ONCA Stops Rolling Limitation Period For Business Interruption Insurance

The Ontario Court of Appeal has held that business interruption claims are not subject to a rolling limitation period.

In Marvelous Mario's Inc. v. St. Paul Fire, the appellant insureds commenced two actions claiming insurance coverage under a commercial insurance policy issued by the insurer respondent. That policy covered “direct loss from any Peril”, including business interruption loss and loss of property due to theft or wrongful handling.

The trial judge dismissed the First Action in its entirety, finding those claims were not covered under the policy. In the Second Action, the trial judge dismissed the property claim as time-barred, but allowed the business interruption claim to proceed in part. She held that business interruption claims were subject to a “rolling limitation period” and that some of those claims were preserved. She reasoned:

[60] For the reasons set out above, the second claim, being the claim for business interruption losses, commenced latest on the day the sale to Amore Sweets closed. It was at that time that the plaintiffs knew or had the means of acquiring the knowledge that they had a claim for business interruption losses arising out of the loss of their property.

[61] However, a claim for business interruption losses is, by its nature, an ongoing claim. As the Saskatchewan Court of Appeal stated in Treeland Motor Inn Ltd. v. Western Assurance Co., 1985 CarswellSask 165 (Sask C.A.) at para. 4, the alleged interruption of the plaintiffs' business might have commenced with a particular event (in that case, a fire; in this case, the closing of the sale to Amore Sweets) “but continued to accrue from day to day thereafter, and cannot therefore be said to have “occurred” on the day of the event which triggered it”.

[62] In effect, the plaintiffs' business interruption claim is subject to a rolling limitation period. A new claim accrues each day for the business losses sustained that day. I thus conclude that the plaintiffs' claim for business interruption (to the extent it can be proven in the next phase of this trial) beginning one year before the commencement of the second action is not out of time - that is, the business interruption losses suffered commencing November 16, 2001 are not barred by reason of the contractual limitation period. To the extent the plaintiffs seek recovery for business interruption losses they suffered before November 16, 2001, those claims were not advanced within the contractual...