitted liability or waived any defence and/or limitation period; to the contrary, all communications from the defendant’s insurer were either expressly identified as “without prejudice”, or included a disclaimer that it did not admit liability or provide any waiver or extension of time.
Click here to read the N.B. Court of Queen’s Bench decision in Gildart v. Minhas.
Care in Communication with Plaintiff is Crucial
The Court’s decision in Gildart v. Minhas is the first interpreting and applying section 22 of the Act. The N.B. Legislature significantly revised the Act effective May 1, 2012. Click here to read McInnes Cooper’s April 2012 Legal Update “NB’s New Limitation Periods Effective May 1, 2012.”
This decision highlights that it is of crucial importance that defendant insurers (and their agents and representatives) communicate with a plaintiff (and her agents and representatives) on a “without prejudice” basis in order to preserve the insurer’s ability to rely on a limitation period defence. We recommend the following to minimize the risk that the limitation period will be extended under section 22 of the Act – and to increase the likelihood that claims commenced after the expiration of the limitation period will be statute barred:
- Insurance adjusters negotiate on a without prejudice basis.
- Insurers and/or their agents / representatives ensure all correspondence includes words that clearly indicate the negotiations do not constitute an admission of liability or provide any waiver or extension of time.
Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Insurance Team to discuss this topic or any other legal issue.
McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.
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