Insurers can’t ask for leniency on time limits, but then enforce them on claimants

An insurer involved in settlement negotiations can’t ask a claimant for leniency on time limits, but then demand the claimant adhere to strict limitation periods for serving a statement of claim, an Alberta court has ruled.

The court thus granted a claimant an extension to formally serve the insurer with a statement of claim, even though the two-year limit for filing a claim had expired.

“An agreement between an adjuster and counsel [for the claimant] that a statement of defence will not be required without notice gives rise to a reasonable belief that other time limits, including the time for service of a statement of claim, will not be strictly enforced until one party or the other advises that the rules of the game will revert to being strictly applied,” the Court of the King’s Bench in Alberta wrote in a decision released Monday.

“It is inequitable to permit an insurer to obtain an indulgence with respect to a time limit from [the claimant’s] counsel and, at the same time, hold the [claimant] to the strict time limits provided by the rules of court.”

The case turns on a legal custom in Alberta, where lawyers file statements of claim with the court, but may not necessarily serve the defendant. Instead, counsel may share the statement of claim informally with the defendant, with the expectation that settlement discussions will ensue.

In Jelonek v Monterrosa-Renaud, Bella Alexandra Josephine Monterrosa-Renaud was involved in two car accidents, one in November 2018 and another in February 2019. The second one involved Piotr Jelonek, who was insured by SGI Canada Insurance Services.

Monterrosa-Renaud’s original lawyer was Shawn Johanson, who filed a statement of claim on Sept. 16, 2020. Four and a half months later, in February 2021, Johanson had an email exchange with an adjuster for Jelonek’s insurer, SGI Canada.

In that exchange, Johanson provided the adjuster, Phillip McDougall, a copy of the filed statement of claim. McDougall asked Johanson to refrain from requiring a statement of defence.

Johanson agreed not to require a statement of defence. He asked twice for information to allow him to serve Jelonek, with no response from McDougall.

Johanson took a new in-house legal position in spring 2021, requiring him to wind up his private legal practice. Michelle Andresen agreed to represent Monterrosa-Renaud.

Andresen met with Johanson to transfer the file. Johanson provided Andresen with an incomplete hard copy of the file on Apr. 15, 2021, but did not provide an electronic copy. A notice of change of counsel was filed in May 2021.

A settlement was reached between Monterrosa-Renaud and the defendants involved in the first accident, which required approval by the court. The court-approved settlement order, signed by McDougall, stated: “[t]he plaintiff [Monterrosa-Renaud] shall file and serve an amended statement of claim on the non-settling defendants [e.g. Jelonek] within 14 days of this order being filed with the court.”

Three days before the court’s settlement order was granted, McDougall wrote to Andresen to inquire whether Jelonek had been served within a year of filing the statement of claim. When the answer was no, SGI took the position that the statement of claim had expired.

Andresen applied to the court to extend the time period. The court granted the application, finding that SGI was not prejudiced by not being served with the statement of claim.

“Where, as here, a party seeks and obtains an indulgence with respect to compliance with a time limit under the Rules of Court from an adversary, it is inequitable for that party to strictly enforce other time limits in the Rules of Court against the adversary without first giving notice of an intention to do so and an opportunity to take the required step,” the court ruled.

Feature photo courtesy of iStock.com/in-future